Investment Strategies and Market Insights of Excellent Traders

During a professional conversation, a seasoned investor shared her successful experiences in the cryptocurrency and traditional financial markets. She had established a panic index options trading model on Wall Street and entered the cryptocurrency field in 2017, combining traditional financial experience with the characteristics of the crypto market to form a unique investment methodology.

Formulating Personal Investment Strategies

When formulating an investment strategy, it is necessary to consider both personal and market perspectives:

personal perspective

1. Assess the total amount of investable assets to ensure it is not constrained by debt and time.
2. Clearly define investment goals and expected returns
3. Understand your own risk appetite and capacity for risk.
4. Consider the investment time horizon
5. Arrange liquidity of funds reasonably

market perspective

1. Pay attention to market cycles to ensure they align with your personal investment plan.
2. Scientifically control your position size, avoid blind diversification, and pay attention to the sources of risk.

How to Outperform Bitcoin

To outperform Bitcoin, it mainly relies on two strategies: timing and coin selection.

Coin Selection Strategy

• Look for small coins with growth potential
• Assess the growth indicators of the project: TVL, number of holding addresses, trading volume, etc.
• Analyze the project's profitability: protocol revenue, profit, and on-chain transactions
• Monitor changes in project public opinion

Cultivate Coin Selection Ability

Long-term observation of the performance of small-cap coins relative to Bitcoin, establishing a four-quadrant matrix:

1. Outperform BTC during the rise
2. Underperform BTC during the rise
3. Outperform BTC during downturns (minimize losses)
4. Underperforming BTC during a downturn (losing more)

Looking for high-quality assets that can outperform BTC when it rises and minimize losses when it falls.

Bitcoin Timing Strategy

• Buy when the market is quiet, sell when it is bustling.
• Seize short-term event-driven trading opportunities
• Long-term configuration, regular selling strategy

Determining Market Top

1. Quantitative perspective: Focus on signals of slowing growth
2. Reflexivity Theory: Observing the positive feedback loop between market expectations and realizations
3. Qualitative Analysis: Understanding the fundamental reasons for market rises and falls.

Market Dynamics Source - Crust Theory

The core driving force behind market changes is emotion, which can be explained using the crust theory:

• Core: Market Sentiment (Fear, Greed, Confusion)
• Mantle: Project fundamentals, price performance, short-term events
• Surface: Overall Prosperity Level of the Market

Methods to Determine Market Sentiment

• Use simple indicators like the Fear and Greed Index
• Pay attention to ETF capital flows
• Analyze price movements outside of trading hours
• Observe open interest, perpetual contract premiums, funding rates, and other indicators

Discover New Alpha Opportunities

1. Actively understand and accept new things
2. Step out of the cryptocurrency circle and focus on a broader range of asset classes.
3. Maintain curiosity about the world and track the drivers behind prices.

Trader Self-Growth Suggestions

• Continuously read high-quality books, such as "Tao Te Ching", "The Art of War", "Poor Charlie's Almanack"
• Recommended trading-related books: "Reminiscences of a Stock Operator" and "Financial Alchemy"
• Make small cognitive improvements and iterations every day.

Finally, investors should find a trading strategy that suits them, continuously improving through learning and practice. The sense of joy gained during the growth process often motivates traders more than monetary returns.