Senior Crypto Trader: 20 Tips for Beginners
"Don't trust anyone."This article is from Reddit, authored by cryptodragonnz, translated by Chain Catcher Echo.
Since 2013, I have been involved in the cryptocurrency business, with trading experience in over 700 altcoins, and I am now a DeFi farmer.
As mentioned above, I have a deep understanding of the crypto world. I briefly entered the cryptocurrency space in 2013, but it wasn't until 2017 that I really started to dive in, and I haven't looked back since. In 2017, I made all the common mistakes that new investors make, including choosing the wrong coins, entering unreliable exchanges, and selling tokens at the wrong time (for example, I sold Enjin on the first day after investing in the ICO). In 2018, things got worse, and the altcoins I held caused my BTC to lose half its value.
Now, I am in a favorable position and have grasped the common methods of making money with cryptocurrencies. Many people ask me for advice on how to operate, including strategies and other recommendations. Here are some of my tips, observations, and thoughts.
Don't trust anyone. You should assume that everyone you talk to is a thief coveting the money in your pocket, including those asking you to invest in cryptocurrencies and random people messaging you (yes, ironically, this means don't trust me, but you'll see I haven't mentioned the altcoins I hold and have deliberately kept silent about my DeFi pool with an APY of 800%).
Every position you buy should be a fixed percentage of your portfolio. For typical trades, I usually hold 1% of my total assets, for higher-risk Uniswap trades it might be 0.5%, and for very strong long-term positions, it could be 2-5%.
Let your portfolio be valued in BTC (or ETH if you prefer). Your goal is to increase your BTC value, and every trade should be in BTC, then redeem BTC. Record all trades in your portfolio under the BTC pair so you can see how much BTC appreciation you've gained. Don't worry about the dollar rising, as it's easy for the dollar to appreciate in a bull market. BTC is the endgame here, so you want to accumulate BTC, especially when BTC's dominance is declining.
Allocate a portion of your portfolio to liquidity mining or staking. If you have a token that you've held for a long time, think about whether there's a way to make money from it. For example, I have a lot of BTC and ETH, and I didn't let them sit idle; instead, I deposited BTC into Sushiswap for liquidity mining. A few months later, the rewards I earned from that liquidity mining were worth about 25% of my initial investment.
Every so often, you can harvest the rewards, reinvest them, or transfer them to your long-term holdings. Note: Compound interest has high returns, and continuously acquiring and reinvesting can yield significant profits.
Have a dedicated BTC or ETH account, which is your "Hodl" portfolio that you will never touch. Periodically transfer some profits into that long-term account. The assets held in my long-term account are not used for anything; it's just my safety holding.
Use Telegram (or Discord). Look for genuinely helpful, smart people and trading groups, and stick with them. Eventually, they will become important sources of information or inspiration.
Read as much crypto news as possible. It's surprising how often significant events arise suddenly, giving you time to buy (for example, Grayscale announcing new trusts with other tokens). Always keep some BTC on hand on exchanges to seize opportunities. Again, Telegram is very useful for this, as you can quickly see shared tweets or news links.
Set predefined take-profit and stop-loss percentages, and sell immediately if that percentage is reached. For most cryptocurrencies, if their BTC trading pair rises more than 30% in a day, I always sell; in 95% of cases, this yields better results than holding on. In rare cases, my position might double, and I always sell my principal immediately (I had two such instances this year with Ethernity and Blind Boxes).
Have a concept of current trends. The crypto market often shifts with changes in certain sectors. For example, look at the Coin Gecko category list, and you can immediately see what's "hot" right now. Last month it was NFTs, so I heavily invested in that area, but now that sector is cooling off, and currently, Binance Smart Chain and trading tokens are performing very well. If that's the case, what else might change? Other low gas fee chains might be a good idea, especially if they are decentralized, so Avax, Raydium, etc., are also developing. You should rotate your positions to align with market fluctuations.
For beginners, start by accumulating Bitcoin and learning the basics like using wallets and security. Don't just buy those DeFi tokens disguised as WSB-style. This might make you feel like you're missing out on the gains from hot tokens, but if you're just burning your funds, it can be harmful too.
Look for opportunities to acquire cryptocurrencies for free. The key here is to sift through scams to find valuable projects. This includes not just staking but also things like Reddit moons and airdrops. If you have an on-chain wallet dedicated to certain activities, try interacting with some projects to qualify for future airdrops.
For liquidity mining, make sure to use the right applications (like Zapper or APY vision) to track all your positions, gains, and losses. Be cautious with liquidity mining on the Ethereum network, as gas fees can eat up your meager profits if your positions are small.
Continuously educate yourself. I still need 3-4 hours a day to research and learn about crypto technology. As long as you choose the right people, I've found that crypto podcasts and even YouTube are important sources of information. Combine your education with technical strategies, altcoin news, and even the general philosophy behind sound money and financial sovereignty.
If you've made a profit or loss on a trade, immediately remove that token from your watchlist. Why? Because you've exited that position, seeing its price soar again will only torment you, and once you've decided to sell, don't go back and try to recover losses on the same trade.
Never hold more than 10 tokens. I used to hold up to 40 tokens at one point, making it impossible to track them based on activity, price, etc. Ten tokens are diverse enough.
Falling in love with altcoins is like falling in love in a strip club. But be aware that, in the long run, their chances of beating BTC are slim. Look at all the tokens I had in 2013 (Peercoin, Feathercoin, etc.). If you want to marry an altcoin, then like in the real world, if you only lose half your money, you’re lucky.
Always learn from your losses. I like to think of the crypto world as a computer game where you can gain new skills. You can make money or accumulate experience, which can lead to new items or skills to protect you from certain things. Did you lose $500 because of a crash?
Do your research and find ways to avoid it next time. You might go crazy about it for the next two weeks, but when the next potential crash project appears, you'll dodge it. Keep learning and accumulating experience, and you'll start to avoid all the traps.
- There are many scenarios where you see a token has skyrocketed 1000 times or reached some ridiculous level, and you feel it's absolutely necessary to buy to avoid missing out. This is an obvious trap. Yes, it's irresistible, but you must resist the temptation.
Assume cryptocurrencies are a pile of boats at the dock, with thousands of boats and a hundred more appearing every day. Why would you try to jump across the water to reach a boat that has already left, when if you wait a little longer, dozens more will appear in five minutes, and you've already fallen into the water, missing those new boats!
- If you must trade as a beginner, I strongly recommend trading smaller/mid-cap BTC pairs instead of USD or margin trading pairs, and not using futures contracts like those on FTX. Why? Because if you use BITMEX/BYBIT/FTX, you'll be trading against whales, sharks, quantitative funds, and machine traders.
If it's your first time in a casino, would you immediately go to the blackjack table with James Bond and Dr. Evil? Smaller BTC pairs are more likely to have inexperienced traders, and once I switched from margin trading USD pairs to spot trading BTC with altcoins, my trades actually turned positive.
- Cryptocurrency is still cyclical. This means we will face another bear market or at least a long, unproductive boring period. If you just entered the crypto world, you might not "succeed" in this cycle, as we may only have six months to a year.
In fact, I lost money in both the 2013 and 2017 bull markets (losing -50% and -85% respectively), and all my gains were made during bear markets when BTC was priced at $3000. "Can you do it?" The test doesn't come when the market seems to be rising infinitely and everyone is a winner, but when everyone is selling and you're the only buyer, that's when the real test comes. Thousands of altcoins will suffer losses or die at that moment. So, scoop up the ashes and don't become the ashes!
Anyway, these are my thoughts, and I hope they help you!
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