What you see is not all there is. - xh3b4sd

The Missing Billionaires, Against the Gods, The Price of Time. Books about money and finance. Books about wealth and ruin. Books about the art of investing and knowing thyself. One of those books brought the coin flip challenge to my attention. The task of that challenge is simple. You have a biased coin that guarantees you to show heads 60% of the time. You have a budget of 25 Dollars and 30 minutes of time to flip the coin as often as you like. You can bet any amount within your budget. When you are wrong with your bet, you lose the amount of your bet for that round. When you are right, you double the amount that you put at risk. What do you do? How much do you end up with? If you would like to do that challenge for yourself, please do not read on, because I am going to spill all the secrets. So if you want to know what's what, go do the challenge. And then come back later with your own wisdom. I love those kinds of games because they ask very simple questions about very important problems that everyone faces in the world all the time. Those games are about intuition, psychology, strategy, math, and frankly, common sense that often seems to be not that common anymore. I heard of a study that showed the average profit across all participants of the coin flip challenge to be around 250 Dollars. That represents a ten fold increase of the initial budget. Scholars would want to ask the question of the optimal strategy here. Gamblers, not the professional kind, would probably just lose it all. I did the coin flip challenge the other night on my phone, laying in the dark in my bed. And I was wondering how anyone should really approach this problem. Here I would like to layout my thought process and explain what to pay attention to, and what not. The task is to flip a coin. And because I did it on my phone, the environment in which I found myself in was rather controlled, call it stable. Those kinds of stable environments guarantee an almost impecible trade execution. There is not much that can go wrong. Yes, I could type the wrong betting amount, or select the wrong side of the coin. But those issues should not impact the outcome of my performance in this case very much. So trade execution was nothing to worry about this time around. Check. Then the question was what strategy I should be executing here. And this one was obvious to me as well, because the task itself told us already what side to bet on. That side is the 60%, without exception. If you know for certain, in relative terms, that one very specific thing delivers those 60% outcomes, then you go with that very specific thing without ever changing your mind. Unless of course those 60% are not guaranteed anymore. The coin flip challenge guaranteed those 60% heads and that means you do the same boring thing all the time for half an hour. No matter what. Having that understanding solved the excruciating task of coming up with a strategy, because this part is usually where the bulk of the wealth and the bulk of the ruin is generated. So, execution, check. Strategy, check. Check, check. Now, there is one thing left. What is that one thing? That one thing is bet sizing. Scholars will lament that this is part of the strategy. And you know what? They are probably right. For our intents and purposes though, we need to talk about it separately, simply because for what the coin flip challenge is. And so if we know that we simply have to take the same side of the bet all the time, then the only missing variable here is the amount that we bet, all the time. This variable, the bet size, can make or break a strategy. And I would maybe go as far as saying that the bet size is the part about this particular challenge that gets an outcome close to optimal. Now, in my case it was the dark of the night, in the comfort of my bed, glued to my phone. I did not do much of fancy math. I did not calculate probabilities in my head. I did not try to figure out what the Kelly Criterion has to say about it. My thought process was simply how to minimize the chance of ruin, given that 4 times out of 10 the biased coin does actually not show up heads. And so I ballparked it and said ok, I will just bet around 10% all the time and see how it goes. Execution, check. Strategy, check. Size, check. Check, check, and check. Now it turned out that 10% was actually the conservative choice. I made a killing, theoretically, but I could have made way more by taking a little bit more risk. I heard that you can actually go as high as 20% with your bet size in this simple case. So how did I do? Remember a study found the average outcome to be 250 Dollars, starting with 25 Dollars. I ended up with over 2500 Dollars. Ten times more than the average. I would be curious how you did on your own. So feel free to hit me up!

