🧘‍♂️All In

Ridiculously simple ways to make more profit.

Dear Meditators

Oftentimes we hear the question: can I become a successful Trader?  

The answer is simple ➡️ Depends. Entirely. On You.  

? Sharing lessons today from one of the TOP traders.  

? If you’re serious about building an edge in the markets, consider joining our community of 24,000+ meditators and gaining access to the full range of insights and analysis?

Delighted to say this article is brought to you by FTX. Make sure to use our link to get a 10% discount. Based in the U.S? Here’s a discount link for you: FTX.US.

Alameda Research is one of the top crypto trading firms in the world. We were delighted to have Sam Trabucco (@AlamedaTrabucco), quantitative trader at Alameda Research, on the Market Meditations podcast.

Now more than ever, in these turbulent market conditions, we want to share his wisdom. And so let’s dive into How to Trade Like Alameda ?

Step 1: Monitor Volatility Through Liquidations 

Crypto markets are volatile: large % swings are commonplace. On top of this, the market is highly liquid with significant trading volume. 

Volatility can work to your favour, say, if you’re long a position and it proceeds to rally 30%. However, it is a double-edged sword: the market can just as quickly and ruthlessly crash 30%. Anyone who has been in the crypto game longer than a month can attest to this. 

It follows that to be able to get a sense for what drives this volatility is to build an edge in the market. 

Sam drew our attention to liquidations as a driver of volatility:

• When liquidations occur, the exchange sends a market order that closes your leveraged position.

• If the market is highly leveraged, it can lead to a cascading effect where these market orders continue to push prices in the same direction, liquidating even more positions. 

We spoke to Sam almost a month ago. His statements have almost perfectly played out. 

The most recent dip cascaded due to the number of leveraged long liquidations and seems to have cooled off as soon as we’ve drawn nearer the end of liquidations.

We’ve said it once and we’ll say it many times again. The beauty of the crypto markets is in their transparency. You don’t need to be part of an institution to access liquidation data. Rather, you can find all the data in a user-friendly format on bybt.

To expand on the above tweet, note the level of long liquidations around 18th May. Whilst correlation does not imply causation, we see the price action somewhat recover after this big liquidation. This one piece of information could be used as confluence with other indicators and metrics to help build a trading strategy or view on market conditions. 

Of course, we must also take away the importance of not using too much leverage. The more leverage you use, the higher the chance of liquidation. Always make sure you have calculated your liquidation price in advance and are aware of the risk you are taking on. 

Step 2: Strategy Games To Improve Decision Making

Institutions see a correlation between trading and strategic games. Strategy games include poker and any other scenarios that require you to make fast decisions under uncertainty and to understand probability. These are great to train your mindset, before you have skin in the game. Specifically, you are geared to stop thinking about outcomes. New traders often don’t realise that it is ok to lose money. 

Losses are a normal part of the game, provided you cut them while they are still small and don’t hold on to a losing position. Some conventional poker wisdom: never risk more than 5% of your entire portfolio on one trade. The same applies to trading. If you don’t manage your bankroll properly, there are 2 outcomes:

1. You’ll lose your funds and be wiped out the market 

2. You’ll have no dry power and when a big opportunity arises, you’ll be left on the sidelines.

You’re aiming for 6 out of 10 profitable trades.

Strategy games help shift your focus to the choices that were made. To understand what made your trade successful or unsuccessful. And to apply those lessons to future decisions. An important reflection is always your ability to have assessed the probability outcomes in a trade.

Any bet that has probabilities and payouts (such as trading) has an Expected Value (EV).

Consider a coin flip where you win 2 dollars if it’s heads and lose 1 dollar if it’s tails.

The EV will be ($2 x 0.5) + (-$1 x 0.5) = 50 cents.

The more positive the EV, the better the bet is.

Managing your losses and applying leverage with caution somewhat addresses how to manage your risk. Another important consideration is how much to risk in the first instance. This comes down to your own life goals. When you are young, risk of ruin is significantly less important as you have a longer time frame to increase your net worth. You are therefore able to take on riskier opportunities, even if you risk your net worth dropping significantly. 

? If you’re serious about building an edge in the markets, consider joining our community of 24,000+ meditators and gaining access to the full range of insights and analysis?

Just because the market isn’t pumping, doesn’t mean there aren’t opportunities. At the moment, we’re looking for talented crypto writers / researchers / technical analysts. If this sounds like you, please follow these instructions ?

By COB Friday (28th May), please could you write up a short crypto segment on the recent BTC dip and send it to ? careers@koroushak.com ? Imagine you are writing it to be included in the Market Meditations newsletter. There will be two components to this:

1) Researching and writing an engaging and useful crypto story
2) Understanding and matching the style/communication/brand of the Market Meditations newsletter.

Please use the ‘Will the Bull Market Continue?’ section of this letter as an example. What makes this example good? The topic is relevant and interesting, the writing is clear and concise and it is actionable (references other resources that readers can use to continue their growth and development should they so wish to [Glassnode, Cryptoquant etc.])

⏰ We look forward to reading your writing by COB next Friday (28th May)!

Please note while we are primarily looking for writers, all talent is welcomed and there are multiple other roles at Team AK for those wishing to go beyond. i.e community manager, content creator, meme lord etc.

Can you guess the coin from the chart above? Here’s a hint, this coin is attached to a platform and said platform is implementing layer-two scaling on their next version.

Improve your Trading through Fundamental Analysis with Koroush AK

CLICK HERE TO LISTEN ?

In this episode, we run through top tips to improve your trading through the use of fundamental analysis.

At Market Meditations, we firmly believe that generational wealth should be accessible to everyone. To that end, we’re delighted to be partnered with Nexo: one of the most user-friendly crypto lending and earning platforms in the industry.

? You can use our link to start earning now.

UNI

It has been announced that Uniswap v3 is set to implement  layer-two scaling on both Arbitrum and Optimism. This may allow Uniswap to make use of smart contracts and other layer-two solutions in future.

Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision.