One trade idea- follow smallcap projects closely- their twitters and telegrams. These might not have a lot of eyes on them. mainly because of their not being able to absorb a decent amount of capital. But for us retail, this could mean a quick 2-4x on 4 or 5 figures. So, their announcements, launches, etc. could be good plays for quick profits because there could be a decent lag between them putting it on x or tg and people going on and buying on the orderbooks. Of course, the actual launch becomes the 'sell the event' point.
Look, I'm thinking about the future, where I will have a good amount of capital and I can allocate 10-20% for short term portfolio properly. And so, these things can then become quite useful.
Thinking something. How when the overall stock market index falls and you expect to buy a stock and you were waiting for the market to fall and it falls. However, the stock that you wanted to buy has felt a lot lower than the index. Your entry level was 30% lower from cmp for the stock. The index has fallen 10% and the stock has reached at your entry level. However, you expect the index to fall more and stagnate for a while.
In retrospect, betting on 2nd fork or 3rd fork (in the sense, similar projects with low mcap) is more risky than betting on pioneers.
Because forks come up when a narrative becomes successful and that likely is the period filled with euphoria and excitement.
So parking money in those lowcaps with the goal of I only need a 5x on this even if it takes me long time is ultra risky because people will forget about it later and it will die down a fast followed by a slow death. So, when you sell something and park money on such lowcaps, it's a mistake.
You are better off waiting months for better opportunities.
Because forks come up when a narrative becomes successful and that likely is the period filled with euphoria and excitement.
So parking money in those lowcaps with the goal of I only need a 5x on this even if it takes me long time is ultra risky because people will forget about it later and it will die down a fast followed by a slow death. So, when you sell something and park money on such lowcaps, it's a mistake.
You are better off waiting months for better opportunities.
When bitcoin, for example, is in price discovery after breaking out from previous all time high, dips aren't as psychologically difficult to handle when the price is above the previous ath. And this makes us a bit complacent in the sense that we become less serious about looking for weaknesses and top areas as we are less bothered by dips and dips can then convert to full fledged bear markets.
A Better Trader 2
When bitcoin, for example, is in price discovery after breaking out from previous all time high, dips aren't as psychologically difficult to handle when the price is above the previous ath. And this makes us a bit complacent in the sense that we become less…
Put it into grok for expanding the train of thought
Like u lose 30 kgs then gaining 5 kg feels like nothing as u feel like u will lose it easily but then slowly bcos of complacency that 5 gain turns to 10 gain then 15 then 20
Similarly in investing wen u make 500% then losing 15% of that 6x value feels like nothing but then u will slowly keep losing more if u become complacent
Similarly in investing wen u make 500% then losing 15% of that 6x value feels like nothing but then u will slowly keep losing more if u become complacent
When u run regularly but someday don't feel like running
U eat bad for few days, gain few pounds, feel bad in mind & body and that starts a cascade where you feel lazy to wake up and go outside in the morning
But you still make an effort, get up and get outside to initiate something like a short or a slow run or even a walk
The u meet your kind of people. The early morning types. The people who run. You become part of the running/jogging tribe.
Meeting them in the morning or during your run exchanging greetings will make you feel like running again and drastically reduce the effecr of the laziness you felt earlier.
You become part of the hive mind. Monkey see, monkey do. In a way, you can't help it.
This early morning running thing is in a good context. A good type of hive mind because the effects on your health are good.
But point to note is that it's nearly impossible to not behave like your tribe unless you are very strictly conscious about it all the time ie you have second order thinking all the time, which is difficult.
Now come to trading. We get our info from social media, other people, podcasts, articles written by others, books written by others. Your source of information itself is the hive mind. However, this is a dillema. You need to get your information from hive mind but not behave like the people in it. You need second order thinking all the time even though it's ultra difficult.
You can do this by being an observer and not someone who participates in the chit/chat or useless discussions.
You need to be aware of your behavior.
U eat bad for few days, gain few pounds, feel bad in mind & body and that starts a cascade where you feel lazy to wake up and go outside in the morning
But you still make an effort, get up and get outside to initiate something like a short or a slow run or even a walk
The u meet your kind of people. The early morning types. The people who run. You become part of the running/jogging tribe.
