Thread by @alpha_pls

A friend of mine panic sold all of his crypto last week.

After speaking with him, I wanted to write something to help others avoid his mistakes.

Here are 9 investing principles that 99% of people in crypto should adhere to:

This is a bit of a stream of consciousness fyi.

And I'm sure it will be obvious to most, but hopefully still helpful reinforcement.

Firstly a bit of background on my friend and some thoughts on how this happened to him.

My friend had been in crypto for a few years and started investing with larger sums when the market turned bullish after the Covid crash.

His go to source for information on the markets has been from traders on CT.

He had no prior trading or investing experience.

Like most, he had a few early wins when the market was up only, which gave him an heir of invincibility.

I think he represents many newer crypto participants.

Many of the accounts on CT which have the largest follower bases are either day traders or swing traders.

From a psychological point of view this is interesting in itself.

People assume they have a magic ability to predict what is going to happen with the prices in the market.

So, they amass a lot of followers.

There are a few incredible day traders on here such as @canteringclark & @bigcheds.

And there is probably no one better than @cobie when it comes to trading market cycles.

These traders are vastly experienced and have spent years acquiring the skills to help them navigate the market.

Good traders are also risking 1-2% of their trading portfolios on each trade.

They do not need to be right anywhere near 100% of the time in order to be profitable.

In the last 24 hours, I've seen some of the best on the timeline be caught out completely by this recent Bitcoin move.

These markets are incredibly difficult to successfully trade, even more so right now.

Most forget that these traders have long term spot bags and are also, by definition, long term investors.

However, successful traders on CT tend to be the exception, not the rule.

There are also traders with large followings on CT who are not profitable.

They are sharing dreadful trade ideas and advice.

These accounts put out so many different trading set ups so they can claim clout for all eventualities.

Tricking the undiscerning follower into believing they have the secret trading sauce.

For the average Joe, it is almost impossible for them to distinguish between the successful trader and the larper.

My friend was blindly listening to trade ideas from CT, implementing no risk management system and swinging large percentages of his portfolio.

The fear and rhetoric of the coming bear market seeped deep into his brain and overrode his original long term time horizon.

He chopped himself up until he was psychologically drained to the point where he sold it all, not wanting to risk losing anymore of his portfolio.

He sold the local bottom.

And has now just witnessed the market rocket back upwards within the space of a few days.

I think this is the experience of a lot of people in crypto, whether you hear about it or not.

CT celebrates the 1% who are managing to sell tops and buy bottoms.

But everyone then assumes that most participants are managing to do this and that is what they should be doing.

"HODLing" seems unglamorous in comparison, as does sensible longer term investing advice because every one wants to make it immediately.

In fact, holders are treated with contempt and derision for sitting through large drawdowns.

Despite numerous examples in the market where patience has absolutely paid dividends.

The stories that also go viral on the timeline tend to go something like this:

"Here is how I turned $100 to $1,000,000 in 6 months".

Firstly, you don't even know if those stories are fact or fiction.

Secondly, it is highly unlikely you are in the 1% of people who will make money trading regularly and swinging your portfolio.

Sorry, it's just statistics.

WAGMI is such a hopeful and positive meme, but the reality is not everyone can or will make it.

You should be focused on growing your net worth and not trying to retire in six months.

Humans tend to overestimate their abilities when they imagine where they are in the intelligence pecking order.

There is wisdom in accepting your limitations.

Here are 9 unglamorous investing principles that 99% of crypto market participants should adhere to:

1. Lengthen your time horizons

Most should go as long as they possibly can.

This industry is still in its infancy.

This decade will present you with one one of the greatest wealth creation opportunities for generations.

2. DYOR - Do shit loads of research

Do as much fundamental research as you can in order to create conviction so you can stomach the volatility and let your thesis play out.

3. Buy red candles; sell green candles.

General rule of thumb for taking profit or buying.

A simple rule that many don't adhere to.

4. Dollar cost average

Do not buy into a project all at once.

Scale in.

5. Take small percentages off the table

Psychologically this is important.

It means you can't lose.

If you have significant gains take some into profit.

You can reinvest later or do something irl.

It will help you be a better long term investor & make better decisions.

6. Never sell it all at once

It may seem like the world is literally about to end (as has been the case recently), but the landscape can change so quickly in crypto.

Likewise, you may think you're selling everything at the top, only for the market to pump significantly higher.

7. Do not trade against other people

The only person that matters is you.

Be concerned with your own net worth moving up each year and do not compare yourself to anyone else.

8. Do not act on emotion

If you are feeling emotional step away from the laptop.

Markets are efficient. They don't go up in a straight line or down in a straight line.

Don't sell in rage, don't buy whilst feeling euphoric.

9. Diversify, but don't over diversify

Most people will blow themselves up being in only one or two coins.

But likewise, investing in more than 6-8 projects will cause you a headache & will dilute your big winners.

And just to say, I am no expert or investing guru.

I am fallible to cognitive biases and my emotions.

I also ape into dumb shit and trade, but only do so with a small percentage of my portfolio.

Awareness of my weaknesses has been the key to me seeing my net worth move up year on year & that's my goal.

Stick to a long term strategy and the chances of you actually making it will go up significantly.

Good luck, anon.

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