All in Speculation

Effects of an Underlying Irrational Mindset on Trading Crypto

“What separates the consistent winners from everyone else?”

The consistent winners, the five percent, profit consistently from the other ninety-five percent. They’re systematic and ruthless.

If you sit down in front of your computer, fund an account and begin trading in cryptocurrencies (or any other financial market) without an understanding of edge, position size and money management, the odds are high you are going to become a fully paid-up member of the 95% club.

You might as well take your seat at the slots in your local casino.

Perhaps you’re thinking, you’d never play the slots because it’s a mug's game.

If you start trading cryptocurrencies without an understanding of your biases, (and how they affect you), and without understanding your edge, you might as well be sitting in front of the video game reels pressing the bet button.

The conditional biases protecting you in everyday life don’t work so well in the cryptocurrency markets.

Going against the crowd is hard because acting alone and answering only to yourself goes against your inbuilt biases and years of experiential life conditioning. We are trained to recognise authority and respond to an authority figure.

We think we’re in control. But studies in behavioural economics has shown we are not. We use a personal collection of subconscious biases and behaviour patterns to help us get through the day.

It could be a perceived expert from your bank or brokerage. It could be a TV talking head, or it could be an article in a newspaper. If you’ve taken a position and you read, see, or hear something that goes against your authority, it will be difficult for you to resist second-guessing yourself. 

If you aren’t clear about exactly why you should take a position, you’ll find many catalysts waiting to either stop you from getting in or spook you into getting out too early.

Why trusting yourself defines the line between success and failure in the cryptocurrency market.

Pushing the envelope, and on the edge of out of control. This is “Chuck” Yeager describing what it felt like as he broke the sound barrier. 

And so it is with trading. Trading and investing in cryptocurrency markets is like traversing a fine line between success and failure. You’ve got to take the best information available to you and make a decision. It’s impossible to know the outcome. There are no guarantees. None.

How do you know when to push it? How do you know when to punch through?

It’s all about trust.

Asking the Right Questions Overshadows Never-Ending Educational Success in Trading

The 95% make decisions not with their heads, but with their hearts. They take their ideas from others and rarely use their wit to figure out a strategy.

Most delay taking any action until FOMO, the fear of missing out, has them in its grip. The 95% use technical analysis tools to help them make decisions.

The most common tools the 95% use are moving average momentum indicators. Simple moving averages, multiple moving averages, moving average convergence divergence, and stochastics. They use different moving average lengths to predict highs and lows in markets, but which indicator and settings work best? And there’s the trap.

Pro traders know their point of reference before entering into a position

Most people are dissatisfied with their lives. And paradoxically, it’s not the demographic you’d expect. The most disenfranchised with their lot is often the most outwardly successful.

It’s because they’ve done everything the system asks of them, and yet they know within themselves they were promised more. Somewhere between 35 and 45 years old, and stuck on the freeway, there comes a time when they ask, “Is this all there is?”

And this is why the lure of magical systems is so persuasive.

The 95% ask themselves, “What if…”

Cheap doesn’t measure price against price; it measures price against value

When you invest, the only thing you have control over is the price you will pay. Every time you look at a market’s price, you can choose to buy or not buy.

This week Ripple had a slew of positive news releases relating to the adoption of XRP, the Ripple protocol currency, and the announcement that xRapid, the cross-border payment system, is going live next month.

Huge volume accompanied by good news. Does this mean the bear market in Ripple and cryptocurrencies is over?

For cryptocurrencies to replace cash does anything have to change?

Innovators and early adopters, the experienced old hands of the crypto space, who understand completely how to transfer from fiat currency into crypto and back, have a problem even their aptitude at moving funds around between multiple exchanges and wallets can’t solve. And this problem is volatility.

If you’re on a cryptocurrency trading exchange and want to protect your profits, or even if you’ve made losses and just want to get out, where can you put your funds to protect them? The most used solution may not be as safe as you think.

