Stop losses are often considered as sub-optimal tools that negatively affects the EV of your trades but I don't agree.
I'm of the opinion that they are actually among the most important tools to make you profitable in crypto

The risk with SLs is "death by a thousand cuts" (ie repeatedly taking trades that get stopped out and accumulating too many losing trades in a row), but people in crypto don't really die by thousand cuts

They die because they oversize, and once their trades become losers, they are unable to close because of the usual loss aversion bias. Then they are either in a position where they take a massive drawdown that they will take a long time to offset, or in the worst case scenario they start martingaling and tilting, and their drawdown gets even more amplified. That's death in crypto, probably 95% of the time.

In crypto there are so many opportunities for meaningful upside that the most important thing by far is managing your downside. Using stop losses enables you to precisely know what your downside is, and to make sure that you respect your plan of cutting once the stop gets hit.

When you enter a trade, you shouldn't just "hope" it goes the right way without being crystal clear about what you'll do if it goes wrong. That's why setting a stop right at the beginning is so crucial. At the very least you should have a mental SL, but that's riskier because you'll find reasons not to respect it once you should.

I consider this one of the most crucial risk management rules in crypto trading.

It first got rejected at $500 but here we are now

I'd expect to see at least $700 but let's see, it's already totally vertical now

$XMR

Price down but 1/3rd of the long $PIPPIN position has now been derisked just through funding payments

(I opened on 12/24 and added on dumps)

$POL looks cooked now

Low risk swing short basket (hedge leg)

$ONDO
$ASTER
$UNI
$ENA
$WLFI
$HYPE
$XLM
$HBAR

It remained strong for 2 days but it’s too hard to withstand these sell flows for $HYPE

Huge volume on $STRC today, and it's trading at par so Saylor probably raised $70M+ just today with it

People are buying STRC today to get included for the next monthly dividend payment

Then after the 15th we'll probably see a dip again that you can buy for the re-peg

Saylor is currently selling $MSTR close to 1x mNAV which is barely accretive in terms of BTC yield, but is useful in terms of increasing collateral for the credit worthiness of the prefs + adding room for more pref issuance

(It's also "useful" for BTC to have buy pressure ofc)

Recap of the ‘’week’’:

https://cryptonarratives.substack.com/p/narratives-of-the-week-january-13

Not even two days and the mentioned target ($700+) has basically been reached for $XMR

Time and time again in this market, we get reminded of the fact that sizing up on large caps offers a much better R/R and Sharpe ratio than trades with smaller altcoins

The great thing about large caps is that when you have identified strength in one of them, you are often going to get a 20%+ move that is in profit immediately and doesn't have a drawdown

Here are the charts of the 4 coins post-TGE

$HYPE was a clear exception by being up only for weeks after launch

If you're repeatedly trying to short a coin that is up only and you keep getting stopped out, I suggest you respect this rule:

Stop trading the coin after 3 failed attempts.

You've been given 3 opportunities to short the coin and you failed, you are probably not in sync with the coin then, move on to greener pastures.

(The worst and also most likely scenario though is that you didn't set a stop loss initially and now you are shorting a coin that is going up only and you're unable to swallow the loss so you let it compound against you... that's an even more important problem to fix in the first place)

Risk management is all about setting RULES and respecting them. If you don't have rules, you should take some time to set them.

Rough and simplified maths to understand how the strategy followed by $MSTR makes money:

Saylor is selling fixed income paying 11% yield per year.

If he sells $1bn of that, the cost over 10 years for him would be 11%*1bn*10 = $1.1bn

But he buys BTC with the proceeds, and the value of that BTC does compound annually at some CAGR, which he expects to be between 20% and 30% a year, but let's say it's only 15%.

So the $1bn BTC he bought will be worth $1bn*1.15^10 = $4.04bn in 10 years

So that whole operation will lead to holding $4bn worth of $BTC in 10 years, but will only cost $1.1bn over that same timeframe. $3bn "profit".

The strategy works for 2 reasons:

- The CAGR of BTC will be higher than the cost of borrowing (that's an assumption, if you don't think that's true then you can be bearish MSTR)

- The yield that MSTR pays on their "fixed income" products is the same every year, whereas the BTC they are holding is compounding: after 10 years, they still pay 11% on $1bn only but they get the yearly BTC return on a BTC stack that has compounded to $4bn over time!

Disclaimer: my maths are simplified and are over-estimating the profit of the operation because to pay the yield of the fixed income, MSTR needs to issue and sell new shares, which is in some way equivalent to selling some of their BTC in slow drips to pay for the dividends. Also BTC doesn't grow linearly, so these dividend payment "drips" become more painful when you have to pay them on years when BTC is down a lot. But the end result wouldn't be *that* different, unless you expect BTC CAGR to be really lower.

$RIVER is still going lmao

That's like a +60% move from $500 breakout level with almost no drawdown

$800 $XMR looks like a decent level to retrace a bit.

I fully TP'd, maybe I'll get a re-entry, maybe not, maybe it goes up 2 without me from here

Anyway, good to see real privacy coins finally being rewarded after years of struggle

$IP down, $LIT down, $RIVER down

Now we're waiting for $DASH and $ICP to follow that path too

We'll never hear about the guy who full ported $LIT at launch because his net worth has been divided by 2 in ten days and now he's just feeling dumb af