Introductions: I'm joskye. A cryptocurrency investor and particl holder. submitted by
Hi again. This is the fourth part in our ongoing series on how to trade better and determine intelligent investments in cryptocurrency for the future.
- In part 1 I talked about the importance of selling enough to make back your principle investment i.e. if you buy something at $300 and it rises to $600 in value, sell $300 to eliminate all future risk of personal loss e.g. if that asset falls to $150 in value after (which can happen easily since suchvolatility is very common in cryptocurrency). In cryptocurrency trading/investments a 100% return of investment should always prompt you to consider selling 1/2 your stack.
- In part 2 I talked about the psychology behind fear of missing out; i.e. the dangers of buying during a sudden rise in an asset's price and how to make the most of such rallies whilst minimising the risks involved in joining them.
- In part 3a I discussed The importance of a value proposition and the absolute need for any cryptocurrency you invest in to already generate or have the potential to generate revenue in a manner completely independent of it's speculative value as dictated by daily market prices.
- In part 3b I discussed price metrics specifically, what determines the price, why assuming marketcap equals value can be a psychological fallacy and the importance of liquidity:
In part 4 I go back into psychology and discuss the importance of buying into facts not rumours i.e. "Sell the rumour, buy the news."
... I've had some amazing luck in the cryptocurrency world.
I've not invested into any scam ICO's, I've not been hacked and by making the right picks for the right reasons, I've managed to land a portfolio which has seen a decent return within 9 months of starting.
Granted that return could have been made better had I not done some panic swing trading, selling low what I bought higher on certain assets and generally learning the emotional control that comes with holding decent assets but also recognising when to sell those assets to buy even better one's for long term holding.
But I haven't done this enough and as aggressively as I should have, often buying smaller volumes of very cheap assets with good upsides by selling much smaller volumes of existing appreciated assets when they are close to, or just post peak. In that sense I've missed out on lots of serious profit and a 9 month portfolio which is overall 440% up could be much higher had I followed one basic rule:
- Sell the rumour, buy the news
You've all hopefully heard the phrase, "buy the rumour, sell the news". It's what smart traders do; buy a promising asset when it's young and under priced, establish the possibility
that a significant development is occurring in that asset within a given time frame and start perpetuating the belief that this development is
occurring within the social circle of potential buyers for that asset.
You suddenly have a rally of people looking to buy that asset; it quickly drives up demand leading to a surge in price. The managers/developers of that asset may come out and make an announcement that something is indeed happening; in some instances it may be exactly what the rumour is, in other cases it may be something entirely different from the rumour yet the original rumour persists in both cases driving up the price further.
The managers may even issue a denial of the rumour yet belief and thus demand persists.
Finally the day comes, the date of announcement relating to the rumour arrives and the news is released.
Buy support on a product is not perpetual.
- Then the price of the asset tanks.
It can only self sustain itself for so long, and unless the news is something remarkable which can confirm much larger and sustainable appreciation
of the asset in question, that buy support will eventually fizzle and give way to the sell pressure of the select few who bought that asset early at the lowest possible price
prior to the rally.
The news has been sold. A few people profit. The majority who didn't sell at the top on time are left bag holders.
It happened to me once. It was costly.
Anyone who has read the previous original parts of this guide knows that when I started writing this, I was a huge
fan of Shadowcash (SDC). Truth is that it had all the elements of a project with the type of characteristics that appeal to me; It was dark, edgy, innovative, had a non-speculative value proposition and revenue stream, low supply, staking, low inflation rate.
Indeed anyone who bought Shadowcash from the point I originally wrote this series in December 2016 up to 3rd March 2017 (bottom SDC price $1, peak $2.20) when I effectively predicted via accidental discovery that a rocketing up of the SDC price was imminent had an opportunity presented to them between 8th March 2017 and 17th March 2017 to exit with up to a 600% return (bottom SDC price $2.20, peak $6.00).
30 minutes after 10pm UTC 17th March 2017 when the expected announcement regarding the future of SDC was due price went from $4.16 to $3.30. By 3am the price had reached $1.90.
