Hey, friends!
Christmas is here, and there was no ETF approval before January. Some rumors about things might happen already January 3rd, so there will be sleepless nights again soon. But first, take some days off (if you can) to enjoy some time with family and friends.
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Some lessons from the last 2 months in crypto
It’s been a wild ride in crypto for the last 2 months.
In today’s issue I wanted to reflect on what I did right, what I did wrong, some thoughts on how I can improve going into 2024.
-Buy more spot positions as I tend to get scared faster out of a position due to seeing the PnL swing heavily. Bigger size is not a problem for spot positions
As an example I remember I sized up on $ETH back in July at $1,830. 1 month later we had a flash dip that nuked $ETH to $1,500. It stayed at this price level for months. If this was a perpetual position, I’d probably freak out. But spot positions you learn to accept that market swings temporarily, and that this necessarily isn’t the end of the world. However, I think this is only true for majors or coins you really have conviction in. Holding $BONK spot for a long time is not a strategy I would sleep safely with in the length at least, but who knows…I might be massively wrong. If it is the new Dogecoin, then this would be only the start.
-Don’t over-rotate: How many times have you jumped from play to play only to miss out on the pump. As an example I was in $SEI, at $0.23, but then CFX 0.00%↑ started to pump and I sold my $SEI to catch the $CFX pump. However, I was late to the party and ended up losing money on $CFX. Then $SEI started pumping and I got in at $0.31 instead. You see where this is going? Hehe.
-Don't chase price: sometimes I can come over a news trade that was hours old, and because of boredom I get in because: what if it pumps more? usually, it ends badly.
Too many examples here really.
-Size up when it matters. I had a crazy conviction about $WLD after reading Thiccy, Zommer and DeFiSquared’s thesis about Worldcoin. Check this: https://x.com/thiccy____/status/1735937712530555190?s=20
My reaction to this thesis with my friend Blank here:
On $WLD I sized up heavily and I had like the perfect entry, but on a pullback from 3.20 to 2.88 I reduced size 50%. We all know how far it went. Could have been one of my best trades of the year if I kept my size. Also I went to sleep with a stop loss and take profit on $3.50 thinking the narrative didn’t going to play out that fast. Woke up the next morning and saw $WLD at $4.10. So basically two big mistakes there. I didn’t let my conviction work.
-Don't use hopium as a strategy, when you feel something is wrong it probably is - intuition is a great tool. I wrote about intuition in this newsletter issue
-Know when to cut losses: Holding onto a sinking ship can drown your finances. Recognizing a bad investment early saves more than money.
-HTF vs. LTF: Your trade can make sense on a 15 min chart, but price action on the daily chart can invalidate your idea. I have more success trading at higher timeframes, but I check lower timeframes for hints on upcoming movement.
-Trading requires emotion management: Understanding and managing your emotions is just as important as understanding the trade, the market, and the prevailing conditions — sometimes more important. Crypto day trading is at a convergence of the cutting edge of overlapping fields — finance, blockchain, community, and web3. When you are on the cutting edge, expect to find friction.
-FOMO: Fear of missing out. You might think you won’t be affected, but rest assured, one day you’ll find yourself waking up at 3 am to check your crypto trades. At least this has happened to me. During December and the potential BTC spot ETF approval I’ve almost woke up every night in case there might be some news about the market
December summarized
Here’s my PnL graph for futures trading for December. The last high was on the $WLD trade. As you can see I haven’t won many trades after. Some of them I have been up on, but I have roundtripped so many times.
But if you study the chart you can see one thing I’ve done right (and that I am happy with): small losses, and big wins (when I first win).
And here’s a breakdown of my December:
369 trades, and almost a 50/50 win rate. Mostly longs. What’s surprising is my avg. trading duration (only 32 minutes). Some of the trades (scalp trades only lasted 1 min, so they pushed this down). However, for me, futures trading is a way to try to gain additional gains to my spot holdings. Spot are long-term holds, while futures are more short-term. Anyway, I think I need to be more patient in general. My style is usually narrative trading, and when the right accounts tweet something I just press market long immediately. In retrospect, I need to force myself to hold longer. But the temptation to take profit immediately is often there (unfortunately).
What are some lessons you’ve learned from the market in the last months?
To finish this I just want to add some tweets/threads that inspired me this week:
A good article by DeFi Ignas below:
Thank you for reading!
And Merry Christmas, anon <3
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Really enlightening read! As someone in content marketing, I see fascinating parallels between your crypto trading strategies and the world of digital content. Balancing risk, timing, and intuition is crucial in both realms. It’s intriguing to observe how principles from one field can offer insights into another. Thanks for sharing these candid lessons – they’re a valuable reminder of the universal aspects of decision-making in any fast-paced, dynamic industry!
Thank you for the knowledge sir! You helped me one on one a couple years back and I’m super grateful. I love reading your stuff and super happy to see you got a column like you wanted. Congratulations my friend! Hope you have a very merry Christmas/happy holidays!
Look forward to your Alpha in the future!
Thank you 🙏🏽