Crypto has brought trading to the masses. But is that actually a good thing?

The language of trading has become so commonplace in the cryptosphere that it’s easy to forget how utterly bizarre it is that regular schmoes like you and me are being given access to such sophisticated trading tools and instruments. Want to trade options? Forget years of training in quantitative analytics - here’s a fun two-minute video explainer instead. Throwing your money into an active volcano has never been easier!

Indeed, if you wanted to point to one thing that crypto has already disrupted, it’s the idea of trading as both pastime and profession. In the face of international, hyper-volatile, 24/7 market activity, crypto exchanges have had to innovate and evolve or face rapid extinction. The result has been an explosive arms race, where increasingly exotic and high-risk trading instruments have become an expected and easy-to-access part of the ecosystem.

After all, if you can use EMA 7-21-50-99 compression theory alongside multi-exchange order book analysis as the basis for a coin-agnostic put-and-call strategy, I mean, why wouldn’t you?

A long time coming

Legacy markets have long treated so-called retail participants as an almost embarrassing afterthought. The UI sucked, the fees were eye-watering, the prohibitions downright patronising. Take, for instance, the idea of a sophisticated investor (AKA anyone who earns more than $250k a year). Theoretically it’s a way of protecting people from risky investments, but in practice it’s just a blunt, outmoded way of keeping regular folk away from high alpha opportunities such as seed funding rounds and IPOs.

Crypto has transformed all that. Trading has become fast, frictionless and, a lot of the time, fun. Traditional gatekeepers have become increasingly powerless as global exchanges provide one-click access to IEOs, high-leverage instruments and even stock market derivatives. So mainstream has trading become, that TikTok investors are a legitimate and booming social media phenomenon. Just, please, I beg of you, don’t ever take their advice.

Just because you can

But here’s the kicker: most people are terrible at trading. The allure of making shitloads of money in a short space of time by clicking a few buttons is hard to resist, but it rarely works that way for the casual futures flipper. Full-time traders who are honest about their craft will tell you that it’s stressful, time-consuming and filled with a level of failure that most people would be shocked and horrified by. But when the wins come...

So, how do you balance the legitimate opportunities of active trading with the very real dangers? It’s all about balance and risk management. Even the best traders only trade with a small portion of their portfolio - perhaps 10-20%. The rest should be high-conviction, long-term holds, such as bitcoin and ethereum. That’s the side you don’t touch, even if you’re on the receiving end of a savage correction, because you know that time in the market will always beat timing the market.

Crypto could barely be more bullish right now and that’s a great environment for trading. But be careful, because it only takes a few shonky decisions to leave you with less bitcoin than when you started - even if you’re actually making money. And given what could well happen to bitcoin over the next year or two, we think having less of it is the worst possible outcome right now.

Happy trading!

Luke from CoinJar

P.S. If you’re keen to give trading a shot, CoinJar Exchange has some of Australia’s lowest fees, deepest order books and most advanced trading tech. Try it today!

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