Having had 40% of my holdings in SDC up to this point with an average entry of $1.30 and having been among those who believed and perpetuated the idea that the much wanted and potentially very valuable SDC marketplace might be released at this point, I got caught out. I experienced the euphoria of the high, and the utter despair of both the news which was devastatingly disappointing to me (announcement of a rebrand, token swap, and a 9 months delay to my expectations) and the loss of unrealised earnings
meant that I had truly bought the rumour and sold the news: I sold half my SDC stack at $2.30.
In that sense I truly knew I had been over leveraged in SDC by 100% of the position I should have held; A position I had accumulated by following the rumours perpetuated by the SDC slack channel by certain members of it's community. If the backlash was real, it was because expectations had been set so high for the news by those representing the devs without clearly defining what those expectations were.
There were months of teases from January to March claiming big things were happening in SDC; never before seen features in cryptocurrency were going to debut, scaling issues were going to be addressed, a rumour that a mobile client was potentially on the way, belief that the marketplace would be revealed in CLI form and that it only needed to be linked to the GUI which itself was already developed.
In short the expectations set by the rumours never matched up to the reality posed by the news.
It was a disaster waiting to happen.
And the backlash the SDC developers experienced and their response at the time about how their news was going to be received in the context of rumours that had flourished on their channels for months and were never outright shot down, showed a total lack of project awareness that this was worrying on my part.
- Lesson: If you or your community sets expectations or spread rumours, quickly confirm or deny them. Transparency is the best way to develop goodwill.
What sucked was that the announcement outlined the details of the new project which was actually very good. It effectively would deliver everything I asked for in the original SDC project and more. It solved all the problems relating to releasing SDC marketplace on it's current chain and added some additional features I couldn't help but find useful and valuable.
That I had built up months of expectations only to be told that I would need to wait longer to get exactly what I asked for was heartbreaking, and made me felt I'd invested a lot of emotional and intellectual time on SDC when I could have been scanning the broader market and making smart deals and trades elsewhere to build up my wealth.
- Lesson: Never be emotionally attached to an asset. **Always be ready to sell it.** If your reasons for holding an asset are based on expectations of fundamental features or functions that are being developed for it in the future rather than fundamental functions that are actively occurring now, you are emotionally attached to your project.
- Lesson: Sell the rumour at peak price in the hours before the news is delivered. If it lives up to expectations and the price continues to rise (almost always the rarity event in cryptocurrency) you can buy back in with a minor loss of profit. Otherwise you can buy back in at the bottom for a massive discount. My regret with SDC was not 50-100% selling the rumour when the price was >$4 and hype was at a peak
It took me 2 days to evaluate the Particl project with the 50% of SDC I hadn't sold and convert it to Particl via their crowd swap mechanism + donate the BTC required for the bonus (they needed a development fund and effectively admitted they were broke).
In reality had I been told the SDC devs needed significant funds to advance the project, that a crowd fund via token swap was imminent, that I could do a 1:1 swap of SDC:PART but since the base PARTICL token supply would be 15% greater than SDC supply, I'd need to donate 15% of my SDC value in BTC to make up the difference and had the roadmap for particl been sequentially disclosed and presented to me during January to March prior to the March 17th announcement I'd have had more time to process the events and I'd probably have swapped within 5 minutes of the particl crowdfund launch.
Also more importantly the price of SDC wouldn't have risen so high prior to March 17th as most SDC holders and the cryptocurrency community would have then known about the PARTICL crowdfund and token swap and there would have been more time for the news to be priced in, meaning a more even distribution of buy demand and a longer period of on-ramp for it and hype and speculation actually relevant to the proposed news
(instead of the rumour) to develop.
I suspect the SDC/PARTICL devs wouldn't have occurred nearly as much bad blood had they done it this way. Indeed every bag holder created from 8th to 17th March 2017 when some of their members said the news would be incredible is someone who may never trust the Particl devs again and indeed may bad mouth them in the future.
Even if you are transparent and give full disclosures with your rumours, news and numbers after such an event, buyers may not trust you and the markets may act accordingly; meaning the price of your asset may not rise even if the news around it is incredible.
This happened to the ICONOMI team in Feb 2017 when the rumour mill spread that a conference which the ICONOMI (ICN/ICNX) team was presenting at would be used to announce the launch of the ICN open fund management platform. Price went from 20 cents to 60 cents; the ICONOMI team didn't make it outright clear enough that this was definitely not happening and didn't definitively squash the rumour mongers who perpetuated the idea it was (driving up the buy demand and ICN price at the time). The rumours flourished; bag holders were created, not enough was done to suppress an FUD campaign about ICN concurrently running on the ETHtrader reddit (a very
large cryptocurrency trading forum). ICN became tainted.
