Everyone says it, but here’s the fact: Most people don’t buy low and sell high.

How can I know this? Because if most people did, there wouldn’t be a low and a high to begin with. The definition of buying low and selling high might be better put: “Do the opposite of whatever everyone else is doing.” A high is high because most people are buying or holding. A low is low because most people are selling. Buying low and selling high is moving against the trend.

This can be done on the minute chart, the hourly chart, the daily chart, the monthly and the yearly chart. In stocks, it might be more common to look at the yearly chart, and in crypto, a 5 minute chart might swing 20%.

So then, practically, how do you actually buy low and sell high — and also consistently win? It isn’t as easy as it sounds. With everyone trying to do exactly this, you have to — by definition — be the minority to win.

Two primary types of trading breaks down to your risk tolerance and style, but if you are a day trader, the answer to success is: “psychology”. If you’re a long holder, the answer is: “fundamentals”.

Day Trading: If you are a day trader (defined as someone who trades on short-term fluctuations, often daily or several times a day), whether or not a project is legit or good, your goal is to maximize the power of your money and increase it.

You use psychology as your primary tool. Just like anger or happiness, where at first you feel intense highs and lows, the assumption is that everything tends to return to a relative neutral (in normal individuals). The more extreme the swing, the more likely and dynamic movement back toward neutral will be, just like waves.

People move in the market the same way, because, well, the market is guided by emotions. Generally, any fast pump will be a fast dump because everyone is trying to swing trade and it creates a self-fulfilling prophecy. The vast majority of time when something moves quickly, the emotions are volatile and people react. Zoom out on the charts, and you’ll see the same general patterns — just slower.

So, how can you tap into the psychology and emotions of the market, as a day trader?

You look at forums and chat boards and project news on a near-constant basis. From that you can asses market momentum and project momentum. You are aware of how people feel, and from there, you can assume the level of hype. Even if it’s a scam, you can do this and make money. Me — I don’t play with cryptos with poor fundamentals, but a day trader could absolutely gamble and win on scam-coins if there is enough hype behind it. Just keep in mind that someone has to lose when you win in this case. Day trading is more about person vs person and market manipulation.

But that’s not all there is to know about hype. Most day traders who chase the pumps lose because they can’t determine the difference between short term and long term hype. Short term hype means that by the time you notice the pump, it’s too late to buy in and you’ll get burned. Long term hype means that if you’re paying attention, you could still be early after an initial pump, but a day trader can lose because they may sell too early and have to rebuy later at a higher price.

If it’s a short-term hype, and you see a pump, don’t touch it. You’re already too late. Short term hype could be an exchange listing or a rumor that hasn’t been verified. To catch these trains, you need to spot the symptoms of coming hype, before the pump, and that means being tapped into every little bit of information and rumor and point of discussion. However, if it’s long-term hype, and you saw it pump sooner than the majority of other traders, then buy in and ride the wave because a legitimate partnership or meaningful exchange listing or a government regulation that’s positive can absolutely make sustained hype, and there’s always someone later to the boat than you.

The recent hype with ONT is a good example of this. ONT, being associated with NEO, was an obvious long-hype project. Why? Because it had the backing and the association of a major top 10 crypto project already. It was provably authentic and powerful. It also ran its coin distribution in a way that created significant demand, and by giving away tokens to its earliest supporters for free, no one had an initial ICO to compare to, and thus — no single initial cost.

What do I mean by this? I mean that because not a large volume of people bought at 30 cents, or 1 dollar, there weren’t pre-determined point of mass dumping when a large amount of the early investors hit their targets: double, triple, 5x, or 10x. Thus, any sell-off was short-lived, and the hype carried the project into the top 30 cryptos in mere weeks. Day traders were generally burned because ONT just kept rising, and trying to play the swing trade never paid off compared to holding.

A smart day trader would’ve detected this long-term hype, and expected much bigger swings before making any moves.

ONT, though, is a unique case. Other projects almost universally have a decent pump and dump wave, and if you recognize the relative highs and lows to projects, and also recognize when you should stand back and not day trade (when legitimate and powerful news comes out, for instance) you can do quite well as a day trader. Long-term hype can come out from nowhere, and that’s another risk you’re taking as a day trader; by playing the short-term game, you might be surprised when you aren’t ready for it and you lose out a large movement.

