I have been trading Crypto for a long time, and regular shares for even much longer. Intially I was quite involved and was day trading at a ertain point before I realised what I am about to share with you today. These are lessons learned through my experience and I provide them as lessons learnt and a reference first for myself, and for you, hoping you may find it useful.
Lesson 1: Follow the experts - don't
My first tip, a lesson I have had to learn over and over, is regarding experts in these markets. Yes, there are people who possess a lot of knowledge, and have been involved in their respective fields for decades. And to an extent they are expert in terms of their wealth of subject knowledge and experience. However this does not translate into an ability to accurately predict the future and there is a fundamental reason for this.
To become an expert it takes 10,000 hours (as Malcom Gladwell puts it), or a long time of involvement. The experience must have clear feedback. The experience has to be in a valid environment. And so on.
And the valid environment is where these experts trip up on predictions. A tennis player, playing for years develops skills and abilities to play better. However a gambler, say playing roulette, for 10,000 hours will neither develop skills nor ability to perform better at the table. That is what a valid environment means. Roulette is a game of chance and the probability of a person winning is not dependant on the experience of the player. It is the same with financial markets, while there is a case for pattern recognition and nearly all technical analysis is rooted in past patterns repeating, given the same set of circumstances in the present, the markets remain largely random in terms of short term price fluctuations, and predicting markets is not to be relied upon.
The second part, possibly the bane of the modern internet culture, is the rise of the influencers. In the past we had sports personalities who would appear in soap commercials. They were marketing to their fans' aspirations, in that people would regard them as role models and wish to follow their lead. It is now much worse. These, usually self appointed, influencers will garner a following using some legitimate means of their own skillset, which is good. But once they have fairly demonstrated that skillset, they branch out into areas they are no longer experts in, and some invariably end up talking about crypto to their adulating fan base. I am here not referring to the deliberately scamming influencers who have a vested interest, but of a lot of influencers who mean well but their advice, in hindsight, is flawed.
So, while personally I have no issues with experts and mentors, I can't stress enough the need to do your own due diligence. If you can't understand it, don't let some red-bulled teenager tell you what you should put your hard earned money into. First you must understand crypto. And then find out what you need to know. Then study the things that you found out you need to know in the previous step. Then try crypto out in a demo or low value investment, before resorting to last investments.
Remember that all experts have very valid explanations as to why the market behaved in a certain way. For example you will hear very often on a sudden dip in pricing, that "investor confidence had gotten out of hand and prices had risen to unsustainably high levels. This sparked off a broad sell-off as major investors take some profits!" They will go on to call this a market "correction".
They are probably right and have experienced this before. But how many of them could predict this accurately, say 70% of the time, before it happened? In my experience there haven't been many that could, and the ones that have had predictions come true, had made a number of predictions some of which were bound to come true. However some would take a further step and advice you to buy the dip. And they will have perfectly good explanations no matter which direction the price takes after that.
The main takeaway from Lesson 1 is to strive for your own understanding. You don't need to understand everything on the subject, nor can you in a short period, but you should develop a thorough understanding of the part of your involvement. There is no expert or bot that is going to double your money weekly (even if there was, they would be doing that instead of trying to help you). A mentor can be helpful, but market prediction is unreliable, and you need to have a business strategy before you start investing big in not only crypto, but any space.
In the next lesson from my experience, I will look at when strategies I was buying with, the mistakes I made, and what I learnt from that.\
Disclaimer: This article is for informational purposes only. None of it is financial advice. Users are strongly advised to conduct their research, exercise judgment, and be aware of the inherent risks with crypto currency investments. I am not liable for any financial losses. Cryptocurrency markets are highly volatile and the possibility of investments tanking is higher than traditional investment instruments.