Liam Davies

Elite Popular Investor on eToro

Category: Latest

Trading vs Holding: XRP turns $1000 into $1,000,000 during 2017

I have received a lot of requests to talk about the subject of ‘Trading vs Holding’ when it comes to cryptocurrency, so I’ve decided to briefly deliver my thoughts in video format.

Hopefully that all made sense, but feel free to leave any queries or suggestions in the video comments.

My Crypto Portfolio (and ICOs)

From the cryptocurrency universe, there has arisen a new and popular way for businesses to access funding for their ventures. Traditionally, these businesses would have to seek investment from banks or other corporate financial institutions, and would often have to sacrifice large percentages of their company in exchange for this initial investment.

The ICO (Initial Coin Offering) model has dramatically changed this system. An ICO allows anyone with the required coin to invest in a company, and in return receive a coin (or token) which is proposed to have some future use or value. A good example of an early ICO is Ethereum (ETH), which raised over $18 million dollars. The ICO not only helped fund the project, but also distributed the ETH token allowing and instant userbase to be formed. Ethereum was distributed initially at a rate of 2000 ETH per 1 BTC. 2000 ETH today is worth around $920,000, so it’s very apparent that a good project offers a lot of financial potential for the savvy investor.

Ethereum growth against Bitcoin since 2016

Throughout 2017 there has been a large amount of “ICO hype” – businesses looking to fund their projects and lots of people looking to invest, often to “flip” the token for a quick profit. Some of these businesses have raised millions of dollars worth of major coins (usually Ethereum, hence the continued flat price in the middle of the year) and often with no actual working product. This has made it increasingly difficult for investors to find quality companies and has even lead to people funding scams, ponzi schemes, and general garbage projects *cough* Electroneum!! *cough*

I myself have invested in a few ICOs over the past year and, aside from one, all fill me with a decent amount of confidence about their growth over the coming years. I’ve had a few people ask me to share my ‘altcoin’ portfolio, so I’ve drawn up a chart with everything as a percentage of what I hold. I’ll give a more detailed look at some of my favourites, too.

Crypto portfolio held outside eToro. Correct as of December 2017

Bitcoin (BTC) 

Bitcoin is quite a small percentage of my portfolio right now. This is mainly due to my exposure to Bitcoin already being quite high on eToro, but also because, at the time of writing, the price is quite high. I will be looking to add more should the price enter a correctional period, as described in my recent post here http://liamdavi.es/next-bitcoin-moving-december-2017/

Status (SNT)  

Status is a mobile Ethereum browser enabling interaction with DAPPS on the Ethereum network, and transactions across the network directly from your mobile device. It’s currently in the alpha production stage, soon to be moving into beta testing. It’s open source and just an overall nice project. I got in at ICO and have held all my initial tokens. This should be a good long-term project. https://status.im/

Sand Coin (SND) 

This is an interesting one. A Russian sand mining company based near Moscow funding their mine project with an Ethereum ICO. Unheard of, right? It might sound a little wild, but I see this kind of operation becoming very popular in the future. Offering the general public the opportunity to invest in tangible commodities projects is something we’ve not really seen before and could change the way people invest their money. I joined at pre-ICO and during the ICO and I’ve held since. https://en.sandcoin.io/

 


Disclaimer: All of the above is my own personal investment. None of the information provided should be taken as investment advice. You are responsible for your own actions and should understand the risks involved when participating in ICO events. I hold no responsibility for any loss (or gain) of earnings from any investments undertaken by individuals.

What next for Bitcoin? Moving into December 2017

At the time of writing this, we’ve just seen BTC break the $10,000 mark…then $11,000! The overshoot here can be attributed to new money continuing to flood into the market and experiencing FOMO (Fear of missing out) and keeping the upward movement going. This explains the flash crash occurring later in the day (yes, this all happened in one day…welcome to crypto!) as the market became oversold.

Despite this flash crash we are keeping with the current trend line as we look to complete the final wave (wave 5) in our Elliott impulse wave pattern. This should see Bitcoin move up to around $14,500 by the new year absolutely smashing our previous prediction of $13,800 by February.

From this point, expect to see an A-B-C correction in Bitcoin (and the market overall). There should be opportunities to buy the first dip and sell near previous highs, followed by a nice accumulation point coming into Spring of 2018.

Prepare yourself mentally for this correction. There is always fear in crypto markets and it becomes significantly stronger in downtrend and correctional periods. Again, I will tell you to stick to your plan and execute as necessary. Once this new market cycle begins, we should see significantly higher prices as we move through 2018, so this predicted correction is a fantastic buying opportunity.

Elliott wave completion followed by A-B-C correction. Look to take profits in the green zones and open new positions in the red zones. Note that buying in Zone (A) is more risky and should be executed with caution.

Managing your emotions

Trading is traditionally viewed as super high risk and sometimes a form of gambling. When trading in this manner it can be very easy to get swept around by wild emotional swings. You make a big win, you feel amazing! But then a big loss comes and ruins everything and you feel terrible. I can say from experience that this is not a healthy way to live – it’s bad for your equity and your mental health.

I like to take a different approach. Consider trading as short-term investing. With investing you typically have an entry strategy (research, risk considerations etc.) and an exit strategy (profit target, loss tolerance). Everything in between is out of your hands and, more importantly, out of your mind.

By using this method, the trade is essentially formed into a binary outcome – the trade either makes a profit or a loss. Our goal, then, is to make our pre-execution research as strong as possible. We do this by sticking to the trading plan if we are making profit, and adjusting when we make losses.

I like to draw an analogy from poker: Once your money is in the middle, it’s no longer yours. All you can do is adjust your play to make it more likely that you win the pot.

Essentially this means once you’ve made a trade you are no longer emotionally attached to the equity tied up in that trade. Removing these emotions greatly helps when it comes to critically analysing your trading strategy and will help you become more successful in the long term.

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