A Trader's Growth Experience

Original Article Title: "EP29: Insights from a Trader's Growth Journey"

Original Source: Mint Ventures

Host: Alex, Research Partner at Mint Ventures

Guest: Colin, Independent Trader and On-Chain Data Researcher

Hello everyone, welcome to WEB3 Mint To Be brought to you by Mint Ventures. Here, we continue to question and contemplate, clarify facts, uncover realities, and seek consensus in the WEB3 world. We strive to elucidate the logic behind the hot topics, provide insights beyond the events themselves, and introduce diverse perspectives for your consideration.

Disclaimer: The content discussed in this podcast episode does not represent the views of the guests' respective organizations, and the mentioned projects do not constitute investment advice.

Career Path Formation and Current Investment Strategies

Alex: In this episode, we have once again invited Colin, who has previously been on our show. Last time, he shared his insights and methodologies on on-chain data analysis, which received great feedback. Today, we have invited him again to discuss a broader topic—trading. The reason I wanted to invite Colin back is because I have been following his account, and the range of his trading is quite extensive, covering both US stocks and crypto.

Recently, he has had several very exciting operations, such as starting to short BTC around 9 to 10k before a significant Bitcoin drop. He reduced his position early. He also sold US stocks in Q4 of last year and bought at the recent panic lows. Colin has been sharing his views on trading on social media, and I have found it quite insightful. So today, we have invited him again to chat with everyone. For some of our listeners who may be tuning in for the first time, please allow Colin to introduce himself.

Colin: Hello everyone, my name is Colin. I run a Twitter account under the name of Mr. B. I'm very happy to be invited back to the show today to share my views with everyone. I am currently a full-time trader. My two main areas of expertise are on-chain data analysis, which primarily helps me make long-term BTC phase judgments, and technical analysis, which is more complex, and I am constantly optimizing my system in this area. I'm thrilled to be on this show again and to share my perspectives with everyone.

Alex: Welcome, Colin. In a previous podcast episode, you talked about on-chain data analysis, and everyone can watch the recording we did together to hear your insightful thoughts. In that episode, you mentioned your views on this cycle, which have proven to be accurate so far. Now, let's move on to today's main topic. You mentioned that you are currently a full-time trader. Were you originally involved in finance, or did you transition to this role gradually?

Colin: This question is quite interesting. I must emphasize that I am just a DeFi degen, benefiting significantly from this era. If there hadn't been a pandemic and the subsequent massive liquidity injections in 2020, today's outcome might have been completely different. So, I am just a survivorship bias case.

Was I originally in finance? No. However, my major in college was in the Business School. At that time, I was exposed to some basic financial knowledge from textbooks. But in reality, universities don't teach you how to trade stocks or crypto. Initially, I didn't have much money; my savings were probably less than $10,000. Also, due to some family factors, my relationship with my family was not good. Back then, as a student, I had only one goal, which was to achieve financial independence quickly and leave that environment. During my university years, I studied some simple financial knowledge. At least I knew what kind of markets existed and the general logic behind them. I learned a very important thing at that time, which was that achieving a doubling of performance in the financial markets is very challenging. To put it into perspective, even Warren Buffett, the stock market guru, only had an average annual return of around 20% over about 60 years. If I wanted to double my money within a year, which is 100%, the difficulty level would be extremely high. I realized this situation back then. So, I had only a few thousand dollars in savings at that time, and if I didn't work, that money would only last me a few months.

My mindset was: even if I double that few thousand dollars, I would only make a few thousand dollars in profit. In this scenario, my goal was very clear—to get a job immediately and look for any kind of work available. My grades were decent back then, so my main source of income was tutoring, basically teaching. Some of this tutoring involved teaching at coaching centers or as a private tutor for individual students. At one point, I had up to 11 tutoring sessions a week, all teaching math. At the same time, I worked at convenience stores, took on some small part-time jobs like distributing flyers on the street, doing administrative work at coaching centers, or working as a teaching assistant. However, I eventually tried to focus only on tutoring. If I could get tutoring appointments, I would turn down other miscellaneous jobs because the hourly rate for tutoring was really high.

Another aspect of saving money was what is known as open source and frugality. During that time, life was somewhat boring. I almost cut down all my entertainment expenses to zero and only spent money on necessary items like telecommunications and meals. I used to smoke a lot before, so apart from eating and some essential living expenses, all the remaining money was spent on cigarettes, and everything else was saved as capital. I would compress half or even more of my sleeping time at night to study. Since I didn't know anything at that time, I needed to spend a lot of time learning anything I could. Gradually, as I accumulated a relatively large amount of capital, I thought that if I used this capital to trade in the market, I might more easily achieve my financial goals. This was what I considered the most critical transitional point at that time.

Speaking of investment assets, looking forward to 2025, it is definitely Bitcoin, followed by Ethereum. As for the U.S. stock market, as Alex just mentioned, I don't really engage in trading; it's more like index investing. Index investing is actually quite simple, it's a passive investment strategy. I aim for market returns, meaning I'm exposed to Beta and don't particularly aim to extract a lot of Alpha from the U.S. stock market. The biggest difference between the U.S. stock market and Crypto is that it's very efficient and has a very large market cap. For this reason, it's very difficult for me to extract Alpha from the U.S. stock market. Therefore, I will focus more on hunting for Alpha in Crypto. As for the U.S. stock market, it's essentially index investing. The partial liquidation of U.S. stock holdings from Q4 last year to Q1 this year was a rather special operation, the kind of opportunity that only comes along every few years with a very low success rate. This time, I was lucky and managed to avoid it. For index investing, the best strategy is to buy and hold.

