The Cryptocurrency Trading Bible

So you want to trade cryptocurrency? You’ve seen those eye-popping 3000% returns and you want in. You don’t want some measly little 10% ROI after a year in the plain old stock market. That’s for grandpas and old people. You want quit-your-job with a middle finger, fuck you money! Am I right or am I right? Maybe you dream of being , or Jordan Belfort, the Wolf of Wall Street ? Gordon “greed is good” Gekko Or maybe your wanna be a baller, shot-caller? You want a gold-plated house, a yacht and rap video supermodels jiggling around one of your six infinity pools in string bikinis. 2 Chainz Luvs Dem Strippers! Well have no fear because the is here to help you with your dreams of crypto glory! Here’s my story: I was living in a one-room apartment and sleeping in my bathtub and now I fly my helicopter to work just because I hate traffic. Buddha of Wall Street All of this, and MORE, can be yours! Come closer and I’ll tell you the ultimate, super-secret ingredient to lightning fast crypto riches! Are you ready? The secret ingredient is… . nothing Wait, what? That’s right. There is no secret ingredient to getting rich. Anyone who tells you different is selling something. Oh yeah and I don’t really have a helicopter…yet. Of course, . And you do have a shot at making some good money. cryptocurrencies do have some of the best ROIs in history So let’s talk about investing in cryptos the right way . I don’t hide the fact that I’m a long-term bull on cryptos. I believe they’re a game changing technology that will ripple across the entire world, remaking every aspect of society. Like my friend Chris Dixon, I believe , although I’m not quite there with perennial , at least not in the next three years. It may take a little longer. I’ve talked about why in my articles and so I won’t rehash those reasons again. Bitcoin could easily be worth $100,000 a coin one day Dennis Hopper impersonator John McAfee’s prediction of Bitcoin going to $500K a coin Why Everyone Missed the Most Important Invention in the Last 500 Years Reflections on the Best Blockchain Tweets Ever Written Here we’re going to talk about cash money, y’all. Unlike many folks in this space, trading is my primary interest, but like everyone I do enjoy making money. not How do you make money with cryptocurrencies? Carefully. Questions, Questions The very first question you need to ask yourself is, do you have enough money to invest? extra What does extra money mean? Surprisingly, the SEC has some good guidance here. Even though they let , they’re occasionally good for something! While, I’m not a big fan of the nanny-state that let’s only rich people invest as they see fit, nor of the “ ” rule that requires to you to have $25,000 minimum in order to day trade the traditional markets ( ), there is some merit to the rules. Those numbers are arbitrary bullshit but that led to the creation of those laws. Bernie Madoff get away with a massive pyramid scheme for a decade, despite someone telling them about it every year accredited investor rules of the SEC pattern day trader which, by the way, does not apply to crypto markets…yet I do agree with the sentiment They’re trying to protect people from losing money they don’t have to lose. And since the nanny-state is not here to protect you in the crypto markets you will just have to go ahead and and . take personal responsibility protect yourself While stories like are funny on some level (college kids can afford to take some risks because they have a lot of life left to recover later if they lose everything) they’re also utterly terrifying on another level. What if that girl lost all her food money for the year? Not awesome. I Invested All My Spending Money In Ethereum (And so Did All My Friends ) I can’t find the tweet now, but just the other day I saw a guy posting about how he mortgaged his car, lost it all trading cryptos and his wife kicked him out. He was looking to get in on a “shit coin pump” aka where traders get together and buy like crazy to pump a penny-stock equivalent to the moon before dumping it on idiots. Not good. Do not be that guy. Only invest what you can afford to lose. Copyright © . Cagle.com If you don’t have a lot of money, . Don’t go maxing out your credit cards or getting a “loan” from that guy your bother knows who sits on the corner outside the bodega on 156th and Broadway. You’ll only get burned. start small The second question you have to ask yourself is: Are you a or a ? buy-and-holder trader These are two very, very different things. By a wide margin, . 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. the right strategy for most people is to just buy and hold If you want to trade however, that is a different beast all together. That means you’re looking to get in and out of the market. The rules of the game are simple: Buy low, sell high. Duh, you say. 