So you want to learn how to enter the market of crypto currency and the volatile Bitcoin & company? Are you sure? Take a look at the chart below. Ask yourself, “What do you see?”
Do you see a world of scary volatility in what is the Patriarch of crypto currency? Or do you see countless opportunities to make a quick and insane return on your investment? Well, the good news is that no matter what side of the fence you are on, there is a potential niche and philosophy that can work for you. The bad news… no matter what direction and approach you take, you still better be willing to potentially lose every penny you invest into this space. The fact that, Bitcoin, the Godfather of it all, can lose nearly 23% of its value just after an all time high should give you pause for concern! But with good practices and fundamentals, you can dodge these dips as a day trader or avoid the mother of all errors of buying high and selling low as an investor. With that being said, here are my first and biggest bits of advice:
DON’T INVEST MORE THAN YOU CAN AFFORD TO LOSE!!! BANKROLL MANAGEMENT IS KEY!!!
Have you ever played poker? Most of us have at least played a hand or two. As a professional poker player, I have played in more hands than at least 99.99% of the people on this earth. And, the biggest key to my success is bankroll management. Don’t ever put money in play that you can’t afford to lose. Doing so is a form of gambling degeneracy. The same goes for crypto currency. If you can’t afford to lose your principal, DON’T PUT IT AT RISK! This is a form of gambling or high risk investing for those who practice safe and sound investment strategies like myself.LOCK UP YOUR EMOTION AND THROW AWAY THE KEY!
This is obviously easier said than done. We are human after all, and have feelings that can alter our logic and decision making skills. But the sooner you can get your emotions under control, the better off your return on investment will be. If you struggle with your emotions more than most, I suggest taking an approach like an investor or long term swing trader. This philosophy allows you to approach the game from a big-picture perspective. It calls for investing in the fundamentals of each currency, believing that it will actually gain in value and be a successful venture long term. It requires extra homework and understanding of each crypto currency’s potential market, products and services provided, and the team behind the coin.
If you are more robotic, or less emotional, then short-term day trading will be your cup of tea. It involves a fast paced decision-making and a stressful environment that relies on really good technical analysis and instincts. You focuses more on the short-term peaks and valleys – bull and bear markets for some industry jargon – of all crypto currency charts, regardless of whether the investment is in a trash coin that is doomed to fail long term, or a staple nearly guaranteed success story. I will go into more detail about these different approaches in a future blog, but feel free to do your own research.PATIENCE! PATIENCE! PATIENCE!
Patience cannot be stressed enough. Hasty bandwagon decisions that are unfounded on any real research will get you burned more often than not. Buying into the news can also get you torched too. Many of these coins are pump and dump (P&D) scams that just try and “steal” from the little guy or those late to the party. The true winners are usually ones that are invested before the news and big moves happen. Even the likes of XRP and BTC have news that comes out where the markets as a whole is not sure if its positive or negative for that coin. For example, pumps and dumps occurred with two of the staple and least risky crypto currencies, Bitcoin and Ripple. The American Stock Exchange (Amex) released news about Ripple, and the Segwit2x cancellation happened with BTC. The AMEX news didn’t positively impact the ripple coin segment of the company’s business model, and the Segwit2x cancellation obviously prevented progress from a scheduled software update with Bitcoin from happening. Both markets responded with an initial increase in value only to sell off way more than they both gained hours minutes and hours later.
In addition to the short-term volatility, most of us don’t have time nor the ability or discipline to sit in front of computer all day long and wait for strong indicators to happen to signal a buy or a sell of a particular coin. You can literally change your mind on whether to buy, sell, or hold 10 times a day in certain currencies. Good luck getting that right more often than not because there are computers, software, and experienced traders that can play that short game better than you. All this leads me to recommend playing the more long game so you can buy low and sell high. And the good news is that long in crypto doesn’t have to be that long comparatively speaking to other markets and investments because it is literally 24/7/365 and never sleeps and is growing in demand at an amazing rate!ADAPT AND LEARN FROM YOUR MISTAKERS
When you start trading crypto, you will make mistakes! It’s inevitable and there are too many variables at play for you to assess or even know everything that can change the fate or the trend of a coin. Some of the exchanges and software needed to trade and invest in this space isn’t intuitive. Take your time and thoroughly work to grasp what you are doing whether it be through blogs or YouTube videos or a financial advisor or mentor.
You have to step into this with an open mind and embrace the process. I personally have made several blunders when I first got into this space; setting up two accounts on the same exchange on accident and thinking I actually got robbed by the commies because my coins where on the other account I had forgotten about; buying the hype of a coin like TRIG without knowing how it will really benefit the fundamentals of the coin; buying high and selling low as well! The best thing you can do is to learn from your mistakes, do your own research, stay informed, and be prepared to switch gears in the game that never sleeps that is played everywhere around the world!WHEN IN DOUBT… HODL (HOLD ON 4 DEAR LIFE)
Thanks to a twitter typo, the HODL community of memes was born. It really has become the default play when you’re not sure what to do. This is especially true if your a long investor or swing trader and not comfortable with the craziness and volatility of day trading. As long as you don’t get in at a or around an all time high, you’re likely to make a healthy profit in USD terms if you just don’t sell. Of course, this is only true if you are invested in an established successful coin and not a ICO or coin that’s speculative and without a viable service or product yet. And if you ever feel like your financial situation changes and you now need the value of your investments, don’t hesitate to claim profits or pull out of the space entirely if you can afford to lose!
So to wrap it up, make a plan of how much you can afford to invest and risk. Don’t let your emotions drive your actions and get the best of you. Patience is always paramount. Always focus on learning from your mistakes and adapting and don’t beat yourself up for making them because they are inevitable. Just focus on minimizing them and you will start maximizing gains! And last but not least…
If you liked this blog and want to get invested in crypto but don’t want to start on your own, I am starting to do crypto consulting sessions starting at $100 for your first 90 minute consultation and $100 an hour for anything after. If you book the consolutation before Christmas, I will reduce the price 40% to $60. Consultations are available over the phone, on skype, facebook messenger, or team viewer. If you are interested, you can contact me for more information at tomcat.bu@gmail.com or on twitter at BUTomCat.
Thomas Manning
Chief Financial Officer & Captain Efficiency Officer ;)
@ Crypto Bay Holdings LLC (website coming soon)