Crypto Mania and Emotions

Mental barriers are a strange one. It can be the be all or end all of attaining the bliss of capitalism i.e. "getting ahead". The former only achieved as a by-product of an admirable emotional state accumalted over time and not that of an object itself.

So after my near death experience, I really lost all the umph! I know it's all psychological and saying you lost "it", whatever "it" is, is almost like admitting defeat and can really stop an uprise but "IT" IS BACK! At least that's what I'm going to tell myself until "it" does come back. Okay, enough of saying "it".

What I want to talk about now is psychological and emotional, related to my cryptocurrency trading experience, and what an experience it is offering. I am yet to be that cool icy motherfucker similar to Harvey Spectre from Suits but I'll get there and by documenting my reactions and thought processes so far can only help me learn from my mistakes.

Opening the account:

So this is the first few steps... setting up a coinbase account, putting your fiat money on there and then moving the funds to GDAX to avoid additional fees and then to Binance ( the only alt exchange I operate on currently, not for any preference reasons, but it's a while setting the others up. I am in the process of setting up on KuCoin Exchange but verification is taking hours! Plan to join others too.) to begin my first trades. The first few steps give you the heeby jeebys, you're nerves are on edge. Your chest has a little pump, at a rate faster than normal and the stare from your eyes becomes a little wider and more intense than usual. Am I really doing the whole crypto thing? I've put it off for a while now, let's take some f***ing action. Hesitation has only slowed me down so far. Might as well jump in.

This has been my first ever trade in any asset class and my educational background is in finance - I've only just recently completed my MSc a few weeks ago. This opportunity isn't just to jump on a bandwagon - which is the antithesis of any savvy financier - but it is an opportunity to learn how to accept and deal with that feeling in your chest that arises when faced with making a decision and being liable for its outcome.

Dancing with risk. That can only be a good thing, right? The opportunity to analyze information from various sources. The opportunity to prepare for new announcements. The opportunity to analyze candlestick charts at different frequencies. These are all more than commendable reasons as to why trading this asset class is definitely worthwhile. It can teach you a whole lot that is already out there to be learned but you're fearful to because you're not knowledgeable on the price history of commodites, stock trading is for "pros" and you're at odds trading FX in pipps in the most liquid global market where the big players rock the boat - not saying they don't do the same in crypto but where these digital currencies are new, everyone trading them is also new so we're all pretty much learning from scratch and we feel a whole lot better about that when we're in it together. To be perfectly honest, I'm more excited about the prospect of gaining big hairy vainy triumphant bastard heavy ass balls that will help me invest off my own back in the future across all asset classes utilising what I studied in my masters because I went into something that is new, scary and defies academia.

What have I learned?:

Okay, so the run-up of Bitcoin... I knew of this magical internet money prior to the summer of 2017 but that's the summer I had the opportunity to invest. I decided not to and instead go travelling because of the risk of the crypto completely crashing and then my travel dreams not happening... What a fool I was... Arguably one of the biggest mistakes of my life to date. I try to take some heat off it knowing that I'll probably make larger and more significant ones along the way. All I can do is learn from it.

I bought the cryptocurrency about 3 weeks into December. All-time highs! To the moon! Bitcoin. Bitcoin. BITCOIN!!! NOOOOOOOOOO! Hysteria. Panic! Bitcoin was crashing the week I bought it. Typical. So in this phase of mass chaos was surely the time to test my "edge". Well myself, like a lot of idiots panicked and thought NOOOOOOO THIS IS THE END!! And sold off for a loss only to see bitcoin make a slow recovery.

Lesson 1: Do not panic. Set a stop loss.

The next cryptocurrency lesson I learned was from Tron (TRX) and it's still hurting me it. Bloody emotions man. So I was sitting at my friend's house and he told me that about a source code announcement for Tron being released in the coming days. I wasn't entirely sure what that meant but TRX was sitting at $0.03. Literally 3 cents! But it was early days in my trading experience so I was still very cautious and that risk or nerve element in the chest and eyes was very much present.

I bought 1187 TRX at $0.03 and put a sell order in to lock in a 33% gain on 500 TRX. The order filled rather quickly and then the irrational exuberance of crypto took off. Justin Sun the creator of Tron Tweeted that more partnerships were to be announced with NASDAQ listed companies and the saying, too the moon kicked in. My head and emotions were in turmoil as I watched Tron rise up to $0.20 per coin whilst I was making every single calculation possible.If I put in this much at 3 cents how much would it be worth now at 20 cents? If I sold off everything across all currencies and put it in Trx how much would I have had? The more I looked into it the more it hurt. A small investment of a few hundred pounds could have made me grands and this made me think less rationally than before.

I decided to buy 700 more TRX at the premium of $0.20 because I believed in the swing of things i.e. I became extremely irrational and believed TRX would continue upwards and completely disregarded everything I learned from my MSc Finance and Investment as well as the knowledge shared by Benjamin Graham and David Dodd in The Intelligent Investor and furthered advocated by Warren Buffet. This decision didn't prove to be the most foolish but the one ensuing definitely was.

After purchasing TRX was $0.03 I saw the price rise and the following night and it was priced at $0.12. The high volume from the Asian market overnight had indented a new price point for Tron and I lay in bed transferring funds from my GDAX account to Binance prepared to double in. Partly because I was still sore about selling 500 coins for a 33% gain when I could have had parabolic gains on all 1187 TRX. I fell asleep and woke up to see Tron hit $0.20. The pain. I decided to buy in at 20 cents. I bought 700. Having a quick read over Tron's whitepaper to deepen my analysis and following Justin Sun - who claims to be the student of Jack Ma, quite a feat in of itself - and seeing some promising news lead to me speculating, yes speculating, not investing and making the decision.

While I was locked in I watched the price soar. Peaking at 31cents. I could have locked in excess of a 50% gain on my new purchases but was in a deluded bubble that it would keep surging. Again, what a fool I was. The dilemma presented: what if it keeps going up and up like the other cryptos?

Hindsight told me exactly what I should have done! Sold off the 700 coins at a 50% gain and then this afternoon (GMT) bought back at the 20 cent mark. Tron even went down to $0.17 cents. It hurts knowing I could have locked in a big gain and bought back cheaper whilst also holding onto the TRX that I bought for $0.03. Hindsight is great because when I was sitting on my laptop in the early hours seeing the price hit $0.31 I was with regret that I didn't buy even more at 20 cents because I could have carried on riding the upward trend...

Lesson 2 The simplest and most obvious: Buy low sell high. Lock in gains.

At this stage of my crypto investing career I've been through the ups and downs of the emotional rollercoaster. I've learnt a lot along the way already in terms of setting orders, stop losses, analysis and the most important and pivotal lesson. DON'T BE SO EMOTIONAL.