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. So does that mean you shouldn’t trade? No way. I love trading! On the days you win, . You’re a Viking raider, swooping in on unsuspecting villagers and mowing them down with glee. it’s the ultimate rush On bad days though, it’s brutal. You’ll lose sleep, hair, friends and money. You’ll be depressed, angry, and scattered brained. So why play at all? Because trading is the ultimate game. You’re playing against other people, with incomplete information, on an occluded battlefield, as well as against the maniacal and sadistic “mind” of the market, and against yourself. Your mental strength, emotions and belief systems are all working you. That business school bullshit they taught you about is just that, utter and complete bullshit. against rational actors with perfectly distributed information making rational decisions in the marketplace Anyone who spends trading knows it’s crap. five fucking minutes The markets are not rational. Nor are people. We are fear based, emotional creatures. Only an ivory tower academic economist would ever think something so utterly ridiculous. First of all, the information is not even close to evenly distributed. We’re all playing with partial information and a . Even worse, we all have varying degrees of ability to . Meaning all of us are kind of stupid. If you’re not that bright, it doesn’t matter how much info you have, you won’t be able to do shit with it. Go directly to and do not pass go. fog of war process that information Dunning-Kruger And most of us are not that bright. All of us have stupid, and that work against us every single second of our lives. magical belief systems broken mental heuristics 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. Even if you’re a good trader, you’re not immune to this kind of mental insanity. If you think you are, that’s another magical belief. As I wrote this article, I made not one stupid BTC trades and busted out trying to catch today’s insane $600 a coin rally late. but two I this was a terrible idea. knew I did it anyway. I was writing this article (not focused) I was late to the party, a double whammy of stupid. Rule number one: If you miss a trade, stay the hell out of the market. Get ’em next time. and But did I listen? Nope. Because I am an emotional fear based creature just like everyone else. FOMO (Fear of missing out) got me. The force is strong with FOMO and not you or anyone else is immune to it. No matter how good you get, you’ll regularly and repeatedly shoot yourself in the foot. When I used to trade the regular markets, I can’t tell you how often (I’m looking at you ) saying “this makes no sense, the market is wrong.” I saw good, professional traders Slope of Hope No, the market is right. always 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, . For most humans giving up their belief systems is the same thing as death. They would rather die, literally, than change their mind. we go with what we want to think about it That doesn’t work for the market. The markets are a lesson in humility. You will learn to see things as they actually are versus how you imagine them to be or you will get taken out to the woodshed and beaten with a rubber hose. In other words you will lose all your money just like that idiot who sold his car to play the markets. The markets are economic Darwinism and they have no mercy. Let me give you an example of how your belief systems work against you in the game of coins. One of the traders I follow closely is the . In full disclosure, I am a member of his “Wolf Pack” currently, which is his paid private trading signals group. I just follow the big market moves he posts about on Twitter. That’s because, in general, I prefer to do my own research, trust my own eyes and right or wrong. Wolf of Poloniex not live with my own calls, The Wolf is a fast, aggressive trader and that matches nicely with my personal style. His calls regularly make me tons of money. A question you have to ask of all traders is “are they right?” Nobody is right all the time. In fact, even the best of the best . The greatest traders make their money on 20% of their trades. The rest of our trades make only modest gains or loses. are wrong more than they’re right So how can we know whether someone is right or wrong, objectively? Simple. Either my bank account is going up or its going down. That’s it. It’s a perfect system. Binary. You win or lose. There is no in between. If my bank account is going up, and I’m following his calls closely, then he’s right. If I keep losing money on his calls, he’s wrong. But most people don’t see it that way. Lots of folks think the guy’s calls are absolute shit. Why is that? Because the Wolf has an in-your-face persona that rubs many people the wrong way. He loves to stick it to people who say he’s wrong. Any time and call him an idiot, a douchebag and a shill hucking trading calls. They him to fail. he posts a call, people are quick to pounce on him want The reason is because they’re unable to disconnect his calls from his persona. They conflate . Whether he’s likable or not is utterly irrelevant. Personally I like the dude but that’s irrelevant too. Except people can’t and won’t see it that way. two unrelated things . Burn your opinions! Your opinions mean nothing to the market. People get very attached to their opinions If you thought a bull market was starting and it turns into a bear, your opinion was wrong. Period. Let it go! Move on! But people love their opinions. They cling to them desperately. We’re just wired that way. Our brains are littered with mental pitfalls. Being “right” when you’re wrong is great way to lose money. Do you know that at times as much as . 38%! In fact, most people don’t vote based on actual politics at all. They and then , even if that person has . 