Meeting them in the morning or during your run exchanging greetings will make you feel like running again and drastically reduce the effecr of the laziness you felt earlier.
You become part of the hive mind. Monkey see, monkey do. In a way, you can't help it.
This early morning running thing is in a good context. A good type of hive mind because the effects on your health are good.
But point to note is that it's nearly impossible to not behave like your tribe unless you are very strictly conscious about it all the time ie you have second order thinking all the time, which is difficult.
Now come to trading. We get our info from social media, other people, podcasts, articles written by others, books written by others. Your source of information itself is the hive mind. However, this is a dillema. You need to get your information from hive mind but not behave like the people in it. You need second order thinking all the time even though it's ultra difficult.
You can do this by being an observer and not someone who participates in the chit/chat or useless discussions.
You need to be aware of your behavior.
Another analogy about hive mind. Kind of similar but slightly different.
The conclusion of this part is that our risk taking stamina goes up being part of the hive mind bcos we behave like the crowd and that makes us forget the individual risk management practices that we generally use. We forget those when we behave like everyone else.
I usually run solo. I run on the opposite direction of vehicles so that I can see the vehicle coming from front and manage accordingly. Roads are empty in the morning mostly and so the vehicles that are there, drive fast. So I don't trust them when they come from behind.
So, I run on the side of the road, mostly on the right side of the white non-dotted line, after the driving lanes end. And that is a safe practice.
However, when I run with someone else, I tend to run even in the middle of the road, not necessarily on the side. My mind thinks that I am safer behaving risky bcos I am with someone else. I forget the risk management strategies that I use individually. Even though the risk of getting hit by a vehicle doesn't change. When the risk level does not change my aggressiveness also shouldn't.
The conclusion of this part is that our risk taking stamina goes up being part of the hive mind bcos we behave like the crowd and that makes us forget the individual risk management practices that we generally use. We forget those when we behave like everyone else.
I usually run solo. I run on the opposite direction of vehicles so that I can see the vehicle coming from front and manage accordingly. Roads are empty in the morning mostly and so the vehicles that are there, drive fast. So I don't trust them when they come from behind.
So, I run on the side of the road, mostly on the right side of the white non-dotted line, after the driving lanes end. And that is a safe practice.
However, when I run with someone else, I tend to run even in the middle of the road, not necessarily on the side. My mind thinks that I am safer behaving risky bcos I am with someone else. I forget the risk management strategies that I use individually. Even though the risk of getting hit by a vehicle doesn't change. When the risk level does not change my aggressiveness also shouldn't.
on-bubble-watch (Jan 2025).pdf
311.6 KB
Quite a good read. I think I should read this pdf once every quarter.
Deprival Super-Reaction Syndrome, also known as Deprival Super Reaction Tendency (DSRT), is a cognitive bias where individuals react more strongly to losing something they almost have or feel entitled to, compared to the pleasure of gaining the same thing.
This bias can lead to irrational behavior and decision-making in various situations, such as:
* Investing: Investors may hold onto losing stocks longer, hoping to avoid the pain of realizing the loss.
* Negotiations: Individuals may become overly aggressive to avoid losing ground or perceived entitlements.
* Relationships: People may react strongly to perceived slights or loss of status, even if minor.
DSRT is related to the concept of loss aversion, where people feel the pain of a loss more strongly than the pleasure of an equivalent gain. However, DSRT specifically focuses on the intense reaction to losing something that was almost possessed or felt to be rightfully theirs.
Understanding DSRT can help individuals make more rational decisions by recognizing and mitigating the influence of this bias.
This bias can lead to irrational behavior and decision-making in various situations, such as:
* Investing: Investors may hold onto losing stocks longer, hoping to avoid the pain of realizing the loss.
* Negotiations: Individuals may become overly aggressive to avoid losing ground or perceived entitlements.
* Relationships: People may react strongly to perceived slights or loss of status, even if minor.
