Intro
I haven't posted in a while... as I mentioned earlier, I'm going to continue building Steem (pun intended as always!) until I feel I'll reach a large enough audience. Although I'm a positive person and I see the glass like this...
it can still be discouraging when just a couple people eyeball the post you've spent hours laboring over.
Still, I have to make the occasional exception when there's something important I want to say. I'm posting this just as much for myself as I am for all you Steemians, because publishing it here gives my thoughts a certain sense of solidity. I've learned from personal experience when I put pen to paper, or digital words to screen :P I follow through FAR more consistently than when I keep ideas bouncing around in my brain.
Quick example - when I write a "to do" list, I almost always finish what I intend to accomplish for the day. When I "know" what I need to get done that day but fail to write it out, I'm prone to procrastination. (Try saying "prone to procrastination" 5x fast π).
Speaking of which... enough procrastination on this post, let's get down to biz-nassss. And yes, you read that correctly. I just spelled business "biz-nassss". Still want to take advice from me?! π Well fear not, most of this wisdom comes from someone with a far longer (and quite successful!) track record in the crypto-sphere. It's BiteSizeBitcoin, a Crypto Youtuber who's investing style resonates with my goals and values.
On that note, here's how I'll structure this post:
Outline BiteSizeBitcoin's "Principle Based Trading".
Mention BiteSizeBitcoin's Profit Tracking Method - the cherry on top of his Principle Based Trading.
Analyze my investment successes and epic fails. I'll reveal how each "win" was tied to BiteSizeBitcoin's "Principle Based Trading". But I'm far from perfect. I'll also describe my failures and the lessons learned.
Without further ado, here is...
1. "Principle Based Trading"
Discipline To Invest Weekly
You pick one or more of your favorite "long term" coins, choose a $ amount you're comfortable with, and invest that same amount on the same day every week. No "ifs" "ands" or "buts".
This removes the emotion out of investing, and ensures you'll be getting the best "dollar-cost" averaged price over the long term.
The easiest way to do this with Cryptocurrency is to automatically invest in BTC, LTC, or ETH with a recurring trade each week. This can be automated with Coinbase. If you know of any other ways to automate crypto trading please let me know!! Since Coinbase only has those 3 coin options, it would be nice to automatically invest in other altcoins as well.
Also, like BiteSizeBitcoin mentions, it does give you a proud feeling of discipline and accomplishment. This feeling of discipline, in my opinion, will also ripple through to other areas of your life.
Never Lose Money On A Trade, Ever
This was a brand new concept to me, as soon as I heard it, I was hooked! It also inspired to make this post. The idea is once you buy a crypto at a certain price point, you DO NOT sell it until you can make a profit. Ideally you'll have a trading goal to ultimately sell at, but in any case, "going home a winner" should be set in stone.
It's one of the qualities I love about cryptocurrencies. Most of those - and let's be conservative, and just include the ones with the top 20 market cap - will go up eventually. Sure, there are exceptions, like the sad performance of DOGE in recent months,
but even that poor puppy might still pop back up down the road #fingerscrossedilovethedoge
This strategy, even more so than weekly investing, requires incredible patience and discipline. I've made the mistake of selling off a coin when it didn't shoot up as quickly as I'd like (an old habit from my penny stock trading days), but it's something I'm going to change. More often than not, I'd find that crypto would be on the rise a few weeks or days later.
Since my goals are long term holding, this principle may not be 100% applicable to you if you're a day trader. I realize many short term traders have an exit point where they take gains, but also where they cut their losses. This makes sense if quick profits are your strategy (and if you have a rigorous system in place to determine these exit points).
Be Fearful When Others Are Greedy, And Greedy When Others Are Fearful
Pretty self explanatory. This is the same idea as "buy low, sell high".
On that note, I've also read "The Tao Jones Averages", an excellent read with plenty of historic stock market examples of this style of contrarian investing.
Everyone, including myself "understands" this logically, but I still need to work on this in practice. I'll admit, when I saw Bitcoin Cash jump to $350+ yesterday, I bought some. Now I'm down, and I can see in retrospect it was a mistake to buy it on such an up-swing. Classic FOMO, which is the exact opposite of this principle.
