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In 2024, one of my core goals is to transition from trading every few hours to trading every few days.
I believe there are several core principles in financial markets: simplicity is key, investors should focus on their areas of expertise, and excessive trading can be detrimental to one's portfolio.
Many people familiar with my articles know that I adopt a highly confident trading style. I prefer to bet on asymmetric opportunities and tend to double down. The challenge with such trades is that they are often capital-intensive and have long lock-up periods before yielding results.
Now, this isn't inherently a problem. It's what I consider the nature of trading: just as you wouldn't criticize venture capital firms for their long trading cycles, you wouldn't say "this money could be used for something else" because you're confusing different trading styles and maximizing profits.
The issue arises when your investment portfolio is relatively small, and capital efficiency becomes a key concern. You simply can't operate at the same funding level as venture capital firms, and your goals are vastly different.
Turning $10,000 into $100,000 is very different from turning $100,000 into $100 million. There are numerous articles discussing the different risk preferences individuals with different net worths should adopt. For example, if your funds are less than five digits, your focus should be on airdrops and memes. If your funds are between five and six digits, you should look for mid-cap coins in the market. If your funds are in the six digits and above, you can pursue high-cap coins.
Of course, these are hypothetical suggestions. But you get my point: with limited funds, the general consensus is that you should maximize risk curves like a Degen to pursue high risk and high returns.
So, what should I do?
I won't say what's right or wrong because, as I've come to understand, the investment world is full of subtle differences. One never steps into the same river twice, for it's not the same river, and they are not the same person. Similarly, trades won't remain constant because they're not the same trade at different times.
Returning to my fundamental trading principles: simplicity is key, investors should focus on their areas of expertise, and excessive trading can be detrimental to one's portfolio.
This means I believe in trading your strengths. If your strength is high-frequency trading, then focus on high-frequency trading and don't worry about other things.
I think 99% of crypto Twitter articles make this issue overly complex. High-frequency trading doesn't involve fancy strategies or complex financial derivatives. I believe the solution is much simpler: just be patient.
What about the opportunity cost of other trades? If your strength lies in having a higher success rate and making more money over longer periods, then why bother with anything else?
Just as if you're not a singer, why bother becoming proficient at singing? Did Buffett try to master algorithmic trading? Did a cheetah attempt to become better at swimming? No.
If your strength lies in high-frequency trading, then stick with it! That's also why I advocate that most people shouldn't be day traders; they should have a decent-paying job and treat the financial markets as a hobby.
The next question is: what if I'm not good at high-frequency trading? My answer is simple: the essence of the market is long-term bullishness.
For 20 years, people have advocated for "dollar-cost averaging the S&P 500" as an investment strategy, and it works! The emphasis is on the fact that the "market is bullish in the long run" is a fact.
If you frequently go long on Bitcoin on an hourly candlestick, your success rate is only 50%. But if you go long on a monthly timeframe, your success rate should be as high as 70%. Of course, the longer the timeframe for buying Bitcoin, the higher the success rate.
Michael Saylor (CEO of MicroStrategy) is a great example. He bought Bitcoin at $69,000 and also at $30,000. Each time he bought, people laughed at him. But at the current price, his profit has reached $2 billion.
Conclusion
Even with a net worth of five digits, I still believe you can become a long-term trader; it just takes longer. I know this because it's what I've done and what I'll continue to do. Of course, maybe my timeframes aren't as long as decades—they're more like days to months. But even so, I've found I make more profit.
Overworld was an operation that lasted for three weeks and made me three times my investment.
Node Monkes was an operation that lasted for a month, and currently, I'm at breakeven.
TAO is a coin I've held for several months, and I've doubled my investment.
What I've truly discovered is that patience is an advantage because few people truly have patience. |
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Post time 19-2-2024 20:52:14