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Trader, Investor or Something Else? What Is Your Role in the Cryptocurrency Market?

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On days when the markets are in a downtrend, and it is difficult to sort through a pile of contradictory information emanating from various sources, it is especially important to listen to your own reasoning and stick with your own strategy and make your own decisions.

Looking back, if I had relied more on my judgment, stuck with my trading and investment strategy, I would have earned much more from the markets.

But to create your strategy, I think, one needs to understand one’s role in the market.

Who are you? Trader, investor or someone else? That is a foundation of your financial decisions.

Many people are often confused or do not understand what trading is in the short term or middle term and so on. The following is a short primer on the various positions you can take while trading cryptos and virtually any other type of financial asset.

Intraday Trading Position

Intraday trading involves 100% of deposit in stable assets (USD or stable coin) and working only with day-to-day trades. All trades are opened in the morning and closed in the evening. Followers of the intraday trading style do not keep any cryptocurrencies or positions on the balance and strictly work within their risk management and stop-loss strategies. They usually work on short time frames like 5, 15 and 30 minutes. Sometimes 1 hour, though this is considered exceptional. The intraday trader tries to catch fast movements in assets.

Short-Term Position

Followers of such a trading style usually open trades from 2-5 days to a few weeks. They typically try to place trades by following the trend and avoid allocating more than 50% of their trading balance on positions. More use of fundamental analysis. Such investors usually work with medium time frames like 4,10 and 12 hours, maybe even 1 day and use 1-hour time frames only for order placement. Usually, they try to exit at the peak of the movement or when there is a downward movement after growth. Short-term traders try to catch part of the action or the entire movement of the trend.

Medium-Term Position

A person who follows such a trading style opens trades with a time horizon of 3-6 months. This trader attempts to enter trades when assets are at the bottom and re-buys when assets go down to specific price zones. The usual strategy involves fundamental analysis of the asset and trend determination. Under such style, the trader can enter and exit one asset many times during the year. He can buy today and sell at the peak of the growth of the whole cycle in 2-3 months – then wait a month or two for the asset to fall and re-enter the asset before the next peak of growth. Usually, the deposit is 70% in active positions and 30% of funds in reserve. They often re-balance one asset into another. This often works with up to 20 assets and the time frames are usually 4-hour – 12-hour as well as 1 day.

Long-Term Position

This is more of an investor position. Such people enter into positions from 1 to 3 years. As such, this strategy is simple – buy and hold the asset for a longer time horizon. If there is an excellent opportunity, they purchase an additional volume of the asset. This is suitable for whales, large investors, and funds with large portfolios; smaller investors who do not have much time can also do it as well. Such investors usually prefer a certain basket of assets and invest only in them and do not consider other assets. They prefer fundamental analysis of asset value and control the situation with the asset using 1 day, 1 week and even monthly charts.

This overview is just an example of the most common roles market participants play when purchasing financial assets. The main point here is identifying which type of trader you are and adopting the psychological traits needed to succeed. Of course, this will be based on your current psychology, future goals and amount of capital you are able to invest. This allows you to focus your attention, strategies and tactics on trading methods that can enhance your performance.

As for me, it took me a while to understand that I work best with medium-term strategies. I like to analyze market fundamentals, look what is happening with the development of an asset, follow 20-30 assets andre-balance them intermittently. As such, I usually enter positions with a 3-6 month horizon.

Remember: no strategy is “right” or “wrong.” It depends entirely on the factors described above.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 29 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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Project to Watch: Phatansma (SOUL)

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Phantasma is a new generation content distribution system. It is an innovative platform for revolutionary application development in a critical area of data management and content sharing. This project is the concept of a decentralized content distribution system based on blockchain technology with an emphasis on confidentiality and security. The platform allows users to control their content, rather than relying on third-party services for its placement, protection, and management.