Are cryptocurrencies immune from the Power Law?

The majority of market participants spend their time reading about how the latest and greatest upgrade to an existing blockchain is going to change the game, or they read the opinions of cryptocurrency gurus, following them on social media, reading the tweets and posts for the one thing they are looking for. Certainty.

Unfortunately, certainty does not exist in any market, including the cryptocurrency space. In financial markets, venture capital, and macro economics, there is one law to rule them all.

Crypto trading: The majority look in the wrong place. They get in late, and out early.

The inconvenient truth: Most people new to the world of speculation and trading start defining trends with indicators and signals from the past. They don’t take the time to learn why trends begin, how trends move through time, and how they end.

Technical analysis is often used to show how easy it is to be successful in hindsight; however, the reality, for most, is different when they attempt to use a TA system in real time.

Not understanding background conditions is like walking across a freeway blindfolded.

The inconvenient truth: Most people new to the world of speculation and trading start defining trends with indicators and signals from the past. They don’t take the time to learn why trends begin, how trends move through time, and how they end.

Technical analysis is often used to show how easy it is to be successful in hindsight; however, the reality, for most, is different when they attempt to use a TA system in real time.

Tron is disrupting the world’s most valuable business — centralised big data.

Imagine a business, where the ingredients are free, but the end product is the most valuable commodity on Earth — a commodity so valuable it is taking over global stock markets.

The gatekeepers have outsourced content generation, but instead of paying you to create the content, you pay them. It’s like you paying a bank to hold your money on deposit, while they lend it out and keep the profit. Genius for them. Not so much for you. It’s a problem one cryptocurrency is attempting to solve.

Losing cryptocurrency traders do the same things in all conditions. Winning traders don’t.

The majority of traders don’t adjust their strategies depending on conditions, and they don’t monitor the strategies they use. Consistent speculators don’t just adjust strategies, dependent on where in the price cycle they are trading, they also follow the performance of the strategies they use, not only in testing before they use them but in real time.

Trading cryptocurrencies can look easy, but tripwires are hidden in plain site.

Not so long ago, it was possible to trade with 400:1 margin, and if you think that sounds like a lot, it is.

Depositing $10,000 in an account with 400:1 margin would allow you to control a $4,000,000 position. And of course, it also means a small move of 0.50% against your trade in the underlying market would wipe out your account — and a lot more.

With public interest in cryptocurrencies waning, are big players quietly manoeuvring behind the scenes?

With bad news all around, fake volume, SEC rejection, and the postponement of Bitcoin futures trading, it’s difficult for all but those who think in probability and likelihoods to hold on. As the public loses interest, are the mega-corporations and financial institutions quietly manoeuvring behind the scenes, making ready for the future with a pincer movement?

As cryptocurrencies move up, is a long term catalyst needed to drive prices higher?

Two paddles applied to the cryptocurrency marketplace kickstarted it into action, but instead of voltage, volume surged through the market lifting all but four of the top 100 coins higher over the last seven days. Is Bitcoin and the rest of the cryptocurrency market, as some headline writers suggest, taking a trip to the moon, or is this week’s move a test launch that’s about to plunge back to earth?

Can cryptocurrencies be used as proxies for the strength of the underlying trend?

Technical analysis can and is used successfully as a short term trigger mechanism, giving clear entry and exit zones, but when attempting to use technical analysis to position yourself into long term trends, trends that will last not for weeks or months but for years, even decades, exclusively using TA will have you at a disadvantage to those who are aware of the drivers of tomorrow’s societal trends.

Can you dramatically reduce overwhelm in the cryptocurrency markets?

Using third-party coin ratings, cryptocurrency indexes and their constituent weightings, and knowing the fundamental difference between a protocol and an algorithm, as well as the three most important functions of a cryptocurrency — security, decentralisation, and scalability, you'll be on your way to building a solid understanding of the cryptocurrency market. No technical background required.