Cryptocurrency is a new and complex space, and there are many on social media styling themselves as experts to help guide you on the path to riches. One approach billed as the "fast track" is to join a paid trading group.
These are structured in a number of ways, but essentially you are paying someone for the benefit of their experience and network while you develop your own. Of course this is quite common in traditional finance circles, from foreign exchange (forex) trading chatrooms to professionally managed funds in which you buy "units" in a portfolio managed by a presumably clever trader.
As with anything in crypto, the value varies considerably and there are some good and bad signs you should look for to protect yourself and get the best value for money.
A Note on Style
I don't mean personal style, though you can certainly find everything from redneck trucker chic to bohemian loungewear to business casual. Trading style is very important to match, or you will find yourself frustrated very quickly. A group that focuses on short term timely social influence trading will be next to useless for an investor looking for tips on long term holds; likewise the biweekly 30 page value report style groups won't excite you if you want to trade intraday swings based on Technical Analysis.
Additionally, some will find raw and uncensored traders more or less suited to their personality than drier and more "professional" folks, and may prefer someone culturally or regionally compatible.
Spend some time following the person on their social media and see what sort of trader they are. In many cases you're signing up for a year, and your style may change over time, but there should be at least some compatibility with your trading interests and personality.
The Tipster
Your common or garden paid trading group is run by a young YouTuber with some success in crypto trading - whether actual or plausibly invented. They are often characterised by promises of HUGE GAINS, hot tips and an urgency to join a limited-access channel at a relatively low price.
It's common for these sorts of groups to be interlinked, and this will be apparent through the trader mentioning others and/or tipping the same coins at roughly the same time. This can result in all or most of their calls being second hand, and it's not unheard of for the paid trader to be in other more expensive groups, funded by their own members, and simply pass on the advice they're getting from elsewhere.
That's not to say there's no value in them - in fact having advice from several premium groups distilled by a lower-cost trader can be cost effective. But do your research and be careful if you're joining multiple paid groups that they aren't just recycling each others' calls.
It's also not to say that there are no original calls being made. Some of these guys are genuinely self-made and very knowledgeable. Just do your research before you commit funds.
The Pro
These groups are typically well organised with at least the facade of a professional, well-resourced company led typically by a personality experienced in traditional markets. Fees are typically much higher than the amateurs, though the research is more detailed.
Be careful with this kind of group that they don't substitute impressive branding for insight. Some who trade on previous success in traditional markets, and are inured to the order and regulation there, may be unwilling to accept that crypto markets could be different. And report volume doesn't always equal report quality.
Also think very carefully about delegating your assets to someone else to manage. Not your private keys, not your coins.
The Pump & Dump Group
The last and most controversial group exists to manipulate markets with synchronised group behaviour. Due to the lack of regulation, low (by comparison to traditional markets) volume and low barriers to entry on markets (many not even requiring basic KYC for low-capital accounts) this sort of coordination can generate buy and sell spikes that can trigger profitable swing trades, and rumour has it that such groups aren't uncommon.
This sort of activity is illegal in traditional markets, and I won't be surprised to see convictions in 2018. Stay well clear.
What To Look For
When evaluating a trading group, especially a paid one, the three most important things you should look for in their calls are:
- they have entry and exit points
- they are time bound
- they are tracked
The very best groups offer all three. As you can imagine, it's very easy to make dozens of calls and reference only the successful ones, or make them so vaguely that almost any result can be justified.
If you do join a group that lacks any of these, consider tracking the data yourself for a while. If you're unhappy with the performance of the calls, the quality of the research or any other factors, the group may refund you.
Finally, Make sure to learn why the calls are being made, not just follow them slavishly. Over time you should develop your own sense for trading ideas.
Good luck!
James
Thanks for reading! If you think this content is valuable, please upvote, follow and comment. I aim to release a cryptocurrency-related post like this every few days, and I'm happy to engage in adult discussion in the comments.
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*The author is not a financial advisor and nothing in this post constitutes or is intended as advice. You are responsible for your own investment decisions. Header image courtesy of Ben White. The author holds the following cryptos mentioned in this article: Nil