How trading Bitcoin helped me become a better investor.
I’ve heard of Bitcoin (I’m sure you have too) for a little over two years now, but never — for some really odd reason— bothered to research or dabble in it. Two weeks ago I finally did and I’ve come to the conclusion that you must really know what you’re doing or else get out.
I’m talking about 15% gains in matter of hours to 50% losses in that same period. You will lose money, but you will make a hefty profit if you’re vigilant. This high volatility makes crypto currency a day-trader’s dream playground, with no market hours, and sporadic trading volume mainly driven by the Asian market, you will, at some point lose some sleep.
1. Stay calm, trade on.
Throughout the better part of the last two years I continued to fund my 401k and brokerage accounts. From individual brokerage accounts to my IRA, all were consistently funded and monitored, mostly though, they worked for themselves and I’d just sit back and rarely watch.
It wasn’t until about 3 months ago that I decided to take a more active role in my investment choices with the end goal of owning my decisions and implementing a long term position that was properly vetted and in line with my vision and time horizon.
With a foundation now in place, a trade would now require plenty of fundamental analysis and some light technical analysis prior to a security joining my portfolio.
Trading Bitcoin taught me to better evaluate my investment decisions and to be hyper focused on the long-term, not every market swing means impending doom. I could now take on Wall Street with a high sense of calmness. It makes you calm, it really does.
2. Never stop studying.
Previously I mentioned technical analysis, which is just fancy for reading charts and studying patterns, price, volume, and history to forecast price movement.
Some will say this isn’t necessary when trading Crypto, I say it is. If I wouldn’t have studied my 15m and 16h charts I wouldn’t have cashed out my near 20% gains right before a crash that would’ve wiped out all my gains plus 40% of my investment. I walked out with a profit and was able to convert it into more Bitcoins.
This has made me a better long-term investor by making me hell-bent on revisiting my investments every week to capitalize on profit opportunities .
3. Time is on your side, until it isn’t.
This brings me to timing. Some may attempt to time the market, and that’s fine, you may lose and you may win by making that call, but more often than not you will probably lose.
In the long term, I’ve learned to be mindful of my commitment, meaning don’t fall in love with a security and be ready to let go before it’s too late. A prime example of this was my inept decision making process with Sunworks ($SUNW), where to make a long story short, time was on my side until it wasn’t and I lost 54% of my investment.
Not all is lost though, I’ve so far made a 178% return on Square ($SQ) by buying in at $10 and currently holding at $28.75, and more than covered my losses on ($SUNW).
These are just some of the lessons I learned and knowledge I reinforced during my 4 week stint trading crypto. If you’re holding crypto for the long-term (5+ year horizon) like I am, then this post may not be directed to you.