What's going on everyone? My name is Nicholas Martin here at day. Two today is October 14th of 2017. Well, folks, as you all keep up with the channeling, you know that from time to time I like to share trading to appear on the day to channel it's a day.
I'm, going to be talking about three misconceptions. I hear a lot inside the crypto community for beginners. I see a lot of people moving into this kind of innovative, exciting market and a lot of people want to step in and they start investing or trading both ends.
You know it doesn't matter. If you're, just investing, you're trading and a lot of people come in with eagerness and excitement and they end up losing money because they have preconceived notions of the market and how it operates.
And you know I get it. I understand it's, an exciting industry. People want to jump into it, but if you can & # 39, t learn from the mistakes of the past that are very clear and open. I you know and listen to the stories of fellow individuals who've, been there.
I've made those mistakes. I've, been in the markets of stocks for six to seven years now, and now in crypto. For the past year, and because of that, I've learned a lot about how these markets operate.
So today I thought I'd. Give you a little bit of a shortcut answer: two misconceptions of the market: how to avoid these misconceptions and why you should at its core all right. So let's, go ahead and jump right into it.
Folks, the first one I want to talk about is in a lot of traditional cases we hear about what comes up must come down and I would generally I know I generally agree with this. I think most things eventually will have pull backs, and this has been proven in markets that once something has a very nice run-up.
For example, we see here with Stratos, you know, has a fantastic run up. You can expect the pullback. Eventually, things always pull back at one point or another: no, nothing's ever just going up exponentially it's, never happened in a market, at least in the long term of things.
However, there is something to keep in mind. The opposite is very far from the truth. A lot of people think that, just because something has gone down extensively, it will go up. You know a lot of people always mention to me like, like Nick, you know what do you think about this coin? I'm, like the chart.
Doesn't, look good, I wouldn't, buy that and like, but it's, really low Nikki, you say: buy low, sell high and the thing about that. That's, different between buy low and sell high, buying the low and does not guarantee something is a good buy.
It does not guarantee that it is going to go up or that you are going to make money off that investment. The reason that is is because, in general, things in the crypto space, where it's, especially something so early on the mass majority of crypto currencies out there, which are now in the thousands, are gonna lose.
They're, not going to make any. They're, not gonna build any value in the long term, and they're, going to go practically to zero. That's, just how it is, and a lot of people will simply just buy the low in thinking that they're all too completely fine.
It's, not true, and it's, just as you know, it just is unsafe to do that as it is to buy a fresh highs. So again you have to have strategy when you're buying something now you do want to buy something at a low.
You want to buy something once it's had a pullback, but if something's down 95 % there's, probably a reason for it. There's, probably a reason. Something has lost that much of its valuation and that doesn't always mean that it's.
A good time to just you know, pour some of your savings in there to say. Oh, let's. Let's, see how it goes. I bought low, you know again. Buying low and selling high is great, but just because something is continuing to sell off, you can lose a lot of money.
I'll. Give you an example here on the Stratus chart if you would have bought Stratus literally just you know the help three weeks ago and not even a full three weeks. It was around a hundred thousands and Toshi's, and people will now picture these three can't.
These two candles right here did not exist, and we were here at around 10,000 Satoshi's, that you'd, be thinking awesome and I'm buying out alone. This thing was that 460, some of the dolls in Sedona.
She's. I'm, getting it a hundred thousand geez man. I'm, getting this at a discount and then you're down 50 %. So again, you have to have strides in place to really mitigate your risk. You know set stops and really say you know, you know how much am I willing to lose, even if I'm buying at these lows always expect that something could go down.
Things could go wrong because they usually end up doing that, especially in your beginning, stages of investing and all right, so remember, just buying something low does not guarantee you're gonna make money.
The next I want to talk about is something that it kind of irritates me, but I get it because I had the same misconception before I started trading stocks. It's, a very common thing by human nature, because we look at items like stocks and crypto currencies like we do when we go to the store to buy a product.
