Stop Trading Crypto!! You’re (probably) no good at it…

2 months ago
58 in investing

The title of this post is a bit provocative and it may not be too popular – telling people on a cryptocurrency site that they are probably crap at trading cryptocurrency is a bit of a low blow


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But the simple fact is that it is true –granted not for all of us, but certainly for the majority of us. The data on this is clear. Most people that actively trade, be it in common stock, in forex, in crypto, in options, in commodities, in oil, in coffee, in whatever, will over time lose money. Just google it and you will find thousands of articles explaining why most (90% seems to be the number most commonly quoted) active traders fail


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So why do people continue to trade?

Bar a few exceptions on this site (I imagine just a few, and I don’t know who they are), ‘we’ as individuals, for the most part, do not have the necessary tools to succeed in crypto trading


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But still people do it – day after day after day I see many posts with price predictions based on charts with candlesticks and lines and specific patterns drawn on them

And to be clear there is nothing wrong with this – I follow a number of people that do this as I am interested to hear what they think. The mistake is for other people, who don't have that knowledge or skills, to try to copy them 

But I get why everyone is into it - because trading is cool, and traders are successful and rich with big houses and nice cars and beautiful women

Like this guy

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Well no, according to the evidence a maximum of 10% of them are… The other 90% see the 10% posting about their successes and they get sucked in to trying to copy them…

Survivorship Bias

“Survivorship bias or survival bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to false conclusions in several different ways”
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…and then trading for them ends up like this


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So what traders do we have on Steemit?

Group 1: Those that are successful – congratulations those of you that are genuinely in this group, you are making money!

Group 2: Those that are unsuccessful, and have realized this and have changed their behavior – congratulations those of you that are genuinely in this group, you are saving money!

Group 3: Those that are unsuccessful but continue doing the same thing thinking that something is going to change – oh dear, you are losing money

Group 3 – please read this

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So, who am I to talk?

Well, firstly I am not a trader. I haven’t sold a stock for a couple of years now, and I have never sold a cryptocurrency

I have no clue about technical analysis, and therefore I don’t do it. And I don’t need to understand it or do it, because instead I use other things – skills, traits, whatever – that help me – not at trading, but at investing

  1. I have the insight to know that I am no good at trading – so I don’t trade, I invest
  2. I have a strategy – to identify and invest in things that I think and hope will be bigger in future than they are today and which will pay me to own them. That could be crypto, it certainly is STEEM, but it could equally be a company that brews beer
  3. I have time and I have patience – to wait for an investment to come good, in a month, in a year, in 5 years. I will never be forced to sell at a loss to pay my bills

And that’s it – that’s all I need

How do we avoid failing?

For most of us, the only way to avoid failure is to not trade. Or at least to only trade with money we are prepared to lose. Most people here will also have the three traits I mention above, and many here will have many more that I don’t have or perhaps am not even aware of. The key is to work out what traits/skills you have that work to your advantage, and to use them

    If you want to succeed, identify your strengths and play to them
    If you want to fail, identify other people’s strengths and then fail to emulate them


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And for most of us, this may be boring, but that means buying and holding

  1. Identify a goal - % return / $ amount / retirement at 40 / whatever
  2. Identify a timescale
  3. Identify investments that you think will deliver on that goal in that timescale
  4. Make those investments
  5. Wait
  6. Wait a bit more
  7. Wait a bit more
  8. Wait a bit more


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Conclusion

The World is not a get rich quick scheme, it is a get rich slow scheme

Steemit is not a get rich quick scheme, it is a (hopefully) get rich slow scheme

Cryptocurrency investing is (mostly) not a get rich quick scheme, it is a get rich slow scheme

Common stock investing is (mostly) not a get rich quick scheme, it is a get rich slow scheme

Most of us should not be trading, we should be buying high quality cryptocurrencies, and holding onto them for dear life

Don’t lose your money quickly, get rich slowly

And one last point. If you read this post and think… 

“Well yes he has a point, but it doesn’t apply to me because I actually am different. I am in the 10% of successful traders”

…then there is a 90% probability that over time you will prove my point for me. I highly recommend that you take the time to honestly evaluate which of the trading groups above you fall into. Chances are it’s Group 3 

Thanks for reading

Holbein81 

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Sort Order:  trending
57
  ·  2 months ago

This is a good warning to those who think they might be able to get rich by day-trading or occasional trading. I've traded plenty of both stocks and forex, and can honestly say that it's very tricky, very difficult, and not very lucrative.

The best strategy is buy and hold. Along with holding long-term, you can also do what is called "dollar-cost averaging."

