Apr 18, 2018
If you are reading this you probably fit into one of these 3 categories
- The crypto fan: Sitting on the sidelines waiting for a good time to buy into the market
- The crypto nut: Currently have invested what you are willing to lose into the market and are constantly looking at the charts in hopes that the market is skyrocketing like it did in December. You have no long term plan and have made some bad trades that have lost you some of your “stack”.
- The crypto Enthusiast: You believe wholeheartedly in the technology, you read block-chain tech articles, and you have thoughtful discussions on the forums. You have invested and are playing the long game and taking advantage of the ups and downs of the market.
skip to the section of the category you think you are in if you would like to cut out some reading.
Crypto Fan:
So what do you do if your currently just a crypto fan?
- Figure out what you are willing to invest and know full well that it’s possible that you lose it all.
- Do some research into some of the projects you have heard about and narrow down what crypto assets you want to invest in.
- Setup an account on one of the major crypto exchanges. Coinbase, GDAX, Binance… ect
- Put the money you are going to invest onto the exchange and get ready to invest.
- Set up a wallet (I suggest myetherwallet)
- Invest your money in stages. Do not just dump everything you have into a single buy. This can (and most likely will) cause extreme emotional discomfort and cause you to sell, trade, or second guess constantly. To invest in stages make a plan like so: In the next week I will invest X% of my money every X days. This will allow you to take advantage of the market swings and keep you from getting stuck into a high price point if the market suddenly takes a dive.
The Crypto Nut:
How to keep calm in an ever volatile and changing market…
First I want you to know that I was a crypto nut for a long time. I constantly stared at the charts, I traded from one crypto to another only to lose some of my precious Ethereum in an emotional trade, I followed ethtrader the subreddit as if it were my bible… It felt like a constant rush. Sometimes I’d wake up in the middle of the night just to check the price… thinking “oo if it just goes X dollars higher I’ll be rich!”… this led to a lot of poor sleep and a lot of lost money. Don’t be like the old me.
So how do you keep calm?
- Have a plan and stick to it (I cover this in detail further down in the article and I highly recommend reading this)
- Do not check the charts more than once a day, because if you aren’t going to sell your stack why are you looking.
- Find some good sources of crypto news and read an article at least once a week (I read several a day).
- Follow your subreddit, but understand it’s meant for community not actual trading advice in my opinion, because everyone in these threads are pretty much as knowledgeable as you.
- Don’t quit your job because on paper you have lots of money. As we all know crypto is volatile and if you want to retire early the best way to do this is have a main source of income aside from crypto.
- Don’t day trade unless you are willing to lose money while learning. Most people you trade professionally still lose almost 50% of the time and they are pros… with lots of education. Do you think you can match this?
- Pick your cryptos and let them ride. Depending on where you live taxes can really take a big chunk of your stack if you are not careful.
The Crypto Enthusiast:
So you’re smart, well read, and hopefully have a plan for when you are going to trade, buy, sell, and cash out… but how do you manage the emotions and stick to your plan?
- Have support: find other like mined individuals online or in person who you can have thoughtful discussions with on a semi regular basis. This will help you see different sides of the crypto world and keep you thinking about your plan so when it comes time to act on part of your plan you do.
- Manage your risk! Make sure you have security to keep your tokens safe. Whether it’s a hardware wallet or paper wallet, make sure you have a backup. Never share you passwords, and never trade on an open public network.
- Reassess your plan at least once a year (I try and do this quarterly).
- Balance your portfolio: if you are not familiar with this in basic terms this is when you have a set percentage of X token and a set percentage of token Z. Each time you balance your portfolio you are transferring funds between the tokens to keep your percentage even. This keeps your risk tolerance even. However this triggers taxes so be careful not to do this too much.
Have a Plan and stick to it
(this is a really important part for any investor)
The plan should be simple and adjustable, but firm enough to keep you from selling in a panic and buying into FOMO (fear of missing out).
Example plan:
- Sell 25% of portfolio when 25% is equally to initial investment
- Sell 10% of portfolio at $1000
- Sell 10% of portfolio at $2000
- Sell 75% of portfolio if its equal or greater than $500,000
- Hold rest for undecided reasons…
The crypto space is similar to the Wild West and the Dot Com era. Be safe, smart, and diligent. Enjoy your profits and except your losses.
