Can crypto trading and investing be taught in just one book?

Crypto-currency books for beginners or non-users tend to follow a very similar pattern. Almost the entire article begins with the obligatory history of money and explains why fiat money is, shall we say, an inconvenience – to put it politely. Then bitcoin (BTC) came along with some shiny new technologies that could solve some of these problems.

These books cover mining, wallets, exchanges, Ethereum and smart contracts, altcoins and decentralized finance, also known as DeFi. Once the authors are sure the reader is convinced of the value of investing in cryptocurrencies, they close nicely with a (predictable) conclusion and pile on smugly.

But even with the desire (and know-how) to buy their first cryptocurrency, readers may feel like there’s a barrier to taking the next step. In fact, once the purchase decision is made, there are a number of new questions that the savvy crypto analyst will want to answer.

How much should I spend? What strategies are available to me? Should I invest or consider trading? How can I maximize profits while minimizing risk? Few books explore such terrain to give readers the confidence to enter the market with at least half an idea of what they are doing.

Breaking the mold?

Digital assets: Your Guide to Investing and Trading in the New Crypto Market is designed to fill this gap. The book, written by Jonathan Hobbs, an investment industry veteran turned independent consultant, is in two parts.

Of course, as expected, the first part starts with the gift of money, but honestly, it would be hard not to mention this in a book on cryptography for beginners. And let’s face it, we never get tired of hearing how bad the traditional financial system is.

Hobbs then gives a lowdown on bitcoin, but only to show that it can be trusted, that it is a hedge against inflation, and that there is a reason why it will continue to rise in value in the long run.

For example, Ethereum and DeFi are explained in a similar way from an investor’s point of view. B. how to make money by placing tokens on lending platforms, trading derivatives, or providing liquidity for exchanges.

Part 1 concludes with a few chapters on how the supply and availability of crypto has greatly improved for institutional and retail investors. The development of institutional custody solutions and cryptocurrency funds and trusts has finally opened the floodgates to a growing volume of funds from institutional and corporate investors.

Improvements in the security and functionality of retail trading and portfolio solutions, as well as the growth of the DeFi, are meeting the needs of individual investors like never before, putting us ahead of most other books.

Saving for a rainy day

Fortunately, Digital Assets has only just begun. The second, longer part covers all the intricacies of trading and investing, starting with how much of your assets you should hold in crypto form.

Hobbs explains the importance of a diversified investment portfolio and compares historical returns with different ratios of stocks and up to 10% in bitcoin. Some readers may be surprised to learn that, due to the volatility of cryptocurrencies, he does not recommend laying too many eggs from his nest.

The section on digital assets also provides examples of the impact portfolio rebalancing can have on reducing risk and vulnerability to volatility.

The book continues with crypto investment strategies covering the increasingly popular HODLing, Dollar Averaging and the more aggressive Value Averaging. The possible results are illustrated using examples with real historical data over different periods of time.

And then it’s the big kids’ turn. ….

Execution of a transaction

If you are a regular fan, technical analysis will be an incomprehensible source of confusion. Of course, some will understand what a downward wedge is, what inverse support resistance is, and the importance of the 20-week moving average.

But you have no idea why these things affect the bitcoin price in this way, so you have no assurance that you can use them to predict future action. Correction: Now you should have an idea.

Hobbs’ introduction to reading charts, recognizing trends, moving averages, trading volume, and Fibonacci retracements makes technical analysis seem like something you can actually do, or at least learn over time.

Digital Assets then explains how to take advantage of bitcoin’s volatility by trading short or long futures contracts. It shows how to read candlestick charts and describes a number of trading styles and their corresponding trading periods.

Of course, it is as important to limit risk as it is to take profits, and there are techniques that use stop losses, position limiting strategies and different types of orders that can be placed on the exchanges. Hobbs also explains when to use leverage, when to open and close a trade, and when to take profits.

A good investment?

The final chapters of Digital Assets discuss the potential of including altcoins in a portfolio of cryptocurrencies, explain the basics of options trading, and offer advice on how to integrate all of this into a personal investment strategy.

The book has an accessible style, with many diagrams and real-world examples to illustrate the advantages, disadvantages, risks and potential returns of each of the different investment and trading methods. Some concepts related to stop loss and bitcoin options hedging you have read several times to fully understand them, but they can also be used.

If you really want to criticize something, it would be examples of comparing different strategies between trader A and trader D, which is sometimes confusing. However, it wasn’t as confusing as when Hobbes decided to get creative with character names – by the end of the variant chapter, it was hard to remember who was who among Lagertha, Ragnar and Utred.

In summary, although Digital Assets doesn’t have much to offer those who are already professional traders, for those who want to get into trading but have never been confident enough, Digital Assets is a pretty important read. You can go sell perpetual futures while you hedge with a protective call option in a heartbeat….. and maybe I’ll see you there.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph.

frequently asked questions

Is metal mesh a bad investment?

So is Chainlink a good investment in 2021? Yes, absolutely. However, it is difficult to accurately predict the price to be achieved as many factors are involved, the most important of which is the general state of the market.

How to invest in crypto-currencies

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Is it worth investing in a fence?

According to Crypto Rating’s predictions, Chainlink looks to be a great investment in the short term, as the price is expected to increase by more than 96% over the next six months, bringing LINK to $12.16. In two years, LINK could be worth $24.27, up nearly 300%.

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