Disclaimer: This is not financial advice. I am not an expert. And you should do your own research.
There is a single strategy that works best for trading cryptocurrency. It isn’t hard. Doesn’t require you to be a genius. But it does take patience. Instead of giving you data, I’m going to tell you 2 stories.
These stories get to the point much better than anything else.
Day Trade Danny is smart & young. He found out about Bitcoin on Reddit. He saw the crazy uptrend and created a Coinbase account within a few hours.
Danny finds out that it’s pretty unlikely Bitcoin does another 10x. He turns his attention to other cryptocurrencies.
The flood gates have opened.
He spends countless hours finding new “hidden gems” online. He watches sketchy YouTubers. Spends every free second on Reddit.
He starts out with the larger projects. Ethereum, Uniswap. Then, he gradually goes deeper down the list. EOS, XLM, ICX.
He knows there’s more risk with these smaller projects. But more potential reward. He dreams about turning his $400 investment into $4 million.
One day, he sees a YouTube video about a new crypto. The market cap is under $150 million. And everyone says it’s an Ethereum killer. He sees a post about it on Reddit. The founder’s Twitter is blowing up. Vitalik freaking Buterin follows him!
Danny thinks he’s found the next big thing.
He sees 3 different posts about it on r/CryptoCurrency. Everyone is shilling it in the comments. And half the crypto YouTubers he watches already made a video about it.
He looks at the price chart. It’s already up 70%. But Danny is too fueled up on hopium to care. This is it. Everyone on Reddit says it will moon. Everyone in the YouTube comment section is buying in. It’s a no-brainer. Danny thinks.
He trades all his other crypto holdings at a slight loss. Goes all in on this new project. Even puts in his last $50 just to get some more. And then he waits.
Slight correction minutes after he buys in. Down 4%.
Danny shrugs his shoulders. He knows this is typical.
He spends the rest of the night learning about the project and sporadically checking the price.
The next day, he wakes up. Instinctively grabs his phone and checks the price. OH MY GOSH!
He’s up 40%
Danny starts celebrating. His hopes were confirmed. This thing is going to the moon. 1000x here we come!
Two days pass.
The price is down. A lot. Danny’s investment is now worth $125. No one is talking about it on Reddit anymore. It has disappeared from the public eye.
He checks his favorite crypto YouTubers. Not a word about it. They’re busy talking about the next big thing. He checks their wallets to see if they still own any. Only one does. And it’s $10 worth.
Danny comes to a dark realization.
He’s been the victim of a pump-and-dump.
Danny rage-quits cryptocurrency. He doesn’t want anything to do with it anymore. He doesn’t mention it to his friends & family anymore.
Long Term Lloyd sees the crazy price action in the cryptocurrency space. He sees a lot of potential to make money.
Instead of dropping in a fat stack of paper on day one, he decides to wait. He researches the market a bit more. Watches a lot of blockchain videos on YouTube.
He has researched everything he needs to know about these projects. Lloyd is familiar with the technology, the communities, and the teams behind his favorite cryptocurrencies.
He has $150 go into each of his 3 favorite cryptocurrencies every month. He doesn’t buy any more than that. And he doesn’t plan on cashing out for years.
Lloyd knows there will be times when the price goes crazy. But it doesn’t really concern him from day to day. He keeps up with tech news. But ignores price speculation.
There are times that Lloyd wants to FOMO into a new project. And other times when he wants to cash out of his current investments because they’re on a downtrend.
During the last bear market, Lloyd almost sold all of his favorite cryptocurrency, Ethereum. The price had tanked. And he was sure it was going down even more.
But right before he clicked sell, he snapped back to reality. He remembered that the long-term HODLERS are the ones who profit in this industry.
“Not today, Satan.”
He clicks off the exchange. Stops looking at all the FUD. And gets back to enjoying his life.
The price eventually recovers. And Lloyd doesn’t even have to stare at his portfolio for it to do so.
Even if Danny had sold at the peak of his FOMO investment, he still wouldn’t have made a lot compared to Lloyd.
There’s a big difference between these two. I‘ve been both. And I can tell you from first-hand experience: only one way works consistently.
Are there Dannies out there who win big? Sure. Those are the day-traders who brag about it on social media. But understand that they are the 1% and not the majority. What they’re doing is 2 steps away from gambling.
Understand this — no one brags about their losses. For every Danny who made a million there’s a hundred who lost it all.
Think very carefully about which kind of cryptocurrency trader you want to be.
If you’d like to become more like Lloyd, there’s a really simple way to do it. Do your own research.
That can be tricky. After all… how? Here’s an entire article that outlines the 3 most important things to look for in a long-term cryptocurrency investment.