Returning to the Crypto part, in 2025, I actually haven't been looking at altcoins much. In 2024, when the market was doing well, I spent quite a bit of time researching altcoins. At that time, I would look at projects, trends, and sectors. I remember at the beginning of the year, the Restaking sector was quite hot, and there was an EtherFi that launched on Binance around February or March 2024. At that time, the effect of new coin listings was very good, and they would just keep rising after listing. I would spend some time researching these projects and if I found out they were going to be listed, I would buy as soon as trading started. I couldn't do angel round investments, so I would buy as soon as trading started. At that time, there was a lot of money in the market, and everyone was eager to buy these things. But the ending was not good as altcoins went into a bear market. So, at that time, it was more like a wave. I think in the medium term, I probably won't go back to look at altcoins again until Bitcoin confirms another bottom, and it's a cyclical bottom, not a phase bottom, then I would pay attention to altcoins. If Bitcoin bounces back slightly, altcoins will of course follow, but I don't want to go for the short gains; I want to go for higher certainty. So, looking ahead to 2025, in the Crypto space, I am mainly focused on Bitcoin. Ethereum also has some special trading strategies, but the trigger frequency is very low, so I'm still waiting.

Key Elements of a Mature Trader's Trading Framework

Alex: I see. You've already explained it very comprehensively. Colin just mentioned that he started learning about investment and business at school starting from 2020, and gradually transitioned to a full-time trader status, which took at least four to five years. During these four to five years, in the capital preparation stage, his workload was very high. In your opinion, what key elements should be included in a mature trader's trading framework? Such as investment philosophy, professional knowledge, psychological mindset, and so on, what key elements should be included?

Colin: Alright, I dare not claim that my answer is entirely correct, but based on my personal experience, the most important framework so far, in my opinion, can be divided into three parts. These three parts may differ from what most people usually think.

The first framework, whether it's someone around me or people on Twitter, or Telegram coming to ask me, the first thing I always tell them is that once you enter this market, you must do one thing, and that is goal management. You must clearly know why you are entering this market. I think everyone's purpose for entering the market is very clear, which is to make money. However, just having this goal is not enough. The next question is how much money do you want to make? I ask this question every time. Many people will say the more, the better, of course. But if this idea is limited to just that, it will actually cause some minor problems in your trading. For example, suppose your goal today is to make as much money as possible. If I tell you that you want to turn 10 units into 10 million units within a week, it sounds fantastic. But obviously, if you want to achieve this goal, you have to increase it by 1 million times in a week, then you should not be in this financial market. I won't say that this goal is wrong; I respect every goal. However, this goal cannot be achieved in the financial market, or the odds are just too low. Although it sounds a bit funny, if you really want to achieve this goal, the only way is to buy a lottery ticket. You shouldn't buy Bitcoin or Ethereum, or even on-chain assets. Even the most meme-worthy dog coins on-chain are unlikely to increase by 1 million times in a week. This is goal management. If you don't know today how much profit you are targeting, or which market to achieve this goal, then in your trading, you will think, Bitcoin looks good, let's trade; Ethereum has an opportunity, let's trade; or you see some arbitrage or launchpads, you want to try them all. But you don't even know where your goal is, and you will miss out on many things that you should actually focus on. Everyone wants to make money quickly. Usually, what I hear around me is that they want to quickly increase their capital with a small amount of funds.

In fact, a problem will arise: the higher the return you expect today, normally, the lower your trading strategy's success rate. You will keep failing in this process, and many people will feel that their mentality is being damaged. Why is this happening? Am I really that bad? Why can't I win no matter what I do? But this is a very normal thing because if you aim for a very high profit, you must be prepared to face this low win rate. Many people did not plan their initial goal setting well, which led to many setbacks in the execution. So for me, the first framework would definitely be the so-called goal management. There is actually a pretty clear goal here, which is generally speaking, for most trades in this world, we usually have a very basic goal, which is to beat the market. Suppose you are a stock trader, then your goal of outperforming may be the SP 500, which is the market, also known as Beta. If you are in the crypto space, your goal may be to outperform Bitcoin. If Bitcoin rises by a certain percentage in 2024, and if your trades did not outperform simply holding Bitcoin, then we will say you might as well just hold the Beta, and you can achieve a decent return. This is a broad, common goal.

When it comes to the second framework, personally, I believe it must be about mindset, and it shouldn't touch on the technical level. I think the technical level comes last because many people are easily influenced by their mindset when it comes to execution. For example, there is a very famous German stock market guru named Kostolany, who is at the same level as Buffett, just in a different era. He once said something that I think is very well said. He said that in the speculative process in the market, it's not 2+2=4, it's 2+2=5-1. 5-1 actually equals 4 like in the first equation, but he emphasizes it's 5-1 and not 4. What he means is that even if you are very skilled in the market today and you are correct every time you look at it, the market won't make your execution always smooth. Suppose you want to go long on Bitcoin today; it may just be consolidating over there, washing out weak hands slowly, and then when it finally pumps after washing you out, your position may have already been liquidated.