DSRT is related to the concept of loss aversion, where people feel the pain of a loss more strongly than the pleasure of an equivalent gain. However, DSRT specifically focuses on the intense reaction to losing something that was almost possessed or felt to be rightfully theirs.
Understanding DSRT can help individuals make more rational decisions by recognizing and mitigating the influence of this bias.
One of the longtail altcoins that i was holding got force sold. The exchange that I was holding it on delisted it and converted it to usdt and it lost most of its value by the time it was force sold for me. And it was the coin I was most bullish on for the cycle and was expecting more than 100x on it tbh. So, few reflections:
1. I was bullish on it because good team (opinion based on opinion), big team treasury, team shipped amazing stuff, had big launch plans, good VC backing, decent community (but that got reduced as price didn't perform).
2. In future, I should categorize projects in a risk spectrum and no matter how bullish, I feel on a long tail asset, I should allocate only a limited percentage of my portfolio with it and this is something that has been gradually becoming more and more important for me over time.
3. If at all I decide to allocate more to such an asset, I should make a point to get my cost out at 2-3x and yeah these coins do give 2, 3 , 5, 10x pumps before melting down to inferno. Maybe not always, but they do. So, DO THAT. It's important.
4. VC shills are not to be taken that seriously as their allocations are in a risk-managed way. And even if this particular investment goes to zero, they'd be fine. I won't be if I allocate a lot to it.
1. I was bullish on it because good team (opinion based on opinion), big team treasury, team shipped amazing stuff, had big launch plans, good VC backing, decent community (but that got reduced as price didn't perform).
2. In future, I should categorize projects in a risk spectrum and no matter how bullish, I feel on a long tail asset, I should allocate only a limited percentage of my portfolio with it and this is something that has been gradually becoming more and more important for me over time.
3. If at all I decide to allocate more to such an asset, I should make a point to get my cost out at 2-3x and yeah these coins do give 2, 3 , 5, 10x pumps before melting down to inferno. Maybe not always, but they do. So, DO THAT. It's important.
4. VC shills are not to be taken that seriously as their allocations are in a risk-managed way. And even if this particular investment goes to zero, they'd be fine. I won't be if I allocate a lot to it.
A lot of times you enter a trade expecting something, probably a very optimal outcome. But the trade does not go your way. It might get invalidated, which is also hard to deal with in the sense that getting out of a losing position is hard and takes time to get actually used to. But a lot of times, it will also not be an outcome as optimal as you expect meaning that you might not reach your target even if the trade is going good. And so, it is important to recognize such scenarios and consider closing trade somewhere between entry and target sometimes because you get some information that makes you conclude that the chances of further upside are now extremely limited.
During the end period of the bull market (the euphoric, PvE, easy period), we do a lot of short term trades because these are going well. Everyone is flipping and rotating.
However, this can be disastrous.
You are buying high valuations and flipping at higher. Then after exiting one coin, you are immediately getting into another at a comparably higher valuation.
You are already up a lot (multiples) from where you started. So, what you are risking now is a lot bigger and the profits you make seem small because everyone around you is making a lot and showing you their best trades.
In the end, you will be stuck in absolute horseshit because of course the quality of projects becomes worse as prices keep going up.
And exiting them is hard because-
1. there is no structure in these trades for the most part
2. no proper invalidation bcos of high volatility so you don't know how to exit the bad trade
3. you are in HODLer echo chamber groups
4. even if you exit one, you will enter another probably at a lower marketcap and so the bet seems good
However, most tickers go up together and go down together as well. That's a hard to swallow pill.
So what seems undervalued to you at 10 mil is actually overvalued considering the state of the market. And in the bear market, it will fall to sub-500k and no one will talk about it. It will be forgotten.
So, getting into these quick flip trades does more bad than good. If you do, size very less and be aware of the size as well. Size less than 1% per trade. And this 1% in absolute terms might fuck with your brain during the final period bcos you have been up multiples in last year or two and you probably had very less money before that. So, in absolute terms, the loss might sound a lot and make it hard for you to exit meaning it will be quite easy for you to get into 'loss-chasing' trades, which will be disastrous. So, if you get stuck in those types of trades (with hopefully less than 1% of pf at time of entry), accept that letting it go mentally is the best possible outcome.
