Trading Tips and Words of Wisdom
(NOT professional financial advice)
Like Biggie once said: “Follow these rules and you’ll have mad bread to break up…”
- Don’t lose money
- Be patient
- Continue being patient
- Buy low - Wait for the fear and panic to reach a fevered pitch, then buy. Also fine to accumulate a coin when it’s just bobbing along listlessly in the bear market doldrums. That also qualifies and can work too. Buying in very early can also get the job done, but be sure to crunch the numbers, especially when dealing with ICOs.
- Sell high - Wait for the greed and the FOMO train to reach it’s zenith, then sell.
- HODL - refer to rules one, two, and three.
- Ignore the hype. I know it’s the biggest driver of short term price action, but in the long run it is much smarter to employ a balanced trading strategy based on sound, research-driven conclusions. Look into the fundamentals and be rational. Hedge your bets and balance your positions as much as is possible. One day, this market is going to mature and hype-driven shitcoins will be flushed into the sewers of crypto history. That’s a way’s off yet however, so for the moment, feel free to disregard this rule and go ahead and chase the hype if that’s you’re thing. Whatever.
- Never chase green candles. For every time this works, there are three times where it will fail miserably. If you go down this road, be prepared to hold on to some heavy bags of regret for a while.
- Maintain perspective at all times. If you are up 500% in USD on the month on an investment, then experience a sharp drop, say 70%, you are still in the money. Don’t panic. Example: 100$ turns into $500, which then plunges to $150. You’re still up 50% on your initial investment in a month, and so long as this overall bull market persists, it is highly likely that after the correction plays out you’ll see a relatively rapid rebound and an eventual attempt to reach and surpass the previous highs. Refer to rules 6 and 2. Also, rule 4, if you are confident it applies in this situation.
- Trade with confidence. When your brain and your gut line up, move with assuredness and a prudent degree of boldness. Don’t ever bet the farm, but only make trades when you are confident enough in your decision that you are willing to stake enough to sting a little should it be lost. This will encourage you to avoid impulsive moves.
Bonus rule and summary
Beware of ICO’s. Unless you are very familiar with both the project and team as well as the landscape of the market it is trying to serve (including potential barriers to success such as existing competition or the extreme uncertainty which exists regarding potential changes to the regulatory environment). Attempt to understand the underlying crypto-economic model before deciding whether or not to invest. Be wary of celebrity endorsements, flashy giveaways, and any project which makes promises that sound too good to be true - especially in cases where the type of transparency which would allow for independent verification of their claims or analysis of their business model does not exist. This advice applies not only to ICO’s but to all crypto generally. Cough, cough…Looking at you BitConnect. You dirty rotten scoundrel, you.
Finally, remember the power of doing nothing as it pertains to trading. Deciding to make no changes to ones positions is placing a bet just like any other and comes with it’s own risks and advantages. Sometimes, less is truly more, and the right thing to do is nothing. Other times call for immediate and bold action. Speaking as a long term buy and hold investor, doing nothing in reaction to short term market fluctuations is the move that most often fits in with my overall strategy. Keep your eyes on the prize and try hard not to be overtaken by either the FUD or the FOMO. Choose your spaceship, pack your bags full of coins, and strap in for the ride. Don’t disembark until you’ve reached your personal moon.
Good luck out there everybody!