Even if you are correct in your analysis, the market will always make you uncomfortable while holding a position; that's the concept of 5-1. So, it goes up to 5 first and then subtracts 1, only then does it become 2+2=4. This aspect has a significant impact on mindset. According to a concept in psychology, human nature inherently abhors so-called uncertainty. Trading itself in this market is uncertain in every aspect because if trading in this market were determinable, then whoever finds that certainty would become the richest person, possibly surpassing Elon Musk. Since everything in this market is uncertain, trading itself is contrary to human nature. If you want to overcome this process today, it's like overcoming your inner human nature. For those interested in this aspect, they can review the so-called discipline of behavioral finance, which is taught in any business school. The content is quite straightforward, mainly introducing a concept: why people exhibit irrational behavior in financial markets. Personally, I believe that if you cannot overcome the impact of emotions today, your decisions are likely to be skewed. Even if your trading system is very profitable, it will still be disrupted and destroyed by your emotions.

As for the third trading framework, I think what's more important is your own trading system. I would actually place this third because it pertains to how you make money. Some people are very good at researching projects, some excel in technical analysis, and some are adept at high-frequency arbitrage. I personally believe that whether you are a full-time trader or not, you should have your trading logic or trading system. Here, I can share with everyone an interesting example I heard before. A reader messaged me, saying he thought that investing is a very professional matter and should be left to the professionals. So, his approach is quite interesting; he checks what decisions the influential figures and bloggers with many followers on each platform make, reads all of them, and then decides based on whether the direction leans bearish or bullish at the end. He asked me if this approach is correct, and my answer is very simple: I absolutely disagree.

The first thing is that I have no way of knowing how capable every influencer is on the surface, including myself, or any individual with millions of followers. The second thing is that even if they are very capable, if you do not know their trading logic and simply follow their lead, when you make money, you won't know if it was due to good luck or their true expertise. If you lose money, you also won't know if it was because of their poor performance or bad luck. This creates a problem where you cannot reflect on your own actions, you cannot know if you can replicate your success in the next trade, and you cannot identify what mistakes led to your losses that can be avoided next time. I think this is a rather serious issue. Investment itself is indeed a professional matter, but if you want to achieve long-term profitability in the market, you must make yourself the professional, not follow a bunch of professionals. Because as you follow along, there will be too much noise, and your head will surely explode.

Above are the three frameworks that I believe are important: namely, trading system, mindset, and goal management.

Alex: Got it. Let's dive a bit deeper into goal management. My understanding is that goal management includes two steps, first, I need to be clear about the financial return I expect to be roughly in what range, once this is clear, then I can seek out the matching investment market. For example, just like you mentioned earlier, an extremely strong investment master like Buffett has an annualized return of about 20%, if I hope for an annualized return of 100%, then at this point, I shouldn't even try to achieve this return in the US stock market where even Buffett can only achieve a 20% annualized return. Instead, I should look for, as you just mentioned, possibly more emerging investment areas, like Bitcoin, and so on. If my mindset is that I want a little less drawdown, I hope for less volatility, but I'm okay with a 10% annualized return, then I see that the US stock market may be achievable, and I go for investments in the US stock market. Can it be understood this way?

Colin: Yes, you need to first be clear about where your capabilities lie. For example, in the US stock market, the average annual return for pure stock market beta over the past few decades has been about 10%. Buffett is at 20%, over 60 years he has outperformed the US stock market, which is why he's called the Oracle of Omaha. If I'm not that skilled, just buying the US stock market beta, at least over the past few decades, has had an average annualized return of about 10%. But if your goal is 100% today, you won't be able to achieve it by buying the US stock market beta, so you have to look for other markets. Here is another important concept, which is that in setting your goals, you need to be rational, you cannot assume yourself to be a trading genius. Having a goal of 200,000% annualized return is basically impossible.

I believe there must be geniuses, but the odds of betting on ourselves being geniuses are too low. It's actually quite similar to the concept of buying a lottery ticket. Personally, I would be more inclined to make some more rational judgments. For example, let's talk about Bitcoin. Look at the annualized return of Bitcoin from 2021 to 2024. Assuming we look at the price from the peak of 69,000 to the current price, the return is actually not very good because you're in a range of over 80,000 from 69,000. So, looking at it this way, the annualized return is not good. Therefore, we can extend the time frame for analysis. You can compare yourself to Bitcoin. In any case, you must rationally set a goal. Once you know what the goal is, you can then develop your own strategy and choose your market. This way, you will have direction rather than just wanting to make money at all costs. If you try to make money in every possible way, you usually end up making nothing at all. This is just my bias.

Investment Framework Sharing

Alex: Alright, combining what you just mentioned about goal setting, mindset management, and so on, could you share your overall trading investment framework, and what is the current situation like for you?

Colin: Alright, for my part, it's actually quite simple. My total assets are divided into two parts: investment and trading. Regarding investment, as mentioned earlier, it's mainly about U.S. stocks, and the frequency is really low. For example, an operation like selling at the peak may only happen once every few years, and we don't know when the next time will be. As for trading, I mainly allocate funds to the Crypto market, focusing on Bitcoin and some other coins, but not in U.S. stocks. In the Crypto space, I personally divide the funds into two parts: spot and derivatives. In fact, a small portion of the funds will be used for more sophisticated operations, but that's more complex and the positions are small, so let's not discuss that for now.

