Jan 6, 2018

This is a bit of a switch-up from the last couple posts, but I wanted to relay some of the general trading advice that has been given to me over the past couple months by people who know their s--- and have millions invested...I've pretty much failed at every single one of these at one point or another so odds are you may be faced with them if you get even semi-serious about this stuff. Here's my lessons learned:

No one ever lost money by taking a profit
Don't be afraid to sell out your principal investment + some profit after making gains. Crypto is volatile. Unless you're long holding a coin and it wouldn't bother you if it were to plummet to $0.00, then feel free to play with house money by taking your initial out.


Don't panic sell
Don't do it. Bitcoin "crashed" 30% six times in 2017. ‪Each "crash" has been followed by an increase of: 76%, 237%, 183%, 165%, and 152%. The same is true for altcoins...unless it's a shitcoin or a scam then they've had a way of bouncing back after dips.




HODL
Fun fact: the term "HODL" isn't an acronym for "Hold On for Dear Life", but it originates from this poor soul years ago and has become a meme:


(hence, the "HODLGANG" mention group name... join here)

Unless s--- is REALLY shi--ing the fan, then hodl your coins and you'll see them correct soon enough. Dips WILL happen. s--- will go sideways. But crypto has a way of coming back stronger than previous. As the saying goes:



Don't fall victim to FUD
"FUD" = Fear, Uncertainty, & Doubt. There's so many false rumors and word flipping being perpetuated across crypto that if you sell your position (or buy into one) based on unconfirmed news then you're going to end up regretting it later. Take a look at Ripple. Two days ago, Coinbase's CEO tweeted that they hadn't made a decision to add new coins. Media sites took this as opportunity to twist the verbiage, saying that Coinbase confirmed that they will not be adding Ripple. In return, people panic sold and XRP took a large hit. FUD.


Buy the rumor, sell the news
Repeatedly, coins have stated that they will have some "big news" coming in a future announcement. And repeatedly, the value will increase leading up to the big announcement, only to have the news fall short and the price plummet. Buy the rumor, let it rise, sell just prior to the announcement, then buy back on the inevitable dip.


Buy the dips
In the example above, the smartest people don't sell, but take the opportunity to buy. Noobs panic sell on the regular. Experienced traders get rich off of it. FYI: I had set a series of stop-losses set on Ripple the other day and they all hit, so I ended up selling out of a portion of my XRP holdings during the dip...which brings me to my next point...


Be very careful when setting stop-losses
Back it up: what's a stop-loss? A stop-loss is a conditional sell that you can place on many of the exchanges that allows you to automatically place a sell order for X coins at X price when the value hits X. Basically, this:


^in this example, when Ripple hits a price of 0.00015010, my account will automatically place a sell order for 500 XRP at the asking price of 0.00015000

I've learned the hard way that crypto can dip hard and then jump right back up within minutes, triggering stop-loss sell orders. I've woken up to find that the coin asking price was worth more than when I went to sleep, but because it had a flash crash during the night, I had sold my position. Because of this, I learned my lesson to be more careful about setting stop-losses and to use them much more infrequently.

In the case of my Ripple, I set a series of stop-loss orders, selling a portion of my coins incrementally at different price points. Even then, I lucked out because Ripple didn't immediately bounce back (but it very well could have).

Many investors use a technique called "fibonacci retracement" which uses the fibonacci sequence (0,1,1,2,3,5,8,13,21,34,etc..) for placing both sell and buy orders. Investopedia can describe it better than me.


Don't buy based off of an advertisement you see on facebook and/or a celebrity endorsement you see on twitter/instagram
Those coins are typically s--- and are pump and dump schemes and/or scams to begin with.


As BTC goes up, your altcoin charts will go down
This took me quite a while to fully grasp, but if following on a BTC pairing chart, it will look like things are plummeting as BTC goes on a rise. In reality, your value is going up. Ex: Bitcoin jumped from $15,000 to $17,000 yesterday (13% jump), so when looking at Ethereum on a BTC-ETH chart for example, it would look like it was dropping. Really, it was dropping in BTC value, but it was actually going UP in $ value:


^USDT-BTC. Jumped from $15,000 to $17,000


^BTC-ETH chart. Jumped from $980 to $997, despite looking like it took a shitdive.

Coinmarketcap.com is a good resource for seeing dual overlays:


This said, as BTC props up, there tends to be an elasticity between it and altcoins. Historically, the better bitcoin performs, it pulls the rest of the industry with it.


FOMO/Chasing/Greed
Don't chase. There's no telling when a coin will stop spiking and will start falling. If you weren't in on the coin before, then try to avoid jumping in while it's surging. Wait for it to settle or dip and then jump in then if you want in on the future action. It's way too easy to fall victim to FOMO and hop in but only to realize that you jumped in at the peak and it's now correcting downward.

Same goes for greed. If you're looking to sell, then have a target in mind and stick to it. You may miss your window and be left with less than you could have previously taken. Which leads me to my next point...


Setting your asks/bids
Don't miss an opportunity because you set your bid/ask price 10 satoshis (aka "sats", aka the unit that's used to measure coins: .00000001 = 1 satoshi*) too low/high. I've sat there for a half hour trying to get the PERFECT price for my buy order but only to see my sell price be the next on the books but not get filled...I actually did this this morning. Got greedy and ended up buying-in for something like 200 satoshis more than I could have because I was trying to get at the very bottom of a dip...not worth the time or effort. Set your price at a realistic one so that you can get in/out of your desired position.

*i'll talk about where "satoshi" comes from in a later thread.


Most importantly: DYOR
Do Your Own Research.


...and that's it. Pretty much everything general-strategy-wise that I've learned or have been told in one thread. Hope you make some money.

If received well, I'll continue to make these.
Future topics will be:
public vs private keys
transferring coins
mining
satoshi & the origin of things
cold storage
the future of bitcoin
forks
chart reading
arbitrage
taxes & the IRS
volume/depth
first time btc was used as currency


In case you missed it:
Part 1 - Blockchain & Bitcoin
Part 2 - General Concepts & How To Invest


shameless plugs:
BTC: 1ByE3HDdqCQZKj45zfnCMkqTf3qCB9anb8
ETH: 0x3B2287769566C2bBB1d6a98bc363160C177a6098
LTC: LRmCyDLA6qKN3z5xFj1qxfUKWQ8fPJTsSN
binance referral link: https://www.binance.com/?ref=18096131
coinbase referral link: https://www.coinbase.com/join/593f11a619ddf609158a2b3d

@HODLGANG