Even today although ICN has assets worth $21 million (that are actively appreciating in value) with a marketcap of $41 million, active revenue streams and a
fixed token supply i.e. a P/B (Price to book) ratio of "2" (that is actively decreasing), the price of ICN is not sky rocketing up as it should. This is because the inertia is there from previous bag holders and there is a lack of awareness in the cryptocurrency community about how to value stocks.
But that's the rumour. Here's the thing; I bought the news.
I swapped that remaining SDC for PART and paid the BTC premium.
The devs have to deal with the fallout from the rumour. I have to deal with the fallout from the rumour. I did my analysis of the PARTICL project and cautiously bought in
and moved past my resentments over what had happened. Soon really I didn't care.
It was a good 2 weeks later where I regained most of those psychologically unrealised profits as I'd bought some PIVx low and sold very high; There is always opportunity in swing trading
for those of you smart enough and looking.
And I remind myself; At least I hadn't bought the rumour.
In the sense that I didn't buy during the rumour period when the price was increasing.
I'd have lost a lot of money that way. Learn to ignore assets based on rumours when their price is increasing; there is always opportunity elsewhere. Only deal in facts.
Repeat that mantra with me.
Fact: The Ethereum enterprise alliance is real. Fact: There are now actively deployed dApps running on the Ethereum mainnet using gas i.e. ETH tokens have an actual non-speculative demand. Fact: Many of the proposed use cases for Ethereum are real but the majority are still in proof of concept or early development phase.
Fact: ICN has a P/B of 2 which is a) Calculable P/B ratio in a field where 99.9% of tokens are valued purely on speculation (i.e. P/B & P/E of infinity) and b) A P/B of 2!
Fact: The Bitcoin scaling debate hasn't been solved for 3 years and currently no solution appears definitively present.
Fact: Particl will be a crypto-agnostic (supporting multiple crypto-currencies for trading/conversion into PART via integrated shapeshift functionality) privacy centric communications and trading platform for settlement of non-speculative goods that will incorporate an updated Bitcoin core code-base, ready activated with Segwit and is incorporating Ring-CT into it's anonymity tx structure as well as built in governance and reputation systems, marketplace transaction reward fees for stakers in addition to stakes and a community centric decentralised cryptocurrency project that aims to bring much needed non-speculative use to multiple cryptocurrencies.
The Particl devs (formerly SDC devs) have promised to be and so far are much more transparent about progress, developments and news. Fact:
Of the last 6 facts, 5 point out fundamental realities happening right now that likely affect the price. 1 of these facts is actually a cleverly worded speculative statement. Fact: Fundamentals always play out over time.
That's true even if the price doesn't always reflect them in the moment.
1. Iconomi price history: https://coinmarketcap.com/assets/iconomi/ 2. PIVx price history: https://coinmarketcap.com/currencies/pivx/ 3. Shadowcash price history: https://coinmarketcap.com/currencies/shadowcash/ 4. Iconomi will speak at the Blockchain Event Conference Feb 9th 2017 (a real example of how rumours can be tacked to the news): https://np.reddit.com/ICONOMI/comments/5rjwcw/iconomi_will_speak_at_the_blockchain_event/ 5. Enterprise Ethereum Alliance: http://entethalliance.org/ 6. Iconomi Financial report Q1 2017: https://medium.com/iconominet/iconomi-financial-report-q1-2017-a1b9dff59e2c 7. The Bitcoin scaling debate (browse through): bitcoin, btc
... Further articles in this series: "The intelligent investors guide to cryptocurrency"
Part 0 -
Part 1 -
Part 2 -
Part 3a -
Part 3b -
Part 4 -
Part 5 -
Part 6 -
Part 7a - "The intelligent investors guide to Particl -" Full disclosure/Disclaimer:
At time of original writing I had long positions in Ethereum (ETH), Particl (PART), ICONOMI (ICN), Augur (REP), Factom (FCT), Swarm City (SWT), Renos (RNS), Wetrust (TRST). All the opinions expressed are my own.
