Crypto Blog

How I approach the cryptocurrency market, a step-by-step guide

No magic, just the way I do it. 

Investing and trading have become my passion. The sheer amount of time I have invested in Bitcoin and other cryptocurrency markets is not comparable to anything else I did in my leisure time last year. The lockdown really gave me the perfect opportunity to sit down, find an approach, and learn it as good as I could. By doing so, I did not even realize that I created my own little training summer camp. The training camp result was an approach that worked and aligned with my specific understanding of how the cryptocurrency market performs. Trading and investing give me a long-term perspective and the urge to create a better future for me and everyone around me, this shift in my time preference was made by my approach.

This is not the “holy grail” of trading but merely a guide to help you find your own approach to the market. What I want to give you in this post is a starting point, from where you can start working yourself through the market. 

Use this guide, write it down, copy it, and reuse it. The more people that know about this, the fewer people spend money on overpriced courses that teach a strategy that might not even be understandable for you. Let us dig into this.

  1. Shift your time preference – Trading and Investing is not a “get rich quick scheme,” if you are here intending to make money today to buy your Lambo tomorrow, you are probably better off using that money elsewhere. If you think that you can quit your job tomorrow, you could not be more wrong about the market. Most think this way, underestimate the risk and get spit out by the markets empty pocketed very in no time. The longer you stay in the markets, the higher your chance is to turn up again in the long run. Learn to increase the probabilities of success, continue reading, and get some tips on achieving this.
  2. Due diligence – Back to school! Do your homework, be sure to understand what you are doing and investing in. Learn how to handle the tools and indicators you are given before making your first purchase. “But the cryptocurrency market is so complicated,” some of you might be thinking now. But that is how it works with all investments. If you want to buy a house, you first want to check it out before moving in. Since we have sources like YouTube or Reddit, learning about crypto can be good fun. You just need to be up for it. Understand Bitcoin, start there, and see if you really can learn about what it is and how it works. Find out if you can do the same with other projects. Having basic knowledge about what the market is will never hurt. 
  3. Consistency – Turn up every day. Look at it as if you would be working or studying something. Taking a break is good and needed, but being successful with anything means you have to turn up again, overcome your comfort, and scan the charts daily. Bringing the routine into your approach is essential. It will help you to get a relevant perspective on the market. 
  4. Security – Dig yourself into this. Cryptocurrency exchanges and hot wallets (wallets that store your money online) get hacked often. Be sure to keep your money safe. Dealing with cryptocurrencies is like becoming your own bank. Every bank needs a vault. A cold storage wallet can help you out here for sure.

As we defined before, your time preference needs to shift, kill the “oh I need it now” mentality. Overcome your inner-slacking-you, do your homework, and do it consistently. Learning how markets work is like learning a new language. It has its own vocabulary, structure, grammar, and culture. Accepting and tolerating is the key. Forcing your own perception onto something much bigger than you makes no sense. Go with the flow and become part of it. 

It is crucial that you got those 4 points ticked off before running into the battle. Let me give you some tips on how you stay in the markets for longer. 

  1. Find your exchange – An exchange is like the dictionary to the new language. The easier the dictionary is for you to understand and find what you need in there, the faster you are becoming in mastering the language. Find an exchange that suits your need. Do you want exposure to a lot of coins? Do you want an easy setup that just gets you started? Do you want an exchange that makes bank transactions most straightforward? Find your questions in this regard, and be sure to choose wisely. An exchange can make or break your experience trading or investing. 
  2. Swing or Day Trading or just investing? – This question is fundamental because it will have a direct impact on your strategy. Be sure of what you want and stick to it. Having consistency in your approach is paramount in this stage, be sure to know how much time you are willing to sacrifice here. 
  3. Never invest more than you can afford to lose – Investing more than you can afford to lose is never a good idea since you will lose for sure, especially in the beginning. This is a common mistake. Moreover, over-leveraging is the number one reason many newcomers leave the markets with heavy losses. Do not go all-in on a single coin. That mentality gets you nowhere and is best compared to gambling. Many trading critics argue that trading is just gambling, and it is if you go all-in on a coin. Diversification is vital. Get yourself a good portfolio of promising coins to be exposed to a greater variety of moves and reducing your risk of losing money. 
  4. Use a strategy – Have an approach. I often get the answer, “oh, I can sell before I am in negative anyways,” this is an approach to get wrecked fast but not to trade or invest. Use tools such as the stop-loss or indicators (or both combined) to find entries or exits while trading. Cryptocurrencies do not behave like stocks. Losing 20% in one day is often seen. Moreover, a strategy keeps you from being too emotional. Emotions are not good while trading. Stick to your guns. That is the plan! 
  5. Plan your trade and trade your plan – This tip combines consistency and experience and makes you unstoppable! No, seriously, have a plan in place. It is much easier to comprehend what you were doing and thinking when you have to look back onto your trades and judge yourself for not being consistent. Having a plan in place makes it much easier to buy and sell and naturally gives you more confidence that transforms into the experience. 
  6. Review your trades – Judging myself is a fixed part of my routine. Sounds weird, but it is the best way to improve and to trade or to invest. I screenshot every trade I made, and I write down my plan I had in place at that time. Coming back at the end of the week and judging myself on my bad trades became very important. A positive trade with a negative execution is a negative trade with good execution is considered a good trade. 
  7. Do not trust anyone when it comes to crypto – I see too many people falling for scams. Double-check everything, be sure that the news you are checking is official. There are more scammers out there than people trying to be honest. Never trust anyone when it comes to your investments. 
  8. Knowing when to stop – Overworking yourself and trying to get every possible investment opportunity out there will not help you become better. Find the profitable trades, execute them, and leave them be. Trust your strategy but also listen to your inner self. Breaks are important. They help to process and reflect on your accomplishments. 

By following these steps, your crypto journey will be more likely to be a successful one. Good investors are investors that plan to stay in the market for a long time. Many tools help you to accomplish this, so why not using them? Thinking that you know everything better might work for you in real life, but crypto can be ruthless, and people who know things better tend to fall harder. Do yourself a favor and use a cushion before falling. Standing up first will be much more comfortable that way. 

If you want to follow me on my journey through the cryptocurrency world, be sure to subscribe to my blog and my social media accounts! Please leave a like or a comment if you enjoyed my content. 

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By Yves Hofstetter

I am the Owner and Founder of Yves talks Bitcoin. My goal is to provide sensational input and educational service to traders and investors all around the world. This blog will focus on trading and investing in cryptocurrencies with an emphasis on Bitcoin.

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