Author of Bullish on Bitcoin. Mishayurchenko.me
#1. “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”
The wise trader has a wide ranging toolkit to choose from. Whether you buy or build trading tools, your trading system will provide all the essentials, but don’t mistake the abundance of tools to mean that you should use all of them. Experiment at first, yes, but one cannot possibly master all of them, nor should one try.
By becoming proficient at one or two strategies, you can gain an edge. An edge is a process that you stick to. It’s your deadly flying side kick to the throat that will destroy your opponent, not your barrage of random moves. You want to master the trading tactics that allow you to consistently defeat the markets — not with a scattered approach or a range of semi-powerful moves, but with a K.O.
The best traders and investors will find their edge and hone their skills daily. They will read everything they can about their method of choice, watch all the Youtube videos, listen to all the podcasts and talk to others who are more skilled than themselves.
You can become the expert in hunting for degenerate micro-cap coins and focus on making 100x gains over the long term…You may be adept at knife-catching big, bloody dips where other traders are too fearful to go. Or you may get really good at setting smart stop losses and train your mind to buy low and sell high. Perhaps you become the technical expert at setting up profitable mining rigs, or staking, or whatever. Maybe you ignore trading all together and sell shovels to the gold miners, establishing a niche and a profitable bitcoin-related merchandise and e-commerce business.
The possibilities are endless, but the point is to find your deadly kick and practice it over and over.
#2. “In the middle of chaos lies opportunity.”
Big Black Swan events like the Great Depression or the housing bubble in 2008 provided ample opportunity for smart investors to swoop in and buy when everybody else was selling. These are obvious examples of how when market sentiment is low, chaos reigns, and people make emotional decisions. Fear is at its highest during these periods since people don’t know how low prices will go. These extreme events provide the greatest opportunity for anybody who is willing to take the risk.
The scale of the event doesn’t have to be huge in order for you to take advantage of the situation. Fortunately, in newer markets and industries plenty of chaos exits. It’s a matter of taking time to observe before taking action and formulating a decent plan. That’s more than most people do. For example, when ETH or BTC or any other coin announce a fork, usually people flock to buy the coin to get their free money. The same with airdrops. Then, when the media picks up the ICO, everyone gets into a frenzy over buying up the coin only to get wrecked on the coins’ subsequent way down a couple of days later.
Savvy traders keep track of the dates for these events and buy before the media picks up the news. They set a target, keep an eye on the market, and sell for good returns, instead of hodling and hoping for the best. They’ve structured what could’ve been a potentially emotional and chaotic situation into an unemotional buy and sell. They didn’t lose any sleep over it.
Often times, the conditions for chaos can be identified. When a crypto exchange is acquired, this could create some panic. What if investors’ coins are locked in or delisted (it happens) because of the acquisition? Before this happens, it’s probably best to diversify or take money you’re not willing to lose off that exchange. The art of making money is also the art of not losing money. Every event reported in the news, company acquisition, new blockchain project, government regulation, partnership announcement, listing of a coin, delisting of a coin, legal dispute, technical failure, endorsement, airdrop, fork, and pretty much anything you can think of has the potential to be disruptive to price. Be vigilant and monitor price movers and, whenever possible, manage related price risk.
#3 “Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot it becomes the teapot. Now, water can flow or it can crash. Be water my friend.”
We shouldn’t force our desires onto the market. Rather, we should stay shapeless and be ready to go where the market takes us. If you look at macro trends and see that we’re in a bear market, don’t trade as if you’re in a bull market because of “hope” — this is not a strategy. Accept what the market is, taking into account that the big wave today could come crashing down tomorrow.
When we set profit targets based on our desires, we are basically pushing our desires onto the market. It doesn’t make sense to choose an arbitrary number like $1 million dollars and say that we’d like to make that much within one year. While it’s a nice round number, it’s impossible for you to predict how much you will make.
You’re not trading precious metals like gold, which barely move in price over a five-year period. You’re trading highly volatile cryptocurrencies that can disappear overnight. The good news is that you could make much more than $1 million, while the bad news is you could only make half that much. Don’t put your mind inside one box.
Those who have a basic knowledge/interest in crypto tend to make their interest a prominent aspect of their identity. Observe the Twitter chatter: “So and so is the Bitcoin guy; while so and so is Ripple; and so and so likes Ethereum.”
