A Cautionary Tale Of Following "Gurus"

Be careful who you follow. You never know where they may lead you. For me, my cryptocurrency investments have been mostly for fun or highly speculative, given that

(a) they're relatively small amounts
(b) it's hard to put a monetary value on something completely new

Because of this, i tend not to be as strict, or as disciplined, as i am when i trade FX or stocks. Perhaps the biggest sin i've made has been to follow "gurus" and buying cryptocurrencies on their recommendations. Here are two bad trades i've made recently.

TokenCard

Probably my worst buy so far, tokencard had been rising nicely and was sitting at around $2.80. That's when i saw my guru make a prediction that it was soon going to reach $5 based on his analysis. He had a decent track record with a lot of 'wins' so i bought $50 worth. Here's the price today:

Thankfully i cut my losses when the price was hovering around $1.80. Otherwise, i would have lost 2/3 of my money.

Decentraland

So if technical analysis doesn't really work, maybe i'll have better luck with following fundamental analysis of developments within crypto projects. Recently, another guru predicted that Decentraland's Mana tokens were going to double from $0.10 to $0.20 because they were having an event where they burn some tokens. Seems plausible.

So i bought the tokens at around $0.11 each and they went up to $0.14 before crashing to $0.108, below my purchase price. I'll give it a little longer before cutting my losses. Hopefully it doesn't come to that!

Lessons learnt

Overall, i've still made a little bit of money with my crypto investments thanks to backing good projects and HODLing. I've yet to see anyone consistently beat the market with technical analysis so i'm very skeptical of it. People see what they want to see on charts and i haven't been on a trading desk that actually valued technical analysis, support and resistance notwithstanding.

The rising crypto tide also lifts all boats so if most of your calls are predicting something is going to "boom", chances are you will probably be right. Common sense should prevail and don't gamble your hard-earned money on someone else's hunch. They should be for entertainment value only.