5 Mistakes I've Made in the First Seven Months of Being in the Cryptocurrency Space
I've made a number of mistakes in the cryptocurrency space and I'm going to share 5 of them with you so that you don't have to make them too. I'd like to preface this article by saying before I began in this space in March 2017 I did not know anything about cryptocurrency, stocks, bonds, or really investing in general. There is always more to learn and I look forward to learning from those around me!
Number 1- investing in the fastest growing cryptocurrencies
When I first began in the cryptocurrency space it was in the middle of an exponential growth period in the market. So naturally I shifted all of my assets into the fastest growing cryptocurrency. This was a mistake because I ended up buying at the peak of a move and ended up being a short term bag holder.
Number 2 - making trades too often.
One of the benefits of starting with $0 in the cryptocurrency space was that I found out very early on how killer transaction fees really are. Soon after I first began in the space I heard a great analogy. Your holdings are like a bar of soap, the more you handle it the smaller it gets. What the person was referring to was that when ever I would exchange cryptocurrencies I would lose a portion of my holdings. So now whenever I exchange currencies, I am only doing it if my exchange will position me better for the long term.
Number 3 - I did not research extensively
At first, I did not research cryptocurrencies. I tried to buy currencies strictly off of what the exchange charts were saying. I didn't know anything about technical analysis either. The only thing I would look at would be how much growth I had seen. Naturally this was a mistake and I realized I would have to put in way more effort. I began researching cryptocurrencies for their long term value. I would try to read and understand white papers, I would do background research on the development teams who lead the cryptocurrencies, really looking for any information I could find. I became particularly interested in finding the long term vision of the currency or development pipelines and used those along with exchange charts. After I researched a cryptocurrency and determined whether or not I wanted to be apart of it, I was less bound by emotional trading. The peaks and troughs didn't phase me as much.
Number 4 - Focusing on charts
I briefly mentioned when I first started in the cryptocurrency space, I would trade strictly off of what the exchange charts would say. This lead me to lose money based off of transaction fees and it caused me to react very emotionally to my investments. People may believe differently, but I believe exchange charts and technical analysis are important. I believe it is equally important to not solely depend on exchange chart information.
Number 5 - Trying to time the market.
I tried to time the market a couple times when I first began. I found out, not only was I not good at predicting micro moves in the market, but I could do a lot better if I shifted my attention to macro market moves. On top of that I would lose money because of transaction fees.
I am a big advocate of constantly learning. I strive to learn more and more as I navigate the cryptocurrency space and general investing. I look forward to building off of the knowledge I've gained so far. If you are reading this I hope you are able to find something of value that you may be able to apply to your own journey! If you're like me you'll want to experience these mistakes yourself to know for sure.
Thank you for your time,
McKenzie Gary
