"I'm going to trade this project. It's going well! I'll keep it because it's going to the moon! Yes! 10x! Fantastic! Awesome trade! Oh no, it's back to 1x. Damn, it's gone down now. But I'll wait, it'll go back up!"
Read on for how to avoid this.
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I've made that mistake many times, so it's one I'm feeling very personally. I rode the #LazyLions from 0.6 to 3.1 and... didn't sell. Now they're hovering about 1. They'll go back up, I'm pretty sure, but still - that's a lot of Eth on the table.
I've spoken about the difference between traders and investors before (
The problem for those of us who are still learning arises when you mix the mindsets up. Both are relevant to every situation - but letting them mix leads to poorer decisions.
Investing: find a project that will do well in the long run; put money in it; mostly ignore volatility
Trading: find a project that will go up in the short term; put money in it; mostly ignore long term value
Both are viable approaches to make money in the NFT market.
The problem usually arises when you start with the trading mindset ("I'll mint this and flip it"), then as the hype builds up, you let yourself be caught into the fomo and the thought that "this project is great, it's going to the moon" - and then don't sell at the right point.
Doing this, you end up missing out on the profits, because the "it's an investment" mindset crept in.
What's worse: it's often a terrible investment decision, made at the height of hype without much due diligence.
Let's borrow a leaf from the startup world.
When I invest in a startup, I don't just "read a whitepaper, check out the roadmap, log into the discord" and then say "yeah this will do well, here's £10k".
I would consider any real investment made like that to be utterly stupid in the startup world.
Startup investors have long learned that the most important things when investing are: 1) Team 2) Market 3) Product
In that order.
A great team in a good market will do well. A shit team in the best market with an amazing idea will do poorly.
So the focus is on the team.
Finding out if a team is great is not just about looking at their CVs (let alone their 5-line, unverifiable pseudonymous bio). It's about interviewing them, seeing how they react to new information, how they adapt to unexpected changes, how their team dynamics work or don't...
And then on top of that, when investing in a startup, if the team checks out, I'll research the market to form a strong opinion if their product has a chance of doing well. If it doesn't, I'll see how they react to that feedback. Great teams will take it on and iterate.
The problem with NFTs? The team is not accessible to you. You literally cannot review the most important factor for investing. It's just not feasible with so many low-ticket investors. And there is no "vetting service" like with traditional crowdfunding - at least not yet.
So when I slip from "I'm going to trade this and make a short term profit" to "This is a project worth investing long term!" I'm almost always fooling myself.
I'm in a fantasy world of my own making, likely based on pure hype, especially if the project is currently doing well.
The allure of the "investment potential" that's basically just in my head, makes me lose track of the trade that's sitting right in front of my eyes right now, and so I leave profit on the table.
That's if I allow mindset to flip flop from trading to investing.
My suggestion to myself and to others is:
Pick investing, or pick trading, and do one at a time on a given project.
Don't flip flop between the two. Not until you're really good at both separately.
Of course, like all divisions this is arbitrary. Ppl who are good at both trading and investing often mix and match, and masterfully manage their emotions in the process.
If you're one of those you're probably not reading this thread though!
So for the rest of us:
TL;DR:
Invest (focus on fundamentals, long term, ignore volatility)
or
Trade (focus on hype/volatility, short term, make money from volatility)
Do one at a time, and be wary of switching from one to the other mid-flight.
gm & gl
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Yesterday, I minted a @pxquest adventurer for 0.125+gas and flipped it half an hour later for 0.6+gas.
In a bear market (which we're likely heading into), WL flips are one of the main ways to make money from trading.
So how do they happen?
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The first thing you need to be able to do a WL flip, of course, is to be on the WL for the project.
There are many ways to do this. Some people grind in countless discords all day. Some people just find out about new projects really early.
Some people hire other ppl to grind for them (because who has the time to get to Level 30 - a requirement I've seen!). Some people are just well connected. Some people are parts of alpha groups that get them WL spots. That last one is me.
I'm also not hearing as much about doodle derivatives pumping, in the alpha groups I'm in, which is supportive of the thesis that the euphoric phase is dying or dead.
Still not quite a bear market... yet.
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If you want to know how those stats are calculated, please check this thread:
. If you want to get this update daily, follow me. If you'd like to get these graphs twice daily on your alpha Discord, get in touch (see swombat.io)
First let's look at the top nine on a shorter timeframe. There, the volume trend is clearly down. This is true whether you exclude Pudgies (1st chart), include them (2nd chart), or substitute them for Doodles.
I post updates to this every day (as well as other more reflective threads), so please follow if you want to get them, and if you find them useful I'd appreciate some RTs.
What is the fundamental behaviour and psychology behind those price shifts?
Let's break down the dynamics of NFT pricing a bit and figure out why.
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Credit where it's due, I got the idea to look at volume from some of @NFTLlama's earliest videos and posts. He suggested that a project that went through the mint hype drop, had a period of decrease, and then managed to create a spike of interest, was well placed to have another.
Volume, in that context, was a proxy for "the team is still working hard and is able to drive attention to the project", which was a proxy for "the project has good chances of succeeding at drawing even more attention to it and therefore going up."
- and follow me for daily updates and commentary on these stats.
Now I don't want to sound like some kind of perma-bear. And I'm not. I was (on @Llamaverse_) cheering the incoming bull market as the graphs started to trend up back in mid December. I'm not trying to throw cold water on everyone.
Let's start with the end: things are *not* looking good momentum-wise.
The early indicators did work, I think. Volumes are generally down. As volumes go down, the market turns more red. Did you pull out of your more risky bets?
Yesterday there was uncertainty as to whether to keep including Pudgies in the ranking given their "artificial" volume. The Pudgy saga continues, but even including them, the original "top ten" volume is down. Here's with and without Pudgies:
It looks better if you include Pudgies of course, because they still have some volume going through, which makes sense since they just (insanely imho) got bought for 750 eth: