Stupidity And Trading


Seven Varieties of Stupidity
(and what to do about them)

Note: I wanted to post an article titled: “3 Secrets of Everlasting Victory in the Markets – Part 2” but I had to postpone it in favor of the article below. Trading is a 100% psychological game, and that is why many experienced, knowledgeable, and skilled traders still suffer huge losses in the markets, and some of them remain poor, despite many years of experience. Once given another opportunity, they will end up making the same mistakes again, owing to undisciplined psychology. You will see traders crying like babies after receiving margin calls, only to repeat the same mistakes that led to previous margin calls, when they resume trading again with fresh funds. The article below is for the populace, but it also has a lot to do with trading and investing. The truth in it can make a difference in your trading career.

“There are so many kinds of stupidity, and cleverness is one of the worst.” – Thomas Mann.

Many words have been expended on the nature of intelligence, while the topic of stupidity is comparatively neglected – even though it is all around us, screwing us up. That’s probably because we assume stupidity is just a lack of intelligence. I think there’s more to it than that. It comes in many different forms; what follows is by no means comprehensive.
Stupidity and Trading1. Pure stupidity
Let’s start with the most obvious type of stupidity: shit-for-brains (excuse the scientific jargon). The common sense definition of a stupid person is someone deficient in cognitive ability, specifically the ability to think and reason clearly. A stupid person has a low IQ. They flunk verbal reasoning tests and Raven’s matrices because they find it hard to spot patterns in data, manipulate language, or follow chains of logic. (I’m bracketing the question of whether analytical reasoning is intelligence – if it is, then according to the Flynn effect our ancestors were all morons – but the lack of it is what most people mean by stupidity). Presented with anything complex, the stupid person sees only meaningless chaos. Introduce a stupid person to a game and they will fail to understand the rules, even after they have been explained clearly and repeatedly, because they cannot learn, or can learn only slowly. Intelligence is inseparable from learning, something that it took AI scientists a long time to figure out; they spent years trying to design an intelligent machine until they realised it’s better to build a dumb machine that learns fast.1 What are the causes of this kind of stupidity? Genetics? The person may have inherited bad mental hardware. Environment? Maybe they grew up in a culture that never required them to learn or think. Or maybe they were poisoned: a recent study found that lead has been responsible for the loss of almost a billion IQ points in post-war America. Whatever its cause, stupidity in this sense means the inability to identify patterns, follow logic, or learn from experience. A stupid person is a novice at everything all the time.

2. Ignorant stupidity
Ignorance is also a common sense definition of stupidity: stupid people are people who don’t know shit about shit (another scientific definition). Now, ignorance is by no means always a sign of stupidity; any intellectual exploration, including science, depends on being aware of what one doesn’t know. But it’s also true that people who can’t draw on a bank of experience, technique or knowledge will find it very hard to cope with new problems and tricky questions. How do they get that way? Perhaps they have faulty hardware, as per #1, and so have been unable to acquire and retain information, or it might be that they haven’t been given the chance to do so: maybe they didn’t get much of an education, either from their parents or from school, and so lack the basic tools and frameworks needed to make sense of the world – verbal and mathematical skill, a knowledge of basic geography or political systems and so on. The education scholar E.D. Hirsch has observed that the ability to read a newspaper and have even the vaguest idea of what all the articles are about requires a level of general knowledge most of us take for granted. Background knowledge in any domain is like water for fish: we’re barely aware we have it but it’s what enables us to absorb new information. The less you know, the harder it is to learn; the less you can learn, the less you know – the stupider you get. This is the ignorance loop, and people with perfectly good hardware can get stuck in it.
Stupidity and Trading 3. Fish-out-of-water stupidity
So far we’ve discussed common sense definitions of stupidity. It tends to be described as a lack of something – either cognitive horsepower (‘intelligence’), or knowledge, or thinking. This seems inadequate. Defining it only as an absence of brainpower fails to account for what I’m calling fish-out-of-water stupidity. People with powerful brains who have acquired a great deal of knowledge in one domain, and who are therefore regarded as exceptionally smart, tend to assume they will have exceptionally smart thoughts in every field of knowledge they wander into. They take their own accumulated knowledge for granted and believe that the facility it gives them in their field is merely a function of their all-round brilliance.

Now, to some extent, these experts are probably right to assume that because they’re smart at this thing they’ll be smart at other things too – there is such a phenomenon as general intelligence. But they can wildly over-rate how intelligent they are in new domains and end up making terrible decisions. Twitter has been great for revealing how scientists or historians can be stupid once outside of their academic field. Often, experts don’t even notice that they have moved into a foreign domain: the bankers who screwed up in the 2008 crash thought they were in the domain of risk when in reality they were in the domain of uncertainty. Regulators who were flat-footed during during the pandemic (more of a problem for the US than the UK) failed to clock that they were now in the domain of crisis management.