The spot part has a relatively large position, and its main trading decisions are not triggered frequently but mainly involve bottom fishing and selling at the peak. The decisions for this part are actually quite simple. If you have listened to our previous discussions, you'll know that we primarily use on-chain data as the main basis and macro market conditions as a supplement. If a signal appears in this part, I will assess and decide whether to start bottom fishing or selling at the peak in batches, which is quite straightforward. It sounds simple in theory, but in practice, there are many analytical and data considerations. The second part is derivatives. The allocation of my funds for derivatives is relatively small because derivatives allow you to increase the utilization of funds through leverage. For derivatives, there are mainly two aspects. The first is to capture some small-scale opportunities using short-term trading strategies. I will use pure technical analysis to make trades. Just last week, I shared a live trading operation on Twitter where I was charting, purely based on technical analysis.

The second function, as I just mentioned, is that technical analysis can help me refine the final entry point. This part is more like swing trading. For example, in early 2024, when the altcoin market was doing quite well, as I mentioned earlier, I would do some research. At that time, I looked into a project called PYTH, which is an oracle project. I thought this project was promising, so I used the line chart to help me identify the entry position I was looking for. Sometimes, I come across a project that I find really great after my research, but by then, it has already skyrocketed. Suppose I believe it will continue to rise, but I don't want to chase the price higher directly because it might experience an immediate pullback. In such situations, I would use the framework of technical analysis to help me plan a good risk-reward ratio entry point. If it's not available, I would just let it go. I wouldn't expose my funds to too much risk because this kind of trading leans more towards short to medium-term. If you hold onto it for the long term, it actually significantly hampers the efficiency of fund utilization.

As for how to improve up to this stage, this question is actually quite interesting. Up to now, I am always refining because whenever I see something that I think is usable, logical, and can help me optimize my trading system, I will use it. The most obvious example at the moment is Bitcoin. In fact, Bitcoin has always performed remarkably well in each cycle, it's just that this cycle has been a bit different. If today I simply try to apply techniques based on patterns like the double top in 2021, the tops in 2017, or even 2013, and try to apply them to 2025, it would be very risky. In this cycle, Bitcoin has accumulated a large amount of coins at the bottom, which has never happened before. In such cases, I need to conduct a multidimensional investigation and research into this special phenomenon, combined with my analysis. Otherwise, I will be caught off guard, saying that something like this has never happened before in previous cycles, and then panic in this cycle.

Therefore, I think this is a process of optimizing the system. In the process of studying these new phenomena, I will learn new things or seek other people's opinions and perspectives. This is a process of enhancement. At the very beginning, of course, you don't know anything; you're like a blank sheet of paper. So, at the beginning, try to learn everything, don't reject learning, and don't reject any school of thought. Because when I was just learning, I witnessed a situation where different schools criticized each other, one saying another is useless, and so on. Try not to refer to these opinions and avoid biases. My advice is to listen to everything first and then use your own thinking to verify whether these things are effective. Don't be stubborn, don't simply use historical induction to judge the effectiveness of a method. You should use deduction; you should confirm whether this thing logically makes sense, and then use this method to gradually filter out some concepts that are not very applicable to this market, leaving behind the more essential parts.

Common Traits of Outstanding Traders

Alex: Got it. Based on your own four to five years of trading experience, including observing the practices and mindset of numerous other traders, do you believe that good traders are born with natural talent, or can an ordinary person develop into a good trader through growth and experience? In your observation, what are the common traits in the character or abilities of outstanding traders? Which abilities need to be developed through experience?

Colin: I dare not directly define the quality of some traders because I don't feel I have the authority to do so; I am still learning myself. Regarding my personal bias, I believe that no one is naturally suited to trading. My view is that in this market, not to mention mastering it, as long as you can adapt to this market, you have already surpassed the majority of people. Because this market is truly contrarian, almost every easily occurring event, including volatility and some strange market manipulations, are not often seen in real life, or rather, not seen by the general public. If you can adapt to these phenomena, you have already surpassed many people.

So I don't think anyone is naturally a good trader because the market itself is quite sinister, and our society's usual education is peaceful, so there is a bit of a conflict. It's not that the market is an entirely evil place, but the various events inside it will make those who are new to the market initially feel less accustomed. Regarding the question of innate ability versus acquired ability, I personally believe that most abilities can be developed through experience, even if you have some innate advantages, you still need to go through a period of experiential learning. For example, earlier I mentioned mindset in the second part of the trading framework. I have some friends who are quite unique because they are not very sensitive to emotions; they don't show much joy, anger, sorrow, or happiness. I'm not sure if this is innate, but if it is, I think they would have a significant advantage in trading. Because if you want to consistently profit in this market, if you are easily swayed by emotions, I think you may not be suitable for direct market trading. This is something that can be trained, but if you come into the market without adequate training, I think it can be quite dangerous.

Regarding innate traits, I personally believe that if you want to consistently profit in the market, you need to have several important personality traits: humility, logic, and discipline. Humility may be different from what most people think; we are not talking about being humble in personal conduct, but rather being humble towards the market. You should have a reverence for the market. If someone tells me that they believe they have mastered the market, I can assure you that they have no idea what they are doing. Because no one can control the market; the market is always right. It can always make unexpected moves or events, hence the existence of the so-called black swan. We must maintain humility towards the market. Within this context, every time you make money, you should think about whether you were lucky to make money, whether you happened to catch a trend, or whether you are genuinely skilled and thus made money. When you lose money, you should reflect; you can't blame the market or others around you, or say that your luck was bad – all of these are not correct. When you lose money, you should remain humble and consider if there are ways to avoid the same mistakes next time.