As a day trader, you are working off of a small margin. In order to utilize the small margin, you need to gamble a larger amount to make it worth it. 10% on a 5 dollar investment isn’t worth the risk, but 50,000 USD might be, especially since 10–20% swings are common in crypto. Great earnings in a day is possible. But, a project in crypto can go up 10x in a single month (or sink 90%). Thus, the consequence of mis-timing can be huge. To be a successful day trader, you have to be very in-tune with the market, and it really is a full-time job.

My recommendation for day traders is to choose a few projects that you know well, and that you can fully commit to following regularly, and trade between them. This way, you’ll be able to be in tune with a project and recognize short-term vs long-term hype. Enter new projects very carefully only after watching them for some time so that you don’t make the mistake of entering during the wrong long-term phase. The initial entry point is the biggest moment of risk for a day trader in my opinion. And, always remember, as a day trader there is ALWAYS another opportunity. There is always another short-term hype coin. Don’t let your emotions take control of you.

Some practical tips:

Sell on the way up, and buy on the way down. Averaging works. You are taking advantage of the fact that a project can only lose 100% of its value, while it can gain 1000% or more. The more it sinks, the more your buying power. The more it gains, the more your selling power. I’ll do a write-up on this, sometime, but I hope this makes sense on the basic level.

Use Limit Orders. Being emotion-less is the way to beat the market. Set your buys and sells, and don’t move them. If they get hit, great, if not, there are other opportunities. Have a number of dream prices on buy and sells for every project already in the system. I have been lucky to catch 3ish “flash crashes” in the past. You never know in crypto.

Never put a stop loss. Related to above, I’ve seen NEO go down to 3 dollars from 26 in a flash crash as the stop losses got executed and then, all the buys got filled immediately after all in a minute or two. Whales are watching for a nice line-up of stop losses, and they will absolutely take full advantage if they see the perfect storm. Remember, this is an unregulated market.

Always keep some fiat and your primary trading pair on hand. I wish I could say I follow this rule, myself, but I can’t tell you the number of times I wished I had USD or ETH/BTC on hand for an amazing buy that lasted all of 10 minutes (if even).

Have clear goals and take your profits when you hit them. Everyone says this, and it’s true.

Don’t spend what you can’t lose is true, but also, don’t move right away when you’ve lost. Take a breath, and don’t react emotionally. You’re more likely to make the wrong decision right after a loss.

Diversify into low caps. Especially in day trading, if you’re diversified in low caps, then you take advantage of the fact that it’s high risk. You don’t spend too much in a single project, but if any moon, your gains will be quickly significant. Playing with a large percentage of your portfolio in small caps is a sure way to lose, sooner or later, so only put in small amounts into the risky bets. This way, if you lose, no biggie, and you only need a couple winners.

Long Investor:

The beauty of trading long is that there is much less stress. You don’t have to pay so much daily attention. You can leave for a week and come back and not worry if its down or up, and when there’s a good time overall, you can make a move after the luxury of careful thought and consideration of other aspects of life. Time to react is the biggest emotional difference between day trading and long term investing.

Of course there are risks as well, but many risks can be mitigated by proper research. A project’s fundamentals based on team, progress, and potential adoption, can give you the peace of mind to trust the project and not react to swings. As a long trader, your goal is to increase your position anytime there’s a significant drop because you trust the project, and sell only when you “should” take profits to lock in your gains. You can instead put your energy into supporting the project, raising awareness, and often times reaping the rewards associate with long-term holders.

In a long-term trading strategy, it’s very true: “Time in the market matters more than timing the market.”

Buy whenever if the project is good because you’re not worried about 5–10%, even 50% swings; you’re aiming at the bigger picture: 10x, 20x, even 100x.

Additionally, most crypto projects reward their holders with staking, interest, and community drops. They appreciate their believers and supporters because they know this is a high-risk investment. They want their believers to get more for riding out negativity.

NEO for example, is one of the strongest crypto projects out there — but they have had their share of downs like any project. People lost faith in the project again and again, but as NEO continued to prove itself; it turned out to be the best-returning investment of 2017. And, on top of this, long holders got the benefits of GAS tokens, simply for holding through the rough times.

Certainly, even as a long-term investor you can’t completely sit back and relax. You still have to watch the progress and market news to determine if it’s legitimately negative for the project.