We look at the price tag there's, a big problem with looking at the price tag in dollars, or even in Bitcoin. When you're buying something on the market. A lot of people say man Nick like bitcoin is, is really expensive.
I just I don't know if, like you know, III, I don't. What I don't have like a thousand dollars to you, know, buy a fraction of a Bitcoin there's, so many people don't know you, of course you can buy fractions of cryptocurrency.
I'll. Mention that as well, but the thing is a lot of people are like I don't even have like enough to really like you know, make any serious money off of it or anything like that. It's way too expensive.
Like I kinda wouldn't pay five thousand something for a single Bitcoin, and then I get people I'm like okay, then what anybody else are you interested in and then I say well, you know I was looking at dogecoin recently And it's like it's, not even like 1 cent like what.
If this became the next Bitcoin, you know I get that a lot and it's, never going to be the next Bitcoin it's, never gonna be worth $ 5,000 and there's. A reason for that. It's because the dollar amount and like the dollar valuation of dogecoin and Bitcoin, are not determined determining his valuation or not.
What's? Determining the valuation? Is its market cap? Okay, this value right here you can see they're quite different, and it's for a good reason. Now you could have a debate about which cryptocurrency is better.
I would assume most people would say pick one, but if you're, a hardcore douche fan like I am I'm again in the major thing that you want to take away is how a cryptocurrency is valued. You should never be looking at this or even the Satoshi mark and saying something is overvalued or undervalued.
What you do want to look at is its market cap on a fundamental sense. You want to look at the numbers and see its market cap because dogecoin sitting at 122 million big one 95 billion. Okay, now to be fair, you've, probably got much more room for volatility and growth with dogecoin within a short period of time, but just as much with the growth side, you have that with the loss.
But the real thing is here that I'm. Really trying to drill in is how valuation is calculated. Okay, so I'll, explain it very simple: it's, the USD price in this case. If we're measuring our valuation in US dollars, in this case 122 million how we calculate that is by taking the circulating supply all of the doge that's out there right now, okay, so every single bit of dose.
That's been generated, and that, of course, will grow over time with new supply that number multiplied by the current market price. Okay - and that gives the valuation that we're given same with Bitcoin.
We have sixteen point: six million Bitcoin in circulation and each one is worth five thousand seven hundred fifty nine dollars at this given moment, because that we are able to calculate a valuation a little under ninety six billion.
Okay, it's very simple math. It's, a simple multiplication problem between the price on the given market and the supply, and that gives us market cap or market valuation, and that is what you want to look for.
You have to ask yourself the question: do I think Bitcoin as a whole, not one Bitcoin but as a whole is worth ninety, almost ninety six billion dollars. Do we think it's worth that now the honesty some people think it's worth much more, and some people think it's not worth that that's, all subjective it's up To you to make that decision same with dogecoin, do you think that dogecoin is worth one hundred twenty two million, not a fraction of a penny? You know that doesn't matter that's, irrelevant Doge, could cut half of its supply and the price will jump up tomorrow and it might be something you know if I double its price, because you're.
Cutting the supply in half and that's, simple supply in the main economics, so same things applied with crypto currencies, much like it is with stocks or anything else, all right and the last one that I hear in this one.
As you all know, I love I love long-term, investing as I always been push it for you guys in unit trading III. Both ends of it, but the big thing I always tell you all - is diversification. I don't care.
If you're day trading, I don't care. If your swing trading, I don't care. If your long-term investing, I don't care, if you you know, you're gonna long-term, invest in the sense of just buying some stuff and never even touching it until you want to retire.
Okay, it doesn't matter. What position you're in? If you do not diversify, you are set for failure. Okay, now you might be the oddball that picks one cryptocurrency or one stock and just goes absolutely bonkers in the sense of your gains.
You do really good, but I hear so much in the community whether it's, someone who's that, like $ 200 and their portfolio like I mean I'm, just gonna gamble it on one cryptocurrency or I Am just gonna put it in this one stuff.
