Dumb & Dumber: How Not To Fall Into The Traps Of Becoming Crypto's Next "Dumb Money"

in #bitcoin7 years ago

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Knowing When To Hold Them, Knowing When To Fold Them

In any financial market the terms "Smart Money" and "Dumb Money" are vital terms to use, even in crypto. These terms do not condone a term to call someone stupid or smart, its all about who has access to analytics and does their homework on the trading markets before them.

Usually when your coined as being "Smart Money" you have access to a slew of resources and the ability to pull a team together to really figure out what a possible investment may or may not do for you. Most smart investors with these superhuman powers can judge most wisely and profit way higher than someone without access to these resources.

"Dumb Money" is coined a lot in crypto for very intense and purposeful reasons. Most investors in crypto on average are just small time traders with not too many resources past a few web searches to decide which portfolio best suits them. Due to this they tend to scrape change on the exchanges only due to the fact they are missing key pieces to the puzzle and not able to trade on higher margins due to that lack of knowledge. This isn't their fault but they are well known to the community as "Dumb Money" due to the usual outcome of losses or minimal gains they can tend to gather up.

How To Overcome The Shortcomings of Being Joe Schmo Investor

The moment you enter an exchange in crypto and you blindly choose a coin to purchase with no background knowledge on is truly a beginning disaster that's about to hit your outcome earnings even if you believe deeply its a wise choice. Sure you may get lucky and most of us do in crypto from time to time but the real earnings by not researching is going to allude you every day of the week.

The concept of knowledge is power is thick in crypto markets. Due to a lot of dumb money running around blindly tossing those coins out there on a hope and a prayer, there is a bunch of smart money guys awaiting your every move to take you down to profit from your mistakes. These aren't apposing sides but usually feels that way to those who take losses, no its more two competing sides but one sticks it out long term and the other tends to lose out by shorting themselves out of emotional panic trading.

The key to trading is education, I am not meaning college but that is a huge plus but simply reading more up on what dynamics your investment presents to the whole of crypto, what unique features outshine the other coins, and most of all you gotta learn the tech behind these things as much as possible to really know what is validly put together withing the coins codebase system. Chart reading education is a plus as well but just blindly reading charts without a key concept of what is going on with a coin is drastic as well in my opinion.

Taking time before a trade to truly understand what you are getting yourself into is a huge course towards becoming smart money in crypto. Listening to trolls and getting countless trollbox tips as well is a key to your demise so I always tell everyone only listen to your guy and your informed mind when it comes to trading.

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Dumb Money Hurts Crypto In The End

Cryptocurrency as a whole is very volatile and can really hurt poor traders with no tactics in the greater stage being played here. That volatility though could be rather stabilized if more people took the time to educate themselves on their trading techniques. So many dips hit us due to people running into panic trading mode and I suspect if people learned to long term like most Wall Streeters do, then that high and low game every hour on the hour would fine tune itself.

In the end I suspect until people grasp that getting emotional on the trading room floor is not benefiting their profits, we may keep on seeing the deep impacts of dumb money on the whole space. Its not anyone's fault, many are average day traders in this game right now but to really bring home the bacon its always benefited me personally when I am on a coin I trust and know a lot about. A coin that I can hold long term and wait out the markets. I am that guy usually that sits alone holding that bag when others run to the hills for the next best thing. Then when that next climb hits and everyone buys back in, I am taking your Bitcoins you just paid hard money to get back into when it reaches the top. That is because I don't fear losses ever, they happen and we live another day. Emotional trading is useless if you want to really trade. To overcome that you must know buying into something has risks but you can minimize that if you know better what market potential can bring and believe in that future for it.

I never like seeing anyone hurt by uneducated decisions so I hope everyone takes the time to read, makes money to set up their families well and enjoys the ride along the way. Because crypto my glorious blockchain pioneers is one hell of a ride to enjoy if you use it right!

~sflaherty

Follow me @sflaherty

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Or just get some trading bots to do the work for you. In this crappy market I've stopped doing any manual trades other than bargain bin buys, and just let the bots skim the margins. Just have to keep an eye on them and make appropriate adjustments. I'd rather spend my time creating content for steemit!

lol....oh yes now the bots if made right got your back. That I agree with and way better than blindly picking on stuff without any knowledge lol. You love Steemit as much as I do I take it lol

Interesting post...great job sflaherty

I appreciate the read my friend, figured get a little more out there about the trading game, I literally been at it of a lot of years so kind of want to stress out there that informing ourselves is a huge factor to success

do you about onecoin...they are working on this same concept actually but many people out there saying that it is a scam due to new idea but if you go in to depth in to its research you will then know that the whole concept is to save your coins and investments ...there is also a gold back to that coin...but they ask one year to come in the market.