4. Rule-based stupidity
We often talk about stupidity as if it is an individual trait – something a person is or isn’t. It is commonplace to talk about smart people and stupid people, even among intellectuals: one of the few scholars to have taken stupidity seriously, at least somewhat, was the Italian economist Carlo Cipolla, who wrote an essay in 1976 called The Basic Laws of Human Stupidity which you can buy as a book. As you can see from this summary of it, Cipolla starts from the premise that the world divides into stupid and non-stupid people and builds his “laws” on top of it (‘Always and inevitably, everyone underestimates the number of stupid individuals in circulation’). The essay is wittily written but I suspect the reason it’s still being read is that it is comforting. It is nice to imagine that a person is either clever or stupid – and that since I realise that, I must be one of the clever ones. It is more unsettling to think of stupidity as something that anyone, even you, can be captured by.

Stupidity can be systemic. The Santa Fe Institute complexity theorist David Krakauer observes that the Romans, as intelligent as they were in many ways, made no advances in mathematics. He puts this down to a numeral system that made it virtually impossible to do complex sums. Arabic numbers, imported to Europe in the Middle Ages (not as dumb as their reputation), are easier to manipulate. The new system made our civilisation collectively smarter, or at least less dumb. The tool or platform we’re using can keep us stupid, even when we’re smart. In fact, Krakauer’s view is that stupidity isn’t the absence of intelligence or knowledge; it’s the persistent application of faulty algorithms (itself an Arabic concept, of course). Let’s say someone hands you a Rubik’s Cube.
Stupidity and Trading Consider three possibilities. You might know an algorithm or set of algorithms which enables you to solve it quickly, and look very smart (actually Krakauer would say that is a kind of smartness). Or you might have learnt the wrong algorithms – algorithms which ensure that no matter how many times you try, you’ll never solve the puzzle. Or you might be completely ignorant and just go at it randomly. Krakauer’s point is that the ignorant cuber at least stands a chance of solving it accidentally (theoretically speaking – don’t try this at home) whereas the faulty-algorithm cuber never will. Ignorance is insufficient data to solve a problem efficiently; stupidity is using a rule where adding more data doesn’t improve your chances of getting it right – in fact, it makes it more likely you’ll get it wrong.

Look around and you can see people trapped in flawed algorithms (if there is war, then it must be America’s fault’; ‘if there is a market crash then a recovery is just around the corner’) Rules of thinking inflexibly applied lead to stupid conclusions. You find a lot of stupidity among people who are highly partisan on behalf of a political party or ideology. Those people tend to be cognitively inflexible, regardless of which side they’re on. They are drawn to clear stories or chains of reasoning. The politicians or activists who capture them are skilled at building and disseminating these algorithmic structures of thought.

Very often, stupidity isn’t derived from an absence of mental materials but from a superfluity of them. It is the product of all the stuff we carry around in our minds and absorb from others: powerful algorithms, bad theories, fake facts, seductive stories, leaky metaphors, misplaced intuitions. The stuff that feels like solid knowledge even though it isn’t. As the old saying goes, it’s not what you don’t know that will get you into trouble but what you do know that isn’t so.

5. Overthinking-stupidity
When the psychologist Philip Tetlock was a graduate student he witnessed an experiment, designed by his mentor Bob Rescorla, which pitted a group of Yale undergrads against a rat. The students were shown a T-maze, like the one below. Food would appear at either A or B. The students’ job was to predict where the food would appear next. The rat was set the same task.
Stupidity and Trading Rats and Mazes
Rescorla applied a simple rule: food appeared on the left 60% of the time and on the right, 40%, at random. The students, assuming that some complex algorithm must be at work, looked for patterns and found them. They ended up getting it right 52% of the time – not much better than chance and considerably worse than the rat, which quickly figured out that one side yielded better results than the other and so headed to the left every time, achieving a 60% success rate.

Smart people, or at least people who have come to believe they are smart, dislike strategies that incorporate the inevitability of error. Confronted with what looks like randomness, they won’t throw up their hands and go with the flow. They wish to impose themselves on the world. That kind of intellectual ambition can lead to insight and innovation but it can also lead to stupidity, when errors are energetically and skilfully defended.

Once a clever person has adopted a mistaken belief it is very hard to talk them out of it: ‘cognitively sophisticated’ people are if anything more susceptible to flawed thinking than average, because they are so skilled at bending reality to fit the model of it they have constructed. I suspect this tendency is associated with high verbal fluency, a quality I used to admire unreservedly but now view with suspicion. People with the ability to speak brilliantly off-the-cuff are also likely to be very good at finding instant and persuasive justifications for whatever it suits them to believe at any point. The right words just magically appear, perfectly turned, glistening like truth.

You can observe another manifestation of overthinking every time you use a product or app that is so crammed with ingenious features it’s impossible to use, or watch a movie that has everything going on except a coherent story. Clever people have a tendency to add features to a product or movie or argument rather than subtract them, which can produce stupid outcomes.

I am particularly wary of cleverness when applied to social and political questions, which can’t be solved with maths. In this I’ve been influenced by some clever thinkers. You can trace a fundamental divide in Western thought between those who believe that knowledge and rationality invariably make us smarter and those who warn they can also make us dumber. On one side, Aristotle, Descartes, Kant, Voltaire, Paine, Russell; on the other, Socrates, Montaigne, Burke, Nietzsche, Freud, Wittgenstein. The latter group includes thinkers who are, in their different ways are interested in the ways that human intelligence generates a unique kind of stupidity. These are my guys.

