Author's note: People new to trading enter the crypto-market constantly, and the amount of information they must digest to make sound and informed decisions can be overwhelming.
Here is the first in a series of articles based upon my own experiences and study to help the inexperienced and under-educated get off to a good start trading/investing in crypto-currencies.
Disclaimer: Nothing I write in any of these articles is financial advice of any type. Be sure to do your own research and thoroughly understand the assets you're investing in and how various trading mechanisms operate before deploying any capital.
Start At The Beginning:
Every journey has a jumping-off point, a beginning that can later be looked back upon as the moment when the game had changed and would never again be the same. For myself, the journey down the crypto-rabbit hole began one afternoon in the spring of 2017 while I was on my computer looking for business opportunities. I had been selling items on the 'bay, mostly music CD's and books, and as my inventory was depleting, I was looking around for another online business I could start.
I saw an ad that talked about making $100K's within a short amount of time & thinking that sounded good, I tracked down the source: a very loud guy from Britain who had his own YouTube channel and was promoting a method for trading cryptocurrencies.
Beyond watching Louis Rukeyser on the TV program Wall Street Week back in high school and stacking some silver here and there, I had practically zero experience with or knowledge of either trading or cryptocurrency. I was familiar with the writings of people such as Mike Maloney and Dr. Ron Paul, who had strongly influenced my views on what "real money" is or is not. "Buy low and sell high" was just about the extent of my trading education at that time. I had heard about Bitcoin a few years prior when the Silk Road case was in the news. I looked into BTC a little then and concluded that while it was interesting as an alternate currency, it wasn't "real money," i.e., silver and gold, and so I dismissed it. I was of the school of thought that real money consisted solely of silver and gold; all else was only fugazi currency and not worth the paper on which it was printed. Had I purchased even a few hundred dollars worth of BTC at that time and held it, needless to say, my life would have been so much different in the years following. It's a fact of our existence: timing is everything.
Expectations ARE Important:
Since I've dived headfirst into crypto-trading, the time has been a blur of study and activity that has been an emotional roller-coaster at some points and cause for sober reflection at others. I have been deeply affected by the experience: at it's the most basic level, learning to trade is as much a matter of enlightenment and self-mastery as it is learning to use technical analysis and employ sound risk management practices. I am not the same person now as when I started, and I am convinced that the reader will also experience changes to their overall perspective and being as they develop their trading skills and learn the lessons only the market can give us.
At the beginning of this series of articles, I think the best place to start is defining our terms and the scope of what one may reasonably expect from trading and these writings.
Defining Our Scope:
One may think of trading as the buying and selling of any number of financial instruments such as equities, commodities, crypto-currencies, etc. by someone who either acts on their own as a speculator or acts as an agent for someone else for profit. Of course, trading is far more complicated than that simple definition outlines, but this is sufficient for our purposes. Since trading involves opening and closing financial positions on a relatively short-term basis, it is fundamentally different from investing, which uses longer-term commitments of time and capital. The focus here will be on trading the crypto-market, but the discussion will cover the basic principles used in any market.
Very often, people who are new to the crypto-market arrive with dreams of racing Lamborghini's across the lunar moonscape. They have heard of the incredible returns on investment that others have attained and want a slice of that pie. They also often have little, if any, experience with or knowledge of trading. People who don't see the work & effort that goes into properly executing trades mistake large profits suddenly made in a volatile market for easy pickins' & a fast buck. Crowdsourcing their trading know-how from YouTube or social media, they spend their time and capital chasing green candles or indulging in other forms of FOMO. Eventually, their trading account depleted, and their spirit defeated, they close up shop, blaming "the whales" or "market manipulation" for their losses and vow never to buy any cryptocurrencies again.
It doesn't have to be like that.
If not all, many of the mistakes that people new to trading make are relatively easy to avoid. Even learning the at times painful experiential lessons found only in the market can be softened by employing sound risk management practices. No one error should ever cost anyone their entire trading account.
The reader should make no mistake and possess no illusions: learning how to trade on a consistently successful basis, especially for someone starting from scratch with no trading skills or knowledge, will require them to either bring certain attitudes to the table or at least have the willingness and capacity to develop those attributes.
As an admin in an online crypto-trading group, I often encourage new members regarding steps they should take to understand trading concepts or principles better. One phrase I use again and again is: "Be persistent in your studies but remain patient with your progress." I am convinced that anyone of at least average intelligence who either possesses or can develop the qualities of persistence and patience can learn the skills and develop the mindset needed to be a successful trader. It isn't necessarily the most intelligent person in the room who's the best trader, but you can bet your last Sat it will be the person who has both persistence and patience to spare.
These articles assume the reader has a basic knowledge of cryptocurrency or knows where to obtain as much information as they require to make intelligent decisions about allocating their capital. For our purposes, discussion of the technical aspects of cryptos or their possible use cases is moot. The aim here is to assist the person with no experience or knowledge of trading to learn how to develop an edge over other market participants, giving the reader the skills and mindset required to work in the crypto-market safely. The article's scope will cover the basics of purchasing and storing cryptocurrencies, basic technical analysis techniques using candlestick charts, and a method for achieving the goal many traders give lip service to but seldom understand how to achieve: removing emotional entanglement from one's trading business. Along with various aspects of risk management and trading psychology, we'll cover online security, taxes, and estate planning. I have a long list of topics to explore and intend to work through every one of them.
Don't Forget:
One caveat here at the beginning: "trading" is a very complex subject with endless nuances and various forms and methods. The trading I will be discussing is from my study and experiences and will not be an exhaustive exploration of the subject; there are plenty of books, videos, or online assets on trading that one can access for further work & I encourage you to do exactly that. You will learn from others, but you will teach yourself. What works for me may not be the best fit for another. Operating one's own crypto-trading business allows the trader the freedom to walk their own path and make their own rules. With that freedom comes the responsibility to accept the consequences of making poor choices while enjoying the opportunity to learn from them.
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One last thing to remember: no amount of study through reading or videos will replace the lessons one learns by opening positions and working through the market. Sound preparation is vital to success, but one can only gain some knowledge by experiencing exactly how the market operates first-hand. For myself, trading is an endlessly fascinating mental exercise that I think of as "martial arts for the mind." If one views themselves as a "life-long learner," you need to look no further than trading to find a subject that can occupy you for the remainder of your time here on earth.
In closing, I would be remiss if I did not give credit to some of the people who have helped me along the way. CryptoBitcoinChris, who operates the CryptoRevolution YouTube channel and trading group, along with the group's admin team and members, have all been an enormous positive influence on me, as has been the late Mark Douglas, who authored several books on the subject of trading psychology considered classics today that I have found to be immensely helpful.
As I continue producing these articles, I hope you will come back for more.
Up next: Part 2: Congrats! Now You're A Business Owner.
