Conviction Trading On-Chain
minimized trade takers, heavy believers, quick thinkers, ego droppers, & sharp minds get rewarded.
photo by: unknown
Every trade is a conviction trade. Why would you buy a coin otherwise? But i am referring to the “make it or break it” type trade.
Tokenized .. >
news
meme
mascot
tweet
belief/idea
artwork
The spectrum in where conviction lies (unsure gamble vs. max convict) determines the level of reward that’s possible. Don’t overvalue social downside (FUD, FOMO) over on-chain downside (holders & liquidity flow, more later). Refreshing and rethinking conviction in accordance to your position is the strength here AKA sizing.
The cost of entering/exiting trades is attaching an ego to your position (bag bias), then mental drawdown.
The best way to trade for your future mental sustainability is to distance the ego away from decision making as much as possible. Ego is fueled by comparison, envy and status. An example is: entering (or not) a trade because X sold or bought, selling (or not) because Y talked about the coin or to keep certain status, etc.
Sizing in with accordance to confidence and portfolio size aka putting your money where your mouth/mind is without ego. This can only be learned through experience. And the only way is to have confidence in your size vs your conviction excluding the ego and mental drawdown.
Dealing with the mental drawdown means having a strong ability to reason with yourself during times of euphoria (win) and distress (loss). How much of your decision making is fueled by emotions? Let alone ego?
For fundamentals, it’s important to realize what changed after key events and what you can do about it (size up or size down). Without constant refreshments of planning after these events, you’re merely gambling.
The things that sets crypto apart from everything else is the constant news, flow of liquidity, option to make permissions-less decisions, and transparency on the blockchain. But the “key events” factors to take into account for your trades are news and flow of liquidity.
Breaking these “things” down—
constant news, crypto is filled with unquantifiable levels of sentiment and information overflow. It’s important to understand why exactly the sentiment is currently like this for your token and if it’s being amplified by peers. if it is, then who is driving it and what is their incentive to gain from this? Assume everyone has motive. Information overflow is a white noise that seeps into your brain and affects your decisions. i’ve made it a habit to block/mute anyone who posts PNL’s publicly on X, wealth brags, or even just shitposts random stuff; because, the information is not useful and fuels the ego.
flow of liquidity, where money goes, the narrative will follow. Money in crypto is ALWAYS coming from somewhere. Track everyone you can. it’s easy to keep track of liquidity and who exactly is “running this coin up” or “jeeting their bags”. By keeping track of liquidity, you’re identifying the competition in the current coin you’re in. And by this, i mean figuring out “who holds this?”. Because at the end of the day, the only thing that makes a memecoin is who holds it. cont.—
blockchain transparency, on-chain is a gift and blessing to have. The entire purpose of blockchain is transparency. By blindly apeing into coins with no acknowledgement of current holders, you’re asking to be rugged. Breaking this down simpler: the only way you lose in trading is by having someone who got in earlier than you, sell on you. So try to understand incentive/holder patterns (cabal coins).
permission-less decisions, nobody can tell you what to do. Buying & Selling is all on you. This is why i reiterate that trading is a mental game within yourself.
Example? GOAT. Many caught the move from 0 -> 20m. But who held through the 20 -> 6m dip? And why? What caused the coin to dip that hard?
News? Nope.
Flow of Liquidity? Top wallets taking profit
What changed? Nothing fundamentally, same coin, stronger holders.
What can you do about it (mental drawdown/ego mgmt)? Size up or size down.
Now the run up from 6m -> XXXm was explosive. Each new key event imbedded a stronger form of conviction & added a layer of depth to the coin. Essentially changing the coin fundamentally. New coin.
But the dip from XXXm -> 150m was a trigger by fake AI FUD (sentiment) which was amplified by people (constant news) who obviously missed the coin, bought (& is in the red), or are just too weak to follow the herd. This move resulted in a stronger mental level of holders than before.
Why?
News? Yup, FUD.
Flow of Liquidity? Weak hands selling because of news. Majority of top sellers got out during the 20 -> 6m drawdown.
What changed? Arthur Hayes in, Pmarca podcast, alpha establishment (clear new mover on narrative).
What can you do about it (mental drawdown/ego mgmt)? Size up or size down.
Consequently, this grew GOAT into a new coin.
The lesson here that i’ve learned is each pos/neg news addition crafts sentiment that attaches to the current token, which essentially creates a “new coin”. It’s only the ego that is stopping from managing size on the current position. I put myself in the shoes of a non-holder, what would I do if i saw this? And as a holder, how should i react if i saw this? Is GOAT the same token now that Andy verified the backrooms manipulation @ $150m MC? No, it’s not. And it also became a different token when Pmarca decided to do a podcast and publicly acknowledge the coin.
The winning view is, understand that tokens change, they grow as different things happen, for the better or for the worse. But sizing it all about managing that change, whilst managing your mind/conviction. Now, those who can simply understand their decisions process consistently will be rewarded exponentially. This has been a big lesson from my journey so far. I only hope that the reader can get insight on this too and learn fundamentals, self-understanding, and techniques that’ll help them become a better trader.
Thank you 🫶✌️