That simply means that you buy a certain every week, or every month. For example, if you buy $100 worth of bitcoins every week for a year, the fluctuations in the price will have less effect on how much bitcoin you have at the end of the year. If you wait until the end of the year, when you have $5200 saved up, you will have missed out on the cheaper bitcoin over the previous 52 weeks.

Conversely, if you buy $100 every week and the price goes down, you end up getting bitcoin at lower and lower prices. And the chances are (particularly with cryptos these days) that the price will soon rebound.

To summarize, STOP day trading. START dollar-cost averaging.

Full Steem Ahead.

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58
  ·  2 months ago

Thanks for the comment

I dollar cost average in both stocks and crypto but trade neither

I do sell a lot of put options on a monthly basis. Some may consider this trading, I don’t, as mostly I sell them and they expire worthless a few weeks later - but I do occasionally need to roll them out and/or down

Cheers

57
  ·  2 months ago

I couldn't vote on your post as it was ending too soon, but I will drop a tip! 1.0 here as a way of making it right :) Keep up the great writing buddy!!

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58
  ·  2 months ago

Thanks!

I enjoyed writing this one, am thinking up another on a similar theme - can't do beer all the time - or can I?!?

Cheers

61
  ·  2 months ago

Your post had been curated by the @buildawhale team and mentioned here:

https://steemit.com/buildawhale/@buildawhale/buildawhale-curation-digest-11-08-17

You have received a Whaleshare Token upvote (@officialfuzzy) thanks to @akrid.

Keep up the good work and original content, everyone appreciates it!

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58
  ·  2 months ago

Why thank you!

Much appreciated - the recognition and also the upvote

Cheers

52
  ·  2 months ago

This is a solid article actually but many won't take this advice. Personally I've done well trading Bitcoin but it's not that hard to trade bitcoin when it constantly goes up lol.

Altcoins on the other hand have lost me a lot, I over diversified and lost track of my trades. I learned i need to keep it simple and just baghold the few projects i believe in knowing the money invested might as well be lost.

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58
  ·  2 months ago

Thanks for the comment - I agree that many will carry on regardless - our Group 3 friends.
And that’s fine, it’s not my money they are losing...

I am buying a handful of what I perceive to be quality coins each month

60
  ·  2 months ago

Such an awesome and educative post @holbein81

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58
  ·  2 months ago

Thank you- glad you found it useful!

56
  ·  2 months ago

Wait... Wait some more.. then start over waiting.. great stragety.. I like to buy small increments every so often.. but I invest most of my money in Steemit by always powering up when I buy

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58
  ·  2 months ago

Me too - I buy a bit each month, from STEEM, BTC, BTS, EOS, IOTA
Am looking at STRATIS at the moment too

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56
  ·  2 months ago

I got a friend who's a huge believer in STRATIS..

49
  ·  2 months ago

Buy wisely and then hold is great advice. I wrote this article which is targeted to people who feel it is too late to get in and participate in the exploding crypto/blockchain sector. https://steemit.com/cryptocurrency/@motowngold/bitoin-crosses-7000-dollars-what-can-you-do-about-it-some-investing-ideas-including-crypto-related-stocks

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58
  ·  2 months ago

Thanks for commenting - I just checked out your post, I hope you are right about BTC - but if you are, then I don't have enough yet!!

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49
  ·  2 months ago

Me either then actually, lol. I think in due time, I think it will shock. For now, it is going to have its constant fits and starts and pullbacks, and then rocket higher. I am not really trying to trade these things very much, just to get into the best positions and ride them. 2 of the stocks I mentioned, which is another segment that I think will be explosive, are up nicely today, SSC and BLKCF. The former has a well known chinese Billionaire backing it,Bruno Wu, and the latter, American billionaire JIm Rodgers involved. Exciting times never the less!!

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58
  ·  2 months ago

Sounds good! I don’t have time or the technical background to look into and understand these smaller stocks. I tend to buy big established companies that will grow over time and pay me to hold them.
To boost that, I sell put options in a few companies or indices on a monthly basis - this generates an additional approx 20% per year on the value of my whole portfolio
At the moment I am taking a bit of that free income and diversifying it into some crypto

Cheers

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49
  ·  2 months ago

Sounds like you have a very solid actual plan. I have sold puts before as well, can be great especially on shares you own that you may sell anyways, no risk at all then.

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58
  ·  2 months ago

Yeah, I have been doing it for quite a while now
I keep my portfolio approx 80% in high high quality stocks and the rest in cash
Each month I sell as many puts as I can, using margin on the entire portfolio, but leaving approx 20% on the table in case there is a major event or buying opportunity
I only sell puts in those same highest quality companies, or indices, and I do it as a credit spread to limit the downside - so even in an Enron situation my exposure is significantly reduced
Price stays flat or goes up, the put expires worthless and I keep the option premium
Price goes down a bit, depending on my strike price I am probably still ok and the put expires worthless, I keep the premium
Price goes down a lot I have a whole bunch of rescue options, plus a stock that I like has just got a lot cheaper so I can buy more

I wish I had started 20 years ago...

