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Trading

Algorithmic Trading Strategies.

Tactics​

Context​

Trading Guidelines​

Taken from Jonah 1000x a consolidated strategic framework for crypto investing.

Core Principles

  • Maintain discipline and concentrated positions
  • Rotate between tokens rather than converting to fiat
  • Use only mild leverage during smooth price action
  • Avoid overtrading; maintain conviction in holdings

Sector Focus

  • ETH/SOL: Choose one as long-term bet, only rotate at local extremes
  • DeFi: Focus on Aave, Jupiter, Aero, and Jito
  • Memes: Stick to established names (DOGE, WIF, PEPE) or low-cap opportunities
  • AI: Consider TAO as leading position
  • Safer plays: COIN, MSTR, WULF, GLXY

Risk Management

  • Maintain strict exit discipline

  • Avoid spreading too thin across sectors

  • Stay informed through crypto communities and research

  • Exercise caution with DePin sector due to traditional equity valuations

  • Jonah 1000x

Media​

Market and Mindset​

The market is prone to extreme mood swings that cause prices to fluctuate wildly, often disconnected from fundamental value. These mood swings tend to oscillate between euphoria and depression, leading to overpricing and underpricing of assets.

The key is to remain rational when others are being irrational and to see market overreactions as opportunities rather than threats.

Irrational Behaviour​

Several factors contribute to irrational market behaviour:

  • Perception shifts: Investors' perceptions of events can change dramatically, even when actual conditions haven't changed much.
  • Cognitive dissonance: Investors tend to ignore or reject information that contradicts their existing beliefs.
  • Contagion: Negative sentiment in one market can spread rapidly to others, like a game of telephone.
  • Ambiguous interpretation: The same news can be interpreted positively or negatively depending on the prevailing mood.

Psychological Factors​

  • Optimism bias: Investors, especially equity investors, tend to be optimistic by nature.
  • Wishful thinking: People often believe what they want to be true, rather than what is actually true.
  • Short memory: Investors quickly forget past mistakes, leading to repeated cycles of euphoria and panic.

Lack of Immutable Rules​

Unlike natural sciences, investing lacks consistent, immutable rules. What works in one market environment may not work in another. This lack of dependable principles contributes to market instability.

Voting Machine​

The market acts more like a voting machine reflecting investor sentiment rather than a weighing machine assessing fundamental value. Daily price movements often reflect changes in psychology rather than changes in underlying fundamentals.

Opportunity in Volatility​

Prudent investors can take advantage of volatility by:

  1. Forming independent views on asset values based on fundamental analysis
  2. Selling when prices are irrationally high
  3. Buying when prices are irrationally low