Development Team

A highly qualified team of specialists with relevant experience in the amount of 17 people works on the project, including:

  • Sergio Flores: co-founder and engineer, a member of the City of Zion development team, has been programming for about 20 years, the experience of previous startups includes the creation of his own game development company Lunar Labs in 2015.
  • Miguel Ferreira: co-founder and engineer, has a Master of Computer Science degree and is an experienced blockchain developer.
  • Alexandre Paixao: marketing manager, graduated from ISCTE business school, where he received a master’s degree in marketing, has more than six years of experience in marketing, of which most of the time he worked in the gaming industry.
  • Sergio Pereira da Silva: finance guy, has extensive experience in the field of finance and accounting, worked for the last two years at the Portuguese engineering company SyncData, specializing in development using the blockchain.
  • Bruno Freitas: engineer, mobile technology specialist, a member of the City of Zion developer community, has a bachelor’s degree in computer science.

The problem of ownership rights in a centralized environment

Cloud technologies, including data storage services, have recently become increasingly popular. This is a classic example of “centralization.” Practically everything that we do today is in the “cloud,” like e-mail, content (games and videos, web services, etc.). Relying on centralized, third-party services for something meaningful and personal, companies may be at risk of hacking and leaking confidential information.

Since the beginning of the 2000s, there have been dozens of cases of such hacking cases. For example, the email service Lavabit in 2013 and Apple iCloud in 2014. The latter incident led to the leakage of many private photos of celebrities.

With the advent of the new computing paradigm, blockchain technology has emerged, followed by a host of innovative decentralized services and applications (dApps). However, this modern computing and economic environment is still in its infancy and does not contain a large number of basic building blocks and infrastructure necessary for the full development and implementation of decentralized applications, systems, and services. One of the essential components is a service for custom communication and data exchange between dApps.

How can Phantasma make a difference?

This platform provides a decentralized content distribution system operating on the NEO blockchain. It focuses on privacy and security. This is the platform on which users control their content, rather than relying on third-party services that take over the functions of hosting, protecting and managing it.

Interfacing with existing systems is extremely important so that Phantasma-based mailboxes will be compatible with standard email addresses. This will enable contact and interconnection with e-mail systems outside the blockchain. As for privacy, all data in Phantasma is encrypted, providing full control over the content. No one except its owner will be able to access it and give access to others.

In other words, possession of private keys to the wallet provides control over all the contents stored in it. Since everything is encrypted, without a private key, no one can read its contents or steal it. Even Phantasma developers will not be able to access it.

According to the authors of the project, their idea is the concept of a new standard for the safe and unlimited data exchange, management and integration through many partner services in the field of user communication and dApps applications in the NEO ecosystem. By providing a single standard interface (API) with all the fundamental semantics of data access required by applications, Phantasma can increase the efficiency of dApp developers, expand their potential and enhance the development of the NEO ecosystem.

 

Platform Architecture

Phantasma provides both a platform for storing content and a protocol for sending messages through smart contracts. The ultimate goal of the protocol is to provide a framework for data management for dApps applications. The developers have created a messaging protocol, files and other data on top of a blockchain. The platform architecture consists of five main components:

Phantasma is originally based on the original NEO blockchain. Its creators intend to use NEOX for interchain compatibility, but in the future to create a separate blockchain for the platform. They consider this the best way to achieve maximum network efficiency.

The core architecture is broken down below.

Smart contracts. The primary function of the project is to create a messaging protocol. The smart contract system will also be used to process transactions during content storage, and the system’s internal tokens will be used as fuel for the network.

Software Development Kit. The authors of the project intend to release a set of tools for SDK developers so that everyone can create their dApps applications using the capabilities of Phantasma. The SDK is a critical component for expanding the ecosystem.

Relay Nodes. To create an architecture that can adequately perform data exchange tasks in a decentralized environment, network nodes will exist on their layer in the blockchain, which will not overlap with other layers. It will be located between the NEO blockchain and all dAps applications of the platform. The purpose of creating this layer outside the network is to speed up the process of sharing encrypted content.

Storage with distributed content. The Phantasma Data Filesystem System (PDFS) file system is a decentralized data storage system that will serve as storage for phantom applications. Users acting as network nodes will be able to make an additional contribution to its work by launching full PDFS nodes.

