Here are some basic tips and tricks for investing in and trading Cyber currencies.


“The tips and tricks below shouldn’t be mistaken as professional investing advice. If you want professional investment advice, consult a fiduciary.”

Cryptocurrency Trading is the Forex (Foreign Exchange) of cryptocurrencies. This means that you can trade different cryptocurrencies like Bitcoin, Ether, Litecoin for USD. Most Altcoins (cryptos that are not Bitcoin) are paired with Bitcoin. The bigger ones are also paired with fiat currencies. It doesn’t require mining hardware nor investing in Bitcoin High Yield investment programs or Bitcoin cloud mining (which always has risk involved in their integrity).

High Or Low: Aim to buy low, sell high… try not to buy high, sell low. Look at the price trend, if you are at the highest point it has been in the past 24 hours or so, that is inherently riskier. It can make sense to buy as the price starts to break out, but buying after a breakout at a new high while filled with excitement is a little “irrationally exuberant.” This is to say “buy the dips” and “the best time to buy is when there’s blood in the streets… even if it is your own.” Conversely, the worst time to buy is generally right after the price has shot up and everyone is overly manic. If you do buy high, consider HODLing (to “HODL” is to Hold On for Dear Life as the price goes down; it is what you do when you buy high and then neglect to set a stop… or if you are going long and can’t or don’t want to cash out yet).

Figure out if you want to go long or short: Are you going short with every penny you have to invest, or are you going to go long with some and short with some? Long term investors will pay a lower tax rate if they can hold for over 12 months, but as a trade-off they WILL have to sit through corrections (likely seeing their balance go down 50% plus on paper as often as they see it go up). Short term investors can avoid corrections if they are nimble, but they’ll owe taxes on the profits from each trade they do along the way (see: how taxes work with cryptocurrency to understand how the long term and short term capital gains tax work with cryptocurrency here at Covault).

Considering the long run: If you are going long, consider dollar cost averaging. No better way to avoid making a poorly timed trade than to dollar cost average (buying incrementally instead of all at once and thereby buying an asset at its “average” price over time).

Looking to be a Trader: Use an exchange, not a broker. You’ll save money on fees. Hold some coins, range trade some coins, keep money on hand for a dip, and set some high-ball and low-ball orders. If you want to ensure you are happy no matter which direction the winds blow, then be set-up to benefit from whatever comes next. If you have some coins you hold, some coins you trade daily or weekly, some money set aside for a dip, and some high-ball and low-ball orders set… then you stand to benefit regardless of what happens.

Take A Laddering Approach For A Change: Consider laddering your buys and sells. In other words, instead of buying or selling everything in one chunk, set incremental buy and sell orders to buy when the price goes down and sell when the price goes up.

Study On Technical Analysis: Technical Analysis (TA) is the analyzing of price and volume data and trying to predict future trends based on that. If you know how to read a chart, you’ll be better able to understand how things like candles, moving averages, RSI, and the order book can clue you in to good spots to buy and sell. TIP: You don’t have to be good at this, you can just follow others who are.

Pay Close Attention to the Order Book: The order book (is found on all exchanges) can give you a good sense of what buy/sell orders are on the books. If you see a lot of sell orders at a certain price and want to sell, you may aim to sell under that price. Likewise, if you are waiting for the price to drop to buy, look at the distribution of other people’s buy orders.

Diversify Your Portfolio Of Crypto: Realize that a diverse portfolio and investing strategy will eat into gains as often as it staves off losses. The only way to make big profits most of the time is to make risky moves. If you go all in on a single coin at a given price and it goes up, that is a payday. If it goes down, your investable funds are locked into that crypto (unless you want to sell at a loss). Diverse strategies protect against this, but they will also eat into your potential gains (as it is rare for everything to go up or down at once). Know what you are looking for and know how to weight your portfolio to reflect that. With that above advice in mind,

For example, “there is nothing worse than getting frustrated with BTC, moving to ETH and missing a price spike, then moving back into BTC and missing the ETH spike. If you have some of your funds in all the coins you trade, you’ll avoid missing out on a unicorn (a term one can use to describe an odd event, like a giant price spike in a short amount of time)”

Watch Out For Scams:  There are a few different scams in the crypto world. Anything that isn’t buying a coin with a good reputation is a significant risk. The advice is all about BTC, but it is generally true for altcoins too. The thing is, altcoins tend to follow BTC on a good day, and get drained while everyone rushes to BTC on a dreadful day. ICOs meanwhile are new altcoins. Invest in Alts and ICOs with caution. Some will be very successful, but you have to watch out for scams. It can be a bad strategy to ignore the top cryptos and bottom fish only.

Trading Bots Are Tricky: To the next point, lots of traders use trading bots. Some are white hat, some will try to get you to make bad trades. Keep an eye out for bots. If using a bot, be careful, there are bots designed to take poorly programed bots out.

Watch Out For Market Manipulation: Spoofing caused the flash crash of 2010 in the regulated stock market, that happens times 10 in crypto. A too-good-to-be-true price spike or dip is often the work of market manipulators.

Ensure You Take Profits: Some investors think “taking profits” is a dirty phrase, but it is a rather conservative strategy none-the-less. Taking profits can result in you making less money than you would have if you did nothing and just “let it ride”… but that is only true if Bitcoin goes up over the long term. If you have hefty profits, consider taking them off the table, and then waiting for a lower price in the future. Worst case, you can buy back in at a higher price later (leaving some potential profits on the table). TIP: If a coin just went up 400%… consider taking some profits. Cryptocurrency almost always corrects at some point after a big run.

Make sure your Tax Complaint: If you don’t understand Bitcoin’s tax implications, brush up on them before you start power trading. One could get them into a situation where they make money on paper, but end the year down in Bitcoin without taking their loss… thus end up owing a bunch of money they don’t have in taxes. Those who don’t have investment experience can really get in trouble if they don’t understand the somewhat complex implications of trading crypto.