62
  ·  2 months ago

Brilliant post buddy. Loved reading it. Totally agree with you. Trading is not everyone's cup of tea. One requires expertise and experience to trade cryptos. For common people its best to buy and hold long term. Its a proven fact that very few traders are indeed successful. One wrong call and you loose it all. Upvoted and following u as always.
Regards Nainaz
#thealliance

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58
  ·  2 months ago

Hi Nainaz, thanks for the comment/upvote/support - glad you enjoyed the article!

41
  ·  2 months ago

Much less stressful to sit back and hold,

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58
  ·  2 months ago

I fully agree - it's nice to be able to sleep at night...

60
  ·  2 months ago

Nice post @holbein81, that's true that a lot of people is losing on this game... I think the point is to blame the investor, and not the game itself ;) Steem on!

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58
  ·  2 months ago

Steem on indeed - thanks for the comment!

53
  ·  2 months ago

I used to daytrade strictly bitcoin (through GDAX), and in 2014 I was making money doing so (not that "bitcoin billionaire" money, but between $800- $1,200 a week). I was just a young teenager at the time and didn't have a job, so a thousand a week was great money (still is), however, I learned it was more profitable(and less risk) to run a bitcoin consulting business or work with startups, and individuals looking to invest and willing to pay for my knowledge. My advice to people in group 3 is to consider investing long-term or hire a mentor to help understand what the mind of us daytraders looks like if you are truly determined to make money trading.

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58
  ·  2 months ago

Agree - taking the time to learn the ropes would make a huge difference for many
I never have, which is why I don't do it

Cheers

55
  ·  2 months ago

Absolutely! I have always told people this. If you invest, invest for the long term. Buy and hold. Keep buying if you can. Dollar cost averaging. But hold. Leave the trading to the experts.

I trade sometimes, but my dad is a broker so I have decades of talking to him about it under my belt, as well as welf-study, but even so, I don't do it often, for the exact reasons you mention.

Again, great advice.

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58
  ·  2 months ago

It seems so intuitive to me, but equally I can see how easily people get sucked into the allure of trading

Cheers

47
  ·  2 months ago

Thank you for sharing it. You are very right and I've read ti just at the right time.

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58
  ·  2 months ago

Thanks for reading and commenting!!

47
  ·  2 months ago

This has to be the most elaborate post I've come across today. FOMO is responsible for the behavior of those in group 3. That said, it is worthwhile to identify a working strategy and stick to it regardless of what the greater majority is doing. Great post @holbein81.

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58
  ·  2 months ago

Thanks for the great comment - it is not often that my posts get called elaborate - probably because most of them are about beer....

Cheers

53
  ·  2 months ago

I may not be good at trading, but I definetly do not have the money to trade :))

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58
  ·  2 months ago

Well then I guess it is easy not to lose money trading them

But you could dollar cost average every month with a buy and hold strategy - even if only $10 or $20 it builds up quickly

And when it comes to steemit I think it is more fun when you have a bit of a vote to throw around!!

Cheers

59
  ·  2 months ago

Although it's tempting to get into trading with cryptocurrencies, I try to not get involved because I don't have a good understanding of what's going on. As for the posts on Steem where geometric figures are drawn on top of charts and candles, I have the feeling that most of their authors are clueless about what's going to happen 😁

So, investing in cryptocurrencies is a rather good advice!

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58
  ·  2 months ago

Exactly, stick to what you know and understand, and play to your strengths. In general, people don't seem to be aware how bit a strength time and patience is when it comes to investing

Cheers

62
  ·  2 months ago

a great and thought provoking post
I am definitely not a trader of knowledgeable in any way on crypto currencies.
BUt I do love the quality and originality of content on Steemit and the wonderful sense of community so I am investing slowly it and holding for the long terms, if I end up making money from it, for me thats a bonus but not my drive

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58
  ·  2 months ago

Me too - am dripping a bit each month into STEEM and a few other coins. If I lose it, so be it - I think the risk reward profile is very positive

Cheers

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62
  ·  2 months ago

Yes thats about where i am at as well, there is a risk of course but lets hope it starts to slowly grow soon :)

61
  ·  2 months ago

Hah, I know for a fact I'd be terrible at it- I'm much better keeping away from that.

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58
  ·  2 months ago

There you go - that puts you in Group 2 - but as someone that never even started - congrats ;-)

62
  ·  2 months ago

Great post man! Thanks for sharing! You are awesome!

