A fellow user on Publish0x left a comment on my article about newbies just entering crypto. My advise, essentially to not get rekt... don't believe everything you hear, do your research before pouring real money into something. Their comment was, essentially, they wish to take my advice, but how do they do research in crypto?
If you use the links attached to this article, you will be at least 70% better off than if you have mostly been trading from the view of Robinhood and Reddit groups (or telegram, or discord etc...). I cannot tell you that this will guarantee you "get it" and the lightbulb goes on, but it will point you in the right direction, and if the drive and determination are there, you are certainly less likely to get rekt.
I can't think of a better point. So, unless the storm outside prevents me from finishing this, I'm holding true to my word, to offer an entry-level recommendation, for what it means to "Research" before trading or investing.
This cannot, by definition, be short, but it is going to be very simple. I'm not going to throw anything clever into the mix, and it won't be separated into 30 parts. I'm sure at some time I will consider an actual course to help really walk people through; for now, I am providing a kickstart for beginners to not get rekt.
First, everything in crypto is divisive-lol. For every good coin or website, there is someone else who hates it. Let's chalk it up to human behavior. People are probably going to leave their opinions in comments as well, unless this doesn't rise in visibility. Coinmarketcap is one of those sites. It has been around a long time. It provides API's for websites to post accurate, live data about their coin projects, exchanges etc. It was recently purchased by CZ of Binance, and many have accused the acquisition serving to lift Binance to the top, and I concur, but at the end of the day, it gives you a one-stop for data you will want. You can search coins, view their timeline and historical data, look at how many exchanges a coin is listed on, find direct links to every project website etc.
Coingecko is often the site that people will recommend if they hate Coinmarketcap, largely for the same data. It is not bad to use multiple resources for the same research, in case different numbers are popping up.
For all of the words, comments, and general language that goes along with trading, Investopedia is a great site to help you get educated when people give advice, good or bad, and you have no clue what they just said. I use it especially when I'm tired, or when I said something I was certain was accurate, and I meet unexpected opposition, and need a reminder of what planet I'm on. In trade, wikipedia's usually help fill the gaps as well.
Investing.com is a site I mostly use for historical data on coins. It's layout has been useful to me for deeper analysis, comparing what happened on what day for one coin compared to another, etc.
Tradingview is for charting; this is where almost all of the industry gets their data on what coins are doing. If the pop-ups or layout are too confusing, you can always use the trading page, even if not signed up or logged in, on most large exchanges, and visualize the coin you are trading.
So now, let's break a few things down.
Two things you want to be familiar about: FA and TA.
FA is fundamental analysis, and it deals with being aware of what is happening in the world news, specific to the market, and the actual teams working on a coin project. These things affect the market, especially in the extreme long and short term. Often, a coin suddenly knee jerks, and people scramble to find out what happened. In those times, there's little any of us can do except to use a good system for trading or investing, but sometimes already keeping an eye on what is happening prevents us from missing a rug pull. This can be tricky, because it has become clear to most of us, that the media is perfectly willing to take a bribe to print what someone wants to pay for them to say. They are a regular source of FUD and FOMO and it is ridiculous. You will develop an instinct for how to react and process accordingly.
TA is technical analysis, and this stands for knowing the technical charts; learning to read the timeline on the data of a coin's performance, and using visualization tools, called indicators, to give you more data about what the coin has done in the past, in order to gain a better guess about what it is going to do now.
TA is where I need to offer more details. A lot of people "chart" coins online, for free, and a lot of people follow them for this purpose. People want a crystal ball from an "expert" that knows what comes next. Short answer: no one has a clue, but they have 70% better guesses than without the tools.
Many people will show you patterns, like a head and shoulders, a dead cat bounce, a golden cross, a death cross. When these things happen, everyone will be talking about them. Otherwise, again, it is totally up to interpretation. Don't be discouraged! With a valid system, you can make better decisions with this information.
You will want to learn about Doji candles, learn to use them, and only trade daily or weekly if you truly understand them. The absolute basics on a candle are that they are an brilliant visualization tool that give you SO much data, in the immediate timeline, it is super awesome. A candle can be green or red, often switching one to the other, and they leave a trail behind, giving you an ongoing history for how a coin is trending. The candle has a wick that faces up or down, depending on what is happening in the moment, and the direction of the wick identifies whether the current orders placed suggest the coin is about to move up or down based on what just happened. This is a starter, so go and learn about candles to see what this all means, but in the end, this should be the first point where you discover whether you think you may develop an instinct for this and learn to trust your gut on technicals.
