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I spent 4 years failing at Crypto just to learn this one simple trick!
Sounds like a bad title for YouTube clickbait doesn't it? To be clear, I'm not going to beg you to pay for a masterclass, no paywalls here. Just my complete unfiltered experience with Crypto over the years. The pain points I suffered through, the mistakes I made and what I learned the hard way so maybe you won't have to.
I have made a LOT of bad choices in my time but none of them haunt me as much as the mistakes I've made when it comes to Crypto. Full disclosure, I'm a millennial (gasp)... Im also a husband, a father of 6 beautiful children, a home owner, a full time employee and a committed life long student of any and everything I can learn.
To my downfall I'm also terribly impatient. Millennials are the beginnings of the instant gratification generation. Granted I never grew up with the technology that the current youth is exposed to but I certainly experienced a shift in culture through the years. By the time I was in high school I was selling burnt CD's after spending HOURS painstakingly downloading albums from Napster on a dial-up connection. Now songs can be streamed in real-time so that is just one shift I've grown accustomed to. I don't like to wait anymore.
So what's this have to do with Crypto?
Good question, we're gonna get to the point but allow me a moment to preface the next section with a little bit of contextual relevance.
- I am a man of simple means. I do not come from nor have I ever acquired any amount of substantial wealth. Even to this day.
- I have paid for classes, one on ones with influencers, telegram signal channels, bots, and in depth market reports. None of them helped me learn in the slightest. (I will not name names, this isn't intended to throw shade, those things may work for some people, just not me)
- ever put in as much as I could afford to lose. A Crypto going to $0 would never bankrupt me.
So you aren't Crypto rich, why should I listen to you?
a financial advisor, this is financial advice. These are strictly my own views and opinions. To be fair, I'm not saying you should listen to me, I'm just offering my perspective because it may resonate with someone out there. If I can save just one person a headache or two that's good enough for me. In the wise words of Benjamin Franklin:
“I didn't fail the test, I just found 100 ways to do it wrong.”
Just like ole Ben here, I found many, many ways to do things wrong. Now, I'm going to walk you through what I learned in the order I find it most helpful.
The TLDR on what I learned
Define YOUR parameters
Listening to Crypto influencers online who have 5, 6 or even 7 figure account balances is probably not a good idea. Someone with a substantial amount of capital is going to approach the market in a completely different way than the average investor. If you are anything like me and also have a living to sustain, mouths to feed or a mortgage to pay then you may only have $50 here and there to throw at the market. be afraid to approach the market with a conservative outlook. You should be trying to grow that $50, if you want to gamble you are better off at a casino. If you have the money to toss around on bets then you probably don't need to invest or try to grow your wealth anyway. Taking a guess at a no name Alt in hopes that it moons in a pump and dump is an extremely fast way to lose money.
Any well developed market is geared towards transferring wealth from the impatient to the patient. Always enter a trade with a plan. If you fail to plan you may as well plan to fail.
Due Diligence
Watching a 10 minute breakdown on any particular Crypto is not what I would consider good due diligence. All you have done is consume someone else's research which may have completely different goals in mind. If you have decided to buy into a project with the expectation of holding long term make sure you understand what you are buying. Read the white paper, find their Twitter presence, if the project is open source find their GitHub read the proposals and fully investigate the development. Figure out the team behind the project and research their backgrounds and what all they can offer.
Most importantly, find their competition. I don't know how many times I blindly bought into a project without even realizing they were just riding the heel of another more successful project with a much brighter future.
Conviction
This one was the hardest for me to get down. Once you have settled on a strategy you need to have a clearly defined set of rules that will help alleviate the stress of normal market fluctuations. If you just put in the only $30 you'll be able to invest for a while it becomes extremely difficult to watch it take any amount of loss.
Enter the trade, if your exchange supports stop-loss (highly recommended) and take profit (much less supported on many exchanges) be sure to put them to use and put that trade on auto-pilot. Stop losses will pull you out of a losing trade and preserve your capital and a take profit will ensure you don't miss the opportunity to realize some gains.
It isn't a loss if you don't sell. This is where patience (my downfall) plays a key role. watching that $30 dip to $27, then $25 and down to $20 makes it overwhelmingly difficult not to just cut the loss and try again, this is a recipe for disaster. Stick to your plan, stop watching the trade and learn the most important skill in this market, patience..
This does not seem like a lot of money to some people, but for the working class its all we have at times. All we want is for it to make a difference, that's why we are here trying to learn the skill. All too often I've seem people get degraded because they only had $20 to invest. We all have to start somewhere.
Calibration
Markets trade 24/7 in the Cryptosphere, it is physically impossible to follow some trades to their completion. Some coins can trade range bound for days at a time. This is where calibration of your trade ensures you don't get blindsided in your sleep. If a trade has moved in your favor adjust your stop-loss to compensate. If you are up 5% adjust your stop trigger to your buy in price. If the trade goes against you the stop-loss can preserve your initial investment making sure you don't lose capital. You can also adjust your take profit targets accordingly.
Depending on your risk tolerances this is also a good way to remove your safety net from the trade. For example, if you enter a $30 position and are comfortable losing at most $15 of it you can set your stop loss to sell out the $15 at your buy in and let the rest of the trade ride. Assuming the trade went in your favor.
The key is not to micromanage your position, watching the trade constantly will pull your emotions in every way but the right ones. Adjusting your stop loss down to prevent from realizing a loss is a direct result of over participating in your trade and a surefire way to lose your capital.
Consistency
Last but not least is consistency, It may take a while to find a good strategy for you. A successful trader only wins 51% of the time. You suffer some losses along the way, this is a natural part of the learning process. You will have to come to grips with your own emotions and find a suitable way to remain dedicated to your initial plan. Once you find that sweet spot stay consistent. Taking wild bets because you're up 40% on a $30 trade goes right back to "Maybe I should be in a casino." thinking. It may work once or twice but your consistency will suffer and in the long term you will lose.
If you made it this far, I sincerely thank you, for giving up your time to read this article and I absolutely love the idea of feedback and criticism. I am brand new to this kind of thing and if there's anything you see I can improve on please don't hesitate to leave it in the comments.
Side Notes
Never execute a trade at market price, pay close attention to the order books, often times the price of a crypto is reported as the mid price between the current top Buy and the current top Sell orders. for example, LTC could be reported by the exchange at $100 but when you place a market buy order you get it at $105 instead. This is because the order books top sell order was priced at $105 and the top Buy order was placed at $95, the price was reported as the mid point at $100. Always place your orders as LIMIT orders to ensure they execute at your desired price.
I use the Pionex Exchange for its extremely low trading fees, the sheer amount of trading tools, bots, and other offerings. Grid trading bots have by far been the best tool at my disposal, they do the hard work and I reap the benefits while not actively having to manage a position. Please go check them out:
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