The Cryptocurrency Trading Bible

By a wide margin, the right strategy for most people is to just buy and hold. Get some well know cryptocurrencies like Bitcoin, Ethereum, Dash, or Litecoin, put them in cold storage, stick them in the sock drawer and forget about them. Don’t read the news. Don’t worry about the wild swings or the predictions of doom from the popular press. Just buy, hold and forget. In a year or two, dig them out and sell some of them and buy a little more with the proceeds. Wash, rinse and repeat until retirement.

If you want to trade, however, that is a different beast altogether. That means you’re looking to get in and out of the market. The rules of the game are simple:

Buy low, sell high.

Easier said than done though.

There are two parts to this game:

• Making money
• Keeping it

Most people crash and burn on the second part. Everyone makes money in a bull market and then most give it right back afterwards.

All of us have stupid, magical belief systems and broken mental heuristics that work against us every single second of our lives.

If you ask a group of people how many of them are “above average” drivers, almost everyone will raise their hands. This is impossible. We can’t all be above average but we all believe we are.

When I used to trade the regular markets, I can’t tell you how often I saw good, professional traders saying “this makes no sense, the market is wrong.”

No, the market is always right.

You are wrong.

You’re either in line with it and making money or you’re losing money and bitching about how the market should be more rational.

The problem is most of us are seeing a movie in our heads about life, instead of what’s actually right in front of our noses. To the degree that reality doesn’t match up with what we want to think about it, we go with what we want to think about it. For most humans giving up their belief systems is the same thing as death. They would rather die, literally, than change their mind.

Being “right” when you’re wrong is great way to lose money.

Do you know that at times as much as 38% of the population can’t tell you which party is more conservative in America. 38%! In fact, most people don’t vote based on actual politics at all. They pick who they like the most and then project their viewpoints onto that person, even if that person has diametrically opposed ideas to their own.

Crypto markets move at video game speed.

This is one of the reasons the popular press does not understand cryptos. They regularly report that Bitcoin is over and dead for good. It’s hilarious. Check out this article from 99 Bitcoins. Someone writes Bitcoin’s obituary every day.

The problem is the pop-press is used to playing the game at slower speeds. It’s as if they were good football players in college only to go to the pros and have guys blow right past them. It’s a totally different level. This is the e-Sports universe.

Crypto is run by people who never lived a life without the Internet. To them it’s just like a tree, it was always there. The NYSE come from the days of ink and wood pulp. When Forbes or CNN or FOX reports on bear markets in the traditional stock world, they’re usually right for a reasonable period. That market will go cold for months. In crypto, it could go nova hot tomorrow. It is all in warp speed.

Technical analysis works pretty damn well in crypto trading. My gut tells me it’s because most of the folks trading cryptos are geeks and we’re prone to liking TA because it makes sense to the engineer brain. That makes them a self-fulfilling prophesy. It also works because there’s lots of machine trading going on. You’ll be trading against bots regularly on the exchanges and they have no choice but to make decisions based on moving averages, pull backs, breakouts and all the other things that TA aficionados love.