A hallmark each Crypto101 episode has is when a question is posed to the guest: what would you say to the first-time listener – someone entirely new to cryptocurrencies? For me, personally, Carter Thomas of Coin Mastery has already spoken those first words after searching for podcasts on the topic. I was immediately hooked by his reasonable arguments, calm demeanor and most importantly – the humility that I found in the content of his podcast and YouTube videos.
For this latest episode of Crypto101, we have the distinct pleasure of speaking with Carter and getting his perspective on how to begin successfully trading cryptocurrencies and other digital assets. Carter is a California-based entrepreneur and a graduate of Bowdoin College who claims past success in creating and later selling his own advertising and marketing businesses. He currently operates Blue Cloud Solutions, an online marketing service which assists clients with creating mobile apps.
First let’s get oriented with the basics: what exactly is trading? Put most simply, trading is the process of asset appreciation over time. One item is exchanged for another with an expectation of a change in value at a later date.
First, fiat (dollars, euros, pounds) must be traded in for Bitcoin (or, if you prefer Ethereum or Litecoin) with a basic exchange such as Coinbase or Gemini (sometimes referred to as a fiat on-ramps).
Once a base cryptocurrency has been obtained you can choose to trade it back into fiat at a profit, or you can take that newly acquired cryptocurrency to another exchange where more trading pairs are available. Bittrex, Binance and Poloniex are among the most trafficked, but are only the tip of the iceberg as there are dozens upon dozens of exchanges to explore. Many traders utilize more than one exchange.
Rather than trying to time the market, Carter suggests dollar-cost-averaging in his free introductory course to buying your first cryptocurrency. At this phase, accumulation is more important than active trading. He also places a high degree of importance on framing your expectations by keeping a focus on the preservation of capital instead of chasing elusive gains (in other words, striving to keep what you already have instead of struggling for what you don’t).
A good next step is identifying if the assets you wish to trade are currently in a bull, bear or sideways moving pattern. Identifying trends on differing levels of time (hourly, weekly, monthly) is a must-need skill to begin developing if successful trades are to be made.
Trading time frames have differing levels of advantage as well as risk. Carter endorses a blend of both fundamental and technical analysis as well as monitoring market sentiment. Fundamentals of a project include whether it has a legitimate goal of solving a known problem, if its team have a success in previous projects and what progress have they made on their stated road-map.
As for technical analysis, understanding and observation of support and resistance lines are the most basic starting point for a fledgling trader. More complicated indicators such as candlestick patterns, Fibbonaci retracements and moving averages are likely best avoided until an asset’s price action history and support/resistance levels are understood.
Once you are indeed taking positions, be careful to allocate your funds in ways which don’t make you uncomfortable. If you’re continually worrying, you have definitely over-sized your position. Set rules prior to trading: cash-out some or all of your position at specific percentages (whether it works in your favor or not). If you do experience a loss, examine the fundamentals of the asset to justify whether you will continue holding through the low points.
Due to a very high degree of asset correlation, Cryptocurrency trading is generally favorable to the newcomer, but this doesn’t mean every coin will always bounce back. Use periods of price inactivity to do other things and create balance in your life (exercise, read, be creative, socialize, learn more about fundamentals or blockchain technology). Carter espouses the value of networking with other people in the cryptosphere by attending conferences and meetups, searching out chatrooms and other social media outlets as both a source to enhance his fundamental analysis of projects as well as a way to reflect and unload stress with others who enjoy (or sometimes suffer) participating with the trading process.
Follow these well-reasoned guidelines (as I have) and you’ll fare much better than you will blindly stumbling and learning from your own costly mistakes. You could certainly do a lot worse!
Listen to the Crypto101 Interview with Carter Thomas of Coin Mastery HERE