So many tokens to choose from, and so many decisions to make.
Overcomplicating your processes – and acting on emotions and biases – is literally the worst thing you can do.
Instead, you need to create systems, and code your brain around them.
In this expansive thread, The DeFi Edge explores systems: how to make them, how to use them, and ultimately, how to master the game of crypto.
Before diving in, be sure to like and share The DeFi Edge’s thread above.
The quality of content from this crypto enthusiast is just getting better, so let’s drive up those numbers too.
This is someone who doesn’t just rely on macro, fundamentals, or technicals, but takes a broad and holistic approach to playing this market.
Let’s dive in.
- A system will help you combat irrational emotions.
- Ten ways to use systems in crypto.
- What to do next?
First, what are systems?
Systems are a set of behaviours and habits, recipes that help you achieve your goals.
Think of them as the foundation, or the base, for how you will navigate the crypto market.
Developing a system, and consistently sticking to it, even when you don’t want to, can set you apart from your fallible, irrational, emotional friends.
Ten ways to use systems in crypto
1. Schedule your buying habits
Stick to buying blue-chip tokens at a set date every month.
Don’t worry about the macros, recent volume, or whether the Relative Strength Index (RSI) is oversold. Just dollar-cost average (DCA) at a fixed time, without fail.
The easiest way to allocate is by designating a spare part of your salary or income (and not too much of it).
Being overexposed and cash broke will only become a weakness further down the line.
2. Stick to your custom portfolio
After making a portfolio which suits your needs, and deciding on the percentages you want to allocate to different categories of tokens (e.g. DeFi, GameFi, Layer-1s) make sure you stick to those percentages: If the scales fall out of balance, readjust accordingly.
Pro tip: The same portfolio doesn’t work for everyone: Design a perfect portfolio for you, based on your theses and convictions.
3. Take profits
Yes, it’s the hardest thing to do for all of us.
We all get caught up in the hype.
When our token is pumping, greed can take over: We start to think it will go on forever.
And here’s the paradox: The more unrealised profits we start to stack up, the less we want to take them.
As tough as it may be, plan ahead. Decide on profit-taking levels, and when they’re hit, don’t even think about it: Take those profits.
Pro tip: No matter how much (and especially when) you “feel” like you shouldn’t. Learning to arrest greed before it blinds your judgement and deviates you from your plan is key.
4. Farming tips
If you are farming tokens, make sure to check back in and claim your earnings, as they won’t always auto-compound.
Best of all, doing this allows you to farm those earnings as well, and compound profits.
Do this regularly, at fixed intervals, no questions asked.
Pro tip: Set reminders in your calendar to do so.
5. Keep track of everything
Set up spreadsheets and start tracking your data: trading logs, entry levels for your tokens, and any tax obligations you might have.
You don’t have to enjoy it. Just do it. And thank yourself later.
Pro tip: If you are following an influencer, track their calls to see what their accuracy is.
6. Due diligence
Make an evaluation checklist on which you will judge every protocol you’re considering investing in: tokenomics, vesting schedules, the team, their tech. Consider all of these, follow the checklist to a T, and never make shortcuts.
If the protocols don’t meet the requirements, don’t invest in it.
Pro tip: If you are feeling FOMO, sit down and read your checklist.
7. Spring cleaning
We are bombarded with so much information every day, making it all too easy for unuseful content to reach us. The DeFi Edge compares this information to junk food. Both do us harm. So, make sure you clean up your Twitter feed, your newsletters, your podcasts, and any other sources you use to gather information.
Pro tip: If the ratio of alpha to content isn’t high enough, unsubscribe from that source.
8. Research system
Create your own process for research, and again, stick to it (at all costs!). Make sure to read the project’s whitepaper, official documentation, roadmap, accomplishments, and never forget to research the founding team to see if they have been (or are being) audited, and by whom.
Pro tip: Jump into the project’s Discord server to get an overall vibe for it. Ask questions in there and see if someone responds.
9. Habit formation
Doing all the above is great and all, but it will get you nowhere unless you make a habit of sticking to the system you created. Keep on track by creating recurring tasks in your calendar, setting consistent times for certain behaviours and making your checklists easy to access.
Pro tip: No system is perfect, so always keep improving upon it, especially when you have new learnings.
10. Systems protect you
Remember, as strenuous as a task as it may be to set all this up, it will greatly benefit you, and save you time in the long run, as well as protect you from making irrational, emotion-based decisions. Creating a system for your investments is probably the best investment you can make.
Pro tip: Spend a good amount of time on making your system.
First of all, if you’re not already, be sure to subscribe to The DeFi Edge’s weekly newsletter here.
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With that done, use this bear trend to your advantage. Build a system with rock-solid foundations.
Then, start putting it into action.
Remember, it can always be improved. Never settle. Come back and fine-tune it at every available opportunity.
Lastly, this market is full of trading bots running on algorithms.
Some say you can’t compete against them.
We say, if you can’t beat them, join them.
The system is your algorithm!