Anyway, the biggest profits are made when you go against popular opinion. This holds true in stocks, cryptos, or any collectible market for that matter. Of course this applies the most to those astronomical, hyperbolic style gains. Most of us would agree that Bitcoin is a good investment, and if you bought a Bitcoin today there is definitely nothing wrong with that for long term investing.
However, in the crypto-verse this principle applies especially to coins which have sunk far beneath their all time high. Like a week or two ago when Ethereum was stagnant around $200 and no one was talking about it any more. Don't we all wish we had followed this principle and picked up a bunch then? ;) There are far more extreme examples, like buying BTC when it was just a couple dollars, but I wanted to give a more recent one so you can see even "smaller" opportunities are presented to us all the time.
Set Short And Long Term Goals
I'd actually put it slightly differently, I'd say "Set Short OR Long Term Goals". Coins you're not 100% convinced about, like Ripple in my case, can be held in the short or medium term for profit. I'm still holding it until I'm in the green, and then I plan on selling.
Until now though, I've bought most coins with the vague notion of hodling for the long term. However, I haven't really set specific goals for each coin. Now that I'm writing this post, I plan on going through my holdings re-evaluating which I want to hold a year or more, then setting exit points for the rest. This will be easy since I can already place a sell order in Bittrex at whatever price point I choose.
A few exceptions, like BTC, NEO, and LTC I'm holding indefinitely aka insert overused "to the moon" phrase / catchy graphic here.
Wait 30 Days Before Buying Any ICO
Excellent advice, also advocated by @jerrybanfield - though Jerry recommended waiting several months or even a year before buying in. I think you have to trust your get in this case, though you can set yourself an arbitrary time minimum if you tend to jump the gun and buy the newest, shiniest coin at the height of its initial, FOMO frenzy.
That said, if it's still super early on, before a coin has spiked up, if you TRULY believe in the coin I think it's OK to get your feet wet and buy in a little bit (whatever is "a little" for you) as long as you realize it's much more of an educated gamble at this point vs a real investment. But hey, I'd much prefer to gamble on a crypto than in a casino! At least with the crypto, there's always the chance you'll make your money back at some point (and then some). See "Never Lose Money On A Trade, Ever" above π
I've bought many hyped coins near the top of the hype, like Populous, Bitquence, and -ugh- Polybius. Sure, I think they may rise more in the future... but buying in so early, at such high levels, probably wasn't the wisest decision in hindsight. (Bitquence it's still too early to tell, but buying any coin at a top statistically isn't the smartest move). Or let's put it this way -- you can still come out ahead, and from the long term perspective it's OK, but buying after the first pump and dump is infinitely safer and more profitable.
Read Books, Blogs, News From Respected Authors
Clearly you're already on the right track because you're reading this post! π I've also been interested in improving myself and investment knowledge as well, which is actually how I came across BiteSizeBitcoin in the first place.
On that note, I'd expand this advice to watching relevant Youtube videos from respected experts in the community. On Youtube, just as with Blogs, you'll see a lot crazies so be sure it's someone you trust.
2. Profit Tracking Methods
I really, really, really wish Mr. BiteSizeBitcoin also gave us the spreadsheet he reviews in the video, but alas, the whole teach a man to fish thing... π’
If you're interested in tracking profits, which I definitely recommend, take a look at that video and you can make your own version of that sheet. It's basically an Excel / Google docs spreadsheet that tracks the entry point price, quantity, profit, and selling target with a profit goal.
When you just buy a coin once and then hodl, this obviously is overkill. You can be even more basic - just list the price you paid and the price you want to sell it at π
Past investments - what made me money and what tanked!
I've had MANY "investments" over the years... from beanie babies to numismatic coins to magic cards to penny stocks... If you've heard of it, I've probably invested in it lol.
