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The 3 Sacred Rules of Crypto Investing

by Syed Shoeb
, The 3 Sacred Rules of Crypto Investing
Most proficient stock traders have tried their hand at crypto investing but it's a real challenge for them to make money from day trading or HODLing. The pump and dump, high volatility and FUD in the market makes it challenging to implement the same strategies that work in stock and options trading. Though it’s difficult, there are a few hacks and rules for profitable crypto trading we’ll discuss them in this article. 


Rule 1 - Bitcoin is King

There are several groups of crypto traders - Bitcoin maximalists, Altcoiners and Shitcoiners. Maximalists are staunch believers and they go all in on Bitcoin. Bitcoin’s purpose is to bank the unbanked and maximalists agree with this sentiment. They religiously buy and HODL Bitcoin hoping they will have enough money to buy a Lambo by next bull run. Rule 1 of investing is to understand Bitcoin’s market dominance and invest between 20-40% of your funds in Bitcoin. Before and during every bull run Bitcoin’s market dominance is over 60%. Bitcoin has an ROI of over 9500% in the past decade and has consistently outperformed all traditional investment instruments. With an increasing number of businesses accepting Bitcoin payments, the number of transactions have doubled in the past 2 years. 


Rule 2 - Diversify and follow a strategy 

It is easy to chart your progress and see which way your portfolio is moving. As traders follow their strategy, it is advisable to monitor Bitcoin price and its market capitalization. As Bitcoin’s price increases, its market capitalization increases and this often leads to a fall in altcoin prices. This means it's time to hold or exchange for Bitcoin. Every crypto trader has lost money and it isn’t always easy to book profits. It's important to remember that losing helps your learn, change your strategy and improve it for better results and profitability the next time. 


There is never enough research for finding the right strategy and it doesn’t guarantee profits. It is advisable to apply a calm mindset, identify undervalued tokens, avoid jumping in on market hype. Leverage trading is for seasoned traders and it is not the go to trading style for beginners or relatively new traders. Avoid margin trading if you are new, because as your profits multiply, even your losses do. Past performance of a token is never a true indicator and there are several cryptocurrencies with more risks involved than others. 


Rule 3 - Keep Trading 

Simple as it sounds, it is the most important step to becoming a successful crypto trader. Top traders make at least 250-300 trades every 2-3 days and that helps them in aligning their strategy to suit market conditions and book profits consistently. Anything less than 100 trades would not be considered enough data to devise a strategy, let alone monitor its performance. 

These are the top tips for becoming a successful trader, other important ones include learning from the trades where you incur losses, staying updated on market conditions and industry news and identifying the right project and team to invest in. Stay on top of the market and keep learning as you trade.


 

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