Hello,

The vast majority of crypto traders are rather new to both crypto and trading in general. This article intends to summarize the most important basic measures one must take to limit the beginner’s mistakes and erase any false hyped-up dreams of wealth and fortunes overnight.

Although I have had some success in growing my trading portfolio in the past 3 years, it was majorly due to being over-cautious and lucky at the beginning.

Please, pretty please, do NOT blindly follow my guidelines as I’m not a financial expert and because trading in cryptocurrencies is a very personal experience that only yourself can develop.

I assuming you have at least a basic knowledge of crypto trading, wallets, exchanges, and have probably bought some bitcoins to start with.

So here we go.

1. SET YOUR BASIC GOALS

At the beginning, you’ve probably been bitten by the crypto hype and heard stories about big wins turning average people into millionaires. Psychology kicks in, you convince yourself about this side of the coin and push away the risks and frustrations.

Firstly, set your goal and limits. What is the reasonable amount of money you can afford to start with. What is the limit of the money you can afford to lose. Remember that money put on a failed project is depreciating with time even if you cashed out the same amount you started with.

Your first enemy is believing that you will be one of the rare people investing few dollars and turning them into millions. Set a certain percentage to cash out at, and let it be reasonable. Few hundreds of dollars cannot turn into a million in few months. $5,000 or $7,000 just might be $50,000 or $100,000 if you played your cards well.
So, know thyself and know your goals, as you will see below the many pitfalls that might just crush your dreams and waste your time.

2. EDUCATE YOURSELF

Forget about passive income theories and the trading for dummies. If dummies and lazy people have a shot, you wouldn’t find any single poor person in the world. This is financial science, mixed with high-tech. It’s a realm of coding wizards and gurus. Enter their world with respect, silent and receptive. Learn, learn, learn before you take any action. Most of us have missed our chance in 2009-2011, so a few weeks of condensed learning will not cost you to miss the train once again. Only jump onboard when you confidently know your trade.

Study people by their applied strategies and do not follow any of their advice on spammy social channels. Look-up the coins by their market cap and their project’s concept, instead of their LAST values and how they are bulling and bearing recently.

Join the slack! Talk to the developers and activists directly. Know what each project has on its menu, and only believe in the project that has something of value to bring to the table.

I’m not advocating learning the traditional Forex trade, but at least have the minimum necessary knowledge in your arsenal, and trust me, it is quite a lot!

3. DO YOUR DUE DILIGENCE

The first step towards investing on an exchange, is to narrow down a few crypto currencies that you strongly feel positive about. If you did well in step #2, this should be an easy thing to figure out. Ask yourself how many are those backing coin X or coin Y. What is the market cap of X? Who are the big investors, or countries or industries backing coin X or coin Y. Research in details the history of successes and hurdles each of these projects had to face.

At the end, you will have a list of 20 potential currencies with 5 top contenders to put your money on.
Make your research an obsession. I’m sorry to burst your bubble, but your day job, family, social life, hobbies, etc… all will be affected. Make this sacrifice worthy by protecting yourself with valid empirical knowledge.

4. ADOPT A STRATEGY

Unlike traditional exchange trading, your only goal in crypto currency investments must be gaining more coins and not more Dollar value. On the long run, as you’ve seen in step #3 how important it is to only follow certain currencies/projects, your goal is to increase those specific coins regardless of their temporary current value against the Dollar.

Here, you have two strategies and 3 combinations:

a. Limited initial investment from which you will try to make more coins
b. A high amount of initial coins you have bought and want to cash out when their value is higher
c. A combination of both a and b

I root for a.

Say you have coin (A) and (B) on an exchange. You sell n% of (A) when it’s 20% up from the point where you started. You wait until it drops to -20% from your initial starting point and re-buy more (A) coins.
Sell the extra coins you gained and redo this with (A). The extra coins can buy more of coin (B), which happens to be a bet on a longer term. (A) must be fluctuating more rapidly than (B) in this case.

5. NO EMOTIONS

Trade without your emotions. Never panic, never have regrets and never back down when your coin is dropping. Remember that in step #3, you filtered out the currencies/projects without a solid community and value behind them, so nothing should make you believe that the project itself is in danger and it will never bulls up again. Remember again, forget about your portfolio’s value against the Dollar. Look only at how many coins you have amassed.

Get a secure hardware wallet and use it as a “cold wallet”. Each time you’ve made some good profits in a certain currency, send everything above your initial investment to the cold wallet and go for a second round.

There are thousands of new traders who get fooled by their emotions and sell a coin to buy another simply because the second is soaring up or the first is falling down. A cold wallet will make it harder for you to gamble with your profits.

Here also comes the matter of security. On an exchange, your private key is generated online and kept forcefully on the exchange. Most exchanges even refuse to give you YOUR OWN private keys. It is YOUR money, so keep it on YOUR computer. No need to be a victim of a hack or a Ponzi scheme. Be smart.

6. PATIENCE, PATIENCE, PATIENCE, and then some (MA)

Unlike what most internet “advisors” teach, day-to-day trading might not be such a bad idea, but it is beyond the scope of this article. For the time being, I only advocate patience on mid-to-long term.

Look at the moving average of your currency and get a feel of its fluctuating patterns. Play in the middle range of this MA. As long as your selling high and buying low inside the MA peripherals, you are safe.

Once the last value exceeds your MA, stop and watch. Re-adjust your strategy. Let’s say your coin is bouncing between 0.00025000 and 0.00032000 in the past 6 hours. You are gaining from those slopes in-between 0.00027000 and 0.00029000. If it goes higher than 24HIGH, or even breaks the safe pattern of the last 6h, stop. See how it’s behaving for some time before adjusting your peripherals and ranging again.

This is a tedious task and will certainly be in conflict with your job time and family time, but remember that if you do not accept this as an obsession, you might just well off buying some of the big coins and leave them alone for a couple of years.

Day trading needs you to be patient and having a serene look over your strategy and goals.

7. KNOW WHEN TO CASH OUT

This is the hardest part of them all, especially if you have been successful. Nobody has the heart to cash out if the coins are still jingling. Only you knows what you initially wanted out of this investment game, and only you will know when to cash out and invest your profits in changing your life. Over time, you would have developed a sense of what worked and what didn’t, so it won’t hurt to keep a few thousand of those certain coins you truly believed will jump to the moon in the next few years.

Call it out and go enjoy life!

I hope you have enjoyed reading this article, and would love to hear your comments and feelings about it.