Lessons from experience: How did I go from losing 90% to getting back to the top?

During the last bull run, I lost 90% of my net worth due to greed. A year and a half later, my portfolio is at an all-time high. Here are five traps that crypto investors need to avoid.

The last bull market was the most profitable for me, and although I haven’t made millions yet, the money changed my life.

Due to greed, my TP/SL (Stop Loss/Take Profit) strategy was very crazy, and when Bitcoin fell from $60,000 to $30,000, excessive leverage caused me to lose 90% of my wealth.

Even with these huge mistakes, I remain deeply involved in the industry. Below I share five pitfalls that investors need to avoid.

Missing framework

Most of us are here to make money without a clue what we are doing. Selling blue chip tokens to invest in shitcoins or margin calls.

Since then, I have adopted 3 portfolio strategies:

• Keep blue chip assets in cold wallets outside the exchange for a long time

• Investing and following medium-term trends/narratives with altcoins.

• Low leverage trading

I gradually transfer part of the profits generated by the latter 2 portfolios to the blue chip assets of portfolio 1. Profits should go to strong and safe assets, not the other way around.

greedy

The most common problem is never setting take profits and stop losses, and people get unrealized gains at the top when the market is crazy but never settle the profits.

Why is this the case? Mainly because we didn’t have a specific plan before buying the tokens, we just let it happen.

This is what happened to me, I made 60x my investment in 2021 without making a single dollar in profit because I was 100% sure it would go up.

The result? A 99% loss.

Don’t be like me and create an exit plan before you even enter a project.

Before investing, you should determine the type of investment you are making:

• Degen/Gambling

• Mid-Term/ Narrative

• Stable/ Long-term

Depending on the investment you make, the take-profit area will be different, so there are many strategies.

The stop-profit price of stable projects is more flexible because the price is relatively low and there is great growth potential before the next bull market.

Every decision depends on the valuation and upside of the project and will be modified based on upcoming catalysts.

When the Twitter shill becomes huge and filled with a large number of accounts, it is a good take profit signal for shitcoins and narratives.

Don't fall victim to liquidity withdrawals, I've given you plenty of tools to get ahead of them. If everyone knows alpha, then there is no alpha.

The main trigger for medium- and long-term profit taking is market sentiment, which is often used for reversal trading.

When the market only goes up, people become overconfident because of their investment success and unfortunately, they assume that everything that is happening now will continue to happen in the future. Better known as the lucky fallacy.

Remember during the last bull run when everyone was betting on BTC to $100,000 and ETH to $10,000?

When the telegram channels are full of talk about luxury watches and cars, and when cryptocurrency-related apps are ranked first in the Apple/Google stores, these are signals to take profits.

The situation is similar when buying. The FTX crash is an absolute example. Remember when everyone hoped that Bitcoin would fall to $15,000 or even $10,000?

ETH drops to $700 during Luna crash?

None of this ever happened.

The market becomes irrational, which is the golden period for savvy traders to make profits.

Remember when ETH dropped to $80 due to covid?

It seems that times of extreme fear in the market are a good entry point.

It's important to understand how this game works, no one "earns" money, you just take money from others.

Trading and investing is a peer-to-peer game, when a coin goes up it’s because other people are buying it, conversely, when a coin goes down it’s because someone is selling it.

So your ultimate goal is to defeat others.

Regarding stop loss, I would not set it at the current market price. If you have invested in projects that you have done due diligence on and respect their roadmap, then why would you stop loss during volatility?

If a project is losing credibility, not meeting deadlines, or delivering poor quality products, cut your losses as soon as possible and move on to something else, there are thousands of projects on the market.

fear

At some point, profits and losses can have a significant impact on life and prevent you from sticking to your trading strategy.

In Texas Hold'em, you will learn how to separate yourself from monetary valuation and move towards the Big Blinds, which can be viewed as a percentage of your portfolio in trading and investing.

The same applies to trading and investing, you should allocate a certain percentage of your funds to a particular investment, the more reliable the project, the highest percentage it should occupy in your portfolio. This can help you stay away from wrong decisions.

To continue to maintain a poker mentality, you have to think differently and not beat yourself up because the market has changed. You might have made an EV+ decision at the time, but unfortunately it ended up losing.

You can sell your tokens before they are listed on Binance and it will be the best decision at that time.

A hand like AA might lose to 72 when all-in, but in the long run, you will win.

That’s why you should execute a plan with a solid foundation.

Avoiding the truth

You have to make decisions with full knowledge of what you are doing.

Don’t blindly follow the leader or the crowd as this may lead you into a bad situation.

But facing the truth is complicated when it's not going your way.

We tend to look for identified deviations rather than conduct research.

Is this project FUD? Well, let me research and verify it myself.

If the FUD is justified, take action (e.g. withdraw funds from FTX, deleverage, ...), otherwise, buy the dip.

It's that simple.

Overtrading

After destroying multiple accounts, I realized that trading was not for me and gave it up. Contrary to what we have seen, long-term profitability is extremely complex and you may win in a bull market because 72 can beat AA.

To become a profitable trader you need to spend 1000's of hours looking at charts and learning price action, and even if I spent a lot of time on charts I would get bored.

However, gaining knowledge of price action helps me understand key areas and potential future directions.

Therefore, do not try to seize every opportunity and maximize your gains, as trading and leverage are extremely risky.

This is a great post by @bongoeson on trading and advice, I highly recommend traders to read it.

In summary, these are some of my biases, there are many more, but I have worked on them during the bear market to more confidently predict the upcoming bull market.

I’m a person who learns by doing, and rekt is the ultimate lesson.

Through these, my portfolio value is back to the top, and in a strange market, I recommend everyone to work on their mindset because it is the most important skill to master in investing.

If you are reading this now, you probably have a good mindset and didn’t give up when prices dropped. In bear markets, we build skills and knowledge to harvest in bull markets.

I have yet to see anyone who has worked hard and not been rewarded during a bull market.