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Trading 101

Trading 101: What Can You Achieve With Trading?

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You might be wondering what the heck is wrong with us to ask that question? Well, of course, people are trading for profits, right? The answer is way more layered than that and it’s much less obvious than a new trader would imagine. Also, believe it or not, answering that question is the first step towards success in the market. Why? Because in the long run, only conscious traders remain successful (or at all present for that matter…) in the market. Consciousness means knowing your long-term goals and acting upon a plan to achieve them. That implies knowing the possible benefits and dangers of trading. In this post, we will focus on the pleasant part of the equation, the benefits.

Trading as a Self-Awareness Course

When you start trading, whether or not you realize it, you are signing up for one of the most effective self-awareness programs. And by the time you are a seasoned trader, one thing is for sure, you will be more observant, objective, and self-conscious than ever. You could think that this is some kind of metaphor, but in all honesty, you will probably really have to change your way of thinking. Of course, everyone is different, and some people are naturally closer to the right mindset, but generally speaking most people are wired to lose money with trading.

Controlling your ego and suppressing your fear and greed is the name of the game. Trading requires simply looking at opportunities as they are, not in the light of your previous trades, your need for profits, or your fear of losses. The good news is that if you learn these skills they will be helpful in every part of your life, not just trading. It’s no coincidence that great entrepreneurs are way more often successful traders than the average. Objectively looking at options and choosing the best outcome is a universal skill, and one that all successful traders share; acquiring this skill should be goal number one.

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Short-Term Profits vs Long-Term Success

Short term or long term?

That sounds nice, you might say, but when do you get to count your profits? For that, patience is required. Because knowing if you are successful in trading or not in the long run is simple—if you are making profits consistently in all kinds of environments than you are successful, period. Long-term the market provides this simple, yet very robust verdict.

The short-term evaluation is the tricky part. Are you having stellar winners, and virtually no losers? You must be the next guru you might think. In reality, that usually means that you are on a roll, or you have a lucky streak. Projecting those winners to infinity inevitably leads to disappointment and regret. This means that counting profits comes after looking at your trading in the light of your strategies and your trading plan. If you are sticking to them then you will be successful in the long run, if not you will most likely fail.

The Art of Losing

The art of losing money

A highly successful trader said that the most important thing that he learned in his career is losing. Losing trades are an inherent part of this business, and dealing with them is what separates successful traders from the rest. So, one of your biggest achievements for you will be to learn this art. Letting go of losing trades seems like a simple thing, but in practice, it’s probably the hardest part in sticking to a trading plan.

“It will come back…” “I will hold it until it gets back to even…” Sounds familiar? All traders experience the sensation when a trade goes negative and the ego switches into denial. Of course, sometimes you get lucky, and it really comes back, but the point is that you acted against your strategy and your plan. Taking small losses is a great skill; sitting out huge losses is not.

Acting on Probabilities

Sticking to a trading plan requires objective thinking and courage to face uncertainty. Besides of the skill of taking a loss, accepting that nothing is certain might be the other game changer for traders. Trading is a business of probabilities. That is very hard to the ego, as it means that you will have losing trades even with the best strategies and perfect discipline.

The problem with this is that people are generally “programmed” to avoid danger and uncertainty. Numerous studies show that even when the possible outcomes would favor a risky strategy, people tend to choose the safer, seemingly less risky way. Evolutionally this makes sense; if you have a little chance of a bear killing you somewhere then you would rather not go there, even if there are beautiful berries. In trading, this is a losing mentality.

Choosing the best outcomes (with the most probable profits) without listening to irrational fear will lead to success. And again, this decision-making process will be with you outside trading, driving you to more optimal decisions in work, business, and personal life.

Getting to Know the System, and How to Hack It

Hacking the system

When you are already capable of following a plan and do whatever is necessary, the fun part begins. You will start to notice patterns, familiar situations, and obvious opportunities. The financial system is huge with enormous amounts of capital moving every day from one asset to another. That opens up a vast number of chances for the individual investor to profit from.

For example, the technical trends that you analyze are often products of the capital flowing into an asset like a natural force. Would you step in front of an avalanche because it’s half way down the mountain? Would you trade against a trend because it’s already up “so much”? It’s basically the same thing. With trading, you can achieve the objectivity that is needed to jump into a long-lasting trend and stick to it as long as it lasts. Not standing in front of the avalanche, but actually surfing on it all the way down.

On the other extreme, you find scalpers, daytraders who are sometimes only in the market for a few hours, minutes, or even seconds. But the mindset is the same, they see the opportunity, apply their strategy to it, and follow the plan. As simple is that, but in order to be able to recognize and harness these chances, you have to be ready to act as soon as you need to. It’s easy to see that day-trading is

Trading vs. Investing or Trading and Investing?

