By now, most people heard of Bitcoin and cryptocurrency and realize many are “getting rich” from their investments. With the fear of missing out being at an all-time high as the number of Coinbase.com account sign-ups are rapidly increasing, it’s clear anyone and everyone wants to jump on the crypto bandwagon to get in on the action.
What most people don’t understand is there’s a lot more to “just getting in” which goes into creating indestructible wealth. Bitcoin and trading cryptocurrency is simply one vehicle, more specifically an asset class to serve as a wealth accelerator. While it’s “the start” which stops most people from ever taking action in the first place, it’s consistency and good habits which separates the good from the greats.
In this article, you’ll find some easy hacks to help in your financial journey through crypto and life. Many of the suggestions may not have much to do with Bitcoin or cryptocurrency directly, but will put you in a better mindset so you can maximize returns over the long-haul and sleep better at night.
1) Increase Income: To invest in anything, you need the capital available to do so. The more free capital you have, the more options and freedom of choice becomes available. Great investors typically have consistent growth potential of their annual income. Multiple sources is important too. You don’t have to own a company to increase your income. The more value you put in the market the stronger the likelihood of your income increasing. Security, freedom to invest, and peace of mind come through hard work and hustling.
2) Reduce Expenses & Liabilities: We’re starting with the basics here. Cut the crap which isn’t serving you in life and eliminate those expenses. Think of every expense going forward as an investment and you’ll begin to see what’s important in life.
3) Eliminate Bad Debt: If you’re making monthly payments on credit cards and perpetually keep running balances, knock it off. You can’t invest and take advantage of great opportunities if you don’t have the credit available or enough income to service the debt. Too many people are buying Bitcoin, Ethereum, or Litecoin on Coinbase.com with a credit card and not paying the bill off in full at the end of the month. Don’t put yourself in a worse financial position by trying to oversteer with rickety financial habits in place.
4) Take Care of Your Mind & Body: You can’t make sound financial decisions if you’re stressed, in a negative state of mind, or your body isn’t in optimal condition. You don’t need to have the body of an Instagram model, but you need take care of yourself with sleep, exercise, hydration, positive thoughts, and a healthy diet.
5) Get Your Spouse on the Same Page: If you’re married, engaged, or in a long-term committed relationship, you both need to be on the same page with the items above. Both individuals must work in tandem to ensure you’re sticking to a winning game plan and keep one another in check when necessary. Great communication is critical for long-term success and happiness, otherwise having a conversation about investing in Bitcoin or cryptocurrency might be difficult or uncomfortable if you don’t have this in check.
6) Control Energy, Attention, and Focus: Time can’t be managed, it can’t be grasped. What was the present has now just become the past. Controlling your time or being a better “manager” of time never works. What you can control is your energy, attention, and focus on things that matter. When you have that down, perform faster to increase output.
7) Invest in Yourself: This is mission critical to achieving success in any industry and especially in the area of investing. You need to take advantage of information which can help you make money, inform you to make better decisions, or showcase different perspectives on a topic you’re already familiar with. The edge you’re looking for might be found in an audio book from Audible, or a course on Udemy.com. Never stop learning.
8) Invest in Others: If you’re on a team, there’s no greater investment you can make than in the people around you who are working toward a common goal. Treat them well and share your knowledge, teamwork makes the dream work! Donating your time and resources to others feels good and makes the world a better place, give more.
9) Create a Liquid War Chest: Suzie Orman is an advocate of having cash reserves and I am too. You’re going to need good old fashioned $USD available to pay bills, take advantage of investment opportunities, service (good) debt, or to be used in the event of an emergency. If an emergency came up and all of your free cash was invested in Bitcoin, would you really want to sell? Having liquidity in the form of free cash allows your investments to remain investments and will help you sleep better at night.
The items above you may already know if you’re a seasoned investor. There’s nothing wrong with repetition and hardening the basics. For other people “the basics” might be a wake-up call to get things in order. Let’s proceed with some additional hacks. See below.
10) Invest in Different Asset Classes: While you’re on a cryptocurrency blog the notion to invest in different asset classes may appear counterintuitive. I view cryptocurrency as an asset class similar to real estate, commodities, cash, equities, and investments I’ve made in businesses over the years. It’s important to recognize different asset classes have different purposes and different values during your lifetime. Selling all your stocks today to ride the “crypto wave” and chase bigger returns in the future isn’t smart because smart investing shouldn’t be based on all-or-nothing type decision making.
11) Control Your Position Sizes: This is a big. I’ve seen many instances where people ask “I have $5000 to invest in cryptocurrency, what’s hot right now?”. You can’t control market pricing, what you can control is how much you purchase at any given time and how frequently you make those purchases. For example, if you like Bitcoin at today’s market rate would you blow your entire investment budget today? Probably not, as there might be an opportunity to purchase in the future at a better rate. Control what you can control.
