A popular crypto analyst and strategist stated that many traders are trying to gain an advantage in the digital asset market using the wrong methods.
Altcoin Psycho The analyst, known by his pseudonym, stated in his post on his Twitter account that many people bought the “alpha illusion”.
“The way I’ve probably seen good traders run out is no quest for a similar advantage in the market. But what would you think if I told you 95% of the time that alpha was actually an illusion? Moreover, most traders keep looking for it in the wrong places.”
Altcoin Psycho, arbitrage, miner extractable value (MEV) of true “alpha”, memepool It relies on things like bots and opportunities to exploit inefficient market makers.
The fictitious alpha, by contrast, is based on things like order flow, technical analysis, footprint and indicators, according to analysts who argue that 95% of traders use this set of secondary tools.
“There are two orders of thinking in commerce. First order/thought, how can I interpret the information offered by the market? Second, how do others interpret the information presented by the market? Most trader looks for the alpha in the first question, but that answer is almost always found in the second question.
To elaborate further, traders will spend years perfecting their order flow starter, the right combination of indicators, the best technical analysis style, or a mix of the above. I also followed this path. In other words, I sought first-order thinking, the best way to personally interpret market information.”
The analyst noted that its profitability did not rise until it moved to “second-order thinking”.
“So what does this mean in practice? The first and indeed the most important part is swallowing your pride. To understand quadratic thinking, you must first accept that much of this nonsense is a self-fulfilling prophecy and that you are not actually a genius.
Because you are good at technical analysis, the price does not bounce off your trendline, but only if enough “players” look at the same level. Smart money knows this all too well, so they use scams like “stop-loss” hunts or support/resistance to trap retail.
While this all sounds pretty obvious, many traders have been turning their wheels over the years asking: ‘How can I better interpret what the market is showing?’ The better question to ask is ‘How can I improve my thinking and others?’ Will he interpret what the market is showing when it happens?”
Altcoin Psycho says he no longer weighs his own view of a project when it comes time to analyze the benefits of an investment. Instead, it simply evaluates what the market will think of this project.
“Most of my biggest gains in trading came after I started applying this mental model. It may seem counter-intuitive to buy things you hate and pass on what you love to others. Refinement takes time. But that’s why I say it requires some ego death.”
When it comes to trading, especially crypto…
narrative > reality
— Altcoin Psycho (@AltcoinPsycho) March 29, 2022
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.