Timeless Trading Wisdom for Crypto Investors

Nico Lim
October 20, 2020

As one of the fastest-growing financial industries in the world, Crypto is considered to be the wild west of trading.

Few investing markets can rival crypto’s unique potential for astronomical gains as well as dramatic overnight losses. Crypto is its own animal and should be treated accordingly.

However, trading is still trading.

At its core, the principles and strategy behind effective trading and investing remain the same. Over the years, traders have found themselves in the same positions over and over again. Yes, markets are unpredictable, but certain situations have a tendency to repeat over time.

For decades, certain nuggets of trading wisdom have proven timeless, and successful traders tend to keep a few of these heady trading sayings and mantras nearby. Not only do they serve as overarching guidelines for new investors to live and trade by, but they provide a framework to stick to when the market is shifting and emotions are running high. Trading can get pretty intense at times and even the most seasoned veterans need to be checked from time to time.

Here we have some of the most famous and enduring trading sayings of all time. They’ve worked for traditional investors and can be very useful for both new and experienced crypto traders too.  If stuck to, and only broken when the situation demands it, these easy-to-remember nuggets of trading wisdom will help you navigate the market and make better trades now and for years to come.

“It's about time in the markets, not timing the markets.”

Consistently timing the market so you can buy/sell at the ideal moment and take advantage of every market movement is every trader’s dream. But it’s a high-risk-high-reward approach and is much easier said than done.

While it is useful to have some basic strategies about how to time the market (buy low sell high is a common one), this trading adage suggests that these efforts of timing the market are not as important as the time you spend in the market.

Long-term investments are a big part of every serious trader’s portfolio and crypto is no different. Investing based on long-term fundamentals rather than short-term noise and volatility is likely to bring you the best returns in the long-term. While it is a perfectly legitimate strategy to trade frequently to maximise short term gains and capitalise on daily/weekly market movements, many crypto investors are choosing to hold some of the coins they believe will be worth a lot more down the track.

Recently it has been revealed that the majority of Bitcoin’s biggest investors are in it for the long-haul and do not intend to sell anytime soon. They believe in the utility and intrinsic value of Bitcoin and are waiting for the OG crypto to reach its full market potential, which according to them, has not yet happened.

In the words of trading guru, Rayner Teo, “Be patient. Once a trade is put on, allow it time to develop and give it time to create the profits you expect”.

"Know what you own, and know why you own it."

This quote from Peter Lynch sums up crypto trading in a nutshell. The success of a cryptocurrency is intrinsically tied to its unique ability to solve a problem in the market or significantly improve on an existing technology.  By getting to know the utility of a coin, as well as the company and community behind it, you will have a better understanding of why that particular coin is a good investment in relation to your trading goals and strategy.

Understanding the technology behind a cryptocurrency is the best way to know when it is undervalued, overpriced, and ultimately when to buy or sell. In the world of crypto and investing in general, knowledge is power.

"Don't marry a position."

When it comes to investing, it can be easy to get too attached to your investments. Crypto is no different. If you put in the time and effort to research a coin thoroughly before picking it as one of your winners, you may find it difficult to let it go when it starts to tank.

Maybe you had a hunch about a certain coin and the more you researched its unique potential and the superstar team behind it the more you became convinced of its inevitable success. In our experience, there is a lot of mental gymnastics naive traders engage in to justify a position.

But winners cash out. Losers take too long to emotionally divorce themselves from their positions. And as the saying goes, "no one ever went broke taking a profit."

The crypto market is volatile and takes no prisoners. It rewards those who can keep a clear and objective mind while trading. However, while it is important to acknowledge when the market has turned against you, many crypto coins have been known to bounce back after a seemingly apocalyptic crash. If you were not able to sell before the dip and you have faith in the intrinsic value and potential of the coin, your best bet might just be to hold and wait it out.

“Know the difference between a good and bad investment.”

Generally speaking,  a cryptocurrency worth investing in will generally have a diverse community behind it, a well-known team of developers, and a well-written whitepaper. In such a competitive marketplace, for a crypto to succeed above all the others, it must possess a unique function or significantly improve an existing technology in the market. A crypto’s unique ability to solve a problem in the world is what defines whether or not it will succeed in the long-term.

There are many factors to consider beyond just the price of the coin (e.g. market cap, trade volume (how much the coin is being traded) and a coin’s past track record). Ensure that you take a comprehensive look at the crypto and that it is a project supported by trustworthy and reputable people. This will save you a lot of heart-ache in the long-run and will have you making the most profitable trades possible from the get-go.

“People lie, markets don’t.”

The crypto space is filled with a lot of people saying a lot of things. Some of it’s legit, most of it’s hot-air. There are now thousands of altcoins on the market and every day sees new and exciting cryptos enter the market. But this comes at a price. With every novel coin comes a team of people who will be trying to sell you on why their coin is the new Bitcoin or Ethereum (or a combination of both). With the ICO rollout model in crypto, there is always a lot of bragging and grandiose statements made about new coins. But there is no substitute for doing your own research about the coin’s utility, its team, and the whitepaper before coming to your own conclusions. And the same goes for market trends and movements.

