Crypto Academy Week 12- Homework Post for Professor @fendit - Topic: Don't get lost in the fuzz.

Crypto trading is a very risky investment. It's a two edged sword; you can make profit at an instance, while in the next, it has stripped you of all your assets even to the clothe you are wearing on your back.

But it's promises of great wealth are too alluring, and just looking at the market, and the lives of people who have become wealthy through cryptocurrency Investment, a trader will be doing himself so much wrong if he refuses to explore the goodies of the market because of fear of losing his Investment.

Pixabay.com: Trading

Now, this bring the question? How can a trader make profit in crypto trading without losing his assets? In today's class, Professor @fendit, while discussing on the topic "Don't get lost in the fuzz" answered this question and more. This article is my response to the assignment she gave after the lesson.

Question 1: PLACE YOURSELF IN THE FOLLOWING SITUATION: YOU BOUGHT BTC A COUPLE OF DAYS AGO AT A PRICE OF USDT 62K. SUDDENLY, YOU SEE THAT THIS SITUATION IS GOING ON:

Image from assignment

1a. What would you have done before reading this class?

If before this class, I found myself in this situation, the first thing I would have done is to check other platforms to know if something is wrong with my chart. Because this dip is unbelievable to me. (laughs). Normally, from the study of charts, this kind of dip most time occur after "double tops", and I can't find it on the chart.

When I have checked other platforms and confirmed that the chart is accurate, then I will wait for an hour, if the trend continues in this manner and the value goes down below 60,000 USDT, I will immediately put a stop to the trade so as to minimize my loss.

1b. What would you do now? Explain in detail if there's something you would do differently?

Thanks to this class, if I find my self in a situation like this, I will not "panic sell" as I did in the first time. What I will do is as soon as I notice the change in the trend, I will first get myself in control and not let fear get the best of me.

After that, I will check the news to see if probably a certain government policy or the installment of a new world leader that lead to this drastic change. If the change was brought about by policies, I will stop trade immediately, as this implies the down trend will last for sometime.

Pixabay.com: Bitcoin news

But if the reduction in the worth of BTC wasn't caused by policies or something drastic, but was a result of the of "whales", who want to buy up BTC from panic sellers, what I will do is to utilize the "stop loss", I will set the stop loss price to 59,000 USDT per BTC, so that if the trend continues and goes down past 59,000, the trade stops automatically, minimizing my loss.

Question 2: SHARE YOUR OWN EXPERIENCE WHEN IT COMES TO MAKING MISTAKES IN TRADING:

A. WHAT MISTAKES HAVE YOU DONE WHEN TRADING AND WHAT DID YOU LEARN FROM THEM? IF YOU HAVE LITTLE EXPERIENCE WHEN IT COMES TO TRADING, TELL IF YOU GOT TO KNOW ABOUT SOMEONE ELSE'S EXPERIENCE.

My Experience

I have had my own bad experiences in crypto trading such as selling when the market wants to go down, only for it to go way up few hours later, and other small amateur mistakes like that. This one is the most painful of such

Last two weeks, (then I was still learning how to read technical charts), I learnt from a friend that when a market trend forms a support lines, the next thing to except is a movement in the upwards direction. I had this little money in my bank account, it was actually my rent for next few month, but since Dan is an expert (at least in my eyes) and I have seen his trades, and he makes lots of money, I decided to give the trade a try.

I bought 20 ADA, for about $1.2 per ADA, when the market was rising after forming a support line. After some hours the value rose to about $1.25, I was happy. My friend told me it will rise more, and I need not to be checking it every minute so as to conserve data, as the market goes a little high and a little low all the time.

I agreed, and I decided to engage in other activities, when I got home in the evening the price was around $1.23, I called my friend, he said I shouldn't worry that it is how the market behaves, that I can leave it for sometime, as long as the price doesn't go down past the support line. Early morning of 22nd April or so, I saw that the value is down to 1.8, I tried Dan's number but it wasn't connecting.

Screenshot from eToro

I couldn't stop the trade, my house rent was no longer enough, so I decided to wait small. After waiting for some hours the market reversed to positive, but I wasn't wise this time, if I knew, I would have stopped the trade when it got back to what I bought it, but greed got the better of me. I let the trade go on.

Then on 23rd my phone was down from early morning till about 4pm in the evening, I was really worried about the trade. When I opened my account in the evening, ADA was worth $1.03, fear gripped me so hard, I was so scared. I quickly ended the trade without even seeking my friend's advice on the matter. That was my worst day ever.

