Trading Cryptocurrency Emotionally Is Good For Me and Bad For You!

With all the hype of cryptocurrency driving all of the coins it creates both opportunities and risks depending on where you’ve bought in and your emotional state.
Emotional buying is for example hearing Bitcoin has hit $6000 USD and then buying it worrying that it is your last chance. In reality buying into new highs doesn’t leave a lot of room for comfortable declines which is why I never buy new highs but patiently wait for a strong pullback. But we must always remember the famous proverbs of “Be Fearful When Others Are Greedy”, “Be Greedy When Others Are Fearful”, “Sharp Rises Are Often Followed By Sharp Corrections”, “What Goes Up Must Come Down” which depending on the time period in general means manage risk, do not trade on emotion, and be prepared that markets can turn either way without warning or in a sudden bearish or bullish trend. If all goes wrong just remember “Buy Low, Sell High” of course as simple as these terms are very few of us actually do or achieve such simple sayings as the end result is often more complex based on a lack of discipline or abundance of emotion.

I fully agree with the many parties that say cryptocurrency is extremely risk, volatile and does trade like the stock market with even less safety and regulation. Therefore my approach is to treat such trading as extremely high risk stock investment with the goal of limiting risk and exposure.

In the case of Bitcoin if you look the chart for the past few years it has been extremely volatile and has had numerous crashes. A lot of people made a lot of money by holding and believing in the long-term value, but just as many lost huge amounts by panicking and selling off at the bottom. At the end of the day the best of us cannot always predict that we know the top or bottom of a market. Instead it is important to look at the fundamentals. Bitcoin is still #1 by market cap today, unless it were specifically banned around the world or the entire network or blockchain itself was compromised there’s no reason to panic based on this kind of emotion. I echo a similar sentiment when people rush to the markets when Bitcoin is the news when things are flying high is when you have the most risk. Before some of you think I’m suggesting to be a contrarian on a fundamental market I’m just saying you shouldn’t fight the trend or the market but be sensible. If you’ve made your own research or belief that a currency is in a bullish upswing then wait for an opportunity such as the “sharp correction” that has been the trend with large rises in cryptocurrency.

Stick to your plan unless the fundamentals have changed so unless Bitcoin has been banned around the world or the blockchain has been compromised or some other fundamental value of Bitcoin has been eroded it doesn’t make sense to dump it on a sharp decline (well it’s good for me and other holders) but for yourself it would probably disastrous.

I am mainly quoting Bitcoin but whenever I watch the charts of the top currencies by market cap I see a very similar trend usually, that often all currencies will be diving or climbing at the same time as a generalization.

The above strategy is only for coins that you have reason or proof have real value and long-term viability. If you have invested in a new ICO and could realize a large profit shortly after I would sell a large portion of that position and continue to hold. In that way you’ve maximized your profit and limited your risk exposure.

I’m going to give you an example of when I bought into some Litecoin. I noticed a sharp decline that eventually hit 5% Monday morning just after midnight and keep watching it. Once the market hit -5% and climbed to -4.5% I bought without regret even though I observed later on the day the decline hit as high as about -8-10%. Obviously buying lower would have been better but in recent trends I’ve seen fast recoveries I was happy with the likelihood that Litecoin would recover my 4.5% discount and more in a few days and it has currently risen to +5.89%. Not a bad spread for less than 24 hours! I think the key is not to be greedy and try to plan what the purpose is.

In my case I am watching some of the top 20 coins in market cap and looking for the chance to trade some Litecoins as they go up and some of the others decline to maximize profit and minimize risk.

Going back to the point of the article is that try not to be emotional when buying or selling, but know that everyone’s actions create an opportunity on either side.

Good luck to all of my fellow traders and please share your thoughts and strategies in the comments!

Disclaimer I am by no means giving out financial or trading advice and am simply giving my opinion, experience and rational for my personal decisions.

Countries where cryptocurrency, coins, tokens and ICOs are banned

There has been a lot of activity lately in the world with governments banning cryptocurrency and ICOs but this should come as no surprise as there has been strongly worded messaging about this for some time.

China bans ICOs and shuts down Exchanges
This had a massive impact on the valuations of coins such as Bitcoin, Litecoin, Etherum, Dash etc.. but things have since recovered since the 2017/09/04 law passed in China but serves as a warning and example of what government intervention can and cannot do.

http://en.people.cn/n3/2017/0904/c90000-9264331.html

Chinese authorities on Monday ordered a ban on Initial Coin Offerings (ICOs), a nascent form of fundraising in which technology start-ups issue their own digital coins, or “tokens”, to investors to access funds as the rapidly expanding market spawned concerns over financial risks.

Starting Monday, ICO activities should be halted, and ICO platforms should not engage in exchange services between fiat currencies, virtual coins and tokens, said a statement from the People’s Bank of China.