6. Emergent stupidity
Quite often in organisations that do stupid things, it’s hard to pin the stupid decisions on any one person even in retrospect, and there may be no stupid individuals involved. Sometimes, as with Enron, the people are very smart. Stupidity can emerge in the same way that intelligence emerges in a flock of geese, or an ant colony, or the cells and synapses of the human brain. When a group of individuals are following a few simple rules in co-operation with each other, then collective behaviour which is much smarter – or much stupider – than the sum of its parts may emerge. In any organisation, leaders should reflect on the simple rules that people follow even when they’re not thinking, and ask if they’re more likely to generate intelligence or stupidity.

There is no innate human drive to avoid stupidity. We evolved to survive and thrive and that means getting along with others – that’s our priority, most of the time. The good news is that getting smarter and getting along are not necessarily at odds with one another; the bad news is that they often are. In my book CONFLICTED I show how avoiding open disagreement reduces the collective intelligence of any group. The more that members of a group follow a rule like ‘agree with the consensus’ or ‘agree with the leader’ the less gets contributed to the general pool of ideas and arguments. The shallower the pool, the more likely it is that something stupid will crawl out from it, covered in slime.
Stupidity and Trading7. Ego-driven stupidity
We’ve talked about stupidity mainly as a cognitive phenomenon but of course it’s deeply bound up with emotion, and with the sense of self. We could probably name seven varieties under this heading alone but the basic principle is that the more insecure a person feels, the more willingly they will make themselves stupid. Psychologists call it ‘identity-protective cognition’. We might call it the ‘I’m with these guys’ effect.

There is a well-established correlation between the propensity to fall for conspiracy theories and feelings of anxiety, specifically the feeling of not being in control. You could see this in action after 2016 when the online left in the UK and US started feeding hungrily on conspiracy theories about Brexit and Trump. Lots of clever people felt helpless and scared and displaced and made themselves stupid in response.

Political extremists and conspiracy theorists crave the safety of clarity. It’s not just the ideology or conspiracy theory to which people are drawn, but the community that forms around it. The ideology or theory is like a park or stadium – it is social infrastructure. You like being there, and your beliefs are the wristband. If you’re worried about being thrown out you’ll do everything you can to show how loyal you are to these beliefs, and how little you care about the opinions of outsiders. Even if it means repeating and believing stupid things.

I wrote positively about Twitter last time so I think I’ve earned the right to say that it’s also a space where the forces of stupidity converge and dance. You have experts who feel compelled to pronounce on matters outside their expertise. You have insecurity and status anxiety: everyone jostling for followers, likes and retweets. You have people doing their thinking in public, in the gaze of peers and enemies. You have ideological communities and sub-cultures who are also up in each other’s faces all the time, in-groups gaining energy from out-groups. The result is that some quite stunningly stupid threads go viral and get celebrated by lots of smart people (you’ll have your own examples – this one is a doozy). But it’s also an interesting laboratory in which you can observe the process of someone struggling to manage and reconcile affiliations with different groups. People can have more than one identity to protect – a scientist may want to maintain a ‘good scientist’ identity with peers and a ‘good liberal’ identity with the public. It’s revealing to see which one they go with when a conflict between these identities arises. More often than not they choose unscientific stupidity (a recent example of this below the fold).

The truth is that stupidity is often an act of will: people make themselves stupid, when it suits them. That humans are able to do this at all is, in its way, quite impressive. The English psychoanalyst Wilfred Bion fought in the First World War, and his ideas were shaped in part by that experience. Bion was fascinated by the way that people shut down their capacity for thinking and reasoning when they go into battle, figuratively as well as literally. His theory of how people learn was unusual in that he incorporated the fact that we don’t always want to know. People don’t just miss out on knowledge; they unconsciously resist or reject it. They seek minus knowledge, which Bion called -K. Failing to learn from experience stems from fear of thinking about what we don’t know, and sticking to the reassuring heuristics and habits at hand. Learning from experience, according to Bion, requires the hard, uncomfortable work of thinking about our own emotions. Put it that way and you can see why many of us so often choose stupidity.

Author: Ian Leslie

Source: https://learn2.trade/stupidity-and-trading

The Bitcoin Discount Store

Recently I went shopping at a gas station where everything was 75% off.

I’m not in the habit of shopping at gas stations, because I drive a Tesla (which, incidentally, I bought with bitcoin). One of the great things about owning an electric car is you no longer have to worry about gas prices. It’s enormously freeing.

I was taking a road trip to pick up my son from college and stopped at a Supercharger to power up. I looked around for something to eat, and the only place nearby was a gas station. It had one of those convenience stores attached, so I wandered in.

Tucked away in the back, behind the Slim Jims and the antifreeze, I spotted a cardboard bin that read “75% OFF.” Always one for a bargain, I looked inside.
The Bitcoin Discount StoreEnergy bars. Canned goods. Cereal. Mixed nuts. Pasta.

