Cryptocurrency Investment Principles 101

All charts and markets, without exception, are a balance of probabilities. There is no single magic bullet that will produce the desired profit every time. A basic principle but a valuable one to grok! In all likelihood, all the lessons learned will be the hard way ;) A good trader / investor seeks to minimize their losses and maximize their gains. Again there is no one way to do this. You only know you're succeeding when you start to make more money than you loose. Trading is a good discipline to grapple with because it gets at all those unconscious motivations that usually win out in other aspects of your life. Trading exposes them instantly and the feedback loop is clear - you're loosing money! In trading generally you are not wrestling with the markets, fundamentals, analysis or research but with yourself. There are some very basic trading styles:

• Short-term - you play the most granular patterns i.e. channels trades in a 10% horizontal channel
• Mid-term - you play the patterns that reveal market psychology i.e Elliot Waves
• Long-term - you do your fundamental analysis of whatever you're investing in and you believe it will be valuable at some future date and that it is cheap now

I fall into the second and third categories and therefore this article will address principles around these. Some of these principles apply to the others but the mid to long term trader is challenged to understand analysis, fundamentals as well as sentiment. I would argue this kind of trader / investor makes the most returns in the end. A useful distinction should be drawn between a trader and an investor. To me they are merely time-based distinctions - traders are short to medium term investors and investors (HODLER's) are long term traders. Both involve buying and selling to maximize profits.

Warren Buffet famously said trading is basically the patient taking money away from the impatient. My experience absolutely backs up this truism. I'm most likely to loose money when I make an impulsive decision - I go in or exit too quickly through basic impatience or fear and so end up trading too often. The FOMO (aka greed) principle governs the 'in too quickly' side of the equation and fear the 'out too quickly' side. Those are the key aspects of your programming you have to learn to recognise and keep in check! You have to start here otherwise you will loose money! If you see the chart mooning tell yourself there will be others (if you go in and it is a false breakout - it usually is - then you're forced to go long or sell at a loss) and if it's dumping can you afford to go long based on your analysis of the patterns (hit that sell button and you loose X% forever). Both impulse moves above force your hand, diminish your options forcing you into a corner i.e. go long or look for the next trade to make up for the losses. You want to make considered decisions that do the opposite - give you time and profit buffers. If I exit this trade now with all my investment I get 10% profit. Maybe I should sell 50% at 10% profit and 25% at 15% profit etc.

So before taking a trade or making an investment you should at least:

• Know what you're investing in!
• Learn how to, from a TA point of view:- read chart patterns, recognize Elliot Waves and read trends (MACD).
• Gauge market sentiment - news, opinion etc.
• Research the project and team.
• Join the community forums and get a feel for what they are saying.

Know that sentiment drives price above all else!

Happy investing. See you on the other side :)