Preface

This is the beginning of just another ordinary story of a guy that got into cryptocurrencies at the worst time possible, took it in the face, but then started learning. Nothing can replace the experience you get from doing things by yourself, but you can minimize your troubles by learning from others that have already been through it.

If you haven’t seen the previous posts in the series here they are:

• #1 Jumping into crypto

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Facing my first market correction

(Photo by Smart on Unsplash)

January 2018 was when I first started learning something about trading. It came naturally as I got interested in it but also forced onto me since I realized I wouldn’t be able to just buy random coins I thought were good and hold them until the were worth millions. I realized the “moon” was very, very far away and I wouldn’t get there doing what I was doing so
I started looking for knowledge.

I believe the first place I went to was Reddit (kinda funny to think about it in retrospect), but soon moved on. I learned about the basic tools I would need, like CoinMarketCap and TradingView. I joined hundreds of Telegram groups, groups for specific coins, groups to discuss crypto in general, groups that give you price predictions and coin signals… So much happening at the time it felt always overwhelming. And I was in a hurry to learn and trade, otherwise I felt like I was losing money.

At first I had only bitcoin, because that’s what my local exchange allowed me to buy with fiat money. Then I learned about a few services that could convert bitcoin to other coins and started testing them. I “bought” a few alts using Changelly and Shapeshift and I would usually send them to a local wallet. That was the “hodler” thought: get some alts and hold them in a safe place until they are worth more. Those services were cool and useful for a while, but I soon realized they were not cheap and were generally slow.

That’s when I learned about Binance, made an account and started getting a few coins I believed in. No, I hadn’t read the whitepapers yet, but I did my 15 minute research so I knew enough about them, right? Of course I didn’t. But there was no time to learn about coins, I needed to look at charts and trade and make money, and only then I would be able to take some time to learn other stuff. It’s quite the opposite of what should be done, you see? Learn about what you’re putting your money into before doing so.

I had no idea the correction would be as big as it was, I didn’t know enough yet. I got into several alts that looked promising, only to sell a few days later for 5% or 10% less. I was buying when they looked good and selling when they looked bad. In other words, buying at the local peaks and selling at the local lows. Pretty bad.

That was the period I “held bags” for the longest time. Holding bags is holding onto an asset after its value is reduced by a big margin in the hopes it will go back up. I got “tipped” about XVG and TRX, two coins that had great runs in the beginning of January, but I bought late. I held onto them for days and days on the hopes of another bull run, but nothing came. I bought them without a plan and held through their worst period. I got out when I was tired of waiting (which is also not a good plan).

(BTC and TRX during January 2018. TRX pictures what many altcoins did during the period.)

I also didn’t know all other coins followed bitcoin. At some point I actually had only altcoins and no bitcoin at all. Bitcoin’s blockchain was so congested that fees were extremely high and transaction times were immense. I believe I paid something close to $60 in a single bitcoin transaction at one point. Not wanting to make the same mistake again, at a later transaction I set the fees so low that it took 19 days (!!!) for the transaction to go through. These mistakes made me mad (a lot) but made me learn. Now I know how transaction costs work and what the hell “mempool” means.

At that point I honestly thought that bitcoin was worthless, that other coins were the future! I realize now it was a mistake. I actually do exactly the opposite now: I use other coins just to make more bitcoin.

I believe the lowest point of my January was when I tried to profit from a pump and dump. Among those Telegram groups I talked about there were many people advertising pump and dump groups. If you don't know, a pump and dump is when people group up at a set time and date to buy a usually low volume coin, pump it to a higher value and then sell it for profit, in other words "dump it". They are sketchy to say the least, even though many try to advertise themselves as serious, transparent and fair for all participants. I joined a few groups, watched them for a while, until I decided to try it out. I transferred some bitcoin to Cryptopia and waited for the time to buy the target coin, that would only be announced when it was time to buy, to be fair with everyone (yeah, right). Needless to say I got burned. I was fast but still got burned, losing about two thirds of what I put in. Gladly it was a very small amount.

It was a month full of disappointments, but these are the moments you learn the most. Some say the worst thing that can happen to a new trader is to be profitable at their first trades and now I see why. If you get burned, you learn to be careful, learn to keep your feet on the ground. If you start out by doing nothing and being profitable, you will keep doing nothing in the belief you will always win. Until you lose big.

One thing that I did right, though, was to keep track of all I did. Since the beginning I kept a spreadsheet (that I spent hours on) to keep track of all my trades. The best way to learn is to look at what you've done and see what you did wrong. This is partly why I've been writing, as a way to remember what happened and remind myself of my mistakes. I plan on sharing this spreadsheet in the future, but I would recommend you create your own and learn as you do it.

A great find for me in January was the Twitch.tv channel Crypto World News. So much of what I've been writing is based on what the people in that channel have taught me that I have to talk about them. I listened (and still do) to the channel as much as I could, it became a great source of knowledge and entertainment. It has been a great door for everything else I've found out about crypto.

So the month ended with a lot of deceptions and an almost red portfolio (incredibly I was still at break even at that point), but with several lessons learned. It could only get better from there, right? Well, not really...

Lessons learned:

• Bitcoin is the king and all other coins follow. I wrote about it in the previous post, but this is so important that it needs to be said multiple times.
• Detect major trends and follow them. Going into alts during an overall correction is very risk, you need to really know what you're doing. If you don't, stay on bitcoin (or fiat). I'm not saying it's easy to detect major trends, but it's important.
• Don't hold bags. You should always have a plan. Unless you really, really believe in a coin, don't hold it through major (60%, 70%) corrections. When you get into it, already set your stop losses, sell as fast as you can if it goes against your plan.
• Even though coins jump 50% up and down all the time, you will not be able to benefit from it unless you are a very, very experienced trader. So accept it and take what you can. Any profit is good profit.
• Telegram groups are good, but there’s a lot more bad stuff there than good (well, this actually describes the Internet in general). I barely use them now. When I go through the groups I’m in it’s mostly to get a general sentiment of what’s going on through people’s minds (are we panicking yet?). There are just a few I still read, daytradernik’s channel and others.
• Do things little by little, learn in small steps. I wouldn’t pay $60 for a transaction if I had done a smaller transaction and if I wasn’t in a hurry.
• Don't join pump and dumps, they are scams. There's a reason why these practices are not allowed in regulated markets. I feel bad for trying it out but at least it was a lesson learned. Also, trying things out with small amounts saved me from losing more money in this case, so I reiterate the importance of taking your time and going little by little as you learn and venture through new grounds.
• Making mistakes is normal, it's part of learning. Learn from your mistakes and protect your capital. It's easier to lose and learn if the amount you're losing is negligible (small steps, remember).

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Stay tuned for the next posts in this series. Until then you can check my other posts at:

• 2018-03-25 An all too ordinary story of an inexperienced crypto trader (#1)
• 2018-03-11 Things you should know if you're getting into crypto
• 2018-03-18 Is Bitcoin at the bottom yet?

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Disclaimer: This is not financial advice, this is for informational and educational purposes only. This is only my opinion, make of it what you wish.