Hey all! I came to Steemit through a tweet by Erik Voorhees on July 12th, wherein he told that it rose 172% that day, on top of 90% the day before. Naturally I checked it out and learned about this amazing platform. I also put some of my bitcoin in openledger and bittrex and decided now was the time to start trading.
Granted, that was idiot-me talking.
I was very lucky. I bought me some Steem after a drop in the price and then it shot back up. I wasn't so crazy to invest all my money in it, or I would've been rich by now, but I sold just after a peak and my ROI (return on investment) was around 60%. I turned my profit into SteemPower, to let it grow over time.
Then I got a little overzealous, wanting to repeat the succes and I made a couple of bad investments, so ultimately I pretty much ended up where I started, after spending a lot of time on the exchanges. This is an investment called learning-time.
Since then, I started to educate myself a little bit on the topic (as far is humanly possible with a job and a family) and realized I made some rookie mistakes. So here is the TL;DR version of that journey.
Don't invest on rumours
I can say I was stupid enough to believe the internet. When I read somewhere that a currency had a large spike, I waited for a drop and invested a few times. Then they dropped some more. I was lucky to only make small investments.
Same thing happened with the Ethereum hardfork. I read (here on steemit) that someone predicted that Ether would drop in price because all the Ether in the DAO would come back on the market AND there might be indecisions about the fork and two chains going on, which would further compromise it. They said they would dump their Ether before the fork and I did the same at a price of 0.0163. Last night Ether was at 0.0229. Needless to say, I missed out.
The lesson: Don't invest on rumours alone. The news, the rumours, everything public is already calculated in the price.
Learn some basic analysis
Analysis has made my decisions a lot easier. Before I would be a complete n00b and just buy and sell on a hunch, as I saw the lines go up or down. I missed out on some big spikes because of this.
After the Ether-debacle, I decided that if I was going to trade, I'd better know what I was doing, so I downloaded some course and started watching. I already knew something about trends, because of high school mathematics, but now I also learned about the one analysis that I have been using eversince: MACD. You can find an explanation here. This resulted in me spending less time wondering and more time looking at the analysis and basing my decisions on that. I haven't had big losses since.
Lesson: Analysis will make your decisions better. It will also prevent panic or indecision.
Don't listen to fear or greed
This is somewhat related to the previous point. I was too often selling too early, because I would be afraid the price would fall. Or I held on too long, because I wanted to recover my initial investment at least.
As in life, fear is a bad advisor. As is greed. The lesson is to feel the fear but don't be ruled by it. It is pretty buddhist in a way. As I read about the history of the candlestick chart, originating from Japan, the advice is to be pretty zen, through all the ups and downs.
Closing ponderings
I will continue to trade, modestly. I won't make it my fulltime job, as I'm still very unsure about how to approach some of the quirky ways the market works.
One thing I don't grasp yet: how do traders sleep? In a highly volatile market, 20 minutes is a lifetime. If I've invested in something and it looks like it might reach its peak somewhere during the night, what do I do? Are there tools to sell automatically as soon as the market starts to turn bearish? Probably, but it requires a lot more education on my part.
Another problem I have is that I cannot spot fake-outs just yet. These are moments when the market seems to turn from up to down, but continue to rise after the fake. Yesterday, I sold some Ether way too soon and missed about 10% of the increase.
I am however, interested in learning a lot more about trading and will continue to do so.
I hope this post was helpful or at least amusing to some of you. Educate yourself and happy trading!