All 75% off.

I couldn’t believe my fortune. I rummaged around, wondering if something was wrong with this stuff. Maybe they had been sprayed with DDT or had an expiration date of 1979.

The store manager happened to walk by. “Is this for real?” I asked her.

“Yep,” she confirmed. “We’re owned by 7-Eleven Corporate, and they’re changing over all the merchandise in our stores. This was all discontinued, so they just threw it all in a bin and marked it down. Did you see the personal goods?”

I looked over and saw there were two more identical bins, all 75% off. One was overflowing with toiletries and medications: Advil, toothpaste, hand sanitizer, tampons, condoms (lots and lots for some reason).

“Can I have a box?” I asked, “I’m going to need one to carry my haul.”

“All the good stuff was gone pretty fast,” she mentioned when she came back with my box.

“Are you kidding me?” I replied, “This will be my grocery shopping for the week.”

I paid $20 for all this (retail price: $80).

So what does this story have to do with investing? Well:

Buy Stocks on Sale
One of the principles of value investing is to buy “stocks on sale.”

Do your research to find quality companies that are underappreciated, i.e., trading below their market value. When you find a bargain, buy it.

For example, I think my Tesla is terrific, but TSLA stock is certainly not on sale.
The Bitcoin Discount StoreThere’s no way Tesla is worth more than the next 10 auto companies combined. (Courtesy WolfStreet.com)

There are two ways to find stocks on sale: the hard way and the easy way.

The hard way is to look at core company metrics: revenue, earnings, cash flow, profitability, dividends, etc. Compare its stock price with similar companies, to see if it’s underpriced.

The easy way is to watch for great companies that have been through some recent “shock” that has caused their price to drop. This shock could be external (like an overall market dip) or internal (something that spooked investors).

I’ll give an example. Years ago, I invested in Netflix (NFLX), which had just started its streaming service. Netflix was still primarily a DVD-by-mail company, and I thought its model was much better than that of video stores. Here I had some experience: I had spent an unhappy year in college working at a Blockbuster Video, which I found to be a terrible company. (Any life experience can be useful, even working minimum wage at Blockbuster.)

I didn’t buy NFLX stock right away, and to my dismay, the stock price kept going up, and up, and up. Then Netflix announced it was going to split the business into two offerings: the streaming service would keep the name Netflix, and the DVD-by-mail business would be renamed “Qwikster.”

If you thought Facebook changing its name to “Meta” was a big deal, you should have been there for “Netflix” becoming “Qwikster.” There was a furious uproar usually reserved for political revolutions. Co-founder and CEO Reed Hastings was called a trickster and a huckster for pulling a Qwikster.

Needless to say, NFLX stock tanked. And I scooped it up.
You can probably guess when “Qwikster” was announced.

This was not an easy decision. The DVD-by-mail business was their moneymaker, and Netflix was essentially betting it all on streaming. Netflix didn’t have experience as a streaming platform; no one did. The company had experience with logistics, shipping DVDs in red envelopes from giant warehouses. Streaming seemed a very risky bet.

This is an example of buying a “stock on sale.” It’s the equivalent of finding the bargain bin at the back of the gas station: the merchandise is not pretty, and a lot of people will think there’s something wrong with it. But a discount condom is still a condom.

I wish I could tell you that I held onto that NFLX stock until today, but I later sold it, only to buy it again in the early days of the pandemic, when the price suddenly plummeted again. (I told you about that opportunity, too.)

So we have two “shocks” to NFLX stock, one caused by an internal decision (Qwikster) and one by external forces (COVID-19). In both cases, investors fled. But the core business remained the same. In fact, Netflix quickly dropped the Qwikster idea, and still offers DVDs by mail.

Sounds easy, but it is actually really hard to buy stocks on sale. You’ve got to get over the fear: What if I’m wrong, and everyone else is right? The great difficulty is overcoming our own brains: why would I buy something that’s losing value?

Which brings us to bitcoin.
The Bitcoin Discount StoreBitcoin is 50% Off
Poor bitcoin is sitting in the bargain bin at the back of the gas station, with a sign reading “50% OFF.”

You can buy bitcoin at literally half the price that people were paying just six months ago. Six months ago, people were lining up to place their orders; today, bitcoin can’t get no love.

Guess what? It’s the same bitcoin.

Nothing’s changed. No regulatory announcements, no technology failures. They haven’t renamed bitcoin “Qwikbux.”

As market strategist Jeff Sommer wrote in today’s excellent New York Times column, no one should be investing in the stock market if they need that money to pay rent or gas. (That goes double for bitcoin.)

But if you have the means and the mettle to stick with it if prices drop lower, these are the conditions that long-term value investors love. (Look at how Warren Buffett is spending big right now to snap up stocks on sale.)

And even if you don’t want to spend big, you can use the lure of discount bitcoin to get started with steady-drip investing, then “set it and forget it.”

It’s better than stocks on sale: it’s crypto on clearance. And no matter what happens tomorrow, one thing we know for sure: these prices won’t last.

