Dear Fellow Traders,
I write this letter to you all in the wake of a market crash that has taken an extraordinary amount of capital off the trading table.
We are in what I call, “The Dead Money” zone. Technology Stocks, a synonym for Growth (which includes CryptoCurrencies), have been on a steady decline and arguably a technical bear market since the start of 2022 as has just about the rest of the global market.
I’ve been spending a fair amount of time listening, watching & reading all the mediums of media that we have access to and I will continue to post my thoughts and feelings to our discord.
What I would like to share with you today is an objective framework to help you navigate these rough seas and allow you to maximize on an opportunity when it comes knocking. I present you with The Zen Trading Commandments:
- Evidence, Evidence, Evidence! There are many talking heads on Social Media that espouse subjective views or dabble in generalizations. Shun them. If statements cannot be measured or the data is diametrically opposed to their crappy ideas, move on.
- First Principles of Trading: The law of demand says that at higher prices, buyers will demand less of an economic good. The law of supply says that at higher prices, sellers will supply more of an economic good. Do not fade first principles. Ever.
- Fundamentals matter, but not in the way you think. To hunt opportunity, your fundamental analysis needs to be sound, logical, and diametrically opposed to the consensus view to gain asymmetrical upside.
- Always start from a skeptical viewpoint. Doubt/Uncertainty is one of the strongest weapons in your trading arsenal.
- Never change strategies mid-trade (i.e don’t swing trade a scalp-trade and so on).
- Seek strategies that provide you with an objective entry and exit condition for your trades. Whether that be going long or short.
- Even better, create your own objective, backtested strategies that you will be disciplined enough to adhere to overtime.
- Use progressive exposure. You don’t always need to be “swinging for the fences”. If you’re confident, size up. If you’re uncertain, size down.
- When it’s time to sell. SELL. Dump it and don’t look back!
- Trading is a consensual zero-sum game. To win, you must be a cold, ruthless killer.
Good luck out there, I wish you only success in the future. Make sure you come back from your journey with plenty of spoils.
Jake.