Introduction to Cryptocurrency Trading

The main purpose of the book you’re holding right now is to provide you with a structured way to learn trading in a way that isn’t so theoretical, as it dives right into developing and testing a working strategy that you can ultimately automate and get tangible (and financial) benefits from.

In this first chapter, after I share my story and my process, I’ll delve right into market myths and why people lose money in trading. As a heads up, most of the information that you hear from other traders (be it on YouTube or other media) will actually sabotage you unless you are familiar with how the market works. My goal for this chapter is for you to understand the myths that losing traders believe in so that you can circumvent them and get to the practical information that will actually help you in your trading career.

In this chapter, we’re going to cover the following main topics:

• Disclaimer
• My journey...

Disclaimer

If you’re reading this book in order to become a super-trader and turn all your hard-earned income into billions, heed my warning: this is not how the world works.

There is always an element of chance, and even by correctly applying a trading technique that statistically provides a profit of 20% a month, you may lose money (and one of the reasons is statistics, which we’ll talk about later in the book).

That being said, I truly believe that any reader who puts in the work will achieve a measurable degree of success, but I cannot and will not promise any profits realized due to the methods presented here. I think that what any trader needs (and what the world needs, for that matter) is clarity in the decisions they are going to make and the actions they’re going to take.

What I can promise is that I will do everything in my power to help you understand how the market works, how you can identify a way to beat it, and how you can test and automate...

My journey into trading

When I was little, I loved Indiana Jones movies. I wanted to travel to unfamiliar places, to have adventures, and to experience unique things.

While growing up, I became that explorer. But more than an explorer of places, I became an explorer of learning. I started coding in the 8th grade, and later, I got a well-paid job at a tech company. Then, I found myself needing to learn to socialize better, so I joined Toastmasters and learned the art of public speaking, which got me second place at Toastmasters’ national public speaking contest. Next, I started doing trainings and helping others learn and learn how to learn. I broke down difficult theoretical concepts and taught them in an experiential, gamified way. I covered a wide range of topics from time management to online course creation, leadership, and personality typologies, and trained people from varied backgrounds such as business, education, and management. This training extended from my home...

Overview of the book’s structure

I am an avid reader. My Goodreads account features over 100 books read per year. That is one every three days, including audiobooks. I mostly read fiction now, but I have read my fair share of personal development books and a whole bunch of trading books. What I found out during my page-turning adventures is that most trading books fail in two respects:

• They aren’t clear enough. Basically, they jump from concept to concept, making it hard for you to follow, or they immerse you in stories and don’t provide enough useful content.
• They don’t provide a step-by-step guide to arrive, together with the author, at the finish line. What they do instead is superficially present concepts, tease you, and promote other programs at the end of the book.

Regarding the second point, I actually know a trading book that is delivered for free (minus a shipping and handling fee that actually includes the book’s price...

Market myths

There’s a lot of information on the internet regarding how to trade successfully. Yet with all of this information, most people using it fail miserably. A few, though, have incredible success and come to like, comment, and share the videos that helped them succeed. Some might even think that the information works, but they just don’t know how to apply it. They too like, comment, and share, mostly because they like the speaker, not because the content actually works.

In this section, we’re going to take a closer look at some common market myths and recommendations newbies get from other people, mostly on social media. Next, I’m going to debunk those myths and help you get a critical way of looking at the market—a way that helps you discern random advice from true and tested information.

I will find a successful strategy on YouTube

Here’s a screenshot of what a simple search for a trading strategy shows on YouTube. This...

Summary

In this chapter, I have told you my story and presented you with the book’s structure.

Then, we went right into market myths and the reasons people believe in them. We finished with cognitive biases and how they can impact your trading, and now, we are ready to jump right into the basics.

My goal for this chapter was for you to understand the myths that losing traders believe in and to understand why get-rich-quick schemes don’t work.

The next chapter is great for new traders who will get a grasp on what happens psychologically when they trade, what mistakes they usually make, and why people lose money. Then, we are going to talk about how to read a chart and who are the market participants trading that chart.

Exercises

1. “A father and son were involved in a car accident in which the father was killed and the son was seriously injured. The father was pronounced dead at the scene of the accident and his body was taken to a local morgue. The son was taken by ambulance to a nearby hospital and was immediately wheeled into an emergency operating room. A surgeon was called. Upon arrival and seeing the patient, the attending surgeon exclaimed, “Oh my God, it’s my son! Can you explain this?” (Story adapted from the Father/Son activity found in Pendry, Driscoll, and Field (2007).)
2. Try to remember how many times you were afraid of being wrong. Now, imagine that you’re presenting a trading technique. Would you make sure that you are presenting it in the best light possible? Would you choose a chart where you have 10 successes and 2 failures or a chart where you have 7 failures and 3 successes? Some people would say they would present both, but when you have...

Answers to the exercises

1. The surgeon is the boy’s mother. Most readers miss this answer and try to elaborate complex stories regarding paternity and priesthood. This is related to stereotyping.
2. This is related to confirmation bias. You are presenting the information in a way that confirms your beliefs.
3. This point is related to hindsight bias. It is easy for us to think we know the answer to a situation that has already passed, but we can’t actually predict the outcome when the situation is in the future.