I’ve been a full-time crypto trader for the past three years and in this article, I’ve consolidated the worthy lessons learned from crypto trading. Whether you’re just starting out, or seasoned, in crypto trading there are some insights that I’d like to impart, especially after this volatile and somewhat disappointing year. My hope is that these insights will help you from making the same mistakes I’ve made, and the crypto trading hacks I’ve discovered or improvised with, as I continue to trade every day.
As most people will tell you, cryptocurrency is an exciting asset class. If you are preparing yourself for the roller coaster career as a full-time trader or serious day trader, I will tell you in frank terms that the odds of success are slim. While the crypto market does present a plethora of opportunity every single day, every trade is essentially a fresh start. Assuming you have basic knowledge how to use the tools in the exchanges, have a good grasp of reading charts and making logical choices, you will still make mistakes. I can guarantee that. With that being said, trading is serious and risky business with the grave risk of losing significant funds if you don’t tread carefully. While some people on the internet are gloating over their “quick riches” and Lambo realities, especially after the 2017 crypto boom, most traders still have not recovered from the big crash of January 2018, including billionaire investor Masayoshi Son.
As an active trader, I can impart some of my knowledge based on personal experience, and the fair warnings from those who paved the way of investing and trading in cryptocurrency. Here are the ten lessons that everyone should pay attention to.
Crypto Trading Is Not a Get Rich Quick Scheme
Being a crypto trader doesn’t mean that you’ll get rich in a week, a month, or even a year. Trading requires patience and consistency, it can be boring, non-dramatic and demanding at times. Crypto trading is all about the mindset. Successful traders wait for opportunities, patiently, as patience can be very rewarding. Trading is a zero-sum game. If you’re winning, someone else is losing and vice versa. I’ve worked hard and into the wee hours of the day sometimes, and I’ve realized that it isn’t too late to enter the game. I studied techniques to decipher candlestick charts and patterns. If you aren’t focused, the market can go the opposite direction, and you have to get out quick.
The Market Stops for No One
For a day trader, the crypto market is a rollercoaster because the market doesn’t stop. It’s basically a stock market that never sleeps. You need to watch all market movements through a 24-hour period. Every eight hours there is increased trading activity in one part of the world or another. The market experiences wild swings and bouts of volatility on exchanges with adequate volume.
Actively Trade or Employ a Firm or Bot
Here are the options for every cryptocurrency trader:
- Become a 24/7 trader
- Hire a broker/brokerage firm to trade on your behalf
- Deploy bots to do your trading
Trading cryptocurrencies full-time isn’t much fun and may not suit every trader. If you have set trading goals, you can hand over control of your funds to a brokerage firm. Before picking bots however, it is recommended that you do your research.
Make Money in Limited Time
Watching the market move, price action and charts isn’t easy. Most traders configure trading bots with predetermined and time tested strategies to buy/sell at the right time. Find time saving resources like a cryptocurrency exchange with high liquidity, a trading bot with proven strategies and guidebooks on fundamental and technical analysis.
Study
Study the projects and coins that you invest, preferably before you dive in. This helps navigate you away from shitcoins and marketing hype.
It’s important for traders to analyze the market and study the team, investors and advisors to projects that they invest in. Traders who read charts predicted the 2017 bull run and the 2018 market crash. There is PR and marketing hype around most projects that don’t even have an MVP out, however, its recommend to see through this and leverage the insight of reviewers and resourceful YouTubers and authors, crypto experts and influencers on Crypto Twitter. Practices such as massive pre-sale discounts, fluffy claims are commonplace in cryptocurrencies, however, it’s important to look beyond this.
Run through a few questions before buying an altcoin or token:
- Are the underlying fundamentals of the project strong?
- Do they have a strong team and seasoned investors?
- What is the review about this company?
- How has the coin performed in the past 1-2 years?
- Is there way too much marketing effort going into the project?
Know the Difference Between a Trade and Investment
A trade is an ongoing thing – there is buying/selling, an investment is more about buying and HODLing. Understanding the difference between the two helps make strategic decisions. If you have a fixed capital set aside for investing the consider options to HODL or stake. However, if you want to buy/sell systematically and book profits with every trade, you aren’t investing, you are trading.
Use the “Angel Investor” Approach
The best way to profit in any cryptocurrency market is to spot the winners before they are there. Finding the next Ethereum, NEO or Ripple isn’t much of a challenge if you have an eye for solid projects and teams with strong fundamentals. Fundamentals will never fail you. Set aside time to study cryptocurrencies that are being launched and use the “Angel Investor” approach to cut the chase and find the diamonds in the rough.
Don’t Set Daily Profit Target Goals
Shift the focus from daily profits to a long-term approach. Set targets for your long-term trades and rise above the daily profit targets. It is highly recommended for traders to enter each trade with an exit target in mind, however, if you don’t make profit on a day or two or even a week, don’t hesitate to keep going. Re-examining your strategy is a good way to deal with this issue, but it wouldn’t be exactly right to set daily profit target goals.
Avoid Pump and Dump Groups
Pump and dump schemes are centered on the idea that small fish lose and sharks win every single time. As a trader with limited capital, stay away from pump and dump schemes. It may be tempting when you see that volatility and gains of over 100 percent in a few hours, make sure you don’t jump in.
You Can’t Control the Market
So control what you can. You can control is your entries, trade size, and exits, so get going. Market movements are controlled by sentiments, news and movements by whales.
This and many more lessons have helped me get through day trading in the past three years. There is mindset, research, and goals in mind. I’d like to hear what strategies and lessons you’ve learned in your crypto trading and investment experience. Follow us on Twitter or join our Telegram group.
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