Author: Yancong, founder of the Coin Generation blockchain community.
Recently, the market is in a bull market, and the demons are dancing wildly. Whether it is the orthodox "Shaolin Wudang" school (mainstream cryptocurrency) or other schools (copycats, memes), they are all booming and taking off. The feeling of making money is everywhere in various communities and confidence news. It feels like there are wealth codes everywhere, and it feels like any purchase will increase by multiples.
At this time, people will fall into a particularly impetuous state, and the frequency of operations will increase significantly. They will jump back and forth on at least 5 tokens a day, and the number of tokens held will be dazzling. Because the market is good, you will see the corresponding amount of USDT on the books every day, which is increasing day by day! In this case, if you are not aware, it will eventually result in: you have more and more USDT in your hands, but less and less potential chips. You think you have made money, but in fact you have become poor.
The underlying logic is here:
1) 1u=1u is constant
2) What about 1act? It could be 0.58u when I write, or 1u, or 5u
3) What about 1turbo? It could be 0.008u or 0.01u
In other words, many people will pay too much attention to the floating profit of u in this market situation - this is actually using the current time to measure your assets, because u is a fixed value, so time has no leverage, compound interest and possibility for it! In fact, the real measure is whether the number of high-quality chips in your hand is increasing - only in this way, when a certain time stamp in the future arrives, your actual assets will be several times the amount of current book assets.
So the best approach is to:
1) Do not move the underlying stocks of high-quality tokens
2) The definition of a so-called high-quality token: in my opinion, there is an 80% certainty that in the process of BTC breaking $150,000, it will give you a 3-10 times return possibility;
3) Based on this, the overall multiple is calculated as 5 times;
4) Then when you calculate your assets, use the current total amount of USDT*5;
5) Then you must balance it. For example, if you have $100,000 in act, $100,000 in moodeng, $100,000 in neiro, and $100,000 in goat, it is definitely safer than having $400,000 in act! Because their multiples are all expected to be 5 times, but the systematic risk is reduced. When the multiples are expected to be consistent, it is the best choice to reduce the risk based on partial diversification;
A simple calculation:
Comparing USDT with chips such as (ACT/NEIRO/MoodENG/GOAT/BAN), this principle is easy for everyone to understand and it is simple to understand! However, when the relationship becomes a non-stable currency relationship, when it becomes a relationship between chips, many people will forget the strategy because of the price!
I just wrote a post on Twitter today because I realized that I had made similar mistakes recently and I was inspired by that.
The most common situation is: cross-token arbitrage when the tokens rise and fall out of place! In the short term, it seems to make money, but in fact, in the long run, it may be a loss.
For example:
1) GOAT is now worth 1 billion, which is at a short-term high, and you are making good profits;
2) Moodeng is currently in a correction and has fallen a lot;
3) You don’t have much GOAT in the first place, and you are optimistic about the high certainty of GOAT’s future return of 5-10 times;
4) In this case, you sell goat and then buy the bottom of moodeng!
5) Then the moodeng you bought at the bottom did rise the next day
6) You will feel like a smart guy in your illusion!
The real situation is:
First, you sell goat and buy moodeng, and moodeng rises by 10 points, and you make a profit, which is normal.
Second, have you ever thought that if you didn’t sell goat, it would go up by 20%?
If you only look at the first one, you will feel that you have made a profit of 10%.
But comparing 1 and 2, you will find that you could have earned 20% points.
When the number of tokens increases from 2 to multiple, and you jump back and forth among multiple tokens to take advantage of the market trend, you will find that you cannot calculate the account clearly at all. This is one thing you need to be vigilant about.
Another thing is that different tokens have different potentials, so the most strategic task is to carefully judge and sort out the high-quality chips that you think have high certainty and higher multiples (not too much), and then give them the base positions they deserve in a relatively balanced manner.
This is not about average distribution: in the case of a balanced distribution of basic positions (such as $200,000 each, just for example), there will be a certain tilt. At this time, it will involve specific details. For example, if you don’t encounter a good opportunity to build a position for a high-quality token, one may eventually attract $300,000, one may only have $200,000, one may have $400,000, and one may have $300,000. This is due to the partial deviation determined by the opportunity, which is fine. However, it cannot happen that all are 1-2 tokens, and the others are 0 chips.
There is another concept here: the life cycle and rhythm of tokens are different.
1) Don’t look at this token and look down upon or feel resentment towards another high-quality potential coin just because it has been rising rapidly recently. It just hasn’t reached its launch rhythm yet;
2) Therefore, we return to the thinking of high-quality token chips, rather than the current floating profit issue of the u-base.
Only by doing this can you avoid being in a rush, and in the end you may not have more than those who do not understand floating profits. In other words, you can operate like a tiger, and it seems that there is floating profit on the books - but the number of high-quality tokens that are 5 times the current value has decreased.
I have explained it in very simple terms. If you don't understand it, you can read it a few more times and think about it yourself.