I could write an entire post about general investing lessons I've learned. Many of the lessons apply to investing in crypto as well, but I don't want to get too far off on a tangent here. Hmmm...I'll crank that out in the future, stay tuned π
My point is, sometimes I've had success with my investments, and other times I've lost big. Over the years I'd like to think I'm at a net gain, but who really knows?! (The fact that I'm not entirely sure is going to be one of my points later!). I've also had plenty of side hustles, from the time I was 4 years old selling lemonade up through today. I'll just focus on a couple actual investments here, not all the creative ways I've used to earn money. So, without further ado, here is...
What worked
A. Automatic investment plan for S&P 500 Index and several other general index funds:
This "set it and forget it" plan touted by Ramit Sethi - and many other personal finance gurus - works well for investment and generally managing your finances.
Why it works: This strategy, also known as dollar-cost averaging, takes 99% of the emotion out of investing, and ensures you get the best price over time. It eliminates the danger of a market's highs and lows, and in a market that trends up more than down, it's success is virtually guaranteed.
[This is tied to "Discipline To Invest Weekly"]
I've set this up for my Roth IRA and employee 401K. I have, however, recently sold the stocks in my IRA in favor of Gold/Silver and Bitcoin. I think this is a safer bet right now, which I explain in my previous post on asset allocation.
B. Investing in Magic Cards
Magic The Gathering, the original collectible card game that has been around since the mid-90's and proclaimed by Forbes as a "bizarre investment strategy", is something that's worked well for me over the years. Almost every single card I've "seriously" invested in I've been able to sell at a profit or at worst broke even. It's a much debated topic in the Magic community but my strategy was incredibly simple: buy the "original" older, out of print cards and hold them.
Considered risky by some, such as the author of this post, I've played on and off since I was 12. I have a good understanding of what continues to increase in value, and what does not. Again, this can be a completely separate post so I'll try not to stray too far off topic here :)
Why it works:
["Read Books, Blogs, News From Respected Authors". I had spoken with friends who have also played Magic for years, and read a bit online about the best Magic products to invest in. Although there was some debate, like you'll see below, there was one type of card that most folks seemed to think was the best investment. Ask me for more details if you're interested]
[Also ties to "Set Short And Long Term Goals" - I was not as methodical as I could've been, but I had a general idea that I was looking for around $25-$50 profit per card, which isn't much but was worth it to me at the time. When I noticed the prices had risen high enough on ebay about a year later, I sold and took my profit! Later on I progressed into out of print sealed boxes, which seem to rise steadily 8-10% per year based on ebay prices. I bought a few of those, and took an easy $100-$200 profit on each after holding for 1-2 years]
[Finally, although this isn't one of the investing principles discussed, "buy what you know" is also a great strategy. You can use this with crypto by becoming really familiar with a few select coins, and then you'll feel more confident if you should invest and if so, when a good time to buy would be, when it's over-valued, under-valued, etc.]
What tanked
A. Concert Tickets
On the surface, it seemed like a great idea. I bought tickets to major festivals like Lollapalooza that I know sells out within minutes, and for popular bands like Red Hot Chili Peppers. The reason this wasn't ultimately profitable was mainly due to one little fact...concert tickets, if not sold before the concert, go from hundreds of dollars in value to $0.00. Yep, it sounds obvious but this is very real, and very scary when you've paid big bucks for the tickets and they're not selling on the secondary market for as high of a price or as quickly as you'd like.
There's also a ton of steps that happens from you buying a ticket to you receiving your profit. At one point or another, there was an issue with all of these steps. I'll break it down...
-You buy them from the website. -> My credit card was declined since I was buying tickets for a concert out of the country
-You list them on the resale site. In my case, the dreaded Viagogo. -> I mis-typed the price of one and it sold for about $50 cheaper.
-You manage the listing on the resale site -> One time I sold the tickets to a friend, forgot to remove it from the resale site and then someone bought. I was charged a large "cancelation" fee.
-You have to receive the ticket from the merchant -> One time I didn't receive 2 Tickets, valued at around $200 each. Ticketmaster would not resend them and would only give me replacements at the venue window...in Helsinki, Finland.
-You have to send the tickets - > I accidentally sent the wrong tickets to the wrong buyer. That was fun.