Next, a lot of people talk about Fibonacci levels of support, setups etc. In truth, I think the most important thing a person can learn, is what I call the self fulfilling prophecy in trading. Often, things happen because everyone is watching the same thing. This translates into the trading "bots", or programs designed to trade automatically for the user, because everyone watches the technicals, and the market moves solely based on sentiment surrounding these factors. You will not run out of choices of someone to follow, who will show you what a coin is doing based on Fib. At the end of the day, the primary reason coins trade in predictable ways that fall within certain Fib levels, is because everyone is watching for them to do so, and they react accordingly; that is my affirmation from 4 years 12-15 hrs/day watching the charts.
Here's what I would like someone to know to use for their own personal technicals: Volume, StochRSI, MACD, Bollinger Bands, and if they wish VWAP. Because very few use VWAP, and because I do not like how this is visualized in Tradingview, I am not going to cover it here.
Volume is usually provided on charts pre-loaded, and will appear below the main window with candles. It will look like a red and green cityscape. This represents the amount of money spent on that asset within that given window of time. Red or green will tell you whether there was more buying or selling within that window. By the way, be it candles or volume, in some countries red is sell, green is buy, and in others it is the opposite. Just make sure you choose the one you're going to follow!
Volume matters, because it has trends that tend to occur as a result, and obviously if things are going red for a long time, you may want to wait until you know why everyone is selling before deciding to go in, but also, "buy the dip" by definition means that when that time is right, you want to buy when everyone else is selling. Buying tells you what, and how much, in a nutshell.
StochRSI stands for Stochastic Relative Strength Index, and provides a range from low to high, which is essentially telling you when a coin is overbought, or oversold. The idea is that when it is well over the logical range for a trend in selling or buying, it is likely to start reversing the trend in the other direction. I mostly find this helpful to compare against my other indicators, and that is an important point about all of this; indicators are like a painter's tools; each color matters, but it is the combination of colors together that paint a more accurate picture.
MACD stands for Moving Average Convergence Divergence, and what you need to know is that it has 4 important, simplified pieces of data that give 16 essential polar possibilities of what is going to happen, and it is often right. There is an oscillating waveform that trends on the value going up and down over a long period of time, and there are two lines that measure two different timelines. The goal in using MACD is to wait until the trend lines are going to cross one another at the lower position, and that this coincides with the negative dip oscillation. Once you see it, read up on it, you should get it. The real power of StochRSI and MACD is in using them together. If there is dissonance between the two, there is a reason for it.
Lastly, the Bollinger Bands. They sit directly on top of your candles, making it easy to add their details to your subconscious when you get comfortable with all of this. And by the way, don't ever get comfortable- lol.
Bollinger bands use data timelines for 3 major timelines about what the coin has done in the past, and overlays it right there. Very basic explanation; the price for a given asset tends to remain within the bands. If it breaks outside of that range, it is likely going to push hard, and quickly go beyond that point before snapping back into place. I wouldn't want to enter a position right when an asset is at the top of the BB, and I might want to wait to buy if it is about to pass through the bottom of the BB. Essentially, you wish to watch the action happening within the range, enter positions when it is done riding the bottom of the BB and getting ready to climb back up. Think of the bands like rubber bands. The more pressure against the lines, the more likely it will eventually pull back inside.
You have exponentially more powerful data about price movement when comparing these indicators to one another while watching the candles live.
Experts will disagree about a few hundred other indicators, and people will also argue whether one RSI is better than another. Again, this is the basics, and you may find a technique that works ten times better for yourself.
Trying to keep this the absolute survival's guide, you now have several sites to reference that I know you can benefit from, a little advice on what to do, an understanding that to avoid pitfalls you must pay attention to the world outside of pumps and crypto groups, and a "basics in TA" that will help you guess better at what is happening. When it comes to research, you at least know a set of tools to learn about to improve where you are.
Now, a little bit more about where most people go wrong. I think the basics are extremely important, because experts get rekt too. They get cocky, and forget the basics. When experts lose far more than they anticipate, it is because they break their own rules.
So, here's a fast-take on things you must know.
First, FUD, FOMO are real, and they get everyone. Fear, Uncertainty, Doubt is often manipulated, fake news to scare people into a certain action. FOMO, Fear Of Missing Out, is usually shilled news to cause someone to drop what they are doing and buybuybuy. Avoid these two instincts and you will be beter off 99% of the time. It sounds so obvious, but we are talking human nature, and it works because we are humans, and it also works, because our bots (I don't use one, but I have in the past) are programmed to react based on our own logic.