So, crypto, for many, is more than just an interest/activity — it’s who they are, rather than what they do. These digital coins really seem to consume many. This leads these ‘analysts’ to assuming an inflexible position whereby they’re not able to analyze the market rationally and make decisions which counter beliefs previously held with conviction.
#4 “Absorb what is useful, discard what is useless and add what is specifically your own.”
When you watch crypto news conducting “price analysis” on a specific currency, you’re wasting your time. The media has a quota of articles to write daily, and the easiest type of article to write is one in which they attempt to predict the future, but essentially say nothing. You can safely ignore these articles. You’re better off learning the skills required to make your own decisions without the media. However, there are some cases in which you should pay attention to the news — for example, to assess market sentiment.
When a crypto project is getting a lot of negative media, is there truth to the matter, or more likely is the media doing what it does (writing clickbait articles) and the coin is actually ripe for an increase in price? Not a rule of thumb necessarily, but what we see in the media can be a good sign that we should do the opposite.
When I entered the recruitment market, among tech giants, many people told me it was a spinning revolving door. For four years I helped tech companies like Google, Amazon and Facebook find and retain top talent by developing my own network. This required me to meet with thousands of people, review countless resumes, and consult with job seekers on their careers. I worked very closely with the tech companies, befriended their hiring managers, and picked their brains on everything from product and monetization to sales strategy. While I’m less qualified to assess the technical specs of a product on Github, I am confident that I have a decent level of insight into the dynamics of hiring talent, which undoubtedly contributed to the success of these companies.
A friend of mine is very good at managing several trading bots. He even builds his own. He’s gotten to the point where it’s profitable for him, even though he’s been scammed and lost money, and he knows more about trading bots than most people. When someone tells him “you can’t make money from trading bots” or “it’s too risky,” it goes in one ear and out the other. He has proven that it’s not true, at least not in his case. Everyone should invest time into diving deep into at least one area, building off of existing skills, and finding that unique intersection of personal interest and opportunity. It’s a lot easier if you actually enjoy it!
#5 ”The successful warrior is the average man, with laser-like focus.”
You don’t need to have three computer screens, lots of trading capital or be a guru in technical analysis to make money. The art of practicing the daily kick (improving diligently on one technique rather than spreading yourself thin), or sweeping the floor, only requires a small amount of action daily. It’s about getting 1% better. The key is doing it deliberately. We falsely overestimate what we need to get started. It’s little steps.
Warren Buffett, amongst other famous investors, reads each day for hours and hours on end. He’s not just reading for fun. He knows that information asymmetry will give him a leg up in the game and so he spends every day learning just a little bit more.
New media and analyst sites crop up daily in the blockchain and cryptocurrency markets contributing to the information overload. Keeping current would overwhelm anyone, which is another reason why I wouldn’t suggest selecting 20 strategies and trying to become good at them. You’ll be mediocre at best and never get an edge.
The actions that require you to gain any sort of knowledge asymmetry are pretty basic. Consume information about a particular topic and learn as much about it as you can. The newer the topic the better, as it’s less likely there are many people who have had time to truly master it. For example, if you decide that Security Tokens and STOs are the future, you could take a few small actions that will compound over time. Start building a list of companies who are in the STO space, follow their activity and join their mailing lists. Reach out and speak directly to their founders, go to their events to engage in real conversations where you can be ‘in the know’ and ahead of the curve. While others are trading their money away, you’re building up a knowledge base and an edge.
These small actions could also include… interviewing 10 people in STO companies for your blog (or whatever), going to a blockchain event, reading one article about STOs every day, finding the experts in the industry and establishing a relationship with them/taking them out for coffee/having a skype call, and sharing what you’ve learned with others. Do this every day and every week and you will have developed an edge.
What are the best valuation frameworks and tools to identify undervalued crypto projects? How do you make smarter investments and stop losing money? And what does Bruce Lee have to teach us about becoming better traders?
I’ve interviewed dozens of investors, traders and entrepreneurs to ask them these questions and much, much more. From bounties to avatars that earn you tokens, Bullish on Bitcoin outlines dozens of strategies to trade, invest, create, and explore the new decentralized economy.
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