38% of the population can’t tell you which party is more conservative in America pick who they like the most project their viewpoints onto that person diametrically opposed ideas to their own How fucking stupid is that? Welcome to the human race. We’re prone to all kinds of crazy-ass mental nonsense. So with that kind of broken grey matter, how the hell can we expect to get good at trading? Is there any hope? Yes. Getting Good at Trading To start with, you better start reading. We all have a lot to learn and the sooner we start doing it, the better we get. Your goal is to . learn something every day for the rest of your life My current favorite book on trading is the super simple . Like all trading books, I prefer the paper copy, as opposed to the Kindle edition, as the chart pictures are easier to see. Top 10 Trading Setups: How to Find them, When to Trade Them, How to Make Money with Them This book is short and to the point. There are no stories of the author’s trading glory, or links to his special, ultra secret system that you can have for a mere thousand dollars more. It concentrates on simple, practical advise, for multiple market trends. Everyone makes money when it’s all going up but how do you deal with trades going sideways or down? It’s in there. While the book is focused on traditional markets, most of the rules he puts forward can easily be applied to the crypto markets. His reasons for why new traders lose money on the very first page is worth the price of the entire book. New traders lose because they: * Trade too big * Trade without an edge, or in other words — gamble * Over trade * Trade low price junk stocks * Use excessive leverage. Don’t fucking do it if you’re not a professional trader. The crypto markets move too fast and you can easily lose someone else’s money that you don’t have to pay back. Not good. Trading with leverage in the cryptos is like juggling Cobras. That brings us to the one major difference between the regular and the crypto markets. Crypto markets move at video game speed. When he talks about how a market might take weeks or months to play out, in the parallel universe of crypto trading, that could play out in days. We literally just saw the market crash out 40%, going full bear, and then recover to new heights. That’s how fast it moves. in two days 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. Cryptos are the computer generation’s stock market. It’s run by kids who never lived 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’s warp speed. To keep up your need an edge. That brings us to book number two: . Encyclopedia of Chart Patterns This book is a monster. It’s heavy and dense and filled with information. After reading it you’ll likely start seeing patterns everywhere, even when they don’t exist. Don’t worry. Study them anyway. You’ll regularly see people drawing random lines on the chart on Twitter and calling it “technical analysis” but this book is much more disciplined and serious. (aka studying the chart patterns) 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. Technical Analysis The other reason it works is because TA is all about psychology. People want to take gains and cut losses. After a certain amount of rise, it’s going to fall. It’s just natural. The markets are really nothing but the shared hallucination of our collective unconscious, the projection of our hopes, dreams and fears. Remember though, TA is not a magic eight ball. It does not work all the time. It’s often just junk voodoo. It’s hard to do right, easy to do wrong and prone to all kinds of false signals. Still, it’s a useful tool. It’s saved me a number of times and helped me avoid big crashes. The last book on my list is one I’ve always loved: , by legendary investor Peter Lynch. Yeah that Lynch, the one with his name on the marquee. He beat the market for fifteen years. Statistically most traders bust out after ten years. A lot of the advice in the book, like making sure you buy a home before investing in stocks, is outdated. Homes are regularly a huge money pit of debt for today’s young people. But his investing advice is timeless and applies to any market. One Up on Wall Street How did he make his mulah? Like Warren Buffet, he focused on “value investing.” What’s that you ask? Excellent question, young Padawan. He invested in what . When his wife or kids came home with a shopping bag from a new store, he’d research that company and buy it. He figured if people were buying from it, it was a good company. he knew and understood Investing in what you know is a great mental heuristic. Warren Buffet regularly refuses to invest in all kinds of companies, like the tech stars everyone loves, because he doesn’t understand tech. Because he doesn’t understand it he can’t make a good call ahead of time, so he stays out. If you don’t understand the purpose of a coin, stay out. Don’t buy it because it’s going to the moon and some jackass in a Slack forum told you it’s killer. In crypto, value investing means not buying a bunch of shit coins. ICOs happen all the time and new coins pop onto the market, promising great returns. Some of them will deliver one day. . But most of those coins will go to nothing in the next few years Personally, I tend to invest in “infrastructure” coins or coins that have a chance to be multifaceted and serve lots of purposes. I have a background in building systems because I was a systems administrator for more than a decade. I’m looking for the folks building the railroad tracks of tomorrow. Ethereum, Bitcoin, QTUM, and Tezos have multiple purposes. does not. Pot Coin Over the years, like all good traders, Peter Lynch made all his money on 20% of his “home run” trades and lost or made modest returns on 80% of his trades. 