Trading Too Much/Selling Too Soon
This continues my series aimed to help crypto newbies avoid costly mistakes. Know some people new to crypto? This should be helpful.
Let my mistakes prevent yours...
Impatience in markets is common. Low fees in trading, combined with new tokens available every day, make trading fun and exciting. Who wants to hodl? Hodlers do nothing but sit on their ETH/BTC/Steem/whatever and watch other coins pump and dump. Trading is FUN!
I've fallen for it myself. I've sold because I got spooked (Plutus, ETH after DAO fiasco) or impatient (Waves, Ripple). I've bought tokens at the top of a pump (Swarm City). I'm tempted to trade more than I ought: let's face it, in this space, there are some incredibly irrational pumps that can reward bad habits.
To the best of my knowledge, this image was created by u/moneyfink on reddit. Hysterical.
I am not a trader...and I'm skeptical of traders being successful in the long run (Malcolm Gladwell's New Yorker piece comparing Nassim Taleb and Victor Neiderhoffer is a must read, but currently unavailable). I've been fortunate that the crypto space has been SO BULLISH that it's nearly impossible to lose money, but my habits, if copied on eTrade, would have resulted in thousands of dollars in fees to the platform, and likely no success. My IRA has been mostly moved over to passive indexing funds to prevent overtrading, in fact.
Of course, I may be wrong, and even my results give me mixed signals, as I have made enough money trading to wipe out my mistakes and then some. I had some success with flipping ICOs (I'M NOT SORRY!) this spring when they were being priced too low ("too low", if one considers the correct price being what the market is willing to pay when the token trades freely on big exchanges, although the numbers are objectively insane when compared to non blockchain startups).
This is why I often try to remind myself, in writing even, that I am not the smart money. I found a few edges and did well, but my approach to investing and speculating would be creamed if this market wasn't so inefficient. An analogy: it is better to be a good poker player at a table of mediocre players than a great poker player at a table with great players.
OK, When Do I Sell?
When is the right time to sell? I'm going to point to some good advice I've read: has the platform matured to the product it promised at the ICO? Has something fundamental changed in the founding team or cryptoeconomics of the platform? Those might be good indicators to sell (MIGHT!). Otherwise, there is a lot of noise, hype, fud, and random crap on the internet that is best ignored.
One Last Thing
I've sold enough too early to realize sellers remorse is painful, so I generally hold a small amount of tokens even after I've mostly exited a position. The last thing I want to do is sell and see the token moon shortly after...ask me how I know.