The second one I think is rationality, which I believe is the most important. Everyone comes to the market with the goal of making money, so every time we make a decision, we should start with this goal in mind, trying to approach it from an objective and rational perspective, and avoid emotional trading. Because once you lose your rationality, it's easy to turn into a certain type of person, called a gambler, and this market may become your casino, where you come to vent emotions. I've heard an interesting example before, where an amateur trader who is a full-time employee placed a losing trade before going to work, which led him to make some unusual moves throughout the day. For instance, instead of taking an Uber to work as usual, he rode a bike to work that day, thinking about this issue all day. Then, when he got home in the evening, he thought, no, I must place another trade today, because I lost money in the morning, so I need to make it back in the evening. From the moment he placed the second trade, his goal had already deviated. He shouldn't try to make back the money he lost in the morning in the evening. Each of your trades is independent, and your only goal is to make money. If you bring in your emotions or other factors around you, and let them affect you, at that point, you've turned the market into a casino, and you just want to satisfy your dissatisfaction and fulfill your gambling desires to vent that emotion. This is actually very detrimental to achieving our goal of making money.

The third one is discipline. Without discipline, if you don't stick to certain things, even if I give you a very powerful and profitable trading system today, you might mess it up with your actions and end up losing money. The three points mentioned earlier can all be trained. The first is humility, which is adjusting your mindset; the second is to maintain rationality; and the third is discipline. To put it more simply, all of these can actually be combined into the second point, which is rationality. Because as long as you are rational enough, you will know that the market cannot be controlled, and you will remain humble. As long as you are rational enough, you will know that if you don't operate with discipline, you will definitely face some money-losing situations later on.

Alex: I see. You mentioned a point just now that was repeatedly emphasized, which is that every time we make a trade, whether it's successful or not, we should reflect and summarize, extract the good aspects of the last trade in the right way, and apply them to subsequent trades. Do you usually write a daily trade review, or trading notes? Because I've seen some people have this habit, and I don't know if such a habit is a good way? Or how do you think about developing this habit, which may be more helpful for trading.

Colin: This is quite interesting. In fact, in the early days, I did try to write down the details of every trade. I think this is quite a unique way of learning, and I believe this method must have some degree of usefulness. I don't do this now, not that I don't do it at all, but I record some more special parts. For example, if I see a specific pattern today, or observe certain phenomena, I will record it. Because sometimes my memory is not very good, I write it down, look at it the next day, and look at it again the day after. I check those things I've recorded every day, and then I go to verify. These things may not be part of my trading decision-making process; they are an additional observation list.

I will observe whether these things will be validated by the market later on. If they are, I will further research; if not, if I succeed in observing it once, succeed again the next time, and fail the third time, I might say that this thing may have just been pure luck the first two times, a coincidence. So I will record some more special cases, not as additional trading records, just to record some rather special things. I used to do the so-called writing a trading journal thing early on, but later on, I became lazy, a bit lazy to do it. Currently, I have internalized a lot of things, and many things are already in my mind, without too many complicated operations. This practice of writing a trading journal may only be done when developing a new strategy or researching a new area. I don't usually do it anymore. But I do not deny the usefulness of this practice because it sounds like it can indeed help some people who are unsure of their direction to record their current thoughts and actions. It can be used for post-event reviews, and I think it still serves a purpose.

Three Impressively Memorable Trading Experiences

Alex: Alright. Since you formally entered the trading business until now, can you share three of the most memorable trading experiences and what you learned from them?

Colin: This question has been asked to me quite a bit. From the time I entered the market, every time someone asks this question, the experience I think of is always the same because that image is too deeply imprinted. The first one is when I was still working part-time, doing all sorts of odd jobs to save money. I just mentioned that I would compress my sleep time to learn some things. During this process, I would take a very small capital to the market to validate some ideas, to train my market sense, to test the waters, to see if my approach is correct. At that time I basically knew nothing, just a little bit of very basic things, really just the mentality of a pure novice. At that time, my capital left a deep impression; it was 2000U, and I put it into a contract account to trade Bitcoin contracts. As a result, in a two-week period, I turned the 2000U into 6000U, exactly tripling it. I know that Warren Buffett's annual performance is only 20%, and I achieved 200% performance in two weeks. At that time, I was floating, and my thought was how easy it was to earn this money. At that time, I heard people around me say that when you earn money, you should remember to appreciate yourself, so I bought a black jacket online, which cost about 20U, wanting to reward myself.

However, just two days after I bought it, I lost 4300U and ended up with only 1700U, which was even less than my initial capital. I only made one trade, opening one contract, and lost 4300U. It is evident that I had no idea what risk control was at that time. I manually closed that position, stared at the screen for about 5 minutes, my mind full of what I was doing, why the money was gone, and I felt completely crashed. Ironically, the jacket I ordered hadn't even been delivered to my house, and my money was already gone; I didn't get to reward myself at all. The jacket still hangs in my closet. That one trade taught me the most important lesson, which is, for every trade you make, before placing the order, absolutely, absolutely do not remove the stop-loss order.