I think it's. Gon na be the next etherium. How can you be sure that it's gonna be the next big coin, especially in a market? Where not only is it extremely hard to find whoa and what is gonna, be the next etherium a multi-billion dollar cryptocurrency, but also you know how do you know that you can solidify that in a market word over 90 to 95 % of crypto currencies are Gon na fail in the long term, would you, like those odds, would you like to you know, consider yourselves uh yeah, I've, got a five to ten percent chance of actually making a return to the long run.
I mean I don't think anyone would want to put themselves in those shoes, but they don't, take that kind of backwards kind of step and then take the whole picture. In the perspective of the risk you're, taking in that case, we don't want risk.
To that degree, we want to mitigate our risk. We want to diversify. We want to have a multitude of holdings and the way you do this in a very general explanation, this picture, for example, you know we find cane crypto currencies.
We're gonna invest in okay. If we take that same mindset, let's say that nine out of ten are going to fail. You would still say like well, Nick it just doesn't sound, very good, like I'm one one or two coins that might like make it in the long run and all the rest are gonna fail.
Yes, that is most likely gonna happen. If you invest this early on a crypto currencies now there are certain safety measures you can set too like, for example, stops to mitigate your losses, and then you can take that and put into something else, and then you might, you know eventually start picking out some Winners, however, if you put it all into one, you're, going to probably lose everything if you put it into ten and when one or two, those one or two winners in the crypto space being so early on, are going to go up exponentially.
Okay, they are going to be winners for the long run and when crypto markets are multi trillion-dollar market in the the way way way way future you know you're, not gonna be worrying about. Oh, I lost some money on you know.
Did you buy it or I lost some? Many of you know money on uh. You know the Monaro or whatever you know, those those eight out of ten holdings, because those were so so small, even in the trading scheme of things.
If you do this among us, you know ten different coins. I can guarantee that in most cases you will win with more with those two winners, one or two winners. Then you will, with the losses of those eight others, and especially people at some safety measures.
Like stop limits so again, you have to apply to your kind of strategy, but this is more of a mindset. Okay, it's very kind of general stuff. You should keep on applying every time you do trading and investing, because these misconceptions will burn you just like they have everyone else in traditional markets and in cryptocurrency.
Cryptocurrency is no different. It's. The reason why it's charts and it you know everything bring just like a stock market. You have to comparative things: where is das or US dollars to cryptocurrency? We have all coins to Bitcoin and you've got to treat it in the same way.
Okay, nothing is guaranteed. You just keep going up, so we don't want to again by just things that are low. We do not want to look at things determinate of their their price value in the sense of US dollars and even Bitcoin as well.
We want to look at their valuation and market cap, and we also don't want to go all-in on something. These are very common patterns and I pray that you all will not fall for these traps as much as it can be eager to do so as much as the gamblers mindset will kick in and tell you to do this and it kind of the you know.
The shopper mindset in the sense of like looking at the price again, these are really good principles to learn early on to make sure you avoid those mistakes and if you can have a trading history or an investing car, you know path in your life and throughout Your journey of cryptocurrency, where you avoid all of these, oh my gosh, you are, you are so fortunate because most people continue to fall for it.
I know I did I was like ah come on. I think I could just buy into this. I remember when I think actually, I'll, be fair with you all. I think my first I remember exactly my first penny stock I bought when I was buying.
You know trading. You know stocks and everything when I was very young, and I thought I was gonna - be the the one oddball out and everything - and I thought I'd - won it, and luckily I didn't, put too much money and I Was young at the time - and I learned it very early on so it's best to learn these things early on avoid making this mistakes account.
I wan na stop rambling. I just want to let you know one though, because I think traders and investors mindset is important to build early on, so you'll, be successful in the long run. Alright, everyone that's it for the video.
Thank you all. So much for watching, if you guys, have a question that you're dying for me to answer, leave it down in the comments down below or you get a technical indicator. You want me to cover on the channel.
That being said, though, everyone. Thank you all so much for watching and I'll, see you all in the next video stay tuned. You