Are you interested in cryptocurrencies such as bitcoin and want to get in on the action too? Here are a few tips I’ve learned since 2017. They should save you from making the same mistakes as I did. After all, mistakes in this area cost money and we want to prevent that.
Note: This post is not financial advice, I am not a financial advisor. I am expressing my personal opinion here and the post is for pure entertainment! I am also not an expert in technical analysis, but find it crazy fascinating how well it often works! Investing in cryptocurrencies is very risky and if you are interested in the topic, do your own research. I can only advise you to only put in as much money that you can afford to lose. So, we have that cleared up as well.
Be conservative and keep cool
Things are robust on Crypto Twitter and you need to learn to simply tune out the noise. Sure, everyone brags when they catch a coin with 30%+. Don’t get upset about it and don’t try to get in on time. This is called FOMO buying (Fear Of Missing Out / being afraid of missing the boat) and usually ends up in you buying when everything is all the way up.
Don’t let others influence you too much. Social networks thrive on narcissism and Crypto Twitter is no different. Everyone brags about their profits and very few write about trades that went pear-shaped.
One of the most important points is to keep your nerves. There are x chances every day to get in somewhere. Do your research and learn with small amounts. At least that’s how it was with me, you talk yourself into the theory. As soon as real money is involved, the adrenaline rises and you are more focused. At least that was the case for me.
The crypto market is very volatile and a roller coaster is quiet compared to that. That’s why research is important for long-term bets. I’ll get to short-term ones later.
By the way, I am far from a professional and I am still learning a lot every day. With a conservative strategy and small amounts, it’s slow going, but … it’s getting there.
HODL often not a stupid strategy
Just buy and hold is definitely a tactic as well.
One of my favorites from the full pros on Twitter is CryptoDonAlt. He calculated: If you had bought bitcoin for the same dollar amount every day within the last year, it would have averaged your purchase at $5500. So you would have made it through the bear market just fine.
Definitely fodder for the brain. If you believe in the Bitcoin thing like I do and that it will be worth a lot more, then it doesn’t matter if you buy it for $5000, $6000 or $8000, put it in a wallet and check back in 5 years, right?
Personally, I have long-term coins and tokens that are in a wallet with me and I don’t care about the current price at all.
Just a short hint, If you’ve been hodling long enough and want to cash out Bitcoin profits, check this informative site on where to do so.
Do not chase green candles
If a coin or token is already up 20%, don’t chase it. Sure, it can still go up further, but the probability of running out of steam is higher.
I too made the mistake and took some time to suppress that FOMO feeling. Don’t mourn a missed opportunity, just close up and look for something else. As I said, there is always another opportunity elsewhere!
Instead of getting angry about the missed opportunity and the 30%+ coin, just look for one that also brings a few percent. +3% is also not money lost
That’s why I keep my hands off the BTC / USD pair.
What I still can’t get right is BTC / USD (i.e. bitcoin / US dollar). There I would be a super counter indicator. If I touch this pair, 95% of the time it goes wrong. I’m still trying to find the reasons why. I have a theory, but it may be completely off the mark.
Bitcoin is doing what it wants. Sure you see support and resistance and so on. However, there are events that I would not have seen that way with my technical analysis. But technical analysis is just an evaluation of probabilities. Whoever determines the market, however, builds traps and Bitcoin is now the biggest market. Bitcoin dominance is currently 58 percent!
The majority of traders today are no longer humans, but computers. They trade according to algorithms and altcoins are less in focus because there is simply less money involved. That’s why technical analysis often works a little better for me there than it does for BTC, I think. However, there is the trap here of altcoins twitching when BTC makes big jumps. But that’s not always the case either.
My goal is to accumulate more BTC. at what price the bitcoin stands, I do not care in the next 2 years or so. 2020 is a halving and the bull run may have started.
Technical analysis on bitcoin?
Bitcoin, altcoins and tokens also behave like a normal market, just on speed. You use various indicators in technical analysis of markets to look into the future. As I said, no one can predict the future, but you work with probabilities here and you see momentary trends.
Furthermore, I really appreciate the Crypto Trading Book in this context. It contains a lot of technical analysis and beginners trading strategies explained. However, it is all in English. The author has a very calm and honest way of writing, I can only highly recommend.
Another very good introduction is Babypips, especially the introduction to Forex trading. There you will also find a chapter on the so-called and so important Japanese Candlesticks.
Take profits and secure profits – stop loss!
I made the mistake in the beginning to always want to catch the bottom or the top. If a coin was way up and then went down again, I was annoyed not to have sold further up and just wanted to wait.
I don’t do that anymore. I set up a plan and then follow it. If a coin is doing particularly well, then I tighten the so-called stop loss. Yes, OK, maybe the coin was up 10%, but 5% is still better than back to entry, right?
