We are not even two weeks into the new year, but I’m over $60K in trading profits.  If you can hit singles and doubles consistently, profits can add up fast.

In…out… ring the register.

One thing I’m not doing is falling in love with stocks or sectors.

Remember Bitcoin?

In December of 2017, bitcoin hit a high of nearly $18,500. However, since then it’s dropped by 80% and is now trading at $3,623.76.

Despite never trading single a cryptocurrency, I followed that market closely, because I knew, that crypto related stocks would go bananas too.  

And boy was I right…

In November and December of 2017, I made over $179,227.50 in realized trading profits…

… mainly from one source…

…bitcoin stocks trading under $10 per share.

In fact, $48,199.52 of those profits came in DPW Holdings (DPW) alone.

I was making so much money trading bitcoin stocks, you could find me in my hot tub on most days. You see, I was locking in profits before the market was even open… in the pre-market. That said, my day was over before most people were starting theirs.  

Bitcoin (BTC) is a lot harder to trade than stocks…

Here are some lessons…

Now, when the cryptocurrency market was inflating… I was trading stocks. You see, I figured trading tokens would’ve been a lot more difficult than trading penny stocks and small caps.

There were so many stocks getting into blockchain and cryptocurrencies, and if major tokens like Bitcoin, Ethereum, and Litecoin ran up… those stocks would follow suit.

Here’s how I fared when Bitcoin broke $10,500 back in 2017…

You might be wondering, “Jason, why didn’t you just buy Bitcoin out right?”

Well, Bitcoin is a heck of a lot more volatile and risky than small caps and penny stocks. Cryptocurrencies are relatively new, when compared to stocks. Consequently, there’s a lack of regulations and transparency in the crypto market. Moreover, cryptos are a lot less liquid than stocks these days…

For example, on Bitfinex (a cryptocurrency exchange), Bitcoin trades on average around 750K, while Bitcoin only trades around 144K. That’s a whole lot less than the stocks I trade on a daily basis. When there’s a lack of liquidity, it’s easy to get caught up in volatile moves. For example, when crypto markets are illiquid, and you have stop-loss orders in place… you could be getting filled well below where you would expect to be… that would be really painful.

Additionally, there is no centralized exchange for cryptos. What that means is that prices are quoted on a specific exchange and if you actually wanted to see the depth of the entire market… you would need to have multiple accounts with brokerages. However, with penny stocks and small caps, you can see all the bid and ask prices on Level 2 quotes.

That said, even though I follow the crypto market, I focus on my A+ setups and primarily focus on small caps and penny stocks – which has been working for me for years.

The reason why I’m focused on small caps and penny stocks is the fact that the cryptocurrency market has “died.” There is not a lot of volume, hasn’t been many positive catalysts, and some exchanges have been getting hacked.

Cryptocurrency Market Could Be Slow for a While…

Now, the U.S. Securities and Exchange Commission (SEC) has rejected multiple applications for a cryptocurrency exchange-traded fund (ETF). You see, they probably won’t approve it until they figure out exactly how to protect retail investors from the plethora of risks in the cryptocurrency industry.

Moreover, the SEC’s Office of Compliance Inspections and Examinations (OCIE) is cracking down on the cryptocurrency industry. The OCIE will monitor trading, management of tokens, the safety of client funds, and compliance.

For the time being, I don’t think cryptocurrencies will reach its peak any time soon. With this cryptocurrency crackdown, it poses even more risks and potential negative catalysts.

Now that the cryptocurrency market has died down, I’m looking for the next hot sector that the hypebeasts will drive higher. You see, being a stock trader allows me to do that… but cryptocurrency traders can’t just hop into the next best thing.

Don’t Focus on One Sector for Opportunities

If you only know how to trade digital tokens, you’re limiting yourself from uncovering opportunities. You see, with small caps and penny stocks, we’re able to go with the flow. If the cryptocurrency industry is hot… we’ll trade crypto stocks. However, if there are no potential catalysts or I don’t see any of my patterns in these names… I’m looking for the next big sector move.

There’s a cycle with penny stocks and small caps. Hypebeasts are constantly driving different sectors.

When the bubble popped in the cryptocurrency market… we weren’t tied down to the industry. Rather, we were able to be fluid and spot the next hot trend… pot stocks

Now, I was able to spot patterns in pot stocks, as well as identify potential catalysts.

Consequently, I was having some trades like this:

Here was my thinking on NBEV (a pot stock focused on CBD beverages) – which was sent out to members of the Millionaire Roadmap:

NBEV – CBD play with a good base of support setting up between $3.50 – $4. Missed last week’s $3.56 – $4.64 bounce so was sure to catch the higher low continuation pattern when it drifted for 3-days. Goal is $5ish for profit.

While investigators try to figure out how to clean up the cryptocurrency mess, we’re going to be focused on other sectors in the stock market to generate profits. Now, if you’re interested in moving from the cryptocurrency market to the stock market, check out how you can cut the learning curve.