80/20 is the formula. You will never do better than that, even if you manage it for a number of years. Eventually you’ll . That’s statistics baby. And math is God. It runs things around here and everywhere else. revert to the mean And of course, even after you read all these books, try to remember: There is no secret ingredient. Actually, there is. The secret ingredient is you. It’s cheesy but it’s true. The way to get better is to . There is no substitute for . There’s an old saying in . get in the game personal experience the ancient game of Go Attack and Defense “To learn Go, first lose 100 games fast.” This is true of everything in life. You have to get into the arena. You’ve got to play the game. Without skin in the game you won’t learn a damn thing. It’s one thing to read about something in a book, and another thing entirely to do it. When the pressure is on and your emotions are against you and you’re watching thousands of dollars vaporizing in minutes and you’re fighting with your significant other and absurdly blaming her for taking you to dinner and “causing” you to lose money (magical belief) because you weren’t watching the trading screen like a hawk, then you’ll understand. This ain’t no joke. This is not hypothetical. This happened to me . last week But every day I learn. Oh and I did make money. I was just mad I didn’t make more. That’s when I knew I needed to and do nothing for a day. I got up late, took a walk, ate a nice breakfast and apologized for being a jerk to my beautiful lady. take a break You have to recharge. You don’t need to catch every damn run. Go out. See the trees, listen to the birds, play with your kids and your pets. In short, do the things that matter in life. The markets will be waiting for you when you return. Here’s the deal: You’ll make mistakes. And you’ll learn. That’s the only way. TR got in the arena and you should too. But if you let this amazing and legendary quote by the great Teddy Roosevelt be your guide to trading and to life and if you’re lucky, you just might do OK in the world: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” ############################################ BONUS Trading Books that I like: (good for testing your skills)The ultimate book for understanding trading discipline and using a system instead of your insane gut feelings is . Candlestick Charting Explained Candlestick Charting Workbook Way of the Turtle ############################################ If you love my work please because that’s where I share special insights with all my fans. Top Patrons get EXCLUSIVE ACCESS to the legendary Coin Sheets Discord where you’ll find: from me and other pro technical analysis masters.Access to the only . look at how I and other pros interpret the market. , where I’ll share everything I’m working on and give you a behind the scenes look at my process.I’ll follow each talk with . Ask me anything and I just might answer. visit my Patreon page Market calls Coin’bassaders private chat Behind the scenes You also get exclusive access to a monthly virtual meet up with me a Q&A session ############################################ If you love the crypto space as much as I do, come on over and join , where you can rub elbows with multiple projects. It’s totally free forever. Just come on in and socialize, work together, share code and ideas. Make your ideas better through feedback. Find new friends. Meet your new family. DecStack, the Virtual Co-Working Spot for CryptoCurrency and Decentralized App Projects ############################################ DISCLAIMER: Be a big boy or girl and make your own decisions about where to put your hard earned money. I am not a financial adviser and this is not financial advice and if I really need to tell you this then it’s best to keep your money in your pocket anyway. ############################################ Here’s the . It’s a small list. Your list should be small too or else you will just get lots of conflicting signals. list of traders I follow on Twitter ########################################### Photo credit A bit about me: I’m an author, engineer and serial entrepreneur. During the last two decades, I’ve covered a broad range of tech from Linux to virtualization and containers. You can check out my latest novel, an epic Chinese sci-fi civil war saga where China throws off the chains of communism and becomes the world’s first direct democracy, running a highly advanced, artificially intelligent decentralized app platform with no leaders. when you join my Readers Group. Readers have called it “the first serious competition to Neuromancer” and “Detective noir meets Johnny Mnemonic.”You can also check out the based on ideas from the book that outlines how to make that tech a reality right now and you can get in on the alpha.Lastly, you can , where we discuss all things tech, sci-fi, fantasy and more. You can get a FREE copy of my first novel, The Scorpion Game, Cicada open source project join my private Facebook group, the Nanopunk Posthuman Assassins