- Understand why you are in Crypto in the first place
- Identifying your strengths and weaknesses instead of blindly following influencers
- Sharpening your skills and finding a common winning pattern
- Track and learn from your previous trades/moves through journaling
- You are probably wrong. Adopt a more practical framework with a probabilistic investing approach
I have observed that people who are successful investors in crypto tend to have a niche or some edge against others in the market regardless of being in the bear or bull. This edge allows them to make sense of what to do and when to execute that plan.
Whether good at short-term trading or value investing in a long time horizon, something always seems to be differentiating the big brains in space from smaller fishes.
I often use a straightforward analogy – crypto is a role-playing game (RPG) where each of us can specialize in various builds to earn more rewards effectively. The meta of the game changes as the cycle progresses, and it is often up to us to keep up with the game’s updates.
Successful people have a strong build and often level up in the space. This gives them a significant advantage over most of us over time.
So how does one learn to level up in crypto? How can any beginner start?
What are you in crypto for?
Understanding what game you are playing and the goals you have in crypto is crucial.
There will be something that you are more inclined towards and probably better at. If you think you are better at trading price action and are not prioritized or emotional towards any projects, then you can focus on that field. Profits are profits, after all.
On the other hand, if you are better at finding early and strong picks, and have shown the discipline to hold for the long term and wait for that 100x, then you can focus on that game.
You might ask, can you do both (short-term trade bags and hold long-term investments)?
Just don’t be confused over which is which. Don’t mistake trading your long-term investments or investing and becoming attached to what should have been a short-term trade.
So make two lists and identify which ones you would like to hold on to despite the bear and what you can scalp/swing.
Finding your ground
Everyone that enters the space is different. You could be any of the following: a Tiktok-addicted 17-year-old zoomer who went down the crypto rabbit hole, a seasoned investor in other asset classes but new to the world of crypto, or a survivor that once held BTC in 2013 across multiple market cycles.
Identifying where you stand compared to others in the space is a humbling but effective process.
What are you good at? Can you read a smart contract? Do you have a good trading set-up? Are you able to identify long-term opportunities in the market?
Context probably matters a lot here. This is where your skills outside of crypto come into play. If you have experience trading FX, this can carry over into the crypto markets.
Once you sort of identify things you are good at, that’s when you can apply to the game of crypto instead of blindly following and listening to what others say.
Sharpening your skills in the bear/bull
Now, time to continuously sharpen your skillset (and work on weaknesses).
As a personal example, I used to be very emotional when looking at projects’ prices. I would buy when prices were pumping and sell when things corrected – buy high, sell low.
My strength was that I could figure out what people think and how they might behave in certain conditions.
Once I observed these two, I decided to work on my weaknesses (account for failure and not be emotional) and strengths (use my skill to look at what trends people will hop on to in crypto).
This led me to bet on Ohm forks as a trend to ride on during 2021, some of which turned out surprisingly well in a short period (before the bear arrived). Condolences to those still in Wonderland TIME, though.
It’s a straightforward example, but I’m sure you have strengths and weaknesses.
To find that, look at the common mistakes or good “moves” you tend to make and spot the pattern among them. Here’s an example of someone who could spot his patterns and develop new goals.
Another example could be this: imagine that you are consistently getting liquidated. This could indicate that you are unsure how much leverage to use – a weakness.
If you are consistently earning money via whitelisting on NFTs, it could also signal that you have a sound system or workflow for finding early NFT projects and flipping them for profits – a strength.
So how do you find and keep track of your talents?
The art of crypto journaling
Write your crypto journey down in a journal. Everything.
Yes, I mean EVERYTHING – your profits and losses (PNL), your best and worst plays, your rationale behind buying (or selling) tokens now, your thesis towards crypto, and thoughts on specific sectors/market participants.
Writing down things like what you are good and not good at, as well as what you are unsure of, is helpful as well.
Do you know how to do the technical analysis? Do you know how to use leverage? How many times did you get liquidated last month? Did you get rug-pulled? Do you understand how staking works? Did you lose money buying NFTs? Did you have a plan to take profits, but you failed to stick with it?
These become useful once you record them and look back at them over time. This is when you start to notice what you have improved on, your weaknesses, and how your thoughts have changed over time.
“Oh, but writing sucks! I hate it!”
You can write it in any format or medium (physical, digital) you want. You can even draw random doodles. The journal is for you alone to read and reflect on it.
Don’t make the same mistakes twice!
Your edge is not 100% correct.
I think a common misconception is to believe that just because you have an advantage over others, you will be correct.
Nobody has a 100% successful hit rate; frankly, some of the things that happen in crypto investing can also be partially attributed to blind luck.
Can we successfully predict a token’s price movement all the time, or say for sure that this trend will be the next big thing?
Experienced people will adopt a more practical framework, which is that of probabilistic investing. You apply probabilities to your different thesis and look at the potential upside of your bets. Ideally, you will want to make bets with an expected positive value or +EV.
I have written in more detail regarding probabilistic thinking in this article here, but I digress. The main point is not about how to calculate the probabilities of what events happen, but more so about realizing this:
“Even if I have an edge in [my expertise], I could still be wrong. We can never be truly certain what will happen in the future.”
This sounds incredibly obvious, but very few of us apply it.
We get emotional about our bags, assuming it is a sure play. You might not think like it but think back to the moments when you started panicking once your coin bled 30% down in a single day.
If you were prepared to lose it and accounted for a failed scenario, you would not be panicking!
To tie it all together, I’ll give an example case study with this tweet below:
I won’t elaborate on the tweet content here. What is important is his thought process. He
- Admitted his mistakes
- Wrote his thoughts and mistakes down
- He realized what he could improve on
You can consistently do these things in your journey into crypto and ” level up”.
So stay humble, observe yourself, and be disciplined in executing your plan. Don’t be afraid to admit your mistakes, and you will be surprised to see how far you can go in the game of crypto.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: Chain Debrief