Token SOUL. Since Phantasma is created on the NEO blockchain, SOUL will initially have the NEP-5 standard. Phantasma users will be able to use it to pay for the data exchanged, as well as to create/update storage space. Developers and other participants will receive SOUL for providing storage and network services, and site owners will be rewarded for their role in verifying network transactions.

Benefits and Capabilities

Interaction with existing systems is the main focus for the later stages of platform development. Expanding beyond the NEO ecosystem, Phantasma is best suited for transferring data between dApps and different protocols.

The platform will begin using its mailboxes, which will be compatible with standard email addresses. This will ensure communication with postal services outside the blockchain.

A possible disadvantage of this is that any information exchanged with email services outside the blockchain will be stored on centralized servers. As a result, this will be contrary to the primary goal of the project – to provide a decentralized data exchange environment.

As a system designed exclusively for the exchange of encrypted data between dApps, Phantasma has more prospects. The team foresees many possible uses of their product if they can encourage developers to use the potential of the platform in their work — for example, the creation of a distributed network of entertainment content and a decentralized e-commerce platform.

Despite the presence of an SDK for developers, the incentive to build applications within the platform will largely depend on the initial success of Phantasma in the developer community at the initial stage of development.

Disadvantages 

The real issue at stake is that if users want to adopt a system of chat and e-mail really that require digital tokens to use. Is there a readiness of the mass market to accept such a model, or will the average users be more likely to continue to use free services such as Gmail, Dropbox, and others?

Despite growing concerns about data confidentiality, some studies have shown that this issue is not essential for consumers to make decisions when using specific services or services.

Moreover, large technology companies have begun to actively use encryption technologies in the field of mass consumer messaging services, such as WhatsApp. Besides, there are already free encrypted mail services that provide many of the security features that Phantasma offers.

Conclusion

The project authors mainly focus on the value proposition, which may not have a sufficient level of support from the average Internet user. But on the other hand, we see that many influencers endorse the project. However, I will not include it in my portfolio.

Price and Liquidity

  • Ticker: SOUL
  • Major Exchanges: none
  • Market and Returns: SOUL token price: $0.0224038679 (-5.08%); 0.0002589056 ETH; 0.00000676 BTC
  • 24h Volume Market Cap: $104,823 $1,306,883
  • Returns Since ICO: 0.10x USD 0.68x ETH 0.23x BTC

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.9 stars on average, based on 29 rated postsVladislav Semjonov has a legal and financial background. He has been involved in crypto space since early 2017 in both ICO advising positions in several ICO consultancy firms, and as an ICO analyst for VC. He began contributing for Hacked.com in April 2017.




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Investing Ideas

Using Tokenomics to Next Level Your Investing

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When investing in cryptocurrencies and tokens, it is easy to fall into the trap of viewing them the same way we view stocks. In reality, the mechanics are very different, and developing a strong fundamental understanding of how each token plays into its parent company’s business plan is absolutely essential as an investor.

The Token Basics

At its core, a token is just a programmable currency unit that is bolted onto a specific blockchain. Using a software application, a protocol applies smart contract logic to the token and enables it to function as part of a larger ecosystem.

All of this technical jargon is just a fancy way of saying that tokens aren’t claims on income of a company – they are pieces of the ecosystem. There was a worry about Bitcoin being classified as a security (which would have differing tax implications), but the SEC has ruled it a commodity due to it not representing a share of a company or claim on profits. Instead, most tokens (there are exceptions) are viewed as a

Cryptoeconomics of a Company

Just like it is essential to understand the economics behind a fiat currency (e.g. money supply, inflation, or what happens if the government spends into a fiscal deficit), you also need to build an understanding of the factors affecting each cryptocurrency you invest in.

Cryptoeconomics is the term generally used to describe the mechanics and specifics of token distribution. This covers everything from the sale to the ownership structure, and can be generalized as the “terms of governance” used on that specific token.