Source: https://learn2.trade/the-bitcoin-discount-store

How To Pick Winning Cryptos – Part 1

According to one source, there are more than 19,000 cryptocurrencies in existence and dozens of blockchain platforms that exist.

Most of these cyptos will not make money in the long run. A large percentage of them would even become eventual losers.

However, there are certain cryptos that will bring fortunes to those who invest in them. In the past several years, many an investor has become rich by investing in coins like BTC, ETH, BNB, AXS, XMR, etc.

Picking winning cryptos, just like picking winning stocks: Investopedia defines a stock pick as when an analyst or investor uses a systematic form of analysis to conclude that a particular stock will make a good investment and, therefore, should be added to their portfolio.

Good stock pickers consider important factors like company strength relative to its peers, trends in earnings growth, the debt-to-equity ratio in line with industry norms, long-term strength and stability, price-earnings ratio as an indicator of valuation, and effectiveness of executive leadership, how the company treats dividends, etc.
How to pick winning cryptos – Part 1Those who are excellent at picking winning stocks inevitably become successful investors. Just like stock picking, crypto picking requires good knowledge and diligence.

FACTORS TO CONSIDER WHEN INVESTING IN CRYPTOS
Are you looking for cryptos that have great potential for unusually massive returns?

If you want to pick cryptos with huge future potential, you need to make research with due diligence. The factors to be considered are listed below. If a crypto meets all the requirements listed below, then there is a very high probability that it would succeed in the long term, bringing enormous riches to those who buy and hold it.

What problem does the crypto solve?
We know the problems solved by Bitcoin. Ethereum is known for smart contracts, plus many other uses. Monero is known for privacy. Tornado Cash improves transaction privacy by breaking the on-chain link between source and destination addresses. Helium is a blockchain-powered wireless service that provides a long-range connection to nearby Internet of Things (IoT) devices. Uniswap is trying to solve decentralized exchanges’ liquidity problem, by allowing the exchange to swap tokens without relying on buyers and sellers to create that liquidity.

What problem does the token of your choice solve?

Many people will just create “shit” coins and market them, hoping that the price will continue to skyrocket. A lot of useless coins like that will end up going to zero in the long run.

In the past a lot of coins have gone to near zero and will never recover. Many more coins will go to zero because the business models behind them are not sustainable and they do not solve unique problems.

If a coin solves a unique problem, then it’s already on my radar.
How to pick winning cryptos – Part 1Look at the tokenomics
Robert Stevens defines tokenomics as a combination of “token” and “economics.” It is a catch-all for the elements that make a particular cryptocurrency valuable and interesting to investors. That includes everything from a token’s supply and how it’s issued to things like what utility it has.

For instance, let’s take a glace at a summary of the tokenomics of Lucky Block, a token with a very huge future potential.

LBLOCK has lower operating costs. Lower operating costs mean Lucky Block can give back more in rewards to its token holders and charitable organizations and good causes. Winners are paid in LBLOCK, which they can either hold to benefit from the token rewards or cash out. Every time LBLOCK is sold on a DEX a 12% transactional fee (tax) is applied (see table 1 below). 4% of this transactional tax is added to the prize pool available for weekly jackpots. The remainder of the 12% tax will be distributed to the liquidity pool, token burn, and the LuckyBlock NFT fund (see table 2 below). A 1% burn rate means Lucky Block is a deflationary asset and this will help to underpin token value.

Who are the people behind the project?
You need to vet the team.

Who are they? Do they have a good reputation? What is the biography of an individual in the team? Have they been involved in any businesses and projects in the past, and what are the outcomes of those projects? Do they have criminal records?

You need to ask questions, since the team behind a project is also a big determining factor.

Try to talk to the team
Can you talk to the team behind the crypto project? Are they friendly? Are they willing to answer your questions? What are their aims and ambitions?
How to pick winning cryptos – Part 1
Look at the token distribution
Once again, let us use the token of Lucky Block (LBLOCK) as an example:

Lucky Block Token distribution
Total token supply: 100,000,000,000 (100 billion)
Presale: 32,500,000,000 (32.5 billion – 32.5%)
Strategic partners and advisors: 20,000,000,000 (20 billion – 20%)
Marketing: 22,500,000,000 (22.5 billion – 22.5%)
Team: 20,000,000,000 (20 billion – 20%)
Product development: 2,500,000,000 (2.5 billion – 2.5%)
Locked liquidity – 1-year lock: 2,500,000,000 (2.5 billion – 2.5%)

Look at the developers
Are the developers really competent? Do they even know what they’re doing? Furthermore, some of the questions that need to be asked as regards the team behind a crypto project also need to be asked as regard the developers.

Look at the competition
Does the crypto have a competitive advantage? Are there other competitors who have similar projects, trying to solve the same problem which the crypto on your radar is trying to solve? Do they have better tokenomics? What are the strengths and weaknesses?

Conclusion:
Why do I need a particular token? The answer is that 90% of the time, I don’t need the token, or else I could end up losing money on it. However, if a certain token project meets all the criteria mentioned above, I would invest in it.

NB: There is another big method of picking winning cryptos, and it has proven to be invaluable, with verifiable results. That important method will be examined in the next article in this series.