Sure, I made a nice profit on the tickets where all the above went smoothly, but I've learned it's NOT worth the hassle. Case closed.
B. Penny Stocks
There are many similarities here to cryptos, especially new coins and ICOs. However, there are SO many more advantages to cryptos versus penny stocks, I don't know why anyone would ever consider buying penny stocks ever again. This could also be a blog post itself, hehe. Suffice to say, the top 5% or so of pro traders can make a ton of money, but everyone else, including me, loses money. I would chase high risers, sell when they dropped (to be fair there's much more danger in a penny stock never coming back up), and didn't do enough research before buying to begin with.
C. Fad Collectibles
I did the opposite of this > "Be Fearful When Others Are Greedy, And Greedy When Others Are Fearful", and I had no long/short term goals.
Baseball cards, beanie babies, comic books, Star Wars figures, Pokemon cards... most of these are worth next to nothing now. (The exceptions would be the oldest, absolute vintage versions of comics, toys, and cards, which of course I could never afford as a kid. Even then, I'm not sure they would've been worth the ROI anyway with prices now compared to 10 or 20 years ago.)
Bottom Line
Compare my experience and values with your own, if they're similar, consider this "frame of mind". I think it's better to use "frame of mind" here instead of "strategy", since it's a lot more about a mindset and less about quick buy and sell tips.
What resonates with me for me may not necessarily be the right move for you. For instance, there are TONS of talented day traders out there who make a killing buying penny stocks - or cryptos at the perfect moment and selling them for 2x-20x gains a few minutes/hours later. I've tried that, and kaaa-blam!!! Splat!! That's the sound of me doing a belly flop off the high dive. I didn't really know what I was doing and lost more than I profited.
Remember, these valuable lessons can be applied to any investment, not just cryptos. Whatever you decide to invest in, I'll be applying as many of these principles as I can, because, [insert cheesy to the moon graphic here].
Thanks for explaining why you changed your crypto strategy.
I like when he talks about trading principles and trading fears. How long have you been trading for?
Glad you liked it, yeah I used to trade stocks (mostly small cap/ penny stocks) on and off a couple years ago. Since I'd lose more often than gain, I quit and just did my boring Roth IRA automatic S&P 500 index fund investments. That almost doesn't count haha, but of course that's what made me the most profit.
I got into cryptos seriously just 3-4 months ago. I already started by making a lot of the "rookie" mistakes I used to with penny stocks, and I've slowly been learning to change my evil ways. Watching these videos was really the icing on the cake for me, and made me realize I really need to be serious about it in order to get to the next level.
How about you @goldsilverguide ?
I been trading in the markets since 2008 and I started out in stocks and ETFs then moved to futures, the forex and cryptos. I love trading it so much fun even when your losing. When it comes to cryptos, i was in when bitcoin was in the 200s and i got into a bunch of mining and been mining since then. so right now I haven't bought any cryptos in years just been cycling my bitcoin into other crypotos.
Oh maaan! Well youv'e got the right strategy there fore sure - buy BTC at $200 lol. Now only if I had a time machine...
Seriously though, respect. Sounds like you're pretty set there.
what you could do is buy some bitcoin like 200 dollars worth and put it into mining companies of bitcoin they pay you from 5 - 40 a month and just keep cycling you bitcoin around till you make more and more. so you dont ever have to buy more bitcoin with you own cash.
funny you mention that, I was just looking into bitconnect and control finance a couple days ago. Although they don't technically seem to be 100% scams, it seems a little pyramid schemey and I'm not confident I'd ever get my initial investment back... do you have experience with those? If so, I'd love to hear about it!
Realy helpfull post
Thianks for experiences shareing
i upvoted you!
for all steemians on this post......... follow me and i follow you bros! :D
Follow Me : https://steemit.com/@cryptonews24
Much appreciated, I followed you back! I put in literally half the day writing this hahaha.
This is why I do it man. This right here. Let's do it together. to the moon!
Thanks! Followed you - we got this!
Very moon. Much bitcoins.
THIS!