If you just have this idea, then don't trade. In my case at that time, I had set a stop-loss order in advance. When the price was approaching the stop-loss point, I canceled the stop-loss order, moved it back a bit, and then when it was close again, I canceled it and moved it back a bit more. I just didn't want to admit defeat, and as a result, I kept losing more and more. The original loss on that order might have been only about two to three hundred units, but I ended up losing 4300 units, which was very, very painful. I remember this number very clearly. So since that incident, I have never removed a stop-loss order again because the memory is so deep. I felt like a clown, not knowing what I was doing.

The second story I want to share is a bit more positive. There was a time when I was studying technical analysis. I would use some small funds to validate my views in the market. One day, I was looking at two assets, OP and DAR. I drew my predictions for these two assets on Trading View and showed them to my friend, explaining why I thought they would move in that way. My drawing at that time assumed a drop to A, then a rise to B, and then another drop to C. The subsequent price action validated this within about a week. It was the first time I felt a great sense of achievement from this learning experience because I was diving into something new. The price movements followed exactly along the line I drew, even matching the timing. The timing was just a guess, but it perfectly aligned with what I drew — first a drop to A, then a rise to B, and finally a drop to C, three segments that were exactly the same.

I happily went to show off to my friend, saying, "Look, what I learned is really useful." By that time, I had already moved past basic trading and had a more stable mindset. Besides being happy, I would ponder why I could predict this trend in advance. I would review the trade, look at more assets, whether it was Bitcoin or altcoins, and see if their historical price charts had anything similar that could be replicated. Here, it's important to emphasize that prediction isn't actually crucial. Our trading decisions shouldn't be based on predictions. Prediction is prediction, and decision-making is decision-making. You can make a prediction, but you shouldn't base your decisions on that prediction. After making a decision, you can make your own prediction. If it's correct, great. If not, let it go. You can't let the prediction influence your decision-making process. That's a big no-no because the market can't be predicted.

The third story I want to share is about 2024, which was when I incurred the biggest loss from a single trade. I had previously shared a bit about this on Twitter, and today I'll elaborate on it. In October 2023, I already held a significant amount of Bitcoin. I believed that the bull market was about to start, even though market sentiment was still very low at that time. I had an idea to go long on the ETH/BTC exchange rate. My strategy involved using spot trading. I converted part of my Bitcoin into ETH to run a grid trading strategy. The goal was to generate some profits during the ranging market, and then hold for the long term. It was somewhat like replacing part of my BTC holding with ETH. Holding Bitcoin is like being exposed to beta, but I wanted to gain some alpha exposure through Ethereum. I set up the grid this way, and at the time of opening the trade, my ETH holding was significant, roughly at a 7:3 ratio. If both assets were to appreciate and my bullish/bearish judgment was correct, I could capture the upward movement in spot prices.

If ETH rises more than BTC, I can still enjoy BTC's coinbase effect. Looking back now, of course, I know the outcome of this strategy. However, from October 2023 to June 2024, this strategy was profitable. I captured the oscillation range quite accurately as it was consolidating within a large range. At that time, there was also hype around the approval of an Ethereum ETF, and I may have been overly optimistic, neglecting the so-called extreme risk. Then, on August 5, 2024, the entire crypto market, along with the US stock market, experienced a severe crash. Bitcoin plummeted to 49,000, and Ethereum fared even worse, dropping to around 2,100. The most remarkable thing about that day was that Ethereum's decline was much greater than Bitcoin's, causing a direct exchange rate crash. The paper loss on my account was terrifying because my average entry price was not that low, even though the grid profit was helping lower my average price. So, it was quite miserable at that time. When I opened my position at the end of 2023, the average exchange rate was around 0.052. I conducted some exchange rate scalping in between, coupled with grid profits, resulting in a final average exchange rate of about 0.045. The nightmare began on August 5th, and it continued until before Trump took office, with the exchange rate dropping all the way to 0.03. The loss in just the exchange rate part was already approximately over 30%, very, very painful.

In simple terms, back then, I had no intention of setting a stop-loss because I was waiting for another big rally. Later, it actually rallied, Trump took office, and the exchange rate rebounded to around 0.04, at which point I exited with a total loss. From 0.045 to 0.04, I suffered a loss of about 10%, but my position was very heavy, so this part was quite painful. Besides losing in Bitcoin spot, I also missed out on significant opportunity costs afterward. Because although I lost in Bitcoin, Bitcoin would still rise, and I missed out on the subsequent opportunity costs, which hurt my performance last year.

Looking back at this trade, I think I learned some new things. In this crypto world, you really cannot trust any asset other than Bitcoin. At that time, I viewed Bitcoin and Ethereum as assets of equal standing, but now it seems not to be the case at all. And up to now, it seems the exchange rate has already dropped below 0.018. My exit price was 0.04, and now it's been slashed to 0.018, quite terrifying. What's relatively optimistic is that I cashed out all my Ethereum spot at the peak last December when the price was 4,000. This can be considered a somewhat silver lining amid a bitter experience.

Three Recommendations for Myself Back Then

Alex: Alright, these three cases are all very interesting, with successes and lessons learned. They can all distill different experiences and lessons. If you could invent a time machine and go back to the year you started studying trading and entered the trading market, what three recommendations would you give to your past self? And you can reasonably ensure that your past self will take them to heart. What advice would you give to your past self? But it cannot be specific investment advice about what to buy.