I cannot guarantee gains; losses are sustainable; do your own financial research and make your decisions responsibly. All prices and values given are as of time of first writing (4th-May-2017). Second disclaimer: Please do not buy Shadowcash (SDC), the project has been abandoned by it's developers who have moved on to the Particl Project (PART) (www.particl.io). The PARTICL crowd fund and SDC 1:1 token swap completed April 15th. You can still exchange SDC for PART but only if it was acquired prior to 15th April 2017 see: https://particl.news/a-community-driven-initiative-e26724100c3a for more information. Addendum:
Article updated 23-11-2017 to edit references to SDC (changed to Particl where relevant to reflect updated status) and clean up formatting.
Why: submitted by
My friends we have had some trying days here, and STAR wont let it stand! STAR has a solution to our communities problems. As you all of you know, I run the reputation thread, which I update about 2-3 times per week these days. The safety of all buyers and sellers on the grey market is my and thereby STARs top concern! Who we are:
Based off my work here I have assembled a group of traders whose intent and trustworthiness is without question! We call ourselves StarCitizen Traders Alliance of Reddit (STAR), we will operate not only on this reddit but in the persistent universe as well.
We have jointly come up with a solution for the uncertainties that currently exist in the grey market! We are creating a insured ship/package buying/selling program. You can now buy an STAR insurance policy when purchasing a ship through a STAR seller. If your ship vanishes through no fault of your own such as the latest incident or some other form of scam, and CIG is unwilling to help (proof will be required). We will replace your ship/package or refund you the purchase price! How the system will work:
Only listed STAR sellers are allowed to sell insurance policies. Every ship/package insurance policy will be priced according to current market value, the price does not include fees. For free transactions I encourage the use of bitcoin! This fee will be deposited by all our sellers into a central insurance POT fund that I will personally manage. The insurance will be issued to your unique ship or package ID number and your name. The insurance will be non-transferable to a different user. Renewal of such a policy for the new owner can be obtained at discounted rate. You may negotiate the base price of the ship with your seller, however the insurance surcharge value will NOT
change unless done in consensus with all STAR insurance providers.
In order for the insurance policy to be issued following information will be needed:
Your real name, Your RSI handle, Your RSI Email, Unique ship/package ID The following sellers have been authorized to sell STAR insurance: Loneshade Realypk (I am opening a store, I have some big shoes to fill!) redinzane Grape_Victim tws101 More sellers will soon be enrolled, please help keep our community safe and report any store or seller claiming to be STAR insured that is not on our list!
Initial Pot Funding: Pledged So Far: $1500, Money In Acct: $1560, more funding still being negotiated with funders
Insurance costs by ship type (prices subject to change same for package as ship): PRICES HAVE APPROXIMATLEY BEEN CUT IN HALF AFTER SOME HARD MATH
Aurora - $4
Avenger - $7
300i - $6
325a - $7
350R - $10
M50 - $7
Cutlass - $10
Xian Scout - $12.50
Freelancer - $12
Gladiator Bomber - $12
Starfarer - $14
Banu Merchantman - $17.50
F7C (all variants other than M) - $11.50
F7M Super Hornet - $18
Caterpillar - $17.50
Constellation - $18
Retaliator Heavy Bomber - $22.50
Scythe - $100
Idris-M - $270
Idris-P - uninsurable More ships will be listed soon
If you are interested in becoming a insured STAR insurance provider (and thus a member of STAR) please message me and we'll talk about the details!
I hope all of you agree that fee which is approximately 5% is worth the peace of mind. Currently we assume HIGH risk until the pot has enough money to cover most ship types. Once a healthy pot is established we will likely lower insurance costs. Please understand we need a healthy initial percentage to get the pot funded! We are taking significant risk by seeding the insurance pot with our own money. Disclaimer: Sadly we do not have infinite wealth as such severe amounts of claims may cause the program to go bankrupt. By purchasing our policy you agree to not hold us civilly or criminally liable in the event that the pot goes bankrupt. We will not pay out more than what is officially reported in the insurance POT. While the chances of such bankruptcy are slim (considering the historic scam rates), it remains a definite possibility. In that horror case we would do our best to help everyone on a first serve basis (based on policy purchase date) and shut down the pot/insurance program. In essence I won't lose my house or any other property/personal money over this.
Making trading of imaginary internet space ships safer since 2013! https://robertsspaceindustries.com/orgs/STAR
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