4 stupid things Crypto traders say and why you should ignore them
Compared to traditional investment markets such as stocks and forex, the Crypto market is immature. Whereas most traditional trading platforms require checks to ensure you understand the risks of trading, the unregulated nature of the Crypto market allows anyone with an Internet connection to start investing in Cryptocurrencies.
The ease at which you can become a Crypto trader presents a huge risk to new investors who have been sold the get rich quick dream. If we ignore the small band of libertarians, we are all here to make money, period! If we are honest, we are all here to make a shit-ton of money, and while this is possible, it is a highly volatile and risky market for the inexperienced investor.
It is easy to lose a shit-ton of money too!
The market is full of early adopters who have made it rich, either through luck or skill, who now provide tips and advice on Reddit, Twitter or through personal blogs. Yes, I am perfectly aware I am doing the same.
The problem with these experts is two fold:
- Some of them aren't self-aware whether they are smart or lucky
- The level of advice smacks of immaturity and can easily mislead new investors
Crypto trading is HIGH-RISK which can mean high reward but can equally mean getting totally fucked! I've said it before; there are plenty of stories on Reddit of investors making stupid mistakes and losing everything. When I mean everything, I don't just mean their trading money; I also mean their savings, their salary, their rent money and even relationships.
Don't become a story!
I follow a number of the leading Crypto traders on Twitter, looking for opportunities or signals and I'm amazed at the level of bullshit which is Tweeted. I mentioned the other day; you can find these experts with names which are made up of two things:
- Start of name = Bitcoin or Crypto
- End of name = cultural legend
I wouldn't be surprised if there is a Crypto trading name generator, here are a few I have come up with:
Only yesterday I got blocked by one of these idiots for calling out their lame tip on Twitter, @BreakoutTickers, see below. These kinds of Tweets suck people into investing in high-risk volatile small altcoins based on what they want to happen and not what is likely to happen. Also, where is the risk? 0.01BTC, this is $40.
A whole $40, you tight wanker, shit call and no balls!— Peter McCormack (@whatbitcoindid) August 20, 2017
I started this blog because I kept getting approached by friends and family on how to get into the market. For a few months I had a private Facebook group, but the more I traded, the more bullshit I read, and the more I worried about people getting sucked into believing they will be making millions, so I decided to make the Facebook Group a website too.
I don't know if I am smart of lucky, but I do know there are ways of relying on sensible decisions rather than luck.
Without a doubt, we are in a bubble, a bubble which could run for years or pop tomorrow, and until we have a real bear market, we don't know who the smart guys in Crypto are.
With all markets there are winners and losers, this is the risk, and there is a lack of solid advice. I'll happily take up the place as the boring, pessimistic, cautious trader. That strategy has delivered over 1,200% return this year, far better than the 9%-12% my financial adviser is offering. Even if the market crashes to 0 tomorrow, my strategy will leave me with around 250% profit as I have taken money off the table.
I have friends and family who have made money this year; even my sister has over doubled her investment. I also know some who have lost, and the questions are always the same:
- Why am I losing money?
- I thought this was a sure bet?
- I bought the coins you talk about, why are they going down?
And alongside your strategy, you need discipline, patience and to accept the reality that you might not make anything. It is a fact that not everyone can make money, for there to be winners there have to be losers. And within the winners and losers, there will be:
- Smart investors making smart decisions that lose money
- Amateur investors making amateur decisions and getting lucky
This is why anyone worth listening to will always start by saying "Do not invest anything you can't afford to lose." You know why? Because there is a good chance, you may lose it, even if you are careful and smart.
Smart investors in stocks and forex usually end up winners, even through bear markets, because they are experienced, embedded in the markets, and often the markets operate in predictable ways. Crypto is not predictable; it is entirely unpredictable. We have a +$4k Bitcoin which was $600 a year ago. We have new coins coming out every day based on a website and white paper, and they are raising $millions. The whole market is pretty much hedged against a single coin if Bitcoin crashes then the whole market crashes.