Knowing when not to be in the market is one of the points where trading spills over to the realm investing. Even hardcore value investors use trading skills to exit positions; although sometimes they won’t admit or even realize it. Warren Buffet, who is strongly against trading strategies, instinctively uses his truly great timing skills. He famously said: “Be fearful when everyone is greedy and greedy when everyone is fearful”. It’s not just a great advice for investors, but also a perfect commandment for traders, although on different time-frames. He also correctly exited positions when he saw parabolic moves in his holdings, which more often than not are the signs of trend exhaustion—another great trading skill.

The takeaway is that with an open mindset, trading will not just simply help you to short-term profits, it will help your investment positions and investment decisions as well.

Financial Independence: Building Wealth

Building wealth

So, we finally arrived at the point of counting the profits. As a trader or investor evolves and gets better in decision making, acting upon probabilities, and sticking to the plan, a whole new dimension opens up. By the time you are a successful trader, the savings that you turned into working capital is growing to serve your and your family’s financial goals.

Wherever you are on the scale between a passive investor and a day-trader who is trading for a living, the final achievement will be wealth. Also, you will realize that this wealth will be dynamic and stable at the same time; dynamic because it will always have the potential of growing thanks to your skills, and stable because your decision-making process assures that you won’t choose silly choices.

We all heard about the “winner’s curse”, the stories of lottery winners who ended up worse off than before their lucky day. This has everything to do with the decisions that they make, the way people generally look at capital, and the lack of consciousness. If you build your wealth organically, through successful trading, investing, or any other business for that matter, you will always have the ability to grow even if disaster strikes. Your skills will be your real wealth, rather than money or possessions.

Our final advice is this: Set learning skills as your final trading goal rather than making profits.

Previous article: How to start trading?

Next article: Trends and a Basic Trend Following Strategy

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Education

Research an ICO (Initial Coin Offering) Like a Pro – Insider Information

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I usually write about Altcoins investing and trading. Right now I wanted to spill the beans on how I research an ICO. If you are not familiar with an ICO, it is a coin offering an altcoin does to raise funds to build the product or to expand their company/reach.

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Instead of doing an IPO as most traditional companies do, a lot of companies are now going ICOs. Why? Many reasons but I would say the top 2 are the fact that millions of dollars are being raised in a short amount of time as investors are trying to be a part of the new altcoin launches in order get in on the ground floor. The second reason is that investors that take part in an ICO do not own actual equity in a company, they are essentially just giving the company money in order to launch their product. In traditional IPOs, investors would actually own a small or large percentage of a company when they invest possibly giving them voting rights as well as actual company ownership.

Now I want to jump right into how I analyze and research an ICO. While some people start with the technology or the idea itself, I have to admit that I start with the ICO token metrics. First, calculate market cap to make sure they are not overvaluing themselves compared to other ICOs or existing altcoins.

Determine the Market Cap of the ICO:

  • Calculate the token price with this formula ETH Current Price/Num Tokens per ETH
  • Now multiply Token Price * Number of Tokens in Circulation (tokens sold in crowdsale + presale)

This is the company market cap roughly if the ICO sells all available tokens during the crowdsale. Take this market cap and compare it to the top 100 altcoins to see how the coin compares. If the market cap equals $30,000,000 then they would need to grow to $90,000,000 in order for you to make 3x your investment. Now go to Coinmarketcap.com and see what companies have the same market cap as this ICO. Ask yourself: Is this ICO as good as the existing altcoin and is it or should it be worth the market cap they are trying to achieve with the ICO launch.

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Now that you have determined that the market cap is good and that the altcoin has the potential to make you 3x – 5x your initial investment it is time to move on.

Read the Whitepaper:

Ask yourself these questions: Is the technology unique? Can this company survive/thrive without doing an ICO? What is the purpose of the token in the company ecosystem? Are they just creating a coin to profit in this ICO craze or does the coin serve an important purpose? How will the coin increase in value, is it based only on hype on exchanges or is it from it being used as a utility in the company? Does this company have competitors that may make this one irrelevant?

Research the Team:

First off, is the legitimate? Do they really exist on Linkedin, etc. You would be surprised how often the team members can be faked. Read the linkedin description to see if the team member is full-time with the ICO and if the ICO is even mentioned at all.

Research the ICO Advisers:

Are the advisers relevant to the ICO or are they just a shiny attention grabber? If you see the same adviser on multiple ICOs then their credibility/value to the ICO diminishes greatly.

