Lessons Learned From A Year of Trading Crypto

Once I entered this space in January of last year, I never would have thought I'd be where I am now.

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I seriously doubt I could be classified as an "expert" or even a "veteran" of cryptocurrency trading, but what I do know is that I am a leg up on almost everyone else I know.

Cryptocurrency has exploded in a years time, with most coins gaining hundreds of a percent in value which is insane. I began my journey slowly buying Ethereum when it was $8. I slowly bought over several months and finally found myself with nearly 100 coins before it reached $100. At that time, I couldn't believe the returns I was getting as it skyrocketed and plummeted over and over again. It was like riding a roller coaster, but unbeknownst to be, I was addicted.

Here are a few lessons I've learned over this adventure.

Lesson 1 : Do not sell!

Oftentimes, I would have done a tremendous amount of research on a handful of coins and feel like it was a good bet to buy. So I would buy 3 or 4 coins and wait.....and wait.....and wait.....and nothing would happen for weeks or months. Used to getting huge returns very fast, I would come to the conclusion that this coin is garbage and throw out all the research I'd done and sell the coins for something else. Guess what happened next, a few weeks later, those particular coins would explode and I'd loose out on crazy profit.

What I've come to learn that is the entire cryptocurrency market is exploding. No matter what coins you are holding, in six months, a year, those coins are going to nearly double, if not triple.

For example, I had significant stakes in Lisk, Qtum, and Monero. I sold very early after months of no gains. Now look where they are, it pains me every time I open coinmarketcap. So be patient, no matter what you are holding, just hold longer, you'll see a return eventually.

Lesson 2: Don't buy into FOMO (Fear of missing out).

A few months back, I did a day trading experiment where I made trades daily in an attempt to turn $75 into $500. Needless to say, it didn't last long and was not very profitable. This went against everything I just wrote in lesson #1. I was chasing coins that were already over bought which caught me in some pretty bad positions.

Fear of missing out (FOMO), is not good at all in this atmosphere. In most cases, you are chasing a coin because of a feeling rather than any actual data. This will almost always end badly because by the time you've gotten in, it is already too late. I usually found myself immediately taking a loss as soon I as made the buy.

Patience is the key in cryptocurrency. Just because a coin is having 100% gains in a day, doesn't mean anything at all. Oftentimes, it is news coming out from the developers, scams from pump and dumps, or just frenzy buying. If you wait it out, large gains are usually followed by huge dumps days later. If you want to take a position on a coin, wait until you see the dips and then buy. Those dips are usually followed by a second wave of large gains whereby you can make a nice profit and get out.

Lesson 3: Diversify

It took me way too long to venture out to other coins besides Ethereum. I was caught up so much in it that I didn't even think of looking at other coins in the market. For me though, I was the only one I knew who was doing this, so I didn't have any help at all. I am entirely self taught and for that reason, I made a lot of mistakes. Now, chances are you can find a lot more information than you could a year ago or have a friend(s) who have been trading who can provide advice.

Lesson 4: Look for Information in Unlikely Places

Sometimes, you can find very valuable information in the strangest places. In October, I was just playing around in 4chan where I often just browse for the laughs. If you've never been there, be warned, it is the butthole of the internet but also great at the same time. This particular day I stumbled on a Verge post about how great it was and how it was going to explode. The posts read like some kind of conspiracy theory thread but it peaked by interest. At the time, Verge was something like 75 Satoshis which is less than $0.01. I ended up buying a few and forgot about it. I woke up one day in early December and found that for some strange reason, Verge had indeed exploded. I ended up making tens of thousands of dollars for literally no reason which perplexed me.

Turned out, a fake John McAfee tweet had made Verge popular overnight and I was rolling in money. I cashed out and am still enjoying the benefits. This taught me two important lessons.

One, trust your gut. For whatever reason that day, I just felt like this was going to do something. I didn't expect anything in the short term, but I knew down the road, this could be something. Call it luck, call it whatever you want, it worked out. Now I listen to my gut (intuition) on almost nearly trade.
Secondly, you cannot lose money in this market, unless you actually try to-see lesson 1. Eventually, weeks, months, even years down the road, just about everything will go up in value. How many coins have failed? How many are less than there a year ago? I can't find any......

Lesson 5: Investment Strategies

Over this year, I've attempted just about every form of strategy when trying to make money. Everything from day trading to long term holds. What I've found to be the most effective are long term holds.

During my day trading experiment, I was also using a $5,000 account where I was actively trading just about every day. It was very stressful and I was pretty much connected to my laptop and phone all day every day. Here I was trying to squeeze out $500 a day trades just about every day or every other day. I did this for a month and made about $1000 a week. After the month, I looked back and found that if I would have held the same $5,000 in one coin for a month, I would have made a considerable amount more than by day trading. For example, I bought Dash at $400 and only held it a day or two and then sold for about a $800 profit when it reached $450-$480. Just a week later, it was trading at over $1,000. By just being patient, I would have been much better off and without the stress.

Conclusion

While I had an excellent year this year with 6 figure earnings, I could have done extremely better if I knew what I knew now. I hope some of this tips help out as some of you are just beginning your journey into the wild west of cryptocurrency. If you'd like more advice or have questions, please respond in the comments and I may be able to help or provide more context on how to navigate this crazy space.