And the day was 5th of August. Every number on every screen went red in a cascade of flash crashes, on pretty much all meaningful markets world wide. What happened? Well, the herd happened. That's what. All kinds of explanations are thrown around about the Yen carry trade. As a matter of fact, some positions had indeed to be covered and delevered. But what caused the bottom to fall out everywhere, were essentially all the second order effects of all the people being afraid of what all of that actually means and implies for their own bags. I could not have predicted any of it. But I can understand and appreciate that fundamentally nothing changed. Not for the world, and not for crypto. Thinking about it, maybe something has changed. Some of the players out there have no portfolio anymore. Some people got margin called and blown out of the game. And the numbers on the screen sent some into midlife crisis uttering words that no sober person would formulate on a good night's sleep. And to be fair, seeing the ETH/BTC and SOL/ETH charts in comparison does in fact hurt a lot these days. Solana's relative strength in price is remarkable compared to Ethereum. I think certain repricing events are fair. But I do also think that ETH/BTC trading below 0.05 should be charged with time in prison. And here within lies the relevant again. What to pay attention to, and what not. That is what makes the difference. Absent of world war three I would like to call the bottom on the ETH/BTC monthly here. The latest unknown unknown is out of the way. From here on out there should be nothing but tailwinds. And in the distance, sirens.

Talking more about tokens that don't do anything really, but trade. XRP was pumping like 20% one day, because Ripple Labs doesn't get sued into oblivion anymore by the SEC. This is hilarious because, coin up, not due to merit, but due to no punishment!? Again, that doesn't change any of the lacking fundamentals and I am patiently waiting for XRP to drop out of the top ten crypto assets by market cap. It may take a while, but as long as XRP is not doing anything, this is all noise and irrelevant. Nobody can predict this kind of price action reliably anyway. Or, I cannot. WIF is proper underperforming now and all memes seem to get recycled into SOL, the dark forest is extracting value from the less competent to the more ruthless. That aspect may also explain some of SOL's additional strength in price action. A lot of the meme coin casino money joins the frontloading of the hottest alt L1. Without judgement, that line of thinking checks out for me.

My number for the week is 10. And that is the 10 month simple moving average. This indicator has become a pretty interesting tool for cyclical markets like crypto. It is obviously not fool proof, this is not a silver bullet, and all the exceptions apply as always. But, anything that closes below that 10M SMA on a weekly or monthly candle is a sell. And in reverse, anything that closes above that 10M SMA on a weekly or monthly is a buy. If you applied this simple strategy without asking further questions in the prior cycles you would have outperformed most of the lore appreciatooors on crypto twitter. Anyway, times are changing and some simple moving average alone will not help you either. So it will be once again, know thyself, with which I would like to leave you this week. Onwards!

What you see is not all there is. - xh3b4sd

The Missing Billionaires, Against the Gods, The Price of Time. Books about money and finance. Books about wealth and ruin. Books about the art of investing and knowing thyself. One of those books brought the coin flip challenge to my attention. The task of that challenge is simple. You have a biased coin that guarantees you to show heads 60% of the time. You have a budget of 25 Dollars and 30 minutes of time to flip the coin as often as you like. You can bet any amount within your budget. When you are wrong with your bet, you lose the amount of your bet for that round. When you are right, you double the amount that you put at risk. What do you do? How much do you end up with? If you would like to do that challenge for yourself, please do not read on, because I am going to spill all the secrets. So if you want to know what's what, go do the challenge. And then come back later with your own wisdom. I love those kinds of games because they ask very simple questions about very important problems that everyone faces in the world all the time. Those games are about intuition, psychology, strategy, math, and frankly, common sense that often seems to be not that common anymore. I heard of a study that showed the average profit across all participants of the coin flip challenge to be around 250 Dollars. That represents a ten fold increase of the initial budget. Scholars would want to ask the question of the optimal strategy here. Gamblers, not the professional kind, would probably just lose it all. I did the coin flip challenge the other night on my phone, laying in the dark in my bed. And I was wondering how anyone should really approach this problem. Here I would like to layout my thought process and explain what to pay attention to, and what not. The task is to flip a coin. And because I did it on my phone, the environment in which I found myself in was rather controlled, call it stable. Those kinds of stable environments guarantee an almost impecible trade execution. There is not much that can go wrong. Yes, I could type the wrong betting amount, or select the wrong side of the coin. But those issues should not impact the outcome of my performance in this case very much. So trade execution was nothing to worry about this time around. Check. Then the question was what strategy I should be executing here. And this one was obvious to me as well, because the task itself told us already what side to bet on. That side is the 60%, without exception. If you know for certain, in relative terms, that one very specific thing delivers those 60% outcomes, then you go with that very specific thing without ever changing your mind. Unless of course those 60% are not guaranteed anymore. The coin flip challenge guaranteed those 60% heads and that means you do the same boring thing all the time for half an hour. No matter what. Having that understanding solved the excruciating task of coming up with a strategy, because this part is usually where the bulk of the wealth and the bulk of the ruin is generated. So, execution, check. Strategy, check. Check, check. Now, there is one thing left. What is that one thing? That one thing is bet sizing. Scholars will lament that this is part of the strategy. And you know what? They are probably right. For our intents and purposes though, we need to talk about it separately, simply because for what the coin flip challenge is. And so if we know that we simply have to take the same side of the bet all the time, then the only missing variable here is the amount that we bet, all the time. This variable, the bet size, can make or break a strategy. And I would maybe go as far as saying that the bet size is the part about this particular challenge that gets an outcome close to optimal. Now, in my case it was the dark of the night, in the comfort of my bed, glued to my phone. I did not do much of fancy math. I did not calculate probabilities in my head. I did not try to figure out what the Kelly Criterion has to say about it. My thought process was simply how to minimize the chance of ruin, given that 4 times out of 10 the biased coin does actually not show up heads. And so I ballparked it and said ok, I will just bet around 10% all the time and see how it goes. Execution, check. Strategy, check. Size, check. Check, check, and check. Now it turned out that 10% was actually the conservative choice. I made a killing, theoretically, but I could have made way more by taking a little bit more risk. I heard that you can actually go as high as 20% with your bet size in this simple case. So how did I do? Remember a study found the average outcome to be 250 Dollars, starting with 25 Dollars. I ended up with over 2500 Dollars. Ten times more than the average. I would be curious how you did on your own. So feel free to hit me up!

