The herd versus the minority.
This is essentially what Altcoin trading boils down to.
The herd can be characterised in a variety of ways but, typically, the herd will execute trades based on one out of two emotions; fear and greed.
There is no skill or methodical thinking involved in herd mentality.
These individuals would rather the thinking be done for them, so instead of committing to conducting relevant research on the market in order to uncover high probability opportunities that have yet to play out – they consistently spend their time betting on the continuation of moves that have already occurred. Which is always a losing proposition.
Another common characteristic is the illogical need of members of the herd to overtrade.
They always want to be jumping into and out of trades because they are under the false assumption that trading is a game of musical chairs, rather than a venture that is undertook to produce a stream of consistent profits.
I have had people ask me about High Frequency Trading algorithms and other ludicrous things, which only further highlights the limited understanding people have on the way markets, in general, move.
I have mentioned that every single coin in this market exhibits signs of some form of a long-term cycle. Thus, by coming into alignment with these long term cycles, trends and patterns – it is extraordinarily possible to draw more money from this market than you will ever put into it.
But, doing that means understanding how the herd is exploited on a daily basis by the minority – the skilled few.
Before reading on, I want you to destroy any pre-conceived notion that you hold in your mind about manipulation.
When one chess player defeats another in the most dreadful manner, is this referred to as “manipulation” … or Skill?
When a big retailer moves into town and decimates all the smaller traders, is this referred to as manipulation… Or shrewd business?
What the uninitiated refer to as manipulation, provides the small minority of skilled traders with continuous piles of revenue.
But is this manipulation, or skill?
You see the herd will exhibit the most irrational and illogical behaviour in the market at all times. And this will never change. Markets are built upon this one fact.
If given a string of straight forward A or B questions, the herd will pick the wrong answer 99% of the time.
What would make someone of reasonable intelligence restrict themselves to buying only high volume coins that are on the first page of Bittrex, only coins that have excessively large buy support, only coins that are being promoted by everyone on the various news sources, only coins that are easy to “get out of” (then why get in in the first place).
These are all selling indicators.
High Volume coins:
Each coin is its own market. Thus each coin has a maximum capacity for trading volume. Once the volume begins to approach this maximum, sell resistance builds to the point prices can no longer lift. If a coin has already attracted a tremendous amount of volume, volume that is magnitudes above average levels – then that particular market is filled (or close to being filled) to its maximum capacity. Thus the only thing left to happen is for the BTC to come back out of that market – causing the value to plummet. Thus, only trading “high volume coins” is a reason why the herd consistently lose… again, and again.
Large Buy Support:
Coins do not just shoot up into orbit at random. There will always be a period of accumulation before prices begin to climb. So if, during a rally, when prices have advanced 100%+, you begin to see buy orders stacking up and forming support, this is an indicator of a pending dip because all this does is provide a guaranteed (and profitable) exit for those who got in days/weeks/months before who are already up 200 – 400%+ …..Thus, only trading “coins with good buy support” is yet another reason why the herd consistently lose… again, and again.
Coins Being Over-Promoted:
I sincerely doubt that anyone would require explanation on this, so I’ll move on.
Coins That are easy to get out of:
This statement in itself is so irrational. Why would you want to get into a coin that is easy to get out of? This defeats the entire purpose of trading. I mean, just ask yourself.. Wouldn’t those who are already in the coin and in profit also find it similarly “easy to get out of?” Thus pushing the price lower when they do decide to cash out – turning your position into a significant loss within the snap of a finger. Guys.. only trading “coins that are easy to get out of” is yet another reason why the herd consistently lose… again, and again.
The herd is directly responsible for delivering immensely large profits into the hands of the small few skilled traders – not due to manipulation, but due to these consistent, illogical mistakes.
You see what you call manipulation, others call skill.
If I buy into a coin during accumulation, I know full and well that accumulation doesn’t last forever and eventually, prices will breakout – taking the market, full force, into distribution mode – at which point the herd will be willing participants in ensuring that my position is transformed into a 500%+ profit.
This isn’t manipulation, this is skill. This is what occurs when the herd commits to their game of checkers – despite the fact that the actual game being played is an advanced form of Chess.
Being consistently successful in crypto means placing yourself at the opposing end of the herd.
You see it is a game of compounding – in other words, literally using profits to multiply your overall yield – thus, expanding your territory.
A novice who trades based on impulse, and emotions.. never has market poise. Takes short-term positions, and overtrades will never expand their territory.
As an experienced, and skilled trader – you will not only be in sync with the trends of the various coins that are worth trading – but you are also in sync the entire market.
What I am getting at is, 200% here… another 400% win in another coin. A 100% gain there.. Culminates into 700% worth of gains. If you’re of the skilled variety, who takes adequate sized positions in coins (1 BTC and above), that’s a 9 BTC haul right there. If you think that’s an excessive portion of money – there are scores of traders who make more than twice that amount on a weekly basis. Many of whom started with 1 BTC.
1BTC position in XXXX COIN, 200% gain = 3 BTC… skilled trader cashes out.
XXXX COIN Crashes
Skilled trader now puts 2 BTC into XXXX COIN at the bottom, 150% gain = 5 BTC… he cashes out
XXXX COIN Crashes
Opportunity spotted in BBBB COIN, XXXX COIN also bottoms out
2 BTC into XXXX COIN, 2 BTC into BBBB COIN – 100% gain on XXXX / 200% gain on BBBB = 10 BTC
That, essentially, is how you expand your territory and grow as a trader.
It’s not about jumping into and out of coins within 5 minutes. It is about understanding and trading in alignment with the prevailing long-term trend.
It you aren’t trading with the trend, then you are trading against the trend. And that’s a battle that you will never win