Colin: Alright. The first piece of advice is I would definitely tell myself to be selective with learning resources. Back then, I bought a lot of books, many of which turned out to be not very valuable. I think every book may have some value, but those books were indeed not widely accepted by the market, containing some flawed and erroneous concepts. However, I didn't know that at the time. I didn't ask others, nor did I search online for verification. After reading them, I spent time validating them, only to discover that these things seemed unusable, wasting a lot of my time.

I believe most theories are valuable, but the premise is that they need to be accurate and accepted by this market. Some things, such as simple historical induction, are prone to issues in this market. This is the first advice I would give to my past self: don't read some weird books anymore; ask professionals and let them tell you what kind of books are worth reading. Speaking from my current perspective, if someone asks, I usually say go read textbooks, at least to understand the entire logic of how the financial market operates. The so-called textbooks are the books used in finance-related courses in business schools, and those books are truly more valuable, the most practical books.

For the second advice, I would probably tell myself to always remember to set stop-loss orders and not to remove them. The reason is, as I shared in the first trading experience, I can still see that jacket till now, every time I see it, I think about it. Never remove the stop-loss order you have set, always leave it there. No matter what happens, because this thing can save your life. If you are not willing to do this today and you hold onto the position, what might have been just a 2% loss could turn into a 10% loss, which is a very serious consequence. Although Alex just said hypothetically that if his past self could listen, I think it's really hard for someone to truly listen to this advice just once. I knew back then that I should set a stop-loss and had set stop-loss orders, but I just couldn't do it; I was really unwilling. So, I think experiencing this kind of thing once will leave a much more profound impression. I heard a phrase before that I thought was quite good, which is, when someone teaches, even a hundred times won't make you understand, but when the event teaches, maybe once is enough to understand. This was a case study on me.

For the third advice, there's a little story, I want to say remember what your original intention was when entering the market, don't let it affect the most important people around you. In this episode, I have mentioned many times that everyone's purpose in entering the market is to make money. So, what is our purpose in making money? It is to improve our quality of life, to be able to eat better, dress better, and live better. If that's the case, making money itself is not your ultimate goal but a means to optimize your quality of life. If in this process, you influence your family or significant other for the sake of making money, or even affect your own mental and physical well-being, you have actually deviated from your original intention of entering this market. In my own journey of learning to trade, I actually fell into this pit. Back then, because I was too focused, a bit extreme, and eager to quickly achieve results in this market, I became indifferent to someone important around me, venting some emotions on them, and as a result, that relationship ended.

What I want to say is that although losing money or facing some uncertainty, some setbacks will make you very painful, but no matter what, always remember that you entered this market to improve your life. Making money is a means, and once your means interfere with the ultimate goal, I think this practice needs to be stopped. If I had the opportunity to go back to that year, I would tell myself, don't do such stupid things. You came in to make money, but making money is to help yourself live a better life, to lend a helping hand to those around you in difficult times, rather than stand by and do nothing. I think this advice should be the most important.

How to View the Current US Stock Market and BTC Price

Alex: Alright, our last question today will be more specific. Last time we discussed our views on the market in the on-chain data analysis show, and you were bearish at that time. I remember that the price of Bitcoin was still quite high at that time, around $90,000, and later we saw Bitcoin drop to as low as $74,000, and many people thought that this bull market was over and we had entered a bear market. We are currently at a bull-bear boundary area, and we do not know what stage the market is in now. What is your view on the current market, including the BTC market, and the recent significant trading actions?

Colin: Let's start with the US stock market. The US stock market is not easy to describe, but at least in my system, it is relatively easier to judge. Trump is a president with a lot of emotions and actions. He has caused quite a bit of turmoil not only in the financial markets but also in the global situation as a whole. The recent volatility of the US stock market is really exaggerated. Actually, this week has been relatively fine, although there was a decline yesterday, but the market conditions in the first two to three weeks were quite terrifying. Even if you have been in the US stock market for a few years, you may not see such a situation. Personally, I am not too pessimistic about the US stock market.

My view is as follows: Tariffs obviously have had some impact on the economy. Currently, the most difficult problem for the Federal Reserve is stagflation, and inflation is still quite stubborn, making it difficult for them to cut rates. This issue will gradually be transmitted to the inflation aspect as the economy cools. Once inflation is eased, they can gradually continue the rate-cutting process. So I think that although the short-term market volatility may be very significant, as long as there are no too extreme risks or the appearance of black swans, I am still optimistic about the long-term outlook for the US stock market. If you just look at the SP chart, open up a monthly chart or a weekly chart, it is all up on a 45-degree angle. So I think any crisis should be able to withstand. However, in the short term, whether it is day trading or medium-term trading, the difficulty is quite high. I am not entirely focused on trading in the US stock market, so I don't want to say too much; there may be a problem of insufficient expertise.

Bitcoin is quite special. Like Alex just mentioned the concept of bull-bear conversion, when I was taking profits, I exited in batches and kept the last 20% of my position. This 20% position, during the pullback, dropped below an on-chain data point called Short-Term Holder Average Cost. The number on that day was 92000, and once it broke below that level, it plummeted rapidly. As of two days ago, the data point was around 92400 or so, still in that vicinity.

