Note: you are currently reading the first version of my Crypto trading strategy, if you would like to read the current version then please visit the main strategy page.
I am an accidental Bitcoin and Crypto trader. I fell into this at the start of the year and am now trading full time. My portfolio is +1,354% (as of 30th Sep '17) this year against a market cap growth of +735% (as of 30th Sep '17).
I have quit work to trade full time, work less and own my time. The goal is to never face the four walls of an office again, travel, spend time with my kids and wake up every day with the choice of doing exactly what I want. I have setup this blog to track my progress, share what I have learned along the way and hopefully help others to trade crypto successfully.
- Warning 1: I am not the most technical, I have a fair understanding of how cryptocurrencies and the blockchain work but there are people out there who know way more.
- Warning 2: I am not an experienced stock market investor. The only time I have tried to trade stocks I lost over £20k. I have been able to use the mistakes of that experiment to be a better crypto trader.
- Warning 3: this site is not giving out financial advice. I am just sharing my journey. If you choose to be a crypto investor then you do so at your own risk. Please do not just copy me. I am yet to find out if I am smart or just another lucky investor in a raging bull market, only time will tell.
Trading Bitcoin and Cryptocurrency has given me short-term financial freedom, in that I have a four-year window of freedom right now (as of 30th Sep '17). My goal is to create a lifetime window, not waste any more time working a shitty pointless job, travel the world and spend as much time with my kids as possible.
I have built what I believe is a solid strategy which works for me and is creating value. I have been sharing this in a private Facebook group, but I now want to share it with a wider circle of people.
There are a couple of main strategies which crypto traders tend to employ:
- Hold - where traders buy and hold coins for the long term, riding out the volatile movements
- Day trading - where traders analyse the market, the charts and news to trade in and out of coins
For me, holding is not a strategy on its own and you need an exit strategy, I have written about this on my blog.
My strategy is as follows:
- I buy and hold coins for the medium to long term which I feel have growth potential.
- I take small punts on small and interesting coins which have significant growth opportunity.
- I rebalance my portfolio based on tiered investments, primarily investing in Tier 1, long term stable growth coins supported by speculative investments on small/new growing coins which might see significant gains and accelerate my stable coins.
- I take money off the table, 5% for each 25% up, back in to FIAT (British Pounds), to give me an income while still benefiting from compound growth
When rebalancing my portfolio, I do two things:
- Move into new investments based on a combination of factors such as price, news, charts and general gut feel, for example, if a coin is making a parabolic move without supporting news and I feel it is overbought, then I will sell off some and move into another coin. Equally, if I think a coin is oversold or has more room to grow, then I may increase my holding.
- Grow my currency coins over service tokens. What I mean by this is that there are currency coins, such as Bitcoin, Dash and Monero, which primarily act as a store of value or payment mechanism. You also have service tokens which operate primarily to support a service, such as Ripple, Siacoin and Factom. Service tokens are speculative investments based on unproven business models, as such there is less reason to hold long term and their movements are more volatile. Also with service tokens, there is a need for price stability for user experience and a natural mental limit to the potential market cap. Currency coins do not have any upper limit for market cap and the business case is proven. Currency coins give my portfolio stable growth where as moving in and out of high performance service tokens accelerates my ability to buy more of them.
When I research a coin I am thinking of buying, and I do this in a number of ways, and the amount of research is dependent upon the size of the investment:
- A small £250 punt will be a quick look at their website, the team and the roadmap followed by a search of Reddit and Twitter. I can usually do this in around 15 minutes. I am working on a mindset of if I invest in 10, I expect at least two of them to breakout and cover the others. So far the ratio is higher than two, and some have brought in significant returns, such as Ripple (+6,070%), Digibyte (+1,193%), Ark (+1,032%), Bitshares (+1,784%) and Lisk (+1,467%).
- A larger investment may take a few hours. I may scan the white paper, but I don't usually read it in detail, often because I don't understand it. I will though spend a lot more time searching the web, looking at the team, looking at what they are trying to do and discussing with others. It is quite easy to get a feel for what is a good project and what is a waste of time.
What I don't do:
- I don't invest money I can't afford to lose. Doing so can create panic and cause me to make emotional decisions.
- I don't panic. Crypto can be highly volatile, portfolio swings of +30% are possible in a day, individual coins can go down 50% and up +100%. It takes time, but the longer I have traded crypto, the more comfortable I have become with this.
- I don't short. I don't have any fundamental issue with shorting; I think it is a good tool within all markets for driving accurate pricing, whether stocks, Forex or cryptocurrency. I just don't do it within crypto for a couple of reasons. Firstly we are in a very long bull run, so I don't want to trade against the momentum and secondly, I find coins have a greater % upswing potential than down.
- I never margin trade. Margin trading is where an exchange will give you a multiple against your investment. Say for example you are offer *10, then as a price moves up your gain is *10, but this also works when the market moves down. Margin trading for me is investing money you don't have which is rule no.1.
- I don't chase the market. I have, and I have been burned. When a coin is making a parabolic move, and you chase it you can easily be caught as it drops back.
- I don't listen to the opinions of others. I will though use them as an opportunity to research something new but I won't blindly buy. I use Reddit all the time to follow news and opinion, but I ignore the idiots who are claiming a coin is going to the moon, or something is undervalued. Most opinions are based on what people want to happen.
If you decide to become a crypto investor, then take your time and develop a strategy which works for you. Be careful with what you invest, do not get emotional and be patient. The reality is the market may crash and all of this fall apart, equally we may be on the verge of a global financial revolution where the early adopters will be rewarded with financial freedom.
Good luck to all, please shout if you have any questions. I answer all emails.