Determine Level of Hype:

Don’t underestimate this step. An easy way to get a feel for hype and popularity is to google the name of the ICO. See how many mentions are in the google search results. Make sure you use exact matches such as quotes in the google search so that you don’t get results for the word ‘the’ or something generic. How many times are they mentioned on social media? The best way to do this is to go to buzzsumo.com and type in the name of the ICO. This will give you a results list showing content and mentions on Facebook, Linkedin, Twitter, Pinterest and how many times the content pieces were shared. Go to the ICO website and search for the websites, social media and chat programs where they interact. Some of the most popular are Slack Channel, Telegram Chat, Twitter, Bitcointalk.org, Reddit.com.

Check out their existing product and code:

For this step you don’t have to know programming or anything like that. You will just want to go to their Github.com account as this is where they will store the code for their project. You can see how often they update their code and how active they are developing. Also, do some research on their past products if they are an existing business that is just expanding by offering an ICO.

Research similar altcoins:

Go to Coinmarketcap.com and CryptoCompare.com and study similar coin charts. Of course, every company is different but you just want to get a general feel for the potential. Right now ICO investors are leaning towards investing in Protocols and Platforms such as 0x, Kyber and Raiden. Ideas that are needed to propel blockchain and cryptocurrency forward.

Good luck researching ICOs and may you see 3x – 100x returns. CryptoDayTrader, over and out…

Featured image courtesy of Shutterstock. 

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Cryptocurrencies

Make More Profit with Proof of Stake Altcoins – Ultimate Guide

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Here is a list of all coins that are Proof-of-Stake. Some of these coins get very little volume but I wanted this to be an extensive list of all coins that are proof-of-stake. The value of these type coins is that you can buy and hold any amount of the coin and you will get paid interest each year for holding them in an active wallet. The more coins you have, the more you make. Long story short: Buy the altcoin, hold the altcoin, make money from holding it each year.

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“Proof of Stake is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. Unlike Proof-of-Work (PoW) based cryptocurrencies (such as bitcoin), where the algorithm rewards participants who solve complicated cryptographical puzzles in order to validate transactions and create new blocks (i.e. mining), in PoS-based cryptocurrencies the creator of the next block is chosen in a deterministic (pseudo-random) way, and the chance that an account is chosen depends on its wealth (i.e. the stake).”- Wikipedia

I will highlight some of the more profitable and well-known proof of stake coins and include a link to their website. This is meant to be an exhaustive list of all PoS coins as of 2017 and will be updated as new coins get added.

