Don’t believe Capo when he says we are heading to $12k next.
Or the other day when he posted that $ETH will go to $550 (we didn’t even go there when everything went to hell June 2022: we visited $880 per $ETH).
We are in a bull market, and there’s nothing you can say to FUD me out of my long-term bags.
No sleep season is here.
Btw, I have made a free private TG group for trading with approx. 2k members. You can join it here:
Yes, we are in a bull market
Today I just wanted to ramble about different things on my mind related to crypto.
The first topic is intuition in crypto trading.
Intuition in crypto trading
The most effective way to develop trading intuition is to immerse oneself in trading experiences.
As Prop Trader says take tons of trades. You need to see how you work as a trader mentally before you can even think of making money in this game.
But simultaneously, you need to learn how to size your bets properly. Let’s say your crypto portfolio is at $100k (or $10k if that is more familiar to you, the number doesn’t really matter so think in %). If you only do trades on $100 per trade, you won’t learn anything about risk management. This will lead you to take trades that you don’t really care about. At the same time, if your risk too much per trade, then you’ll likely find yourself to react psychologically in a bad way, eg. close out your trade before it is hitting your stop loss due to big red numbers. Or take profit early because it is comfortable to at least secure some profit.
The ideal risk reward is where it makes your balls tickle, but you should still be able to sleep at night if you lose. Or, if you find yourself constantly monitoring your position then that is probably a sign that you’ve risked too much too.
My point is that you just have to find out this for yourself by trial and error.
Another reason why you should take many trades is to develop your intuition. In crypto, sometimes you get a gut feeling or an instinct about a trading idea. Personally I often get this in situations where the market is dipping. By using a combination of order book flow, Twitter sentiment and gut feeling I buy dips on majors like BTC and ETH in uptrending markets. Surprisingly often I hit close to the daily low. Also I don’t go all in at once on a dip, but instead averaging down. My worst case scenario is that I miss and turn into a bagholder, however this isn’t necessarily bad if you believe in Bitcoin and Ethereum long-term. I could never do this with very volatile altcoins (unless there was a certain catalyst). Right now for example I believe $MATIC has a strong tailwind with upcoming news both on December 14th and December 23rd.
Intution isn’t something you can give an exact recipe for, it can only be felt within when you have a lot of practice. And obviously you will be wrong a lot of times. There’s no guarantees.
Just showing a small example here about intuition on $ETH.
I never buy the exact bottoms, and I am trying to read order flow. But obviously I can’t see market orders coming in, so there’s no guarantees.
Overrotation (selling your altcoins too early)
You’ve seen it on Twitter. Your favorite influencer has just shilled you a ticker, but already the next day this coin can be “finished” and a new coin is shilled or pumping hard. You get FOMO and sell your first coin with a loss or at a small profit because you want to rotate to what’s hot.
I’m also falling for this. This is a natural tendency for humans, we want to be where everyone else is. We want the new, shining coin or at least the one that everyone is talking about.
A recent example is Celestia ($TIA). Celestia broke out at $2.50 around 1 month ago. The coin was shilled non-stop, but now that it has slowed down it’s pace a little ($8-$11), people have started tweeting about taking profits and putting these profits into new plays. For example $SOL that looks like it is having a new run from $59.
Good traders manage to time these rotations quite well, but for the average investor that reacts slower, these can become expensive lessons.
Let’s say you sold $TIA at $10 because you see Hsaka shilling $SOL at $67. However, you’re slower and don’t manage to get an entry before $69. The price consolidates a bit and go down to $67 (here your are shaked out), before it explodes up to $73. Sounds familiar? To make it worse $TIA is now $13 and the influencers are again shilling $TIA. You get an entry at $14 and it continues like this…
So instead of selling your $TIA in the first place to ape $SOL (and lose money), you could have just relaxed in $TIA riding the trend.
Okay, this was just an example. But you get the point, and I have to say I find myself in this trap more often that I like. Logically I know it is smarter to stay in spot bags for coins you believe in, but the freedom in using leverage (in order to reduce capital size on exchange + possibility to be in several bets at the same time with size) makes it so convenient.
Before I got my last bag in $MATIC I was shaken out 3 times along the way (obviously small losses each time), but holding it on spot would have made me earn much more than in my current position. Writing these things are so obvious, and I know what’s the right thing to do, but as I said, often I fall for this :) I’ve made a lot of good calls too, but the learning is in avoiding doing these stupid mistakes.
Bet more - size up
Hsaka said something interesting. I can’t remember the exact quote, but it goes something like this:
“Why would you reduce your risk when a bet goes your way right after a breakout?”
