Cryptocurrency has been for quite a long time a lingering interest of mine. It first came onto my radar as the news reports of Silk Road's closure started to surface and while I was interested in the space as a whole, I was incredibly hesitant due to the stigma associated with it at the time. This interest was dormant for a few years until last November when a chance at work conversation got me interested in the space. A friend of mine tried to sell me on the concept of BitConnect. Luckily, I've got this internal thought process that tells me that if something sounds too good to be true than it probably is and avoided it (since it really did remind me of a pyramid scheme).
Still the conversation sparked interest in the space again and after about 2 weeks of research I decided to register an account with Coinbase and cautiously make my first purchase of ETH. What has followed has been similar to what a lot of you have experience over the last 2 months. A series of dizzying highs and equally crazy lows.
At the end of the day, this post is really for me. My attempt to codify into words what I feel that I learned in this short two months and break out of the music posts that have been dominating my feed. What you'll see here are some of the mistakes that I made and hopefully what I learned from them. If you see something in here that is straight up incorrect then please call me out in the comments. I'm always interested in having my assumptions challenged.
1. I Really Do Not Have The Instincts to Be A Day Trader
Shortly after getting my Coinbase account, I moved onto looking at purchasing some Alt-Coins on Binance. After settling onto getting some Tron and Ripple due to the hype around them and seeing some results as both began to make some gains, I found myself getting confident enough to make a few day trades. At this point I FOMO'd into Verge on New Year's Eve as the hype around Wraith was intense at the moment. This is the point where Verge began to nosedive. My rudimentary understanding of candlestick patterns led me to make a series of mistakes that involved me selling and rebuying multiple times losing more and more each time all while Tron began it's run towards its ATH.
Here is one of my big tips for breaking this mindset. Make two portfolios: one with your coins as they are now and one with what your portfolio would have looked like if you didn't trade and just Hodled. Then you can have quantifiable evidence on if you make good trading decisions or if you would have just been better off staying put.
When the dust settled, I felt pretty defeated for making such rookie mistakes but I think I needed to make those mistakes to learn that my instinct are kind of shitty, I put way too much faith into the suggestions of strangers on Reddit, and that I wasn't adhering to the next thing that I learned which is...
2. Buy the Rumor, Sell The News.
In the long run, I'm fairly happy that I learned this lesson from Verge early on. My personal opinion of the coin aside, it know seems pretty obvious that it's rise was being built on hype from Tweets and the release of Wraith. I didn't anticipate how much of an effect there would be if it didn't deliver on those expectations precisely when it's base was expecting. As I sat back afterwards and thought on it, this phrase that we hear repeated frequently really came into perspective to me. The expectations vs reality is very real in this space. I watched this happen again as Ripple rose seemingly fueled on rumors of being added to Coinbase. My big personal lesson, have a target that you set before you buy and don't be afraid to take your profits at that point.
3. Do Your Research and Find a Project You Really Believe In (AKA: A lot of people on Reddit, Youtube, and Twitter don't exactly know what they are talking about either and a healthy skepticism of the motives of people is important)
The first coins that I bought were fueled mostly by FOMO, hype, and suggestions by Reddit which as I've stated, is exactly the wrong way to go about things. I decided after about 3 weeks of doing this, that I really needed to get my shit together and reassess why I told myself I was in this space to begin with, which is because I believe in the application of the technology. The fall of BitConnect as well became an important part of my education because I got to see exactly how people got swindled by people making misleading Youtube videos. Spurred by this, I started to develop what I feel is the right mindset for the average person in this space which is doing your research, finding projects and teams that you believe in, and holding onto them because you are making an investment into something you actually care about it (much of the reason that I'm on Steemit is because I really think it's potential for sharing music and video is amazing). This type of mindset has been a life saver in the past few weeks as the markets began to crash/correct (however you interpret things). I managed through it with little worry as a I fully believed in the projects I was backing rather than worried about my bottom line.
Some other smaller Lessons Learned:
1. Don't Treat Your Coins Like A Cult (AKA: You don't have to be so defensive of your portfolio and it kind of makes your community look like assholes if you are screeching FUD and rage defending things. Smart people tend to have doubts)
2. Get a cold wallet and don't keep your funds on an exchange if you can avoid it.
Well, I hope this post was interesting for you. Let me know what you think below.