By now we've all heard the crypto to riches stories, anecdotes about how found btc on forgotten hard drives have netted, in some cases, up to half a million USDs.
These legends sit next to the other ones of the "bought pizza for 10,000 btc" variety, and they're sure to make any small time investor's mouth water.
But that's no reason to risk your value.
Sure, it's entirely possible to get lucky in today's cryptomarket and become a bitcoin billionaire, but it is much more likely that entering the market with rose colored glasses will find small investors rekt.
So how should an individual small investor, looking to grow his dragon's pile of bitcoin, go about that task?
While these would be my recommendations, they should not be construed as investment advice. It's important to do your own research and make choices you feel are well informed.
This is my perspective over my first year trading crypto and building my knowledge from the ground up. And It's been awesome and harrowing.
This stuff ain't for the faint of heart.
To Buy or Not To Buy
If you're small time potatoes like me, trading between USD and BTC is not only the fastest way to get rekt, it's also a sure fire way to ensure your first impression of trading is a negative one. BTC is trading somewhere among the stars these days so unless you're coming to the table with a few hundred thousand USD you may not get as nice a seat as you'd like.
Enter Alt Coins.
What I observed pretty quickly upon entering the market in the summer of 2016 was that it was resting at a point of time when companies, started years earlier, were on the cusp of attaining greater recognition, and market share. It was also a time not too far removed from Mt. Gox and Ethereum's DAO crisis, two events that caused the market to stagnate for some time.
As a person who has never invested consciously, I was initially too risk averse to move my BTC outside my personal wallet. Also, the way that BTC continued to appreciate in value made me feel that my hesitance was well rewarded. The higher that BTC is valued against my fiat currency, the more I'd have to trade with, when ready.
My first decision was that fiat to BTC would be my onramp to crypto, and my second was that alt coins would be where I traded my BTC into more BTC. I didn't want to tangle with my fiat's masters, it was the reason crypto resonated with me in the first place.
But today, there are more options to get your fiat converted into crypto, so BTC may not be the best home for your trading funds.
1-3 %'er
When day trading, I very much prefer the seemingly slow and steady race that's actually highly efficient and potentially lucrative.
For this purpose, coins that are caught in a visible 1-3 percent price channel work great. While there are no guarantees ever, this approach usually works for me.
In my mind, it's as simple as buying a coin with the right history and keeping my potential gains humble but consistent.
Of course there are a few considerations to keep in mind:
Trade Amount: In the screenshot above, I used my Stratis history for the example. At the time, I didn't have much liquid BTC to throw at Strat so I employed some channel trading to scrounge up some extra scrap.
Duration: How long are you trying to ride this ride? If you look at my example, all of those trades except for the last happened on the same day. For me, I don't want to hold a coin that I'm channel trading, I want to buy it at the right time and take my 1-3% and move on, unless there seems to be manageable volatility that I can continue capitalizing on.
Choice of coin: You can't channel trade a coin that isn't moving much... not unless you're pouring significant gasoline on that fire. But again, that goes against the strategy of channel trading and turns into a medium to long term position.
The biggest thing to keep in mind is that this isn't applicable to anything outside your trading funds. This is more of an observation about how I flipped my trading fund up from dust.
No, these aren't amounts that will make me a millionaire (yet). But yes, they are fun to do and it's a great learning experience that comes with some extra scratch at the end! To me, any amount of bitcoin is a win.
Don't take your life savings and throw it into price channel trading!
I've used this method to really develop more discipline in executing trades by forcing myself to take profit at the maximum of 3% increase since purchase.
Here are some results:
For a time, I would flip 10,000 XRP as many times as I could catch the right opportunities. Eventually, that behavior slowed down as I became interested in XRP as a medium hold.
The Bus Stop Dilemma
When I was a young man, I would sometimes miss the school bus and have to take a transit bus to get to school. Sometimes when this would happen, I'd be standing at the bus stop and realize that I left an important item at home, like a textbook or homework assignment, or lunch.
I would stand at the bus stop which sat at the bottom of the hill from where I lived and I would think about whether I had enough time to run back upstairs and get that item before missing the bus and having to wait another hour for the next.
Back in the 90's, New Jersey buses that weren't going into NYC weren't as on schedule, so sometimes you could be waiting for two hours. This led to a cycle I dubbed the Bus Stop Dilemma, and I think it applies to cryptocurrency as well.
E very 15 minutes, I would realize that I could have gone there and back and would never have missed the bus. But then I think "well, if I go now, I'll surely miss the bus at this point," and 15 more minutes would pass.
The moral of the story is that you can't tell what the future brings so do what you have to do, there'll always be another bus.
Similarly in crypto, you can wait on the sidelines forever, scared to make a move and also scared to miss the bus. And sometimes some of your choices will cause you to "miss the bus" on a certain project that suddenly spikes in price.
But remember: There will always be another bus.
Images sourced from pixabay and Giphy.com