Let’s say you caught $SOL at $67, it is now at $73. You’re up 10%. $SOL has been ranging from $55 - $69 for a month now, and finally it broke out. And now you want to sell? I get it, it feels good to secure a 10% profit, but if you think risk/reward you might be at a point where it’s natural to increase your risk. All these things are naturally scary for human beings because we are so vulnerable to losses.
The same goes for $ETH. All of 2023 the price has been hovering between $1,500 to $2,100. Now that we finally got a breakout it makes sense to stay in $ETH, not sell it.
I have to repeat here that I am not an expert trader, and that’s true for 98% of CT too. It is easy to give advice in retrospect, but to actually size up during a pull back, or to risk more when you’re already up (and instead end up roundtripping) requires diamond balls. You can get this by practice, but I think that most people naturally won’t get hard enough to actually do this. The reason why: you start thinking in net worth swings instead of % swings. I usually place trades with 6 to low 7-fig size (this does not mean that I risk 6 or 7 fig per trade, but if you have read my other trading articles you would have known that by now). Anyway, seeing your portfolio swing by a normal 9-5 monthly salary in the matter of minutes is not for the faint heart.
I think successful traders need to set off some capital that is allocated for trading, some that is allocated to spot bags and some that should be secured in other assets like real estate, stocks, T-bills etc. So that if you for some reason lose it all in crypto (getting hacked, misclick, liquidated++), you have a life to fall back on. This is well meant advice, but I know that many people on crypto Twitter doesn’t follow these rules. They risk more, are 100% in crypto and are here for generational wealth. All kudos to them. I just knew with myself that if I were at risk of ever going back to my 9-5 life due to a big loss in crypto I would become quite depressed. Not that a classic 9-5 life is bad, it’s just that it feels like a downgrade when you’ve been “up there”. Luckily I secured some profits in 2022 and bought assets that are outside of crypto. In that sense it makes me much more relaxed in this bull run, and I don’t feel FOMO in the same way as I used to in 2021. The drawback to this is that I am less “hungry”. By hungry I mean I am not that hungry to grind profits as many of my fellow traders. For example I have completely skipped farming airdrops lately because it “takes time”. Pure stupidity of course, especially when you see how easy the $JTO airdrop was.
At the end of the day figure out what your goals are
It’s easy to stay up late, be on the computer all day, ignore family & friends and don’t take care of your health in a bull run. But at the end of the day, ask yourself why you’re doing this. Set yourself some goals, and remember to take profits. Maybe your goal is to make $10k, $100k or $1m and more. Whatever the goal is, at least secure some money that you allocate for something else. Get out of your mother’s basement if possible, buy that watch if it makes you happy. Take your GF out on some great dates or a nice holiday. Numbers at a screen in the end won’t ake you happy.
You could be the best trader in the world, but if you have no people to share this happiness with, then what do you really have?
I’ve said it before, but I’ll repeat it again. This will probably be my last cycle in crypto. More money could always be nice, but at the same time it is very time consuming staying up to date in this field. At some point I think it will not be worth it. Or maybe I find out that I just want to be a passive crypto investor instead. But I am pretty sure that I will spend less time in here after 2026. Maybe I want to spend a time on a start up or as a founder in some kind of sense. Or a travelling entrepreneur.
There is a quote by Naval that goes something like this that I highly resonate with:
”When you finally make it, you realize it wasn’t what you wanted in the first place. But that’s for another day”
You can’t take your money with you to the grave. Set yourself some goals and be happy if you reach them. Please promise me that you don’t roundtrip this. At least if you’re not financially independent already. And also remember that CT is an autistic, crazy place. HEre you will find the extreme outliers. One guy wrote that he spent $10k on one night at a luxury resort with his GF, and then one guy replied that he spent $10k traveling the world for 6 months with his wife. Seriously this made me think, I would 10 out of 10 times spent these money on traveling for 6 months. I think I am still grounded in this sense that I still see real value in money. I guess this is something I learned through being frugal for many years prior to starting with crypto. For new readers, I was a part of the FIRE-community before crypto. Basically the concept was to save as much money you could in index funds and live off the passive investments.
What are your goals for this cycle? It could be a net worth number, buying an apartment, getting a web3 job or maybe just learn? Feel free to comment in the comment section or quote tweet it on Twitter.
Thanks for reading!
PS! You will see me post a lot more going forward, now that the bull is running I will try to cover interesting coins, airdrop plays, DeFi hacks, trading stuff and of course general life wisdom and observations.
See you in the order book, anon ;)
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Could you talk more about how you will invest after you leave crypto? Low cost index funds? Is tax savings on your mind? Eg dubai?
Great read, my goal is to make enough to build a house for my wife and I