Oh, and while you were up during those trades, you should have taken profits aggressively because you were already in a high risk trade in a high risk period. The music ending was a 'when' question, not 'if'.
However, this can be disastrous.
You are buying high valuations and flipping at higher. Then after exiting one coin, you are immediately getting into another at a comparably higher valuation.
You are already up a lot (multiples) from where you started. So, what you are risking now is a lot bigger and the profits you make seem small because everyone around you is making a lot and showing you their best trades.
In the end, you will be stuck in absolute horseshit because of course the quality of projects becomes worse as prices keep going up.
And exiting them is hard because-
1. there is no structure in these trades for the most part
2. no proper invalidation bcos of high volatility so you don't know how to exit the bad trade
3. you are in HODLer echo chamber groups
4. even if you exit one, you will enter another probably at a lower marketcap and so the bet seems good
However, most tickers go up together and go down together as well. That's a hard to swallow pill.
So what seems undervalued to you at 10 mil is actually overvalued considering the state of the market. And in the bear market, it will fall to sub-500k and no one will talk about it. It will be forgotten.
So, getting into these quick flip trades does more bad than good. If you do, size very less and be aware of the size as well. Size less than 1% per trade. And this 1% in absolute terms might fuck with your brain during the final period bcos you have been up multiples in last year or two and you probably had very less money before that. So, in absolute terms, the loss might sound a lot and make it hard for you to exit meaning it will be quite easy for you to get into 'loss-chasing' trades, which will be disastrous. So, if you get stuck in those types of trades (with hopefully less than 1% of pf at time of entry), accept that letting it go mentally is the best possible outcome.
Oh, and while you were up during those trades, you should have taken profits aggressively because you were already in a high risk trade in a high risk period. The music ending was a 'when' question, not 'if'.
Human brain hates complexity. It wants to stay dependent on already established neural paths in the brain. And trading is complex, yet manageable thing to do.
However, memes and simple terms are easy to comprehend for the brain. And where we have something simple available, we stop thinking.
And so during the peak period of bull market, simple terms like
HODL
Supercycle
Diamond hands
To name a few
Get invented or emerge in order to keep you holding the bag.
And when your brain gets this simple idea of never selling, it sticks to it. Because selling and patiently waiting takes time and proper execution. Not selling is just simple.
However, memes and simple terms are easy to comprehend for the brain. And where we have something simple available, we stop thinking.
And so during the peak period of bull market, simple terms like
HODL
Supercycle
Diamond hands
To name a few
Get invented or emerge in order to keep you holding the bag.
And when your brain gets this simple idea of never selling, it sticks to it. Because selling and patiently waiting takes time and proper execution. Not selling is just simple.
You need a few indicators for decision making. You do not need a lot of indicators. There are unlimited number of indicators available on tradingview. You do not need to use all of those. You will try many indicators but then settle down to only a handful for good decision making. Because too many indicators will always give you mixed signals and make it almost impossible to make a decision. And if you stick to only one or two, then your viewpoint will be too limited as not all indicators work well in all scenarios. During some periods, some indicators are more relevant than others. Hence, you do not need too many indicators or too few.
For example, I use MACD, RSI, trendlines, horizontal levels, moving averages, fibs, some chart patterns and some non-chart patterns/observations. Oftentimes, more than one of these help me make a decision.
I do not use other famous indicators like ichimoku, bollinger bands, ATR, gann, elliot waves, supertrend or exotic candlestick types. These do not help me make a decision, are too noisy imo and hence, do not suit my style. But if those may work for you because you may observe them in a manner which i am not able to.
For example, I use MACD, RSI, trendlines, horizontal levels, moving averages, fibs, some chart patterns and some non-chart patterns/observations. Oftentimes, more than one of these help me make a decision.
I do not use other famous indicators like ichimoku, bollinger bands, ATR, gann, elliot waves, supertrend or exotic candlestick types. These do not help me make a decision, are too noisy imo and hence, do not suit my style. But if those may work for you because you may observe them in a manner which i am not able to.