Many have learned the hard way that people’s words can’t always be trusted. Learn to read the market and understand its trends based on past movements and your own knowledge about a certain coin. No matter who the person is and how strongly they feel about a prediction, recognize that they have a bias based on their own emotional attachment to their own coins and investments.  Additionally, in the crypto space, a public endorsement by a certain person or group of people can have a huge impact on the coin’s market value and it is not uncommon to see hype-filled pump-and-dump schemes inflating the value of a coin before it inevitably drops back down to earth leaving investors stunned and empty-handed. Trust your research and the market before betting your hard-earned cash on someone else’s word.

However, if you’re new totally new to crypto and the world of trading, some early guidance from crypto professionals can be invaluable. At Digital Surge, we provide all our customers with personalised customer support and trading guidance, tips and strategy assistance so you can make the most out of the crypto market and start your investing journey off on the right foot. If you have any questions or just want to have a chat, shoot us a message in our live chat or organise for us to give you a call! We treat our customer’s like family and would be more than happy to help.


“It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong.”

Whether you’re a beginner or a veteran, this quote from George Soros is an important one to remember. Taking losses is an inevitable part of trading. Even some of the best traders are wrong most of the time. However, what makes them successful is their ability to accept losses and get out of a bad situation before it becomes worse. Then, they capitalize and bet big when the market is favourable and they feel strongly about a position. It is common for successful traders to lose small amounts of money and then occasionally win large amounts – what matters is their overall profit margin.

Too often we see new crypto investors fail to accept that they are prone to making mistakes like everyone else. Doing your research helps but you can never be certain about anything when it comes to investing. Regardless of whether you made a hasty decision or one of your most valuable assets is tanking, a good trader will acknowledge the situation without too much emotion. Accept and act accordingly.

Not letting yourself be paralyzed by losses and realizing that they are actually part of a wider trading strategy is something all new traders should strive to do. Always endeavour to be as unemotional and objective as possible when deciding when to buy, sell or hold. In the words of Yvan Byeajee: Confidence is not “I will profit on this trade.” Confidence is, “I will be fine if I don't profit from this trade”. Swallow your pride, don’t personalise your losses, and take calculated risks when the time is right – everything else will fall into place.

"An investment in knowledge pays the best interest."

This one is from Benjamin Franklin and is pretty self-explanatory. It’s also one of the most important when it comes to crypto trading. Without solid research and knowledge of a coin and the company behind it, you’re probably gonna’ end up worse off than when you started.

Such a large part of the art of crypto trading relies on evaluating the many factors that contribute to a coin’s value and future potential. Warren Buffet advised to “never invest in something you don’t understand”, and we’d have to agree. Put in the time before you make the trade. Trading should be the easy part; the hard work is in the preparation.

“It is much better to buy a wonderful business at a good price than a good business at a wonderful price.”

Another quote from investing legend, Warren Buffet. This piece of wisdom is especially relevant to crypto and has led Buffet to make some of the best investments of his career. In the crypto market, it is crucial to know what you are investing in. This includes having a solid understanding of the coin’s proposed utility and function, the company and team behind it, and the community who are likely to adopt its use case. Most cryptos start with little to no value and come with the possibility of astronomical gains that are rarely found in other trading environments. However, following Buffet’s advice, just because a coin can be bought dirt cheap does not mean you should buy it.

Although Buffet and many other investors have bought into some of their best investments while prices were incredibly low, it is important to remember that in the world of crypto, a wonderful coin at a good price is far better than a good coin at a wonderful price. There are thousands of coins on the market and just a small portion of them actually make it. The intrinsic value and utility of the coin in the world is the most important thing. As we have seen over the years. the vast majority of cryptocurrencies don’t even make it off the ground and fail before ever reaching anywhere close to what their founders envisioned. This is why research and having some positions in more stable, established coins is so important. Although an undiscovered coin that brings real, unique value to the ecosystem is rare, they are the fantasy of most crypto traders. If a crypto is truly unique and has the right people around it, it is likely to be a better investment than other coins – even if the cost to invest is a little higher.

“My attitude is that I always want to be better prepared than someone I’m competing against. The way I prepare myself is by doing my work each night.”


This quote from Marty Schwartz reminds us that trading, at the end of the day, is a zero-sum game that takes no prisoners. Generally speaking, every gain in the market is balanced by a loss of the same size and vice versa. To put it another way, for every person winning, there is someone losing. All you need to do is make sure you win more than you lose.

Schwartz reminds us that there is no easy way to riches – at least not in the long-term. By acknowledging that everyone else is out to win and probably also thinks they are making great trades, you will realize that the best way to get an edge on the competition is to be better prepared and informed than the rest. While the importance of following these timeless trading guidelines cannot be understated, the no. 1 thing you can do to increase your chances of long-term profits is to do your research, talk to other traders, and learn the data and info better than your competitors.

Final words


We hope you’ve enjoyed this handful of wise trading tidbits that have stood the test of time and guided many traders to financial glory. While keeping these sayings and rules in mind can be useful, especially for new investors, know that there are no guarantees when it comes to investing – and especially not in the world of crypto.

Crypto trading is undoubtedly more volatile than traditional investing. This is a good reason to use these nuggets of old school trading wisdom when necessary, and also to remember that crypto is a different game, with different rules. Volatility can be both a good and a bad thing. It all depends on how you trade. Keep these trading tips in mind, do your research and set yourself up for long-term success! Stayed tuned for part 2 in this series.

Good luck and happy trading!

 


   

Nico Lim

Nico is a professional writer with a keen interest in technology that can simplify and enhance our everyday lives. He has a knack for making things simple and easy-to-understand and is a regular contributor for Digital Surge.