Trading Crypto. What I do and don't do.
https://www.thenfapost.com/2020/12/26/bitcoin-era-review-does-this-works-review-by-crypto-reviews/
Trading can be a fool's errand.
Trading (not investing) can a fool's errand, and most people are unprofitable at it. There, I said it. But I do it anyway, because I love doing it. In the beginning, for years, I lost money. The mistakes I made were numerous. But I did learn three big things. Such as...
Don’t panic.
Years ago, if I was long a position, seeing the stock take a 10% hit because of some news headline, I'd panic, sell the stock at the bottom, then watch it go back up a few days later, then I’d buy another stock, and do the same thing. I know, ridiculous.
If you're in a position, and it takes a significant hit, and if you feel yourself panicking, get up from your chair, and go make some hot chocolate, pet the dog, put together a puzzle, anything but sell your position. Trading is about patience and sticking to your strategy. And this leads to my second point...
Have a trading strategy and stick to it!
I look at the fundamentals and the technicals.
Fundamentals:
- Does the crypto have a long term viable and competitive advantage to the next best alternative? For example, Ethereum vs Cardano? How many users and developers? What is their growth trend? Is there robust liquidity in the protocol token/tokens and is that growing? You get the picture.
Technicals:
How far has the price deviated from the moving averages, the 20-day, 50-day, 200 day? And in the chart’s historical context, what is the standard deviation and likelihood of a mean reversion in the time frame I am trading? For example, if a crypto price is 30% above its 200 day and over the past year the price rarely gets above 20% its 200 day in any given 3 month rally, you probably should wait for a pull back to or below its 200 day before buying.
Are we in a bull or bear market? I am more likely to make more money in a “long” position when we are in a bull market and more likely to make money in a “short” position when we are in a bear market.
Longer term trades are better.
The less frequently I trade, the better I do. Trading too much drives me crazy, and eventually leads to many mistakes. Spreading out the trade from days to months so I don't have to pay attention to it 24/7 brings me larger winnings. And filing taxes is not such a freaking nightmare because I'm filling less trades. So I make more money with less trades and less work.
In Conclusion.
There you have it, three simple rules I follow in trading. Even though this wasn't meant to be exhaustive, and there are more rules, these are three big ones for me and they have saved me a lot of money and made me some decent returns.
Remember, trading is about probabilities of success over a given number of trades, it is not an exact science. You will win some and lose some, but if you don't panic; have a trading strategy; and focus on longer-term trades, you will have a higher probability of winning more than you lose, potentially, maybe, I did say trading is fool's errand, haha :)
Stay frosty people.
30% allocated to ph-fund.
Hi buddy, hope you are good? Was wondering where you have been after not seeing you around for a while. Did you take a break from blogging?
Yeah, life got in the way. Beginning of the year is always super busy with work and life stuff. But as the year progresses, it calms down and I have more time for blogging.
I hope you are doing well my friend.
Yeah, I am doing great. Just tranna accumulate some SBD/steem and get a new device. I'm planning on starting to create digital artworks.
Do you trade in SBD/steem for Naira or Dollars to buy stuff? If so, how easy is it to exchange between crypto and fiat? And creating digital artworks, I bet you're going to be INCREDIBLE at that!
I trade SBD/steem to Naira. But I don't do it directly. I just send the steem/SBD to my trusted exchanger and he will send me the money equivalent into my bank account based on the current price of SBD/steem.
Yeah, I think digital drawings are more appreciated these days unlike before. And also one can sell them easily online.
Do you know many people, friends/family/neighbors, that owns/uses crypto? Here in the US, I know just one person, a friend, that owns crypto. The rest of my friends, family and neighbors think I'm sort of crazy that I own Bitcoin, not to mention any of the other crypto.
Like seriously? Probably they have not been exposed to crypto world. I know of only one person that I am close to though he's not always that active now. @johndoer123. He's one of the earliest friends I met when I joined steemit and he really helped me in the journey. I guess other activities have taken his time.
Over here too. Only few people have interest in crypto. In fact in my area, no one is into it. All of my friends I managed in inviting to this blockchain gave up without staying for long.
Hello @fijimermaid
Thank you for sharing your experience in trading, I have some time studying the subject and I had many doubts.
Your publication helped me.
Thank you for sharing this information.
Have a great day!
Best regards.
You're welcome @janettyanez :) And thank you for reading.
excellent contribution, for most people trading is something of trend and emotions, when the market is up they want to invest but if the market falls they panic, personally I am in a group where we do currency trading since 2017 and now that the market is up it seems that they forgot their strategy they just want to earn a little of all currencies I on the other hand am applying a medium term strategy that with less risk is giving me the same results.
"when the market is up they want to invest"
I love this statement. People often make a misplaced judgment about price vs value. They think price equals value, which is not always the case. For example, latecomers into crypto will chase the price up. Especially when Bitcoin gets to values like 100k. It is a nice big round number that people will associate with value. I gather that my friends and family will really start asking about it then, when they didn't give a damn before it got to that price.
Thanks for sharing this nice post about trading in crypto and some tips that you have shared in this post are quite useful for the people who are planning to enter in this segment. I agree with you that we should be trading with passions and that too with the long term vision mindset which can be great to earn some good returns on the investment .
Thank you and you're welcome. I agree, having "long term vision mindset" is essential to a higher probability of profitability :)
Agree with you, I actually did not know that there are some online classes where such trading strategies explained and there are some books about. For me initially it was just like luck or lottery. But in reality to have a strategy and and of course the research, spending time for investigation long term will pay off. Myself, I do not have patience, but my hubby is completely opposite, which is good :)
My wife says the same thing, that trading is about luck. She also calls it gambling. And she is not far off. It's about playing the odds of certain outcomes.
Excellent, succinct advice. Panic trading is classic for retail traders. (Speaking from experience.) What I am working on doing is reading the charts before I act on a trade – entry or exit. Not reacting to the price action but looking at the trend in relation to the 20MA and the 200MA. Looking for the right set up is a good place to begin.
Thank you. Yeah, the most important aspect of trading is emotional, not intellectual. Controlling your emotions and sticking to a strategy will do a trader well. Actually, most of personal finance is emotional.