It’s that time of year when many of us reflect on 12 months gone by, and make plans for the year ahead. In the Northern hemisphere it’s a time for cold dark nights and a good time to stay indoors and strategize, and in most cultures the turning of the new year signifies a chance to restart somehow - to learn from what’s gone before, and implement any necessary changes.
For anyone trading or hodling in the crypto markets in 2018, the reflections may be a bit rueful right now, as the bear trend has continued way beyond the predictions of most analysts. A year ago we saw all-time highs, and now many well established tokens are back to prices not seen since 2016.
There are many factors involved in pricing, but the important thing to realise for you as an investor is that you can’t do anything about any of them. Unless you are a significant influencer - of course there are people who can move markets with one tweet, but for most of us, the only thing we can control about price movements is how we react to them.
I do not give financial advice or trading advice, but I will share some commonsense ideas which you might decide to reflect on and adopt in your strategies going forward - for crypto, and other areas of your life in which you might wish to see improved gains in the new year:
In the bullrun at the end of 2017, people rushed into crypto - Coinbase, the typical on-ramp for new users at that time, booked 43% of its $1bn annual profit in that month alone, as even mainstream media rushed off in pursuit of the bandwagon, fueling unsustainable growth and pricing… and when the inevitable retrenchment happened, most of those newbies had no idea why, selling out fast, and decrying the deceptive bubble (whilst the whales quietly cleaned up, as always). We’ll never know how many people massively over-leveraged themselves in a brand new asset class they knew next to nothing about, but there is no excuse for being so badly informed.
There are masses of resources online to help you learn about crypto, and our own podcast Crypto Confidence is just one place to start. Follow respected authorities, compare sources of information, and make sure you know what you’re doing.
Anyone can make money when the bulls are running, and it makes taking a profit look easy. But there are reasons that top fund managers earn vast sums for consistently delivering alpha returns whatever the market conditions, and one of them is that they stay on top of the constant stream of market and news data.
CryptoZink is building a hybrid exchange with a built-in market data analytics tool, combining data, news, and sentiment, to maximize realtime intelligence for investors. Until their platform is released, you need to seek out accurate data from a range of sources, and learn how to interpret it effectively, to make wise trading decisions.
Master your time
As Charlie Munger said, of investing in general: “The big money is not in the buying or the selling, but in the waiting.”
He wasn’t talking about cryptos, but in an asset class of such unprecedented volatility, this truth is even more evident. Catching knives is not a strategy, but using stop-losses and margin trading is, and so is understanding that cryptos trade 24-7.
Mastering time doesn’t always mean moving fast, sometimes it means pausing and looking beyond a fleeting trend. Waiting is hard, but timing is everything, and mastering your response means mastering your emotions too.
And of course as few of us trade full time, managing your time better overall will lead to greater opportunities not only to profit from your crypto buys, but also to find the time to focus on being educated and informed... so it's a win-win for better results in every area of your life.