And the day was 5th of August. Every number on every screen went red in a cascade of flash crashes, on pretty much all meaningful markets world wide. What happened? Well, the herd happened. That's what. All kinds of explanations are thrown around about the Yen carry trade. As a matter of fact, some positions had indeed to be covered and delevered. But what caused the bottom to fall out everywhere, were essentially all the second order effects of all the people being afraid of what all of that actually means and implies for their own bags. I could not have predicted any of it. But I can understand and appreciate that fundamentally nothing changed. Not for the world, and not for crypto. Thinking about it, maybe something has changed. Some of the players out there have no portfolio anymore. Some people got margin called and blown out of the game. And the numbers on the screen sent some into midlife crisis uttering words that no sober person would formulate on a good night's sleep. And to be fair, seeing the ETH/BTC and SOL/ETH charts in comparison does in fact hurt a lot these days. Solana's relative strength in price is remarkable compared to Ethereum. I think certain repricing events are fair. But I do also think that ETH/BTC trading below 0.05 should be charged with time in prison. And here within lies the relevant again. What to pay attention to, and what not. That is what makes the difference. Absent of world war three I would like to call the bottom on the ETH/BTC monthly here. The latest unknown unknown is out of the way. From here on out there should be nothing but tailwinds. And in the distance, sirens.

Talking more about tokens that don't do anything really, but trade. XRP was pumping like 20% one day, because Ripple Labs doesn't get sued into oblivion anymore by the SEC. This is hilarious because, coin up, not due to merit, but due to no punishment!? Again, that doesn't change any of the lacking fundamentals and I am patiently waiting for XRP to drop out of the top ten crypto assets by market cap. It may take a while, but as long as XRP is not doing anything, this is all noise and irrelevant. Nobody can predict this kind of price action reliably anyway. Or, I cannot. WIF is proper underperforming now and all memes seem to get recycled into SOL, the dark forest is extracting value from the less competent to the more ruthless. That aspect may also explain some of SOL's additional strength in price action. A lot of the meme coin casino money joins the frontloading of the hottest alt L1. Without judgement, that line of thinking checks out for me.

My number for the week is 10. And that is the 10 month simple moving average. This indicator has become a pretty interesting tool for cyclical markets like crypto. It is obviously not fool proof, this is not a silver bullet, and all the exceptions apply as always. But, anything that closes below that 10M SMA on a weekly or monthly candle is a sell. And in reverse, anything that closes above that 10M SMA on a weekly or monthly is a buy. If you applied this simple strategy without asking further questions in the prior cycles you would have outperformed most of the lore appreciatooors on crypto twitter. Anyway, times are changing and some simple moving average alone will not help you either. So it will be once again, know thyself, with which I would like to leave you this week. Onwards!