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  • AcesCoin (ACES)
  • AcesCoin (AEC)
  • Aegis (AGS)
  • Aero Coin (AERO)
  • Algo.Land (PLM)
  • Allsafe (ASAFE)
  • Ammo Rewards (AMMO)
  • ArchCoin (ARCH)
  • Ardor (ARDR)
  • Asia Coin (AC)
  • Atmos (ATMS)
  • Avatar Coin (AV)
  • AvonCoin (ACN)
  • BattleCoin (BCX)
  • BattleStake (BSTK)
  • BigUp (BIGUP)
  • BitBay (BAY)
  • BitCurrency (BTCR)
  • BitHIRE (HIRE*)
  • BitLuckCoin (BTLC)
  • BitMoon (BM)
  • BitOKX (BITOK)
  • BitVegan (VEG)
  • BitVolt (VOLT)
  • BitcoinTX (BTX*)
  • BitluckCoin (BTCL)
  • Bitradio (BRO)
  • Bitshares (BTS)
  • Bitz Coin (BITZ)
  • BlackCoin (BLK)
  • Blackstar (BSTAR)
  • BlitzCoin (BLITZ)
  • Boats and Bitches (BNB*)
  • BonesCoin (BON*)
  • CAIx (CAIx)
  • CabbageUnit (CAB)
  • Cardano (ADA)
  • CheckCoin (CXC)
  • Clickcoin (CLICK)
  • CoffeeCoin (CFC)
  • Coin to the Future (BTTF)
  • ColossusCoinXT (COLX)
  • CoolCoin (COOL)
  • CoralPay (CORAL)
  • CraigsCoin (CRAIG)
  • Creatio (XCRE)
  • Crowdwiz (WIZ)
  • Crypti (XCR)
  • CryptoCircuits (CIRC)
  • CryptoJournal (CJC)
  • CryptoPennies (CRPS)
  • Cryptokenz (CYT)
  • CybCSec Coin (XCS)
  • Dash (DASH) – Website: https://www.dash.org/ – Annual Return: Approx 7.5%
  • DeOxyRibose (XNA)
  • Decent (DCT)
  • DeltaCredits (DCRE)
  • Diggits (DIGS)
  • DigiCube (CUBE)
  • Digital Bullion Gold (DBG)
  • Draftcoin (DFT)
  • Dropcoin (DRC)
  • EGOcoin (EGO)
  • Ebitz (EBZ)
  • EbolaShare (EBS)
  • Exclusive Coin (EXCL)
  • Extreme Sportsbook (XSB)
  • FaucetCoin (DROP)
  • FazzCoin (FAZZ)
  • FindCoin (FIND)
  • FlyCoin (FLY)
  • Forever Coin (XFC)
  • FreeCoin (FRE)
  • Fuel2Coin (FC2)
  • FuturePoints (FTP)
  • GAIA Platform (GAIA)
  • GPU Coin (GPU)
  • GameBetCoin (GBT)
  • Global (GLOBE)
  • Global Currency Reserve (GCR)
  • GlowShares (GSX)
  • GorillaBucks (BUCKS*)
  • GrexitCoin (GREXIT)
  • GrowthCoin (GRW)
  • HealthyWorm (WORM)
  • HeelCoin (HEEL)
  • HiCoin (XHI)
  • Horizon (HZ)
  • Iconic (ICON)
  • Incrementum (INC)
  • InvisibleCoin (IVZ)
  • Ionomy (ION)
  • KryptCoin (KTK)
  • LePenCoin (LEPEN)
  • Let it Ride (LIR)
  • Limited Coin (LTD)
  • LuckyBlocks (LUCKY) (LUCKY)
  • Lutetium Coin (LC)
  • MacronCoin (MCRN)
  • MaieutiCoin (MMXIV)
  • MapCoin (MAPC)
  • MasterMint (MM)
  • MintCoin (MINT)
  • Mojocoin (MOJO)
  • MudraCoin (MUDRA)
  • Nas2Coin (NAS2)
  • Nautilus Coin (NAUT)
  • Navcoin (NAV) – Website: http://www.navcoin.org/ – Annual Return: Up to 5%
  • Nebuchadnezzar (NEBU)
  • NEO (NEO) – Formally Antshares, Website: https://neo.org/ – Annual Return: Approx 5.5%
  • NeosCoin (NEOS)
  • NeuCoin (NEU)
  • Neurocoin (NRC)
  • NewInvestCoin (NIC)
  • NoLimitCoin (NLC2)
  • Noocoin (NOO)
  • NuBits (NBT)
  • NuShares (NSR)
  • NukeCoin (NUKE)
  • Obsidian (ODN)
  • OkCash (OK) – Website: https://okcash.org/  – Annual Return: 10%
  • OldSafeCoin (OLDSF)
  • OmiseGo (OMG)
  • Opair (XPO)
  • OptionCoin (OPTION)
  • PSIcoin (PSI)
  • PandaCoin (PND)
  • PayCoin (XPY)
  • Persistent Information Exchange (PIE)
  • Phreak (PHR)
  • PIVX (PIVX) – Website: https://pivx.org/  – Annual Return: Approx 4.8%
  • PokeChain (XPOKE)
  • PostCoin (POST)
  • Power Ledger (POWR) – Website: https://powerledger.io/Annual Return: Not Sure
  • PrimeChain (PRIME)
  • Prizm (PZM)
  • ProCurrency (PROC)
  • Pulse (PULSE)
  • PureVidz (VIDZ)
  • QTUM (QTUM)
  • QoraCoin (QORA)
  • Quantum Resistant Ledger (QRL)
  • RadicalCoin (RADI)
  • Radium (RADS)
  • RadonPay (RDN)
  • Ratio (RATIO)
  • Red Pulse (RPX) – Website: https://coin.red-pulse.com/Annual Return: 5%
  • RenosCoin (RNS)
  • Resumeo Shares (RMS)
  • ReturnCoin (RNC)
  • Ride My Car (RIDE)
  • Rise (RISE)
  • RoyalCoin (ROYAL)
  • RoyalCoin 2.0 (RYCN)
  • Rubies (RBIES)
  • RubyCoin (RBY)
  • SARCoin (SAR)
  • SelenCoin (SEL)
  • ShortyCoin (SHORTY)
  • Signatum (SIGT)
  • SkullBuzz (SKB)
  • Specie (SPX)
  • Spectre (XSPEC)
  • SportsCoin (SPORT)
  • Squall Coin (SQL)
  • Stakecoin (STCN)
  • Stakers (STA*)
  • Stakerush (STHR)
  • SteamPunk (PNK)
  • Steps (STEPS)
  • SterlingCoin (SLG)
  • StorjCoin (SJCX)
  • Stratis (STRAT) – Website: https://stratisplatform.com/ – Annual Return: .5 – 1%
  • Subscriptio (SUB*)
  • TeamUP (TEAM)
  • The Vegan Initiative (XVE)
  • TrashBurn (TBCX)
  • TrickyCoin (TRICK)
  • TrumpCoin (TRUMP)
  • Turron (TUR)
  • UPcoin (XUP)
  • Ubiqoin (UBIQ)
  • Ucoin (U)
  • Ultimate Secure Cash (USC)
  • Universe (UNI)
  • Vcash (XVC)
  • Versa Token (VERSA)
  • Viral Coin (VIRAL)
  • WMCoin (WMC)
  • Wanchain (WAN)
  • WarpCoin (WARP)
  • WayCoin (WAY)
  • WealthCoin (WEALTH)
  • Wexcoin (WEX)
  • Wink (WINK)
  • XDE II (XDE2)
  • YobitVirtualCoin (YOVI)
  • ZeitCoin (ZEIT)
  • Zennies (ZENI)
  • deCLOUDs (DCS)