FUD and FOMO are manipulated largely in crypto, because of pump and dump groups. If you don't know the game, there is a good chance that the groups you have joined just to know about crypto, or follow a specific project, are in fact pump and dump groups and you may not be aware. In general, true p&d groups will tell you when a pump is to take place, and will even give you copy/paste data to shill to the outside world, so people will pile on top of market buy orders. This is too much to cover here, but understand that it is a very fast-paced Ponzi scheme. Most of crypto is not a Ponzi, but the super fast pumps absolutely are. The organizers are pre-programmed and ready to sell a massive profit, and they rely on the volume of the group to sell their profit target. Anyone a fraction of a second too slow is stuck at the top of a worthless asset. In the larger scheme, rarely, coins like Doge are prime for pumping even though they are a bigger deal with more legit lovers. Otherwise, if it is brand new and follows similar sentiment, the long term data suggests it will moon, and die a sudden death, and it is the beginner trader who is expected to provide the necessary volume for more advanced users to steal their cash in the form of instant volume.
There's so much more to share, but let me just add that if you are going to invest or trade with real money (you define what is a lot, not anyone else), do not do so without a plan. It may take you some time to truly know the plan that works best for you. Once you have determined that plan, do not stray from it. Looking back, I personally do not regret a single time that I escaped a trade with profit, even if I played it far too safe and missed a massive added gain. I do, however, regret every time I was a tiny bit too greedy and tried to hit the absolute top of a peak, and got stuck. Almost every single asset other than Bitcoin has gone from its highest highs to dropping 80-90%, never to return to previous highs. Every single YouTube "expert" advised for people to hold on to those positions and wait, because they were guaranteed to pump again. They are still -90% from entry since 2017. No one knows, and no one takes responsibility for people losing millions.
So, this is treacherous territory! It is worth the warnings and disclaimers.
The last point I want to make, and it is such a complex one, but I guarantee it is true, is that it is very, very, very hard to choose a winner based on merit. Some of the smartest looking/sounding projects are doing awful at market, and some of the dumbest projects that have loud screaming "don't go here" signs attached to their foreheads, pump over and over and over again. This has been a market that rewards stupidity with radical gains, and punishes the best laid plans. The truth, is right around the corner, in a week, a month, maybe slightly more, that is going to shift radically, and it is a matter of time before you wonder how the climate shifted so fast. Where is all the positivity and sense of family surrounding your favorite new coin? Why isn't anyone updating their Telegram group? Where'd all the money go? If I had not seen this happen 700 times before, and I mean that number literally, I would not speak with such confidence. The new line of coins are just the new wave of projects that eventually, some people are going to dump to chase the next thing. People often develop a gambler's mentality to chase another 100x gain to justify getting out of their current loss of 20-40%, and they aren't thinking about the odds they are going to make the same mistake. The best way to avoid all of this, is to simply stop chasing mad gains.
A little insight to my advanced process that I am working still today, since 2018; if you're here to trade, and want to avoid pitfalls, go for exponential growth, not pump and dumps. Establish a baseline for how often you want to trade, and how little profit you are willing to take to make the safest choices. Repeat this with circulation of the same funds, adding tiny profits, and you can double your money in tiny, safer bites with much higher likelihood than chasing the moon. For most people, though, trading is simply a bad idea with too many possibilities of loss, so if you want to earn from crypto but don't want the risk of trading, the experts will recommend to choose a top coin, and do something called DCA, or dollar cost averaging. You can do this with a little skill, or automate it from your app.
DCA is regularly, consistently buying at whatever the current price, and holding on to the asset. Over time, you get price discovery at a good, fair, average price. If it is something like Bitcoin, Ether, Litecoin, it is expected to continue to rise over time despite short term volatility. If we're all wrong, then there isn't a method that will save us. Do not resort to shorting with heavy leverage. If you get desperate, you're better to stop what you're doing than to use methods that are out there most people use to reverse a bad call. This is the gambler's addiction and it always leads in failure; not sometimes... always.
I hope that this is helpful, and for now, crypto Gordon Freeman... out.
Resources https://coinmarketcap.com/ https://www.coingecko.com/en https://www.investopedia.com/ https://www.investing.com/crypto/currency-pairs https://www.tradingview.com/chart/