There is a lot of noise in cryptocurrency – everyone is an expert. Based on just about 5 years of experience in this space I have a pretty good understanding of what works, and what doesn’t.
In this post, I will tell you about some of the mistakes I have made – take it onboard as useful information, and hopefully you won’t make the same errors.
Table of Contents
Don't follow "experts" on social media
When jumped on the crypto bandwagon back in 2017 I had no idea what I was doing.
At the time everyone was talking about Bitcoin and I was following everyone on Youtube. Huge mistake.
It turns out 99% of YouTubers in cryptocurrency have no idea what they are talking about. Or, put in another way, they just want to make money themselves and draw made up trend-lines or feed you with sensationalist information which in the end – is just for entertainment.
Everyone is promoting something, either a coin, a miner, a trading bot, a course, a pyramid scheme. You name it.
I will of course not name names but a quick Google search and you will find the worst offenders.
- For the market analysis, I follow the chart guys. Chart Man Dan, as he is called, does the technical analysis. He is excellent at it and as far as I know, has made a living of trading for roughly 10 years.
- For knowledge in crypto, I follow Richard Heart. Although he has a reputation of being blunt and some people call him controversial, but he has in-depth knowledge of the cryptocurrency space.
You can follow both these channels on YouTube and Twitter.
- Chart Guys Youtube
- Chart Guys Twitter
- Richard Heart YouTube
- Richard Heart Twitter
KEY INFORMATION: It is tough finding reputable sources in this space. I have mentioned the ones I follow in the links above. I recommend you follow them – both channels have a thorough library of information both for beginners and advanced users in the crypto space.
Don't Act on Impulse
One of the worst decisions I have made in Crypto was investing in Bitconnect. I saw a couple of videos on YouTube, didn’t do any research, and invested a small sum right away.
A couple of hours later, after having done the research – I realized that this was another mistake.
If you are not familiar with Bitconnect they claimed they had a trading bot that guaranteed 1-4% ROI per day.
Sounds too good to be true? Yep – it was a scam.
Luckily I only invested a 3 digit sum and managed to withdraw just over half of it before it was game over.
KEY INFORMATION: There will always be numerous opportunities in cryptocurrency. The lesson is to wait – which I have found out the hard way. Whenever there are new opportunities to buy a coin, a miner, or whatever it is – I sleep on it.
After all – some of the best decisions you take are the decision you don’t take.
Don't Get Emotionally Attached To a Coin
Way too many users in this space have formed some kind of strange attachment to a cryptocurrency.
I see this on Reddit every day. When it is all doom and gloom, as it was back in 2018-2019 I read through some subreddits of some of the more well-known cryptocurrencies, and to my bemusement saw daily comments like:
- Buying the dip
- People selling – great, more for me
- This coin naturally wants to go up – I don’t get it
The cryptocurrency market is changing rapidly – many of the coins that were in the top 10 back in 2018-2018 are gone – slowly being overtaken by better projects.
KEY INFORMATION: Don’t get sucked into communities that religiously believe in a project. Don’t get blinded by false promises.
Look at the chart, take a step back, if the crypto you own has not made an all-time high in the latest bull-run. That is a potential red flag. Maybe it is time to look elsewhere.
Don't Day Trade
I am 99% sure that you will lose your money if you start day trading in cryptocurrency. Especially if you use margin trading.
There is a reason why cryptocurrency exchanges lure their customers in with 10x to 100x leverage.
If a whale decides to dump all his coins (there is always a whale) in a market sell – you get liquidated if you have a close liquidation price. All your funds = gone.
Furthermore – most of the time you are trading 2 charts unless you only trade Bitcoin. For most cryptocurrencies – the correlation to Bitcoin is over 90%.
So if the setup looks good on the coin you are trading – well, that is irrelevant if Bitcoin dumps – so will your great setup.
KEY INFORMATION: The lesson here is to buy and hold. Sure it sounds boring but Bitcoin has gone from 0$ to over 65.000$. Ethereum has gone from 0.1$ (ICO) to over 4000$.