Learning curve, mistakes and the joys of investing

As most of you know (or will soon learn), I have not been an investor for very long.

My business focuses on teaching people how to get into investing, specifically in cryptocurrency.  I do not sell, provide or otherwise claim to have a handle on the investing itself.

I know how to secure a computer, what exchanges are best, what software and hardware is the most secure.  I know many of the top 100 currencies and the blockchain projects behind them, which are less impressive, which are cutting edge and who the asset is backed by.  In short, for the young and brave new world of cryptocurrency, I am way ahead of the pack.  However (comma), I make it very clear to my customers, I am not a stock trader, and I am not qualified to give specific trading advice.

Beginners, Beginnings and Leaps of faith.

When it comes to investing, well, let’s just say it is not-even-close-to my first language. Regardless if I am not offering a service for investing strategy, I still need to learn for my own sake and, well, I’d rather not learn the hard way.  So I have been taking a few online courses, attended a 2 day workshop, listing to hours of podcasts and reading like a madwoman.  All of this has been fine and well – but you never REALLY learn until you have skin in the game in a crisis.

One of the motivators I have is managing my 401K Trust account.  (Note to self: Blog about how you can actually be your own 401K trustee and invest it in anything you can imagine within the much-broader-than-you-think tax law).  So I have a allotted some funds toward a small (but I-would-definitely-miss-the-money-if-I-lost it) cryptocurrency account assigned to the trust.  Among half a dozen other cryptocurrencies in smaller amounts, I also have some Bitcoin.  Once you learn more about the crypto-verse, you learn the market is driven and derailed by Bitcoin ups and downs.  I used the skills that I learned and patiently waited and bought at the market low in August, just before the latest bull-market kicked in (look at me, using the lingo. I know I am so cool).  And just after I bought, the market soared.  Pat on the back, job well done you little genius.

Not. So. Fast.

Markets that go up, inevitably go down.  Sometimes just a little bit before they go up again, sometimes more than a little… (Example- over $1K in 12 hours!).  It turns out there was an anomaly, a large investor who only recently claimed his assets from the custody of the Feds (apparently someone who was associated with but exonerated from Silk Road affiliations) and finally decided on Wednesday morning PST to sell a cool $75M on 3 exchanges around the world.  Well, $75M is a small portion of the roughly $13B traded daily this summer, but it was enough to send strong signals and set the panic in motion.

Down. Down. Down.

Essentially, it through the whole market into a tailspin for the next two days.  One minute the market is stable and I’m sitting 30% up on my 2.5 week old investment… than it starts dropping strangely, not too fast but a definite trend.  I’m at the gym when it starts (I notice while doing a quick check on the elliptical).  I get home an hour later and it’s down 8% – in 1 freaking hour.  HOLY SMOKES BATMAN.  Luckily, with the little practice and education I have had, I knew to sell to protect the profits, then get in again later. By the time I reacted, my profits were cut by 10%.

Now, had I set up a stop-loss for this very reason, it would have been much safer, much easier, less OMG and a whole lot more easy street.  I learned my lesson, luckily only at the price of a higher profit.  ALWAYS have a parachute plan for trading.  Always set up an automated sell JIC.

The happy ending.

Not only did I sell for a 20% profit, but I got back in a day later at nearly at the price I paid in August.  HOW COOL IS THAT?  Next time the price swings high, there will be no hesitation to cash out and take a break.  I always used to think I should hang on, ride-it-out.  Now I realize the magic and discipline of a successful day at the trading desk.

Moral of the story:  You do not have to lose large profits in asset trading, ever, if you follow a few simple rules.

1. Always have an exit plan (and the confidence to execute it).
2. Don’t be greedy (even 5% profit is better than -1% loss – EVERY DAY).
3. The market doesn’t have or care about your “feelings.”
4. Stay patient and recognize the charts for what they are (not what you hope they will be).
5. Study-Learn-Practice-Repeat