I personally believe this data point is key to triggering another significant upward movement for Bitcoin. Although it has risen from 74000, 75000 to the current 87000, 88000 range, which is quite a large movement, I think that, in order for Bitcoin to reach higher levels today, this Short-Term Holder Average Cost will be a crucial threshold. The principle is simple: because a large part of the market's oscillations or price movements actually stem from the trades of these short-term holders. Once the price reaches their breakeven point, a so-called unwinding may occur, as these trapped chips may choose to sell at this point, potentially ushering in a wave of selling pressure that needs to be watched closely.

The second data point is one I haven't shared before, called TMMP (True Market Mean Price), another indicator within the previously mentioned Coin Time Price system. I might not be able to provide a detailed explanation of this data here, but I can briefly describe one of its characteristics. Its characteristic is that historically, the time Bitcoin's price has spent above and below this line is almost one-to-one, making this line a rather slow but effective bull-bear threshold. Currently, this line's price is approximately around 67000, if I'm not mistaken.

When I was analyzing and making decisions about taking profits, I wouldn't refer to this line, as if one were to rely solely on this line to exit, it might be a bit too slow. However, if the price continues to fluctuate now, this line might become a very important true bull-bear boundary. Throughout this bull market rally up until today, this line has not been breached, as it has been steadily rising since above 60,000, and has not dropped below that level. Another point worth noting is Bitcoin's current chip situation. Roughly two to three months ago, there were approximately 4.5 million chips trapped in the range of 87000 to 110000. After these few months of digestion, a large portion of these chips have shifted to a new range. Currently, this range is around 81000 to 85000, with about one to two million chips having moved out.

On the optimistic side, Bitcoin being able to absorb so many chips in this range without a drop, without being hammered down, indicates that there is a consensus among many investors regarding this 81000 to 85000 range, as they are willing to buy in this range. However, there is still another risk to note, which is that we just mentioned these chips are from the above 93000 trapped chips, who sold at a loss and may add to the selling pressure. When they sell off, it indicates that they are no longer as steadfast in their mindset as before. So, once they accelerate their selling, if the market is unable to absorb this selling pressure, the price may further decline.

Currently, the number of chips above 93,000 is approximately around 2.9 million, based on the data from my weekly report the day before yesterday. I believe this is a relatively neutral interpretation. However, at least in the range of 81,000 to 85,000, there should be a relatively significant stickiness in the short term. Once the price rises, it may be pulled back; once the price falls, if it does not fall very rapidly or significantly, the price may slowly rise back to the range of 81,000 to 85,000. Therefore, the central axis of the Bitcoin price game at the moment is likely the 81,000 to 85,000 range.

Of course, the price may directly drop below, but if there is no larger bearish news after the drop, you can expect the price to slowly rise back up. At the same time, the current price is around 88,000, this 88,000 level must bear the selling pressure from the profit-taking in the 81,000 to 85,000 range mentioned earlier. Because all of the 81,000 to 85,000 range comes from short-term holders, how many chips will become diamond hands and turn into long-term holders, we cannot know now. But all of these chips are currently held by short-term holders, so once the price rises, these people will want to take profits. Taking profits means selling, so they may push the price back to the 81,000 to 85,000 range.

Personally, I think that breaking below 81,000 and rising above 93,000, between the two, I personally lean a bit bearish. Because currently, if you look at it from a cyclical perspective—I'm not talking about the four-year cycle, just looking at the simple bull-bear conversion of Bitcoin, if my judgment of the top was correct, this is likely the highest point of this current cycle. However, it does not rule out running a double top like in 2021, which looks a bit like at the moment, but there is not enough evidence and data to support my view. If my previous judgment of the top was correct, I personally lean a bit bearish, and I am currently in a short position. Maybe wait for the price to drop to around the bull-bear boundary line TMMP, where there happens to be a chip accumulation area. At that point, I might start considering whether to start bottom fishing in batches, or wait for even lower levels.

Alex: I see. Just now you mentioned that the next point where you will start accumulating is the price range of over 60,000, which is the bull-bear boundary line. Another point you just mentioned is the average price of short-term held chips at 93,000 and 92,000, which is also a major resistance. So if the price now goes up from 88,000 and smoothly breaks through 93,000 and 92,000, I understand that you will also opportunistically increase your position along the trend, is that correct?

Colin: It's possible, but this might involve using funds from the contract, so the spot position may still be empty. Based on the data, in my personal opinion, I think that side may not break easily. There are too many trapped chips on the upside, and they happen to overlap with our short-term holders' average cost. So personally, I may really have to wait to confirm for a period of time when the breakthrough occurs, for example, standing above for a week, or say three days, five days. If there is no obvious weakness, in the end, I will combine the judgment of technical analysis to decide whether to enter a long position through the contract to make a swing trade.

Alex: Okay, the discussion with Colin today was really insightful. We not only talked about his growth as a trader but also delved into some of his core insights and practical experiences in trading, including his framework understanding of the market and operational logic in different market environments. Whether it's the emotional fluctuations of the US stock market or the changes in Bitcoin's chip structure, I believe everyone can gain a lot of inspiration from it. Many thanks to Colin for being our guest again today, bringing us so much in-depth thinking and wonderful content. I hope there will be another opportunity in the future to invite you to the show again, to continue discussing the market and strategies together. Thank you.

Colin: You're welcome, thank you.

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