Source: https://learn2.trade/how-to-pick-winning-cryptos-part-1

AjalaJ:
How To Pick Winning Cryptos – Part 1

According to one source, there are more than 19,000 cryptocurrencies in existence and dozens of blockchain platforms that exist.

Most of these cyptos will not make money in the long run. A large percentage of them would even become eventual losers.

However, there are certain cryptos that will bring fortunes to those who invest in them. In the past several years, many an investor has become rich by investing in coins like BTC, ETH, BNB, AXS, XMR, etc.

Picking winning cryptos, just like picking winning stocks: Investopedia defines a stock pick as when an analyst or investor uses a systematic form of analysis to conclude that a particular stock will make a good investment and, therefore, should be added to their portfolio.

Good stock pickers consider important factors like company strength relative to its peers, trends in earnings growth, the debt-to-equity ratio in line with industry norms, long-term strength and stability, price-earnings ratio as an indicator of valuation, and effectiveness of executive leadership, how the company treats dividends, etc.
How to pick winning cryptos – Part 1Those who are excellent at picking winning stocks inevitably become successful investors. Just like stock picking, crypto picking requires good knowledge and diligence.

FACTORS TO CONSIDER WHEN INVESTING IN CRYPTOS
Are you looking for cryptos that have great potential for unusually massive returns?

If you want to pick cryptos with huge future potential, you need to make research with due diligence. The factors to be considered are listed below. If a crypto meets all the requirements listed below, then there is a very high probability that it would succeed in the long term, bringing enormous riches to those who buy and hold it.

What problem does the crypto solve?
We know the problems solved by Bitcoin. Ethereum is known for smart contracts, plus many other uses. Monero is known for privacy. Tornado Cash improves transaction privacy by breaking the on-chain link between source and destination addresses. Helium is a blockchain-powered wireless service that provides a long-range connection to nearby Internet of Things (IoT) devices. Uniswap is trying to solve decentralized exchanges’ liquidity problem, by allowing the exchange to swap tokens without relying on buyers and sellers to create that liquidity.

What problem does the token of your choice solve?

Many people will just create “shit” coins and market them, hoping that the price will continue to skyrocket. A lot of useless coins like that will end up going to zero in the long run.

In the past a lot of coins have gone to near zero and will never recover. Many more coins will go to zero because the business models behind them are not sustainable and they do not solve unique problems.

If a coin solves a unique problem, then it’s already on my radar.
How to pick winning cryptos – Part 1Look at the tokenomics
Robert Stevens defines tokenomics as a combination of “token” and “economics.” It is a catch-all for the elements that make a particular cryptocurrency valuable and interesting to investors. That includes everything from a token’s supply and how it’s issued to things like what utility it has.

For instance, let’s take a glace at a summary of the tokenomics of Lucky Block, a token with a very huge future potential.

LBLOCK has lower operating costs. Lower operating costs mean Lucky Block can give back more in rewards to its token holders and charitable organizations and good causes. Winners are paid in LBLOCK, which they can either hold to benefit from the token rewards or cash out. Every time LBLOCK is sold on a DEX a 12% transactional fee (tax) is applied (see table 1 below). 4% of this transactional tax is added to the prize pool available for weekly jackpots. The remainder of the 12% tax will be distributed to the liquidity pool, token burn, and the LuckyBlock NFT fund (see table 2 below). A 1% burn rate means Lucky Block is a deflationary asset and this will help to underpin token value.

Who are the people behind the project?
You need to vet the team.

Who are they? Do they have a good reputation? What is the biography of an individual in the team? Have they been involved in any businesses and projects in the past, and what are the outcomes of those projects? Do they have criminal records?

You need to ask questions, since the team behind a project is also a big determining factor.

Try to talk to the team
Can you talk to the team behind the crypto project? Are they friendly? Are they willing to answer your questions? What are their aims and ambitions?
How to pick winning cryptos – Part 1
Look at the token distribution
Once again, let us use the token of Lucky Block (LBLOCK) as an example:

Lucky Block Token distribution
Total token supply: 100,000,000,000 (100 billion)
Presale: 32,500,000,000 (32.5 billion – 32.5%)
Strategic partners and advisors: 20,000,000,000 (20 billion – 20%)
Marketing: 22,500,000,000 (22.5 billion – 22.5%)
Team: 20,000,000,000 (20 billion – 20%)
Product development: 2,500,000,000 (2.5 billion – 2.5%)
Locked liquidity – 1-year lock: 2,500,000,000 (2.5 billion – 2.5%)

Look at the developers
Are the developers really competent? Do they even know what they’re doing? Furthermore, some of the questions that need to be asked as regards the team behind a crypto project also need to be asked as regard the developers.

Look at the competition
Does the crypto have a competitive advantage? Are there other competitors who have similar projects, trying to solve the same problem which the crypto on your radar is trying to solve? Do they have better tokenomics? What are the strengths and weaknesses?

Conclusion:
Why do I need a particular token? The answer is that 90% of the time, I don’t need the token, or else I could end up losing money on it. However, if a certain token project meets all the criteria mentioned above, I would invest in it.