I haven't had time to look into them but I hear 50/50 word about them. Though the gold backing interests me, do think we need a few more like that where there is a bit of real world backing. I may look into it more soon and do a write up here for you. I rather not speculate till I really know more about it but I haven't heard completely horrible things about Onecoin..just people unsure yet about it is all I seen

yes people are unsure because of the propaganda's against onelife but mentor's are great doing great job out there to clear concepts of people and i would like to hear some words from you in future

I will do that for you, maybe tomorrow start some research into them and maybe get a post up of what I found out. Hey its new material and something everyone maybe curious about so might be interesting to look into

you can get the great positive stuff from tom mcmurrain and has channel out there on you tube ....i have done a bunch of research
on cryptocurriencies and negative stuff from https://cointelegraph.com ..which topic you like the most is up to you just put it in to your content...surely you get lot of attention from the people at your contact...

I agree its usually best to write about what you know and enjoy, hopefully others get it and like it. Seems I am doing well here but its still a long way from where I plan to bring this. Gonna check out that youtube channel, one I am not aware of and always looking for new ones to check out, thanks for that

Interesting :) ,I've just followed you ,do the same for being always connected & earning ,following @braveheart22

Will do and thank you for the follow and support on this article. Always look out for my followers so I will add you in a minute

Super interesting! I agree, dumb money is hurtful to just about every economy... But especially crypto. Now I just gotta go educate myself more and cash in!

Its just that they think they know the market but miss those important factors you gotta weigh in and only knowing your investment will get you those key parts figured out. Do agree, these guys just tossing money on coins and treating it like the lotto do a lot of damage to the whole space, more than they probably realize

Trading bots? Also do you have any recommend resources for educating myself on coins besides Bitcoin? What are some recommended coins that you see potential in besides BTC?

Yea there are bots out there you can program to trade for you on the exchanges, really useful if you know a good bit about trading technics, I personally love the old fashioned manual way but they do work well. Best thing I do is join the coins community or forum and talk with users. Try to always read a coins whitepaper too. What I did in the early days was watch a lot of trading videos, even fiat ones because some tactics in regular cash markets do still apply in this one. For me I am big on Bitcoin, Litecoin, Steem, PiVX (Though I am biased there because I used to work for PIVX lol) I do like Monero, there is one not well known called TransferCoin (TX) that is a lot like PIVX but very cheap...that has some potential. I am not much for ETH though due to the banks in there and definitely against RIPPLE, those two I suspect will be doomed due to letting bankers in there so I avoid them even though they are hot right now, just my purists movement side to me against them.

Emotional trading, lol, it can be heart-wrenching at times xD

lol it truly can be, boy have I seen some meltdowns on some people in crypto before lol. Gonna miss that old Polo trollbox because it was so entertaining lol

I am new to crypto-currencies. I researched it loosely for a couple years.
I totally hear what you're saying about the emotional buys though. I probably don't make moves when i should bevause I'm really really cautious. Better to be safe than sorry though. Upvoted and resteemed

That truly is a big key to success in trading, well though out and well educated choices. When you get emotional or panic in anything you tend to make snap decisions and usually those end up being the wrong choice. I found a long term solution makes you not sweat the numbers so much. I used to sit there for hours and watch those charts every minute but now I just buy something, put it aside and check on it occasionally, since doing that and really reading about the coin I am way less stressed and making way better income. Glad you got something out of this, and really do appreciate you coming to be apart of our Slack today, really great to have you with us.

Thanks a ton! Glad to be there.
Back to your comment though I agree if you're basically constantly stressed over it you probably dont understand it at all. Or maybe just a little but not enough.
I used to flip flop around like that with my 401k until i actually learned what i was doing so i was not in panic mode. Now i check it like only every couple months. Long term money shouldn't need to be constantly monitored.
Not that i am a pro with that either but anyway. Have a good night

You got the right exact concept. I kind of do the same with crypto as I did with my 401K lol..you just find that one that you can invest in and feel secure to hold. That is where the long term real money is at. Steem is a good one for that because you can do something proactive to increase your holdings, kind of why I am more all in here. You get the idea, honestly crypto is no different then any other from of investing, just a little scary for short term investors, its the long term people that will sit back in a year or so buying homes and being fully free I believe. Yea I said goodnight a long time ago didn't I? lol I better actually hop off. Have a great one, we shall chat again

Lol yep, imma actually catch some zzz's myself here so I can go to work tomorrow and continue to contribute to the 401k. :p
STEEMIT is addictive

That it is, for me its pretty much become my full time job.

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I think that the average investor should have a buy and hold strategy, simply because they don't have enough information and they panic when the numbers go red. So I'm a big fan of the same strategy you use.
Another thing; I don't think investing and trading are for everyone you need to have a certain mindset and a willingnes to work hard to have success at it.
I think that time in the market beats, timing the market, which is why I don't try day trading, It most likely won't end well.

Agree with you big time. Its really not a game to play for everyone. Problem is in crypto a user makes that one lucky move and they think they got it all figured out, trust me I was that guy myself at the beginning so it encourages to keep on the same strategy and we know well enough now more of the time noting works the same way in the crypto trading game. Education is a big key and lots of serious research