I'm a big fan of trying to get to narratives early, so when everyone was preoccupied with $ARB and the future of France, we bought some $ZERO and started focusing on the LSD narrative to come in April.
But how do you know if you're early or late? 🧵
A lot of the time, it pays to forward-think the market because if you get itright, you really capitalize on the maximum RR you possibly can get. When no eyes are on something, it's really scary to buy, even for me.
But when you feel this fear, you're likely very early, and the RR is great. This is when you can capture the multiples everyone talks about.
Feeling: feeling in trading is so important, and listening to your body and understanding how it reacts is paramount to any trader's success.
When you feel comfortable, for instance, this is usually when you are late, everyone has shared it, the protocol has shown that the tech works, and your favorite influencers are threading about it.
What does all of this confirmation do for us? It makes us feel comfortable.
What does it do for price? Likely this confirmation and comfortable feeling we feel others have felt or are feeling, and price has sent. Your RR has drastically changed.
This is when I try to be careful, and even if I am going to long it, I will do so with a reduced position size.
What happens when everyone is focused on $ARB, but you want to buy an LSD token forward thinking the next narrative? You see that $ZERO is posted in a chat, and everyone ignores it. No one replies to it. You think okay, whatever, I have some time.
You read the docs, you search Twitter - crickets. My god, what am I doing? This thing is surely a rug, you think to yourself.
This is when we did some increased due diligence and tried to find out as much about the team as we could. Anon team - nothing. Jeez, that's scary, isn't it? Price is not moving. Why is it not moving? This is an Alchemix for LSD with good tech, and the market cap is 1mm.
What's going on here?
Rug risk is still there, so take that into account, but after digesting the docs, you feel you're early anyway. Still afraid? What do you do? Well, we size in.
When you feel fear, sometimes it's because you are early. As human beings, we crave the comfort of the herd. As traders, we need to be mindful and careful of this comfortable feeling because it brings complacency. And complacency makes us lose money.
This same complacency and comfortable feeling are what get people to go all-in on BTC at 69K. We want to be a part of the group, we want confirmation that everything is okay before we bet, we don't want to lose. This same human nature is exactly what makes us lose.
So how can we protect ourselves against ourselves? When the herd is euphoric, especially in a bear market, and you are feeling amazing, and you decide to share your PnL screenshot with your group and your friends - you're late.
In this scenario, I try to take risk off the table, but I don't always get it right. Sometimes even for me, emotions get the better of me.
When the trendsetters come out, and everyone is euphoric, including yourself, you have to breathe deep and ask yourself "who is going to buy after me?" If your answer is everyone knows about it already, the catalyst happened, and it's flooded in all my groups and on Twitter...
Risk is high. This is when you sell.
When you feel fear to enter because no one is talking about it, if you have done your due diligence, and this is a good product by a good team with good tech and it has good tokenomics and it has passed all of your tests, it's time to put some risk on.
Use this fear as a guide to if you are early. It is a different kind of uncertain fear than the fear you may feel when you size in too big at the top or put too much risk on (that's for a whole other thread in itself).
It is a fear feeling of uncertainty, and it is the most profitable feeling we have.