NB: There is another big method of picking winning cryptos, and it has proven to be invaluable, with verifiable results. That important method will be examined in the next article in this series.

Source: https://learn2.trade/how-to-pick-winning-cryptos-part-1

where can I source funds for this type of investment,?

You Need To Accept This Trading Truth If You Want To Survive

A TRUTH ABOUT TRADING

A couple of things in life that I really don’t look forward to are:

1. when they draw blood for my semi-annual health checkup and
2. when I have to go to the doctor.

Yet, when I think about it, not going could be a lot worse than going. I don’t know which I would dislike more, finding out I have too high a cholesterol reading or finding out that my blood sugar is too high. Hopefully, I’ll never have to compare the two. Fortunately, I don’t suffer from either condition.
You need to accept this trading truth if you want to surviveRegardless, as I was sitting in the doctor’s office one Monday morning, I realized that sometimes I am like the doctor in regard to the occupation of trading. Sometimes my being blunt about the things that need to be said is not well-liked by some traders. Much of the time there is a little pain involved in doing things the right way, because there is rarely such a thing as instant gratification when you are a trader. However, in the long run, you are far better off if you do things the right way.

As much as I hate going to the doctor, I know that if I take care of things now, even though I experience a little bit of pain, it will save a great deal more pain in the future.

For those who cannot see past the desire to always receive instant gratification from their trading efforts, I am not well received. For those who can see that the information and experience that I provide, although sometimes painful to realize, and even more painful to actually follow at first, will ultimately save them from a great deal of pain in the long run compared with how most traders actually fare.

Knowing this does not make it any easier to go to the doctor, because the immediate pain is the same whether I like it or not. However, knowing and understanding this enables me to go in spite of the small bit of pain that it may cause.

You need to accept this trading truth if you want to survive. Each Spring I enjoy planting a garden. A garden requires work. Tending the plants while they grow requires even more work. Even harvesting the fruit of my garden requires work, but then comes the enjoyment. It is always in that order, which is the way God created it. It’s the same way with investing and trading.[i][/i]

No matter what your situation is right now, don’t compromise to receive instant gratification at the cost of a great harvest later on. I write from many years of experience and from making these kinds of mistakes in the past.

And that is a truth about trading.

Author: Joe Ross

Source: https://learn2.trade/you-need-to-accept-this-trading-truth-if-you-want-to-survive

Post-Merge Long-Term Price Forecast For Ethereum (ETH), 2022 – 2025

Ethereum currently is bearish. The bearishness started in 2021 and has lasted till date and will continue for the rest of this year and the year 2023. Even on the day of the Merge, ETH plummeted furiously.

The most important reason for the bearishness is crypto winter. During crypto winter, ETHUSD will be trending downwards no matter how positive the fundamentals surrounding it, are and no matter the number of developments and improvements on the Ethereum blockchain.

When a crypto summer begins, ETHUSD will experience overall bullish movements, even when negative fundamentals are coming out as regards it. The overall bullish movement will inevitably happen irrespective of occasional pullbacks in the market, leading to lower highs, and higher highs.

This is what is called seasonality in the world of crypto. There is a bullish season and a bearish season, and that is the biggest determinant of the overall movement of a major crypto like ETH.

Seasonality trumps everything!

Post-Merge Long-term Price Forecast for Ethereum (ETH), 2022 – 2025

ETHUSD – Daily Chart
ETHUSD Long-term price territories
Distribution territories: $5,000.00 $15,000.00 and $20,000.00
Accumulation territories: $1000.00, $500.00 and $100.00.

ETHUSD Daily Chart:
The daily chart shows that the overall market tendency is bearish. This is a kind of market in which short-term sellers will make lots of money just by selling rallies in the market, using margin trading facilities.

Using margin trading techniques, going long in this market would invariably result in financial disaster, as the price is projected to reach the accumulation territory of $1,000.00 before the end of this year.

The most logical trading approach for margin traders is to sell every considerable bullish attempt on this crypto; since every bullish effort will invariably be transitory.

In the year 2023, the accumulation territory of $500.00 will be tested (or possibly breached to the downside, albeit briefly). That is when Ethereum will be prepping up for the next big rally, which would happen in 2024.

Post-Merge Long-term Price Forecast for Ethereum (ETH), 2022 – 2025
ETHUSD – Weekly Chart
ETHUSD Weekly Chart:
In the weekly chart, it is depicted that the price would reach at least $500.00 territory before the next major rally.

In the year 2020. ETHUSD reached a low of $89.55 and then reached a high of $4,856.65 in November 2021.

The next major rally will begin any time after the next Bitcoin halving has been completed. According to one source, the next Bitcoin halving is scheduled to take place in 2024 at block 840,000. On Apr 28, 2024, 12:16:22 AM UTC the Bitcoin block reward is scheduled to drop from 6.25 Bitcoin per block to 3.125 Bitcoin per block.

Will Ethereum Hodlers Make Profits?
Yes, they will make profits.

