Alpha Mail #62
CryptoUB, rangebound rebalancing, and The Art of Patience
PARTNER: THE HAVEN
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UB is a crypto trader and investor, active since 2017 primarily focussing on equities and cryptocurrency.
“The constant self-blame is a downside, but during those times, you learn the most about yourself.”
JIM TALBOT: RANGEBOUND REBALANCING
Market activity has dwindled since this initial sell-off from 25k. My guess is that we get a period of ranging whilst market makers rebalance.
Keep a look out for sideways/lowering open interest with choppy low timeframes and oscillators staying subdued.
We had the classic Sunday top-side squeeze that took out a lot of late short exposure.
My best guess is we gravitate back towards the weekend’s range, taking out the diagonal low structure.
If things pick up, $24,200 could be a potential short and $22,000 for a potential long.
I think anything in between you would fare better doing nothing and avoiding the chop fest.
DELTAXBT: THE ART OF PATIENCE
Anyone trading full-time or utilizing his free time after work knows the frustrating days you sometimes get, where you’re sitting in front of a monitor watching price action and waiting for a trigger all day long.
You sit there, for 4 hours, watching the chart crawling slowly as if to drain your happiness and soul out of you like a Dementor, and you get no triggers whatsoever, for 4 whole hours.
You decide to go smoke a cigarette, maybe grab lunch from the bakery next door, maybe take a number 2 and a quick shower, only to come back and see that the chart printed a perfect, ‘by the book’ type trigger, and you missed it.
You sit back down, frustrated, and watch for 4 hours again, only to watch the same, painful, boring, soul-draining price action. You start feeling bored, as if you wasted time for nothing, feeling like “I haven’t worked all day long”. The brain goes “Trading is the job you do, right? Well, no trades executed, no work done.”.
You tell yourself there is no way you finish the day with no trades done and you don’t want to finish the day on 0, so you start scrolling through altcoins, looking for something that looks “just good enough” to punt.
You find some random altcoin, punt a trade, only to lose 250$.
You break your keyboard.
These types of days can turn out to be some of the worst days a trader can have if you let them push you to do things you’re not supposed to do.
People tend to start letting the boredom and feeling of lack of work done get to them and they start pushing trades while having no edge and no plan whatsoever.
Trade with no edge or plan and you will lose money, almost guaranteed.
Even when people do trade with some edge, the edge shows that over time, their strategy will generate a profit. So all you have to do is execute it every time you can and let your balance grow over time. Some decide they can’t wait, so they will just crank up the leverage, only to lose way more money than they ever expected and turn the whole strategy upside down.
“The hardest trade is no trade.”
The reality is that trading (more often than not) is just a game of patience for the right time to execute a trade when the market gives a proper opportunity.
As many traders have said before — “2% of my career I’m clicking and 98% of the time I just wait”.
If you have an edge, a system where you know the likelihood of your position to make a profit is higher than the likelihood of losing money, why do anything else but wait?
Most traders should aim to have a PNL curve that looks something like this:
A slow, gradual growth, with big upwards moves that represent trades taken with size and conviction on the rare occasion you get them.
Trading is a long-term game, not every single day you will trade, not every day will be profitable, and your main focus is to survive as long as you can so you can trade when the big opportunities come.
As mgnr famously tweeted:
Of course, if you are a scalper, then this doesn’t help much.
But you can still take a positive from the tweet, realizing that most of the growth you will have in your portfolio will be from big, centralized, high-conviction bets you take. Until that comes again, your job is to grow your capital with focus and religious discipline.
Finding yourself bored? Here are a few ways to keep yourself busy:
In my “Journaling 101” article, I mentioned how the whole aim of journaling is to help you answer three very important questions when it comes to trading:
How can you make more money from your winning trades?
How can you lose less money from your losing trades?
How can you generate more winning trades?
If you continue working on finding a way to make your edge provide you with more triggers, or perhaps even finding new edges, you will both provide yourself with more “work” or triggers for trades, and keep yourself busy. Don’t want to change your edge for whatever reason? Find a hobby. Play video games, go for a run, shitpost on Twitter, speak to friends on discord, play poker, etc.
Personally, I play Runescape, also just got myself a PS5 finally.
So, what is the solution?
Sadly, there is no perfect solution or some key secret for solving the issue of boredom.
What helped me the most was promising myself that whatever happens and no matter how bored I am, I only trade systematically.
Never execute out of boredom or “just for the hell of it” because that’s just pure random gambling, and we’re not here for that, we’re here to make +EV bets.
Control yourself and if you feel you start losing it make sure to know when to step away from the PC before you make a stupid decision.
The number of traders who got burned due to lack of patience is massive, don’t be a part of that statistic.