“Is this a death sentence for this project?” is the question you should be asking. China banning ICOs was a legitimate concern for NEO. It crashed the price from $60 to $12, and much the overall market moved with it. But for those who were long holders, who believed in the project despite China’s ruling, it was one of the best times for entering and increasing their stack.

And therein lies an important point: every significant crash is legitimate.

The price wouldn’t crash unless it is legitimate. You, as a long-term investor, will have to determine if that legitimate concern is legitimate enough for you. At this crux, you are taking into account this legitimate concern (no one is stupid for selling, and no one knows the future), and you must decide if you’re going to sell low or not.

When there’s a project crash due to negative news, it’s never going to be a good time to sell; you don’t have the benefit of selling high anymore. By selling low, you are betting that this legitimate concern is enough to damage the fundamentals of the project enough for you to exit at this poor time.

I don’t blame those who exited NEO during the China FUD, but clearly, they made the wrong decision (and maybe they didn’t — because their money in other places could’ve out-performed NEO).

Whatever the case, for long investors, project fundamentals determine the general movement of the price more than temporary emotions. If you bet wrong on a team, of course you’ll suffer. But in general you have a lot more time to research and follow a project, and then react if you aren’t convinced by a project’s fundamentals.

One of the most common phrases I hear in crypto is, “I wish I bought at ___ dollars.” But the truth is that no, you probably wouldn’t have actually bought at that price, or held through the shorter-term gains. It’s easy to look back and say, “Oh, NEO was 3 dollars at one point? Jeez, if I’d only bought then!” Except that most people were selling; people thought it was a Chinese scam, and faith in the project was at a low. The truth is that when people get a chance to buy at a low price, they don’t because they don’t have faith in the project. It’s the ones who hold fast to their faith that get rewarded (or hurt, if ill-place faith).

Some practical tips:

Choose high cap projects that have the strongest fundamentals in regards to actual progress. Too many large cap projects are out there based on whitepaper, or on promises and advertising and hype. You are taking on a huge risk if you follow the trend and haven’t seen any proof that the team can execute on their promises. If it’s low cap, then this risk makes sense, but choosing a high cap without product is dangerous.

Know what you’re investing in. Thanks to being a long investor, you have time to research. Do it. Don’t move until you’re absolutely convinced that a project is going to be realized, or at least, has a high chance of being realized. Understand the impact that your favorite projects could have on the world.

Remember, besides team and technology, adoption is key. Even if the technology is amazing, you do need “hype”, which I would rather call, “community”. CoZ made a huge difference in the growth of the NEO ecosystem. They are arguably the best community team in crypto. Community involvement builds a long-burning hype that can help the project in ways that the team can’t necessarily foresee. What this also means is, get involved in the projects you love.

Choose only a few. Long investments are all about true belief. This means that you’re putting more into these projects than speculative investments. This means that you need to maximize the power of your involvement and energy because, remember, time is money. Don’t spread yourself too thin.

My favorite long-term investments are: NEO, ELA, LRC, and WTC. With honorable mentions to ONT, ADA, ICX. Yes, most of these are medium to large cap (minus ELA which I would still consider small-medium cap at the time of this writing), but when you’re talking years of investing — you’re looking at how much the entire crypto-sphere can grow. I personally think crypto has a huge amount of growth left in it; I’d compare crypto to the pre-teen stage of human development.

Conclusion: Personally, I’ve found an inverse correlation with the amount of trades I make and the success I have. Thus, I don’t day trade often, and only a small amount between projects I love so that if I end up “stuck” with a “bad” trade — it won’t matter long-term; I’m happy to hold either token I’m trading between.

I’ve recognized and accepted that I’m too easily affected or too emotional or too inexperienced or too easily manipulated by whales to time the market accurately, and the stress isn’t worth the reward. I also love to support projects I believe in. To put my own personal energy towards building a community around projects that have meaning and value feels more rewarding than day trading because I believe in crypto as a whole.

Crypto is changing the world, and that matters more to me than “maximizing” my gains. If I disagree with the ethics of a project, I won’t invest in it even if it could clearly 100x. To me, investing long makes it more about people working together to better the world rather than person vs person trying to make the most money off each other.

Thanks for reading.

To read my article on crypto as a whole, and one of my favorite projects, Elastos, click here: medium.com/@kenneth_21220/your-future-with-blockchain-elastos-da429710602c