What is a Free Position?

How a Position can be FREE

Assets go on rallies and then they cool off.  This happens all the time.  Sometimes the uptrend can take months and months while the downtrend feels like only a few days.  Traders try to time the top and time the bottom but to no avail because timing the market is actually for suckers.  

But, what a lot of traders and investors will do after an impressive move, is take one single measurement and WAIT for price to fall down to that level.  That level is a 50% drop in value.

But why 50% and not 40% or 30% or for that matter, 60% or 70%.  The reason is very simple, they are looking for a “Free” position.  A Free Position is when you are buying an asset at 50% value from it’s ATH or the upper most level in a large trend.  

They call this a free position as the assumption is that price will eventually reach the previous high again and when it does, it would mean that you doubled the value of your position.  If you have doubled the value of your position, then you could remove your original investment and continue to ride the new trend with the new, current and “Free: position.

Let's take a look

Here we can see LINK and we can easily demonstrate what the idea behind a Free Position looks like.  The idea is to eliminate RISK but still make a profit on your Capital.  To eliminate Risk, you need to recoup your original Capital.  

This can be achieved with a free position if you are confident the asset will return to its ATH or previous rally high and you are able to buy the 50% level. 

We can see in the example above that if you were to use your “profit” as a risk free position, you still went on to make some really good gains.

Why This Matters?

Of course… Why Do You Care?  Well, like it or not, Bitcoin is approaching and getting closer to it’s halfway mark from it’s Local and current ATH.  Bitcoins ATH is exactly $69,000.  Half of that is exactly $34,500.  Bitcoin is currently about 40% down from its high and trading between $40,500 and $41,500.  Bitcoin is also on its last Support level above $32K.

The though is already there in a lot of investors heads – drop the price to $34,500 and accumulate a position down to $30K.  Wait for price to reach $69K again and sell half.  After that, let the rest ride until another major milestone has been reached.

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