Four months ago I transferred 100 Steem from my first blog post to Bittrex, launching me into the world of cryptocurrency investing. Here's what I learned and how I tripled the amount of Steem I now have through trading...
1. Sell high, buy low.
My first sale of Steem on Bittrex took place June 5th. If you look at the image above, you can see this was right at the peak Steem price within this time period. However, if I was a more experienced investor, I could have held longer during the day and nearly doubled my profit.
My first suggestion to new traders is to look for 'turn signals' in the market before making a buying or selling decision. If I had more patience, I could have benefited more. But instead, I was eager to get started. Now I wait for a change in activity in one direction or the other before buying or selling.
2. Diversify.
Because of the market volatility over the past few months, my portfolio has experienced many ups and downs. On an average day, the highs and lows balanced themselves out. Because I bought so many different cryptocurrencies, a small dip in one didn't affect my portfolio too much. When the price of one of my selected cryptocurrencies doubled, I'd sell a portion and reinvest the difference.
3. When Bitcoin tanks, invest in what's winning!
One mistake I made over the past four months was to hold onto my losing positions during a market crash. When the price of Bitcoin falls significantly, it takes many cryptocurrencies with it. However, it doesn't lower the price of all cryptocurrencies. (In fact, Steem is often one of the few winners as Bitcoin falls.) Because I thought there was a chance that my holdings could rebound, I didn't sell. Now, a small portion of my portfolio is worth a fraction of what it was worth before the market crashed.
What I Would Do Differently
If I knew what I now know, first, I would absolutely sell any currencies that fall during a crash immediately. Second, I'd keep any cryptocurrencies that I absolutely want in my portfolio and the ones that gain traction in a down market. Third, I'd reinvest in a winning cryptocurrency. Finally, I'd sell my winning position and reinvest once things stable out with the market.
You can still win in a tumbling market without trading on margin, if you make quick decisions, and find the few cryptocurrencies that outperform the market at a good price. This is the one strategy I'd highly recommend during a market downturn.
What Do You Think?
Now that you know my experiences and struggles, why not share your own? Let us know your thoughts, strategies, and tips in the comments below. Thanks for taking the time to read, upvote, and share this content!
Image credits: All images are my own screenshots.
Disclaimer: Many people outperform me easily on the market. This is not investment advice, but rather a look at my story as an investor and what I would do differently.