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RE: Note for Non-Whales: HODLing is More Effective Than Day Trading in All of the Ways
To be honest I've been tossing stuff around on Bittrex for the past couple of weeks. The funny thing is that all of the coins seems to be mirroring what Bitcoin is doing, more or less. Sure, it's satisfying to see my account value go up every day, but people are pouring money into coins like crazy right now, so of course things are going up. It's pretty easy to make money in any bull market. It could get ugly if this turns into Dutch tulips after all.
Oh the other hand... meh, I'm learning how to trade and reading up a bit on the technologies behind the coins. And we're talking chump change here, at least until DOGE goes to $10.
"people are pouring money into coins like crazy right now, so of course things are going up."
This is basically it, right? Everybody is earning - you'd have to be really really bad, abysmally bad, to lose much money in cryptocurrency over the last few months. But nobody is tracking their actual earnings vs. the earnings they would have by HODLing from, say, early 2017 to late 2020.
If you tracked everybody who trades and HODLs between 2017 and 2020, it would be fascinating to see how many earned more by trading than they would have by HODLing that same investment.
IDK if we'll ever know for sure - and many people want to keep the waters muddied so they can make profits off the confusion - but as far as I know from The Four Pillars of Investing, in-depth studies have shown that the vast majority (99%+) of professional financial traders lost money over their decades-long careers as opposed to if they'd done a HODL of the global markets during that same period.
So is Learning to Trade even a real thing? Or is it an illusion?
I would argue that getting better at trading is futile. It's kind of like learning poker, except you have to play against the Micheal Jordan of poker every single session.
And furthermore - right now it's like you are playing against the Michael Jordan of poker, but there are 10,000 10 year olds also at the table. So you might make a ton of money because 99.99% of the players are throwing money into the pot like idiots. But what happens when the game tightens up and now you're at a 6 hand table with only the top professionals, literal Harvard PHD teams of traders and etc, to your right?
Basically - amateurs will only make money by trading in markets that favor HODLers anyway. That's my main idea I think.
/megacomment
At this point it feels a little like a pyramid scheme. And it's working because there's still enough people out there that hadn't heard of crypto that we can sustain geometrical growth for a bit longer.
But when new money stops coming in from the outside, things are going to go pear-shaped in a hurry. All the coins that don't add real value are going to disappear. Even the good ones will have to stabilize.
But where's the stable level? I guess that's the question that only Michael Jordan knows the answer to.
Sometimes I kick myself because I didn't listen to the Wife and buy a bunch of Bitcoin at $300.
And then I just kick myself back and say, "Yeah, but I would have just sold it at $500 and bought a few pizzas with the profits."
And then I just kick myself back and say, "Yeah, but I would have just sold it at $500 and bought a few pizzas with the profits."
amen lol