Can you imagine if the entire global stock market was reliant on the performance of Apple?
Which brings me nicely onto those 4 stupid things crypto traders say...
Buy the dip
Buy the dip is the thing which Crypto traders say which I hate the most. Buy the dip implies that any investment will always regain losses, as such, any coin will go up forever. In my article yesterday about how to use trend lines to spot opportunities I used the following chart for Ripple.
Ripple has been in decline since March 17th, where it peaked at $0.43 with and is now trading at under $0.16, a fall of nearly 65% and is showing no signs of breaking this trend. Now if you are stuck in bad trade you have two choices:
- Sell and cut your losses
- Be patient and wait it out
The above decision comes down to how bad the trade is. If you are all in on a coin, then this is tough because option 1 means new trades with a portfolio in negative and option 2 can go on forever. I can't tell you what to do as each trade has a decision based on its facts but what I can say is that you should always have a diverse portfolio and never be putting a huge % on a coin.
Buying the dip can be throwing good money after bad. There are Ripple investors who have been buying the dip since $0.43 where each trade is likely in negative.
Do not just buy the dip, especially on a coin in a downtrend unless the down trend is a dip in a long up trend.
Hodl is a meme term referring to holding a coin long term. The story goes that it was a once misspelt use of the term hold and has since become the go to word for when a trade turns bad. Reddit and Twitter are full of Hodl memes, which you can especially see with Ethereum since it hit $400.
Holding can form part of a wider strategy, but it isn't a strategy on its own, you need an exit point. I have written about this before. The problem with Hold is similar to Buy The Dip; it implies that every dip or correction will come back. With Ethereum I do think we will see a price above $400, maybe even this year but it is not guaranteed.
Further, Hodl can suck you into loading up on a coin when it spikes and leaves you stuck in a bad trade if it drops, tying up investment collateral while you wait for it to come back. You then may miss other opportunities or need to invest more money, potentially more money than you can't afford to lose.
To the moon/Lambo etc...
Okay, don't get me wrong, I want a Lamborghini, and if I make enough money in Crypto, I'll be first in the queue for a Huracan. I've even been sucked into joking about it before. The problem with memes such as to the moon and Lambos is that they distort your view on Crypto, they imply that whatever happens, you are going to make it rich.
Trading crypto requires discipline and strategy and to do this you need to be as neutral as possible allowing you to ride the waves up and down without fear. This also means avoiding getting over-excited when things are up as this can lead to greed and greed can lead to bad decisions.
X coin is about to fly
Remember, nobody knows what the fuck is going to happen. Nobody. Ever! Well, maybe some of the whales who can manipulate the market do, but for the rest of us, we are trying to make informed and smart investment decisions.
A sensible trader may say a coin is undervalued; a coin has potential, a coin is trading safely sideways and has potential upwards momentum. Fine, but nobody can say a coin is about to fly as they have no idea who in the market is trading and at what volume.
Believing someone saying this can easily suck you into a bad trade. I have done it, more than once. I have been left holding the bag on Monacoin, Swarm City, and Zcoin to name three. £thousands in losses because I believed some idiot on Reddit.
Do not ever invest because someone says it is about to fly. Invest because you believe and use the charts for a good entry point.
Investing is hard. Crypto investing is tough. It is volatile and scary at times. Things can fly up and down at extreme rates. If you are not careful, then you risk massive losses. If you can accept all this, but you still want in, then cool, make sure you learn as much as you can, be careful and do not listen to stupid things Crypto traders say.
If you do want to follow some people in the Crypto space then I can recommend two, two of the smartest I have found:
- CryptoPicasso: yep, funny name but smart technical analysis based trader. I have subscribed to both his trading videos and his signals group. I don't follow his signals directly as I am not a day trader but I do use them as part of my research.
- NicTrades: I found her on Facebook. She invests in all markets and her Crypto technical analysis is great.
As ever, shout me if you have any questions and trade safely.