South Korea Bans ICOs

The good news is that while ICOs are banned it does not appear that trading in the currencies themselves is banned.
http://www.nasdaq.com/article/south-koreas-ico-ban-a-reaction-to-serious-concerns-over-cryptocurrency-investment-practices-cm854236

In fact it appears South Korea plans to allow trading but wants more regulation and safeguards:

South Korea Makes it Legal to Transfer Cryptocurrencies Internationally

Singapore

Although not by law, many companies in Singapore dealing in cryptocurrency have had their accounts closed:

https://www.out-law.com/en/articles/2017/september/singapore-banks-closing-accounts-of-cryptocurrency-firms/

Countries subject to strict or promising strict regulations

Nearly every country has taken a similar line where they are making a legal framework and claiming that ICOs are subject to the same laws and rules as IPOs. However this doesn’t appear to have been translated into law. It also doesn’t address the question of how holders on the coins will be impacted but one would guess that in the future they may be subject to capital gains tax and treated like traditional stock investments.

This list of countries includes:
EU, Hong Kong, Canada, Singapore and many other countries around the world.

Hong Kong Regulators Warn ICO Tokens May be Securities Under the Law

SEC: ICO Tokens Like Those of The DAO are Securities Subject to Regulations

Canadian Regulators Say Cryptocurrency ICO/ITO May be Subject to Securities Law

Is the regulation valid, practical and legal?

This is a hard call for me to understand in the sense that these cryptocurrencies are just that, digital currency and currently people are not taxed or penalized for simply exchanging, buying and/or holding different currencies.

It may also be interesting to see what the large exchanges, businesses and users do in response such as unprecedented regulation and laws. It may be that some of the regulations and laws imposed around the world may be found invalid or unenforceable in the end.

What are your thoughts and as always please let me know if I’ve missed any new developments around the laws of cryptocurrency.

2017 and Beyond The Future of Cryptocurrency and Government Financial Regulations

Governments, banks and other large entities have all been murmuring, talking and hinting what the future of cryptocurrency could be or specifically the block chain. They all agree “blockchain” is good, there is no one against it but there has been a lot of confusion about the internet thinking this is equates to government and corporate backing of decentralized cryptocurrencies. I believe this couldn’t be the truth, in fact there have been lots of issues for companies exchanging cyrptocurrency for cold hard cash being unable to wire etc.

The excuse you hear from the big players are concern over fraud, money laundering, etc.. all of which happens in the current fiat monetary system. The true issue behind all the fuss is simply that these decentralized cryptocurrencies allow unhindered free trade around the world regardless of which country you are citizen of and where you are, no one can sanction you or freeze your assets in cryptocurrency. Further, it is of course a huge threat to the current financial system and governments around the world who depend on third party “reserve” banks to print their money. It’s bad news for their monopoly on finance and business transactions worldwide.

Bitcoin Exchanges in China are being shutdown: https://www.usatoday.com/story/money/2017/09/14/china-orders-bitcoin-exchanges-shut-down-report-says/665209001/
Russia says Bitcoin is illegal: https://www.reuters.com/article/us-russia-bitcoin/russian-authorities-say-bitcoin-illegal-idUSBREA1806620140209
Bitfinex sued Wells Fargo for blocking their wires: https://bravenewcoin.com/news/wells-fargo-sued-for-suspending-bitfinex-wire-transfers/
US SEC says they want to regulate coins: https://themerkle.com/sec-may-be-looking-for-ways-to-regulate-the-cryptocurrency-ico-market/
JP Morgan’s CEO Jamie Dimon calls Bitcoin a fraud: https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin

The part in China is most significant because the action in China has coincided with drops in value of the major currencies, as well as Chinese users doing a lot of mining and trading in crytocurrency.

When we take some examples above, this is the general consensus among bankers and government worldwide. They all like blockchain and want to make their own currencies that they control and centralize, but they are certainly against the decentralized ones and as new banking, taxation and other government intervention roles out surrounding cryptocurrency it will be very interesting to see where things head.

I personally think the decentralized currency will always exist and it can and will coincide with other mainstream offerings from banks and governments. There will be a place for both just as cash from other countries is traded for other items whether gold, silver or even electronics and oil. Trade will continue but through a different method of settlement and transfer.

One thing is for sure until we see how things break in terms of government regulations and how their own cryptocurrency’s play out, the value of the original decentralized currencies like Bitcoin, Litecoin, Etherum et al will have wild fluctuations as people react to news that threatens these currencies the same way people would read the news about Greece’s debt and haircut on the bonds they sold. In fact many watch the crypto market including the ICO (Initial Coin Offerings) and note they do seem to function as any other traditional market would in terms of news and advancements.

I believe we are seeing a financial revolution, all currency will soon be crypto and physical cash before we know it may all be stop being used.
The only question is how fast does it all happen and how does the difference between centralized banks and decentralized crypto users play out?