Strong cryptoeconomics are important, but even more important is the way a token interacts with the business model of its parents company. As each business model is required to support a token-based model, they must be strongly linked in a logical way, otherwise the token will have no real value.

Explaining Tokenomics

Tokenomics is all about understanding the utility role of a token. Once you have a use case and purpose, users will start demanding that token. There are many use cases (and more creative twists pop up every day, but the most common ones are: right, value exchange, toll, and currency.

Many coins have multiple use cases, which adds to their utility and the strength of their tokenomics. You will most quickly understand the currency use case, as this is where Bitcoin operates. Bitcoin is a payment unit on this platform, and users purchase it for this specific reason.

Value exchange tokens are used on marketplace-type platforms to buy and sell products or services. Ethereum has a toll use case, as you need to spend ETH to run smart contracts and use the network. Finally, tokens with right use cases allow for voting, product access, or ownership. Each of these cases creates endemic demand for the token, which results in a market price emerging.

This is more of a fundamental article about how you should assess less well-known coins. No matter how well an ICO is engineered, companies still need to build viable business models that thrive over the long-term. The utility role of a token is absolutely key for your success as an investor in the company, and by learning to break companies down to these fundamentals, your investing (assuming they are long-term plays) will end up being much more profitable.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Cost Management in the Crypto World

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A common trope in the “get rich” world is that it is about how much you earn, not how much you save. To rephrase that, it is far more important to increase your earnings than it is to penny pinch on a few minor line items.

Applying this to cryptocurrency investing, that would mean the choice of cryptocurrency you invest in matters far more than saving a few bucks on a transaction here or there. This is probably true in some sense. Getting 100x on a coin you bought at the right time before the next bull market is far more important than penny pinching on that limit order.

The Argument for Optimizing Systems

The only time I would recommend worrying about saving money on the small things is when you believe you are going to repeat that one thing enough times that it will make a difference. One example would be learning how to time your trades better or distribute your buys/sells over time to get yourself the best price. You’ll repeat the action enough to make it truly worthwhile to your bottom line. And that added bottom line will go on to compound over and over as you repeat the action and your profits earn additional returns.

Another time where you can benefit greatly from monitoring your costs is when you’re moving money from fiat to altcoins. This usually takes a few steps, and the fees can add up.

Once or twice a month, I dollar cost average into a few “blue chip” coins and some altcoins. To acquire altcoins, it is necessary to purchase Bitcoin or Ethereum over a larger exchange, transfer that sum to Binance (or another exchange of your choice), and then make the purchase. That is 3 transactions, and fees can quickly add up if you aren’t smart about it.

Bitcoin Transaction Fees

In late 2017 and early 2018, the transaction fees on Bitcoin were much higher. This was due to the high level of congestion at the time. Since there is a limited number of transactions per block, miners weren’t able to confirm all the transactions at that time. The only way to ensure your transaction was confirmed was by raising the transaction fee you are offering miners. At this time, it made much more sense to use Ethereum for the transactions, since the fees were much cheaper. However, on exchanges like Binance, many currencies are now solely paired with Bitcoin, which would make an additional transaction from Ethereum to Bitcoin necessary before buying an altcoin.

Since then, there has been a considerable slowdown in the market, and Bitcoin fees have dropped rapidly over the last year. Although no backlog of unconfirmed transactions has emerged yet, it is very possible, especially with the lower Bitcoin Memory Pool. The scalability debate is outside the scope of this article, but even with Lightning Network showing promise, it still needs to be implemented before we hit the next bull market. However, for the time being, Bitcoin is the cheapest intermediary currency for purchasing altcoins.

The Holistic Approach

The top thing you should take away from this is that even though Bitcoin is the best way to execute these trades now, that wasn’t the case at the beginning of 2018 and probably won’t be the case next year.
Every few months, I split my order into halves and execute the second half in a different way that I think has the potential to be cheaper. Whether this means transferring a different cryptocurrency or using a different exchange, it is always worth testing. Yes, you can get quotes ahead of time on the costs and fees, but things change and are inexact. The only way to know for sure is by trying something different and comparing your results.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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