For example, I got into ZIL (Zilliqa) at 227 and 252 and the thing went up to 307. Before I went to bed, I set the stop loss at 280 and that actually triggered overnight. After that, the thing went up again to over 290 and is now bobbing around 280. Maybe it will go up again. But I don’t care. 1.5 years ago I would have been annoyed and hoped that it would go back to the top. Now I don’t shed a tear for the top. I am in the plus out and just moved on. have bought VET for 91 and they are just at 101. However, I have secured on the way up already at 96 again a little profit and tightened the stop loss.
Since I’ve been working with stop loss, I sleep much better. I know that my Satoshi are secured in case of a ripple. Of course, sometimes it backfires and I get stopped out – so I sell cheaper than I bought. But at least the loss is minimized and the bottom line is that theoretically I only have to be 51% right. As long as you don’t lose money, it’s fine!
Emotions are extremely hindering here
As you saw in the last paragraph, nothing holds me emotionally to various coins anymore. I have a few favorites like that and I have put some of them in my long term investments. But they are well researched and I can justify the stake for me. For such short trades I don’t care at all as long as I get more Satoshi.
If I see an opportunity based on a technical analysis, I go in. I don’t care what the project does and can do. I am then delighted to have been right and to have taken a few percent. I’m just as annoyed when the shot backfires. But as I said: I have to manage to be right more often than wrong!
I am not a fan of such groups at all. If the leader was so good, would he need your money? Of course there are serious groups. But the leader will always know first, buy in and then give a signal.
If you use such a group, see exactly what happens. If you see the signal too late, keep your nerves. If the candle is already very high, do not chase it. An acquaintance of mine is in such a group and there signals are announced relatively far in advance and also justified. Here you still learn something. I will not answer any questions about this, please do your own research.
Personally, I prefer to learn and be in control myself. I have never been good at walking in the herd. If I can’t do it myself, then I have no business being in this field. It still hasn’t quite turned out if that’s the case.
Hands off pump & dump – that’s where you lose Bitcoin
In any case, stay away from so-called pump & dump groups. They promise high profits by pushing the price up briefly and then selling at the top. This is what the operators of these groups do. They buy in at the bottom, give the signal and sell at the top. By the time you realize what’s going on, they’ve made X% profit and you’re left sitting on a completely dead project with your coins. This often happens within a few minutes and so fast that you have no chance. This is what a typical pump & dump looks like.
- I’ve never fallen for that, thankfully, but I get it all the time.
- Bulls vs. the bears – the eternal battle and the bitcoin price.
What I learned in the bear market: It’s okay to do nothing at all. I will keep it that way in the future. If the bear rages, I will go into hibernation.
There is a very high probability that we are at the beginning of a bull market. From now on, it will be interesting.
What if bitcoin does go to 0?
That’s a possibility, of course, but I think the chance is rather small that Bitcoin will disappear again. In any case, I was there then. The few euros won’t make the difference in the future, and if it does work … Amazon shares could have been bought for less than 20 US dollars several years ago.
There will be 21 million Bitcoin and it is estimated that 4 million are lost forever. I think: 1 Bitcoin and patience is all you need. If you have one, guard and protect it like a raw egg ….
Of course, you can also put your money in the bank at 0% and inflation will take care of the rest.
In the past I would have spent the dough on cigarettes (this year it will be 5 years of non-smoking), today I put part of it into cryptocurrencies. That’s how I see it. Now think about it, 365 x cigarette money invested at $5500 in BTC … would currently be worth just 25% more.
- Be careful and conservative!
- Don’t just follow the herd, do your own research! Getting ideas is OK, but control is better!
- Don’t fall for scammers!
- Do not let yourself be provoked! It’s great when others have made 20% profit, but you can also be happy about 2%! As long as you are in the plus, it is OK!
Where to trade and how to hedge Bitcoin, Altcoins and Tokens?
The fastest way to buy cryptocurrencies / Bitcoin is via Coinbase*!
You can trade many cryptocurrencies at Binance*.
I like Binance because the Android app works really well. So you can react quickly on the go. Also, it is the trading exchange with the largest volume. By the way, I also have the exchange only the funds I want to trade.
Otherwise, my coins are either in a paper wallet or in a virtual machine that is encrypted and decoupled from the OS.
You should also use all possible protections otherwise. This means 2FA, additional email confirmations and so on. at most exchanges this is already mandatory anyway.
In the future, DEX (Decentralized Exchanges) will also play a major role. In this case the operators have no access to your balance and the private keys are with you. So if the exchange gets hacked or goes bankrupt, your balance will not be affected. By the way, Binance has developed a DEX at binance.org, but not many pairs are traded there yet. Binance’s DEX works very well with the trust wallet.
When I am on the road and use public WLANs and the like, I always have a VPN active. I never know who is on the same network. This is also true in faraway countries when I use the mobile networks. The best way to beat surveillance and censorship is with a virtual private network.