This blog post is slightly different than most of our Wolverine Crypto Trading posts. Most of our posts are very analytical or technical, but I wanted to provide a more anecdotal article. I have learned so much about myself since I started trading crypto, and I wanted to chronicle part of my journey in this blog post.
Patience. A word that does not initially come to mind when I think of cryptocurrencies. It is a quality that most do not possess. A skill that when used correctly can result in millions, but when not can result in a loss of millions. It is a skill that I have to actively work on, especially when investing in cryptocurrencies, because I know it will lead to the greatest success.
Trading cryptocurrency is extremely fast paced. The price movement, the volatility, the constantly increasing number of assets, the numerous ICO’s. It can all be a lot to keep up on. When I first started trading, I would spend hours reading websites and looking at charts trying to make sense of it all. Crypto started to consume my entire life, and there is no way to stay ahead of the markets. I would make dozens of trades a day. I was so excited at every percent my portfolio increased, and heartbroken at every percent loss. The volatility was so much to deal with, and it was a mental burden to trade all day.
One thing I do every weekend is reflect on the previous week of trading, evaluate how I felt each day, and what I did right or wrong. About three weeks ago it suddenly occurred to me how few trades I had been making. It was the week that Bitcoin dropped over 50% and I lost a lot of my portfolio balance. I remember being scared about the price drop and that I wanted to close a lot of my long term positions. Instead I kept them all open and went to bed. Two weeks later all my positions are up and my portfolio has regained a lot of lost value. Six months ago I would have sold everything at the bottom and been destroyed. Here I exhibited patience, not only holding an asset that has increased dramatically, but also lost value dramatically.
When I evaluate coins now I find myself asking what this project will look like a year from now. I ask myself if I think this coin is undervalued. If I cannot answer this question easily with a yes, I pass on the investment. I have begun to research my coins with much more vigor and try to be as unbiased as possible. I treat my investments as such, not as a quick way to make money, but a long term hold that I expect to increase in the long term. This simple mindset has allowed me to find great entries on assets I find undervalued and weed out assets that would more than likely burn me in the long run. When you zoom out and look at the bigger picture, the worry about intraday volatility disappears.
There are two quotes that I have from famous traders that I read every day:
Both of these quotes are from very famous investors. Jesse Livermore being one of the only traders to profit from the stock crash in the 1930’s and Warren Buffet being arguably the best investor of all time. I take them both of these quotes, and their advice, seriously, they both had different styles, but both exhibited patience. When it comes time to make big plays, Warren and Jesse executed patience and got the entry that I wanted. They were willing to wait years for an investment to enter their price range and even longer to watch it appreciate.
People often say that they wish they could have bought Bitcoin at $10 in 2012, $100 in 2013, or $200 in 2015. But would they have been able to hold through 80% market retracements? Probably not, and because of people who did sell at those drops we see so few Bitcoin millionaires today. Investing in cryptocurrency is not easy and takes a lot of patience. If you want 200x gains you have to be able to deal with 90% drops. It’s the name of the game but it can be incredibly rewarding, all it takes is patience.
****************************Disclaimer*****************************This article is not to be construed as investment advice. I actively trade and manage my risk, only investing what I am willing to lose. The crypto markets can be highly volatile and everyone investing should exhibit caution.