In spite of the ongoing bearish bias on the market, Ethereum is always rated a “BUY.” Investors who buy it during massive bearish markets will also make profits if they can wait for just a few years. On the other hand, those who buy ETH in the month of the next Bitcoin halving will make at least 1,000% (10X) returns within several months.

So, investors (apart from margin traders who buy and sell, using stop loss and take profits), can rest assured that ETHUSD will never go to zero (even if they invest when the market is very weak), making the value of their investment go down. They will eventually recover their loss and make massive returns on ETH.

It all boils down to timing: Some investors make money within years and some make money within months, just because of timing.
Ethereum to Reach $20,000.00 in the Year 2025
ETHUSD will breach its All-time High of 4,856.65 in 2024, reaching at least the distribution territory at $10,000.00 in that year.

In the year 2025, the distribution territory at $20,000.00 will be tested and surmounted, and then possibly surpassed, since that is the minimum target for the year 2025.

However, the price territory of $25,000.00 is another possibility before the end of the same year.

Ethereum (ETH) is always a buy, for the long-term bias is bullish, in spite of the current medium-term bearishness.

Source: https://learn2.trade/post-merge-long-term-price-forecast-for-ethereum-eth-2022-2025

3 Emotions Pro Traders Have Mastered

Successful traders may differ in their trading strategy, but they do have one thing in common. Pro traders have learned to manage key emotions that affect their results. Here’s how you can do the same. Finding and properly following a proven trading strategy is one of the most important steps to becoming a successful stock or crypto trader.

But becoming a consistently profitable trader requires more than just having a winning trading system.

It also requires you to understand yourself as an investor and how you react to stress, greed, and the virtue of patience.

As an investor, you must understand your own emotional reactions to market volatility before putting your money on the line.

Your ability to properly manage stress, greed, and patience plays a huge role in your long-term trading success.
3 Emotions Pro Traders Have Mastered1. Stress and Trading

We all experience stress from time to time, but it can destroy your health and relationships when it becomes a way of life.

You are also far more likely to make bad decisions with your money if you’re in a constant state of stress.

Stress may cause you to make rash decisions, such as exiting a trade too soon or staying too long and losing money.

If you want to trade profitably, you must remove as much stress from your trading as you can.

Having a rule-based trading system that works is a great way to reduce stress because it eliminates trading decisions based on emotion.

Also, if you find yourself becoming extremely stressed out when the market is going through a correction, it’s a fantastic time to take a break!

Spend some time to determine what causes stress in your trading and take immediate steps to remove it.

2. Greed and Trading
Greed is one of the most dangerous emotions that any trader or investor can experience.

Greed will lead you to take outsized risks with your money that you really shouldn’t take.

When you are greedy, it’s nearly impossible to walk away from a bad trade when you should.

Greed makes you believe that you deserve to make more money from a trade than you actually do.

Greed also makes it easy for you to take on too much risk with your money.

You might decide to aggressively invest in a trade that is outside your risk tolerance level.

You may also buy a larger position of a stock or crypto than you can afford to lose.

Greed is a feeling that is challenging to get rid of, but it can be managed.
3 Emotions Pro Traders Have MasteredThe best way to keep greed from ruining your success as a trader is to set strict rules for yourself.

That’s why we always suggest a fixed position size to members for each new trade in The Wagner Daily stock portfolio or Morpheus Crypto portfolio.

Don’t let greed make you break your own rules.

3. The Virtue of Patience
Even short-term swing trading is a long-term game, so don’t try to rush the process.

Nearly everyone who properly follows an effective trading technique can eventually become a successful trader—but it requires patience to get there.

When you first start trading, don’t rush to buy every stock or crypto that catches your eye.

Take time to research and determine if the potential trade entry falls within the parameters of your trading system.

If you miss the trade entry, another profitable opportunity is just around the corner.

When the market becomes too challenging, don’t be afraid to shift your portfolio to cash until conditions improve.

Cash is always a valid position.

In fact, the most successful traders we know are out of the market more than they are in it!

At Morpheus, we step on the gas pedal in ideal market conditions, but quickly press the brakes when the bear strikes.

3 Emotions Pro Traders Have MasteredSummary

Becoming a winning trader or investor requires more than just about having a successful trading strategy.

You must truly understand yourself as an investor, and how you react to stress and greed.

If you’re naturally an impatient person, make it your mission to change.

Consistently finding winning stock picks is an obvious element of success, but you must also understand your own reactions to emotions that can affect your trading decisions.

The best way to deal with these emotions is to prepare yourself for them.

Read your emotions and understand how they might affect you.

Doing so arms you with the ability to combat them before they have a chance to affect your trading results.

Source: https://learn2.trade/3-emotions-pro-traders-have-mastered?fbclid=IwAR17zR2wiZ7XASJb5FgbECO5d1zHHazZ6cSPlc49DfRd835SXdBsz5b9YyM

When I decided to start trading on a crypto exchange, it was important for me to switch to real money trading as soon as possible. In trading, speed is very important, so I decided not to waste time and use the tips from this article https://www.finance-monthly.com/2021/12/us-forex-brokers-how-to-select-best-trading-platform-for-us-forex-traders/ on how to choose a reliable and convenient broker.