By early morning the next day, it was worth around $1.15, although it wasn't up to my investment, I was filled with so much regrets. Had I known, I would have waited a little. But even if I did, how sure was I that it would have rose to $1.15. It wasn't funny at all.

What did I learn from them?

The first lesson I learnt from the trade was never to use the money I cannot spare to trade. That was the thing that made the experience so painful. Had it not been for the votes I got that week from cryptoacademy, I wouldn't have known what I would have done to replace that money.

Second thing I learnt was to never get greedy during a trade. Had it been I stopped the trade immediately after it rose to $1.23 dollars, I wouldn't have made lots of profit, but I surely wouldn't have lost any of my investment.

The third lesson I learnt was to set "stop loss" in all my trade. Probably the situation would have been a bit different if I didn't have a flat battery within the day. Next time "stop loss" will help protect my asset even if I have a flat battery and can't access my trade.

Screenshot from Binance

The last lesson I learnt from the experience is not to go into a trade because of someone's result, but to go into a trade when I have fully learnt the concept behind. Surely I would have acted differently if I knew all I learnt from the class before investing on this trade.

B. WHICH OF THE STRATEGIES DISCUSSED IN THIS CLASS YOU FIND THE MOST USEFUL FOR YOU? WHY?

The most important strategy I learnt from this class is to "Never to Invest any Money that I cannot afford to lose". This is actually a big lesson, I wish I learnt it before I experienced it myself. But all the same, it is a lesson I will never ever forget.

Let say the money I invested in wasn't the money for my rent or for another need, I wouldn't have panicked so much, nor feel so bad when the price went side ways. I might have even allowed the trade to go on, even though it had gone in the opposite direction, because it must surely come up one day. But this couldn't be an option, considering the fact this money was for my rent, and if I don't pay on time, I would be evicted. This is a very big lesson to me.

Question 3: PLACE YOURSELF IN THE FOLLOWING SITUATION: YOU'RE BROWSING TWITTER AND YOU SEE THIS:

Image from assignment

YOU SEE THAT WHENEVER THIS KIND OF THINGS HAPPEN, BTC PRICES RUSH. WHAT WOULD YOU HAVE DONE BEFORE READING THIS CLASS? WHAT WOULD YOU DO NOW? EXPLAIN IN DETAIL IF THERE'S SOMETHING YOU WOULD DO DIFFERENTLY.

What will I do before reading the class?

If I saw this before the class, I would have quickly bought BTC without thinking twice about it. I wouldn't even put a stop loss limit to the trade. After some days, when the value have grown considerably, I will then sell it. The reason why I will buy BTC immediately is because of the rise in crypto value each time Elon musk tweets. He did something like this with Doge Coin more than once, first on 20th December 2020, and the value of Doge coin appreciated considerably. So, there is a high probability that the value of BTC will rise high after the tweet.

What I would you do now after reading the class?

Based on my experience in addition to all that I learnt from the lesson, the first thing I will do is to make sure that I will only use my spare money for the investment. No matter how alluring this opportunity is, it is not really worth the risk of losing any money that is not my spare money.

To buy, I wouldn't actually buy BTC, but rather, I will buy other stable coins like BUSD, TRX and some Ether. These are the reasons why I wouldn't buy BTC.

1. Buying BTC when the price is rising is very expensive. For a small investor like me who can only buy 0.0003 BTC or so, buying BTC wouldn't be of so much profit to me. Also, it will be hard to find a seller who will be willing to sell his BTC, except he or she have an urgent need for the cash.

2. Most greedy investors will begin to sell their other cryptocurrency to buy BTC, this will make the value of those other currencies to drop at first, due to so much selling. Buying these Altcoins at this time will be very profitable.

Pixabay.com: Strategy

Soon enough, those Altcoins I bought will begin to rise with Bitcoin, and immediately after the "Tesla Fever", those who bought Bitcoin will begin to dump Bitcoin to buy back the alternate coins they sold to get Bitcoin, because at this time, the Altcoins are rising in higher percentage that Bitcoin. This is when I will make the highest profit as a small investor.

It's actually a long time game, but it actually work. After all, the Doge Coin fever only last long enough for Elon Musk to cash out before returning to it's previous position.

CONCLUSION

Just like the professor @fendit said in the class, everyone who must profit from crypto trading must first know his/herself. If you know yourself, then can you be able to control yourself and not allow greed and emotions get the best of you. Also, only then can you be able to tread safely on the risky "cryptotrading" market.

Thank you Professor @fendit, I am glad that I participated in your course.