12) Know Why You’re Trading Alt Coins: For experienced traders, you’ll get this. For people new to trading alt coins this concept might be new for you. Let’s say you’re on Bittrex.com and you purchase 100 units of your favorite alt coin. If the price of the alt coin goes down 10% and the price of Bitcoin increases 20% during the same duration, you’re still down 10% on the investment. The concept that “everything is OK if Bitcoin goes up” to hedge the downside of an alt coin doesn’t hold true when valuation is no longer in $USD if the purchase was made in Bitcoin. When viewing account balances in Bittrex, the key metric to look at is the “Estimated Value in BTC” and not $USD which can be misleading and provide a false sense of success and security. The reason you should be trading alts is to potentially acquire free positions of alt coins, increase your quantity of BTC through taking profits, take advantage of volatility (opportunities) in markets not tied to $USD values, add diversity to your portfolio, or utilize the tokens for their intended purpose.
Real Talk: If you’re fueling alt coin purchases with Bitcoin, you’re theoretically shorting Bitcoin because (whether you realize this or not) you’re betting you’ll be able to generate larger returns in another vehicle (the alt coin) during the same duration you’d be holding the same amount of Bitcoin. Don’t trade for the sake of trading without having a firm grasp of the entire ecosystem and how one system can influence another.
13) Hitting The Eject Button is OK: You’re delusional if you think you’re going to get it right 100% of the time on every trade, especially with alt coins. Holding for the sake of holding is a dangerous game to play. The key is limiting your downside and having a strategy in place of what to do when you’re faced with that situation.
14) Stick to a Plan: Having a plan before you enter any trade or investment is key. What will you do when you see the value go up? Will you buy more? Do nothing? Sell it all? Sell a portion of it? The same strategy for protecting downside risks must be in place when you’re in a position of profit. The biggest mistake many cryptocurrency traders make is not having a plan for instances in your favor. If there’s no plan, the result is usually a quick and sudden change in the opposite direction where you’ll be challenged with what to do.
15) Assemble Your Team: Great businesses and investors don’t operate alone as solo acts. Assembling a team of likeminded individuals where you can discuss strategy is key. Crypto is best played as a team sport so find smart people to collaborate with. You probably don’t take financial advice from strangers, same rules should apply in crypto.
16) Get Reliable Information: Some people say money is the root of all evil. I disagree. Data is the root of all evil. Why? Because, data tells you where the money lies. The charts are only as good as your ability to interpret them or how well someone presenting the charts conveys their interpretation. Always do your own research and seek information from those who have a stellar track record of presenting facts without bias and predicting things before they happen. For regular news, updates, and market sentiments be sure to check out Crypt0’s News and Carter Thomas on YouTube and subscribe.
17) Limit the Potential for Loss: Repeat to yourself, “I am not uncertain”. That’s what you must to before entering any position. Obviously, you’re not going to get 100% of your trades right, but you must remain a good manager of risk at all times. Many people who have done well trading cryptocurrency last year (2016) may not be managing risk the same way in today’s markets because they’re trading “house money”. If you’re in that boat, prepare to get smoked. All it takes is one bad trade or a short sequence of poor and impulsive decisions to erase all the time, energy, and effort put into creating a profitable portfolio. Fortunes are made, but in most cases lost in the blink of an eye. Always analyze risk, no matter how far ahead you think you might be in the game.
When these markets start climbing up again the only regret you'll have is not buying in large enough quantities to reap serious returns.
— Nick Cuttonaro (@NickyPapersNY) September 14, 2017
18) Buy Bloody Dips: I’ve said it before, and I’ll say it again, you need to take advantage of buying the dips in a way that will put you far ahead when the markets rebound. Anticipating the dips and having funds on deck ready to deploy is an art in of itself. While you may be in a position to “call bottoms” you’ll never be in a position to take full advantage of those bottoms if you don’t have funds ready to deploy on exchanges.
19) Have Fun & Enjoy Life: Money and finance are serious topics, but as a person you don’t always have to be! While these markets are volatile, they can be a lot of fun once you get a feel for then. There are many interesting, thoughtful, and inspiring people in crypto. Be authentic and be yourself. Taking breaks and coming back to your computer is important if you plan on being in these markets for the long-haul. The reason why I trade and invest is to provide a better future for myself and family. If you’re all work and no play, the work you’re putting in doing research can lose meaning quickly. Make your own rules and have fun in the process.
If you’re looking for additional cryptocurrency investing and trading strategies, read this interview where I’ve shared additional insights. Cheers!