The Altcoin market is pulling back while Bitcoin is still consolidating at around 32k. LINK and DOT look as if they would position themesleves for some higher moves, will we see some long trends forming or is the market giving back more?
Trading is a buzz, especially when trying to figure out strategies. It is tough to stay concentrated with all those traders sharing their own strategies that apparently work wonders. Not being distracted by all the buzz is the key to becoming a profitable trader. Many newcomers think that the more they know, the better. It does not work that way. People sharing their strategies is a good thing, and I do not want to criticize that. Every trader needs some form of plan to get started. Many think it is about that “one” strategy that will make them buckets of money, and I am trying to point out why this way of thinking is not very productive. Even though the truth is quite near to that. There is no such thing as the “one “strategy because the strategy you decide to use is understood on a personal level. This means, the more familiar you are with the strategy you think suits you best is the one thing you should double down on.
Make sure to stick around till point 4 or 5. I will give you some great extra tips from my personal arsenal. At the end of this article, I provide my own routine that you guys can use or even copy. Without further hesitations, let’s get started! Here comes the first one:
- Do not use more Indicators than necessary – As we discussed before, there is no such thing as the “holy” grail of trading. If you want to become good at trading. The fewer indicators you use to judge your execution of trades, the better typically. Indicators usually just add to the buzz you should be avoiding while trading, so the fewer you use, the better your executions usually become. You need to change your mind here. Indicators should not help you enter a trade. They only should keep you out of a trade. This is one of the best ways to avoid being influenced by the indicators. Indicators should not be a critical point of your strategy but a healthy fundament to build your strategy right on top.
- Use a strategy – Do not just use any. Using the wrong strategy can really lose you money. Find a strategy that makes sense to you. Do not let yourself be talked in by trading mentors that guarantee you X amount of money with their strategy. The holy grail of trading doesn’t exist. This is the best way to improve, finding the strategy that works for you. Research every single strategy out there until you are confident that you want to use the chosen, focus on the selected strategy, and try to blind everything out that has nothing to do with your approach. Trading is about finding your focus and keeping that focus consistent like a death-ray.
- Use as many perspectives as you can before entering a trade – It does not matter whether you want to day or swing trade. The more perspectives and views you got on a particular trade set-up, the better your judgment usually gets. An often seen mistake is that traders look at a timeframe that would make them enter a trade, and as soon as they move up higher in the timeframe, they redecide. Different timeframes can give you constructive insight while trading.
Now many of you probably knew about the first 3 points. So as promised to let me give you some tips that improved my trading in no time.
4. Plan your trade and trade your plan – By planning your trade, you really learn to understand what it means to trade. You must think about every move you are going to make before even taking it. This helped me immensely because I stopped taking emotional trades, and it gave me the new thinking of “Did I really think about this?” before hitting the buy button. Making unelaborated decisions while trading is one of the main reasons why many newcomers drop out very fast. So keep your head cool and trick your consciousness into a new state of thinking about trading.
5. Document every trade – This is my favorite tip I can give you guys because it is easy to do. All you need to do is taking screenshots after you made a trade. Make sure to save the screenshot because we are coming back to look at it again at the end of the week. Reviewing your trades is a great way to learn and really is one of the best ways to preserve the experiences you collected while trading. All it takes is time and consistency. If you find the time to judge your successes and your failures, you will understand what it means to take a good trade.
Trading is by no means easy. But learning how to trade wrongly will not help you in the future. Ensure that when you choose a strategy, ensure that the strategy really suits your understanding of the markets. Do not be distracted by all these traders trying to teach you the new way of making your living. Find something that works for you and focus that death-ray on it. Make sure to have a strategy and a plan for every trade you are going to take. I would do it like this:
- Plan my trade
– Where is my entry?
– Where is my stop-loss?
– What is my target? (1:1, 2:2)
– Check the timeframe
– Check the indicators
– Entry as planned
– Get stopped out
- After the trade
– Take a screenshot of your entry and your stop
– Save it and look at it at the end of the week again
By using this routine, you will bring consistency and simplicity into your trading. This model does not include a strategy, so you guys can use whatever strategy you feel most comfortable with. Use this routine every single time you execute your trades, and you will learn fast.
If you need help scanning the markets, you might be finding my daily podcast very helpful, or my blog where I post my thoughts on the charts and the markets. Make sure to check out my website for additional tips and tricks.
Let us get the terminology straight first, what is a bull run?