Featured image courtesy of Shutterstock.

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Trading 101

Trading the News in Cryptocurrencies

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bitcoin news

Cryptocurrency trading shares many similarities with both forex and stock trading. All of these assets can be traded with a range of different trading strategies, using technical analysis, quantitative analysis, and fundamental analysis. In this article, we will focus on fundamental analysis and how you can succeed with cryptocurrency trading by trading the news.

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In the stock market, we all know how news can impact stock prices. This is especially true for penny stocks, where one corporate announcement can make a huge impact on the price. The same goes for forex, which is largely driven by fundamentals in the long terms and technicals in the shorter term.

Cryptocurrencies are ideal for news trading

One can argue that the cryptocurrency space is better suited for news trading than the stock or forex market is. The main reason for this is the lack of institutional traders, including high-frequency traders, in the crypto space. This is a space that is still dominated by retail traders, meaning you stand a much better chance at profiting from news releases by reacting in a quick and smart way.

So, what are some important things we need to consider when trading the news?

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  1. Is the news fresh? You need to evaluate whether the news is actually news or if it is already priced in by the market. Look at how the price moved ahead of the news release? Did the news just confirm an outcome that was already expected by the market, or did it bring new information to the table?
  2. Is the news of importance to the price of the cryptocurrency? Is it likely to impact the price over the long-term or is it a one-time boost?
  3. Is the coin liquid enough to be traded profitably in the short term? How many people are actually following this coin and related news?

Let’s take a look at how this can play out in a real-world scenario:

Phase 1 – The first leg: The news has just been released and the first reaction in the price is already seen. This is your first opportunity to take a position in the market to profit from. If momentum and liquidity is good, you can take your first position here.

Phase 2 – New buyers are joining the party: After the initial euphoria has settled, you will often experience a move in the opposite direction. This is expected, and happens because all the traders who were ready to buy right away already got their orders filled at this point. The market now needs new buyers to join in in order to continue to rise. And more often than not, that is exactly what happens. As the word of the positive news in your crypto asset spreads, more and more traders are joining in, extending the upward move in the price.

Phase 3: The swing trade opportunity: Medium to longer-term traders are now eyeing the opportunity to make money from this asset that is “in play,” instead of the boring stuff they are currently holding on to that is not making them any money. This type of trader is looking for longer-term opportunities in coins that are trending. Once an uptrend has formed, they look to enter as early as possible and ride the trend up.

How long should you hold the trade?

The trend will persist as long as new traders are jumping on this opportunity. Usually, trends act as self-fulfilling prophecies in the way that the longer the trend has lasted, the more people will hear about it and join in on it. When we finally reach a point where the sellers outnumber the new buyers, the trend ends and the cycle may repeat itself in the opposite direction.

One way to develop an estimate of how long the trend is going to last and setting a target price is by using Fibonacci extensions. You can also study previous trends in the asset and see if you can spot any pattern. In all asset classes, crypto included, trends move in waves that tend to repeat themselves.

Personally I prefer to hold on to the trade until the market has given a clear indication that the trend has ended. Usually, I will let this come in the form of price breaking through one of the moving averages, for example the 20 day moving average when trading on the daily timeframe. That way, I don’t have to second-guess when I should get out of the trade, and I also never change this rule once the trade is entered into. It’s not so important what strategy you choose for getting out of the trade, but it is very important that you do have a pre-determined plan for getting out and actually follow through with it.

These strategies work just as well for crypto trading as they do in the stock and forex markets. As the legendary trader Jesse Livermore said more than a hundred years ago:

“The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.”

Featured image from Pixabay.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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