Cryptocurrency Strategies: How To Trade & Win Bigly
We are living in extremely exciting times.
The trading of Bitcoin and other cryptocurrencies is the greatest wealth creation tool in human history. Indeed, the coming few years will be a once-in-a-lifetime golden age. I predict that we will all look back at this window between 2018-2020 as the most lucrative 3-year period in the history of mankind.
But take heed, the wild era where thousands of millionaires are newly minted every month won’t last forever. If we are lucky, this crazy period may stretch up to 5 years. The earlier you get into the party, the more wealth you will generate.
Since everyone is asking me about my tips for trading cryptocurrency (especially after I predicted the explosion of the BNB coin), here is a quick overview of the different strategies.
I will talk about 3 strategies you can use to win bigly, and 2 mistakes that you should avoid at all costs, so read till the end.
Remember, even though I only blog about topics I’m confident about, e.g. professional soccer betting, I’m not responsible for any losses you may incur.
Mandatory disclaimer: This is my personal opinion and not financial advice. You should do your own research and due diligence. Never put in more than what you are willing to lose.
Strategy 1: BUY & HODL
For those new to crypto, “hodl” is an intentional misspelling of “hold” – used in the community to refer to holding your cryptocurrencies rather than selling them.
The key is to resist the urge to sell your coins. When you are fresh to crypto, you will be shocked to discover how volatile the market is. Gains of 50% in a day (or losses of the same magnitude) are nothing to fuss over.
This is very unlike the traditional stock market. Thus, you need some time to develop balls of steel, get used to the exaggerated market fluctuations, and learn to resist selling your coins. Selling your coins can often turn out to be a grave mistake that you will regret just a few weeks later.
Common mistakes include:
1) Selling at a loss
2) Selling way too early (when there is still a lot more room for gains!)
You can buy Bitcoin from Coinbase and HODL.
You can buy Alt Coins (any cryptocurrencies besides Bitcoin) from Binance and HODL.
Strategy 2: PUMP & DUMP
After you have gotten a feel of how things work in cryptocurrency markets, you may wish to set aside a small portion of the funds in your portfolio to employ this strategy.
The key is to follow the hype and ride the wave.
Or as they say, buy the rumor and sell the news. What this means is that the price of a coin tends to rise (and in some cases, quite dramatically) in anticipation of major news. However, this sharp rise tends to be short-lived as it is often followed by a huge pullback/correction in price soon after the actual newsworthy event.
Examples of events that may generate a lot of hype include:
- Upcoming coin burning (This is when the team behind a coin “destroys” a portion of the total supply of coins, thus reducing the available supply on the market.)
- Hard forks (Most famously on Bitcoin, where a “split” in the blockchain occurs that results in a cloned coin. When this happens, investors holding the original coin will receive the equivalent amount of the new coin for free.)
- Impending product release
- Hints of major partnership announcements
- Rumors of listings on new exchanges
Strategy 3: ICOs
Initial Coin Offerings (ICOs) are an interesting beast. These are similar to IPOs (Initial Public Offerings on the stock market) and are basically a form of crowdfunding.
In essence, you get to buy a new coin/token before it is officially trading on the exchanges. The rewards can be huge, as top ICOs can increase in value by 10X immediately upon being listed on exchanges, and then go up to 100X or even 1000X shortly after that in a matter of months.
However, not all ICOs are created equal.
Pick a good project, and you enjoy the privilege of buying a new coin at a much cheaper price (compared to the future price when it gets listed on exchanges). Imagine buying Bitcoin when it was still $2.
Pick a shitty project, and you bear the risk of being ripped off.
One should never dive into ICOs without proper and thorough research as they can be very risky. Many ICOs are known to be blatant scams. It takes an intelligent mind and plenty of hard work to find the gems.
What To AVOID: Day Trading
I strongly believe that most people have no business day trading. The fact is that 80-90% of day traders lose money in the long run.
Studies have shown that only a very small percentage (between 1-8%) of all day traders actually make profits consistently.
To be honest, most people in Crypto would be tempted to day trade at some point. Just remember that you will probably be better off in the long run by HODLing.
I was listening to Mike Cernovich’s podcast the other day, and he was recounting how he and his friend both got into Bitcoin when it was just $500. The friend who is an avid day trader has since 3X his investment. Mike on the other hand simply HODL, and has 25X his investment.
If you day trade, most likely you will end up like the figure below.
What To AVOID: Weak Hands
In cryptocurrency trading, the biggest sin you can commit is to have weak hands and panic-sell during periods of FUD (Fear, Uncertainty, and Doubt).
Let me tell you a little secret. In September 2017, there was a major round of FUD due to China’s banning of cryptocurrencies. Like many other newbies, I panicked and sold a great Chinese coin called NEO for $18. Fast forward four months later to January 2018, NEO reached $196.
Just be mentally resilient during periods of FUD (which comes around every so often), because the market WILL recover. And it will bounce back HIGHER than ever before. It usually happens much faster than you think.
Damn it, remember: you want to BUY LOW and SELL HIGH. Not the other way around!
J.K. Diego Crypto Consulting
I already have my hands full with clients on my soccer betting program. In recent times however, due to strong interest from some of my existing clients, I’ve started Crypto Consulting with a small group.
And I believe they have been extremely happy with their results, to say the least.
UPDATE (Sep 2021)
Due to many requests, I now have a Stocks & Crypto picks program.
Remember, this gold rush won’t last forever!
I hope this overview of cryptocurrency strategies has been useful and I’ll see you in the next post.