A bull-run is an increase in the value of a cryptocurrency over a long period of time. And since the price is rising, direct demand is increasing too. The longer a bull run is, the more people enter the market and join the rally. Good examples of bull-runs are the Bitcoin bull-run in 2018 and 2020 (writing this during the bull-run).
So, is a bull-run a self-fulfilling prophecy?
No, even though this could be considered as a logical assumption, but it is nonetheless incorrect. Since many people enter bull-run thinking exactly that, most of them will be surprised when the price comes down again and sell-off. Let me evaluate this further by listing you 3 reasons why Bitcoin is bull running now at the end of 2020. Make sure to stick around for a reason number 3 since it is the one we all can relate to the best probably.
- Retail Investors are entering the markets – Huge international corporations are turning their heads towards cryptocurrencies. Bitcoin and some of the Alt’s have outperformed every other market on the planet in 2020 and soared to new all-time highs. The financial world finally starts to understand that Bitcoin is here to stay, if they want it or not. Companies like Microsoft and Visa are the top companies on the list. Retail Investors start to understand that diversifying into cryptocurrencies might dabble in some nice and good profits to top of a strong year in all regards. Moreover, financial institutions like Square Inc. or Visa have added some Bitcoin to their portfolio in 2020. The news that Square Inc. would invest in Bitcoin was widely recognized as the reason why retail investors started to turn up with some money.
- Limited supply – Since there are only 21 million Bitcoin out there and demand for Bitcoin is picking up, the value of Bitcoin is increasing too. This effectively means that the more money there is in the Bitcoin market, the likelier the price is to rise. This makes it the perfect store of value. And since the US government has been inflating the Dollar at rates never seen before in the history of fiat currencies, many investors realize that Bitcoin is, economically speaking, the only real store of value next to Gold right now. This year alone, did the US print 50% of all the existing Dollar supply. I understand that this money is needed desperately, but, in my opinion, the US requires discipline and not more inflation to solve its problems.
In the year 2020, many unfortunate events brought it down to this. The world now uses inflation as a tool to “fix” all the problems that we have. This is the reason why 2020 was the year for me where I started to understand what Bitcoin really means to the individual. It is crazy to think that the only alternative monetary system to the one we use to run our world is a magical internet bean with subjective value. But it is the reality, and to have the ability to use Bitcoin as an alternative system makes me more than happy. Luckily, we all live in a time where having Bitcoin is made possible.
This brings me to point 3, so without further holdback:
3. You and I are entering the markets – Since the general awareness about cryptocurrencies increased during the 2017/18 bull-run, the public only starts to understand and grasp the complexity of Bitcoin. We were not ready to understand this new technology in 2018, but more and more people nowadays. The younger generations realize that Bitcoin is the internet solution to a 2020 problem. The financial crisis and now the crisis caused by the pandemic have increased awareness among every age group that value preservation has changed in the past years. This time it feels different than in 2018, where the Fear of missing out was consuming the public. Many in cryptocurrencies have learned from 2018 and are now better prepared for the markets’ complexity and volatility.
So, as I said before, the Bitcoin Bull-run does not work like a self-fulfilling prophecy because its value is based on the individual’s subjectiveness (how much some see value in Bitcoin). And since the public and retail investors do not act out of Fear of missing out anymore, they are likely to keep their Bitcoin for a longer time. Investors and you and I are all behaving more appropriately to the volatile market situation, which is excellent for a consolidating Bitcoin and hopefully a continuous run. This mentality change is crucial because it shows a maturing market situation that will eventually bring long-term price stability into the Bitcoin and cryptocurrency markets.
So, is it too late to enter the market?
NO, NO, and NO. It is never too late to enter the market, but please, never enter the market just for the sake of joining, do your due diligence and only invest if you have a strategy in place that might reduce the probabilities of losing your value. Starting out in cryptocurrencies is hard, but it is doable with a structured strategy and the willingness to sacrifice some time.
To conclude, there are many reasons why the ever-growing interest in cryptocurrencies is not flattening out anytime soon. With Bitcoin set to crack new all-time highs and the growing interest of professional investors and ordinary people bring additional momentum, Bitcoin has a bright future in front of itself. Join this significant venture that combines the opportunity for independence and financial freedom. Bitcoin has outperformed this year, and it will happen in the coming too.
If you need tips and tricks for trading and investing, do not forget to check out my website and follow my weekly newsletter tips and tricks for trading. If you need someone that shows you how to scan the markets, check out my podcast Yves talks Bitcoin on Spotify or YouTube.