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58
  ·  2 months ago

Hi Yandot, thanks for passing by and commenting, and for the compliment - hope all good with you

Cheers

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62
  ·  2 months ago

Youre welcome my friend! You are amazing

Cheers

70
  ·  2 months ago

And this is the reason why I don't want to engage in trading. I tried once, don't guess what happen because I believe you already know :). I lost all my investment. It's not that big (thanks that it was small).

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58
  ·  2 months ago

Precisely...

45
  ·  2 months ago

I don't trade to get rich.

The common statement that traders lose 90% of the time is relative to Bitcoin buy-and-holders. ("Bitcoin buy and holders" make more money than crypto traders 91% of the time).

I scalp small amounts of my Bitcoin profit when I feel like playing and tinkering, if I see a high-volume alt-coin showing a strong buy-pattern - like Monero has shown all day today.

I don't recommend people do it but I KNOW people WILL so I try to help to educate them on doing it right.

All my trade profit goes back into buying more Bitcoin.

It's my money. I'm well ahead of the game. I'm entertained.

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58
  ·  2 months ago

Thanks for the comment - the 90% number, or at least the one I was referring to, is actually nothing specific to crypto, but seems to be generally accepted across all trading - stocks, forex, commodities etc. I see no reason why it would not apply to crypto

Sounds like you have a method that works for you, in which case great - that was the point of the article

Cheers

60
  ·  2 months ago
48
  ·  2 months ago

VOTED!
ultimoooo...,ñ,ñ,.jpg

59
  ·  2 months ago

Verry good post. Upvote you.

62
  ·  2 months ago

This post has received a 5.01 % upvote from @buildawhale thanks to: @holbein81. Send at least 1 SBD to @buildawhale with a post link in the memo field for a portion of the next vote.

To support our daily curation initiative, please vote on my owner, @themarkymark, as a Steem Witness

51
  ·  2 months ago

Well, i don't think is a bad thing to say.

Even if the people are not so new in crypto, they may not know what happens if they haven't trade at all. Or they just did once or twice for learning the steps and they might be lucky.

Even if i watched a lot of stuff and i thought i know, when i entered just to test things and went on my own decisions, i didn't know what to do for sure. Because here in crypto, this volatility drives you nuts and also makes you feel delighted of the opportunities.

But when you buy some alts that are low and then wait for them to rise 10-30% they may not and worse they could go down, hehe. I remember that happening.

I also went into 2 moment tradings with a big group with intention, to be pressed by time and see how i react. Twice i lost about 30%. Because i was not expecting to happen what happened. But i tried to see how i can manage the quick thinking of a transaction.

I can't say i lost much. There was in total $25 if i remember well. But they could be around $90 extra.

What i see here with day trading, hour or even minute trading is just another addiction, like gambling and other ones.

And i know for sure that i'm not lucky at gambling and never was. So, will not trade my life savings on crypto.

I am just because we need to be with what we can in bitcoin. It is not the starting point anymore. Things are changing and if we don't make the step now, then when? I said that because i know about it now.

Lol, a brews beer company. I should expect that. You know so much about beer. I think you can own one in the near future.

Only from steemit you can have some people that will know you and maybe will come to you.

And trading could be made for fun from some of us. Instead of smoking or drinking or who knows what, we can play from time to time with the info we have and go do some predictions... ;-)

I also saw recently the binary options "trading". It has got a lot of attention from people at some point. There is for sure a gambling one. Somebody told me and it was really sound to good to be true. But i went there, watched some videos about it and very quickly i found a real trader channel who was explaining very fast why is not worthing to do that. Because it is a gamble and for 99% of new people will lose and that will be almost all the time.

Meaning there are almost the same advice all around this world. Trading, buying and selling and lately investing.

Eh...

At the end one question: I would love to buy some btc, should i wait for nov 15th? Or buy now?... (i don't have much)

I hope you know is not a trading advice what i ask, i am in that point where i don't know if to wait few more days or buy... ;-)

And i consider you among my steemit buddies, even if we talk only here. I will not blame you for anything. But sometimes i do things like that and from other people came more inspired options than mine.

Cheers

51
  ·  2 months ago

verry interesting writing...thanks for sharing

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58
  ·  2 months ago

you can't have read it that quickly

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51
  ·  2 months ago

hmm right..i read slowly ...

67
  ·  2 months ago

Calling @originalworks :)
img credz: pixabay.com
Nice, you got a 6.0% @minnowbooster upgoat, thanks to @holbein81
Want a boost? Minnowbooster's got your back!

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60
  ·  2 months ago

The @OriginalWorks bot has determined this post by @holbein81 to be original material and upvoted(1.5%) it!

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To call @OriginalWorks, simply reply to any post with @originalworks or !originalworks in your message!

61
  ·  2 months ago

Yes very True... I do well when I invest small amounts and do not trade .