I started to get involved in crypto fairly recently - only 2 months ago. At first due to apparent - and my guess - most popular reason: for $ (or if to be exact €, since I live in Europe)
I guess the ideas and stories that you migh get rich quickly in crypto are very apealing to everybody. Well at least it seems very appealing to me. I would love to get rich overnight. Who wouldn't?
Once you start to get involved with crypto this idea of getting rich suddenly starts to not seem that remote anymore: lot's of coins just recently grew 100% 300% 500% or even more in just days or even hours. That all seems very exciting. And frustrating at the same time: once you start counting all that money you could have made if only you were invested into that particular coin just few days ago. Even the biggest and most important coins, such as Bitcoin and Ethereum grew extremely rapidly in recent months compared to any other real world investment.
So once you get involved with crypto you immediately start to look for shortcuts on getting massive financial gains quickly. This is probably a human's nature (or my personal feature? - let me know in comments) to look for shortcuts. But if you want to save yourself some time on reading my post further, here is what I learned:
Shortcuts don't exist.
Yes: there are smarter, more effective, better, faster ways or methods to achieve anything in life (including getting rich), but don't expect one single thing to change everything overnight: shortcuts don't exist. Nevertheless crypto can be a great vehicle to do just so (get rich) for lots of people. Actually it already is.
Obviously in such rapidly growing and perspective market supported by disruptive technology there are lots of opportunities. Especially for early adopters.
But blockchain technology and Bitcoin itself been around for quite a while now. Let's face it: it is not that early times to join this train anymore (even though I think the train still has A LOT of steem to go much further longterm). Throwing 100€ into Bitcoin and leaving it for few years will not make anybody rich. It would be a slightly different story six years ago when Bitcoin was priced next to nothing and buying a pica required shitload of Bitcoins. Now cryptocurrencies are much better established market and entering it without any strategy or knowledge is not a great way to do it. It stands the same for any financial market. It takes some preparation and understanding. There are lots of content being created on this topic and there are so much news about crypto everyday that it is hard to follow. Learning never stops here. Take example from these two gentlemans here: Rod and Papa Ron. So in two months of doing pretty much nothing in life but charting, reading about cryptos and learning various things I came up with this small list of things the you should NOT do and shortcuts you should NOT take in order to be more successful as a newbie in the fascinating crypto Space:
1) Trying to daytrade.
Statistics show that only 5% of short term traders become profitable in the markets. Reality is that it just hardly possible to predict any market direction for short time frame. Markets are driven by hundreds of factors which you can not possibly process all in your head. So unless you have some sort of an insider edge on fundamental information or news that other market participants don't know yet, I would not suggest to trade daily. Almost everybody uses the same tools an reads the same news. Short term trading is likely to bring you losses especially in such volatile market as cryptocurrencies.
2) Not knowing anything about TA (Technical Analysis) OR relying too much on TA
Technical analysis, patterns and charting is great. It is also really interesting if you have a certain type of trader personality. I managed to do pretty well in my trades and got on average of 50% profit on most of of them (Yey!). It is really not that difficult to trade when the entire market hyped and in a massive bullish run. Even though getting 50% profit in short time period seems tempting a little more patience and most of my trades would have ended up in 100%-200% or even 300% profit. Why bother to trade if you can simply wait? Finding another successful trade requires effort and time as well. Cryptos are very diffrent from any other tradeable assets: 50% increase on a trade is not a huge deal here. In the most recent crypto cycle most coins went hundrends or even thousands percents in few months period. Somebody on the internet said that trading in crypto is like picking pennies in front of a bulldozer. And it is kind of true. In fact I've made an approximate calculation that if I would have invested and waited instead of traded my total account profits currently would be around 3000€, which is 300% more compared to my "successful" trades profit of 1000€. Warren Buffet himself said: If you would only be allowed to make 20 investments in your lifetime you would probably be very rich. And most likely 6 would be enough. This is very true. HODL as they say and look at it as an investment.
3) Trading too much
In two months I made a total of 410 trades and traded 41 coins. That is aproximately 400 trades too much. As a beginner coming into the market you always want to do something all the time. And action is great in real life. Nothing happens without it. You don't need to work in the market, though. I mean you should do some work but not actively work: in a financial markets your action should be learning and understanding things instead of trading or investing and actively attending the market all the time. Calculated, strategic and quality moves are import here. Definitely not quantity of moves. You should watch this video from Francis Hunt - The Market Sniper and why he calls himself that. And never go to the market unprepared: this means collecting all the necessary info about the specific project, its current price, marketcap, possible price in the future, competitors etc. This is work. Going to the exchange and placing an order is the outcome of your work done.
4) Using leverage in crypto
This is a big no no for newbies. Also a fairly big NO to anyone in crypto. The idea of 5X 'ing your profit is great but up until the moment when you completely understand the fact that leverage not only multiplies your loses but also introduces you to a possability of wiping your entire account completely empty. Also it makes no sense to leverage anything else apart from Bitcoin, since all crypto prices depend on Bitcoin. And Bitcoin itself is not exactly a very predictable currency.
5) Not knowing your goal.
Knowing your goal in crypto space is not that obvious as it seems and wanting quick profits only in Euro/Dollar or any other so called fiat currency should not be your short term/ mid term or even ultimate goal here. I probably haven't found my ultimate financial crypto goal yet, but at this day it would look something like this:
a) Collecting as much Bitcoin as possible and selling it partially (taking my profits) only when it's at ATH's (All time highs)
b) Collecting and holding as many and as much perspective altcoins (mostly TOP 10 ones according to their market cap) as possible. I'm not a big fan of derivatives such as ICO's (Innitial coin offerings) on Ethereum, though. There should be another topic on why I think 50% or more of all ICO's could be scams or loose value and fail ultimately (no regulations and no real obligation to investors helps, since you can simply cash out your millions and walk away next day after ICO ends.).
c) Contributing to the crypto community and helping other people to get involved in crypto projects. Especially the cool not-so-geeky projects and understandable for "normal" people such as Steemit platform.
6) Buying coins in all time highs and expecting it to rise forever - FOMO (Fear of missing out)
This is where technical analysis comes handy. Just because you should not trade in short term doesn't mean that you don't want to buy a good deal. Buying a coin that is already on the rise that day or that week is crazy: each rise of a healthy growth cycle returns to re-test it's support levels close to the previous price breakthrough - this is where you buy in if you did not manage get it's 1-2-3 bottom formation prior the massive bull run in the beginning of the season in all cryptos.
7) Wanting to get rich quick
There is nothing wrong about wanting to get rich. But being greedy is never a great thing. Use the tips above from what I distilled in those two short months and save yourself some time (and most likely money) while trying to get rich from crypto. Also invest the funds you are OK to loose and don't borrow money for such risky investments.
Thanks for reading my thoughts: if you find this article interesting/helpful or you disagree with something - let me know it in the comments below. An upvote would be highly appreciated as well if you liked my message!