This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin - up to $1200 worth. I really encourage you to check them out.“Given a 10% chance of a 100 times payoff, you should take that bet every time.” — Jeff BezosThe idea of taking bets with asymmetrical upside is nothing new. As I discuss often, poker players will push all of their chips into a pot when the odds are against winning the hand because the “pot odds” favor the move. If you have a 30% of winning the hand, but only have to bet $100 more dollars with the chance of winning $1000, you make that bet every single time.The caveat to Bezos’s quote is that you can’t make this bet with all of your capital. And an important nuance it is! A poker player might push in all of the chips they have on the table, but they likely only have about 1-2% of their entire bankroll in play.If you put your entire portfolio into a single investment that only has a 10% chance of success, the odds are irrelevant. 90% of the time you will be left destitute.The spirit of the quote is correct, but the context is important. This is why traders ONLY TRADE with a small part of their portfolio, keeping the rest in stronger long-term investments. You can make the “Bezos bet” with a small percentage of your portfolio many times over without blowing up your entire portfolio.Never go truly all-in on a bet with a low chance of success - rather, risk what you can afford to lose on the chance that the small position becomes a life-changing investment.To accomplish this, you need to be really good at riding the highs and cutting the lows.“Selling your winners and holding your losers is like cutting the flowers and watering the weeds.” – Peter LynchInvestors and traders are often drawn into a strange, seemingly counterintuitive phenomenon - letting their losers run while cutting their winners short. This seems strange but can be explained easily in the context of the emotional side of trading. In an effort to be “right,” traders will take profit too early in fear that they will eventually be “wrong” if they let it run. On the flip side, realizing a loss on a trade is also an admission that they were “wrong,” therefore compelling a trader to continue losing in an effort to eventually be “right.”We all know what we SHOULD do, right? We should cut the losers early and let the assets that are performing well keep going to continue to pay for those small losses. It’s a few huge trades a year that make a trader most of their money. These huge trades can’t happen if you cut them short.Strong hands always prevail.To my free members (I love you!) - paid members receive emails like this one 5 times a week - Monday through Friday. Every Wednesday I chart any request sent by my paid members, often over 30 charts. It’s a ridiculous amount of work, but I do my best to add real value to anyone who subscribes. If you would like to join the paid side, you can do so for $15 a month here.In This Issue:Asymmetric BetsBitcoin Thoughts And AnalysisAltcoin ChartsLegacy MarketsIs Bitcoin A Speculative Asset? From IntoTheBlockSHIB Momentum Explained From IntoTheBlockChart RequestsThe Push For A Bitcoin Spot ETF ContinuesShiba Inu Community Is Petitioning Amazon New York City Elects Bitcoin MayorHoloride Brings Metaverse To Every Car With Elrond The Wolf Of All Streets Podcast Ft. Alex KrügerMy Recommended Platforms And ToolsIF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.CO
The Wolf Den #365 - Asymmetric Bets
The Wolf Den #365 - Asymmetric Bets
The Wolf Den #365 - Asymmetric Bets
This newsletter is sponsored by PHEMEX, the world's best crypto exchange for both spot and leverage. Sign up with the link above and get some free Bitcoin - up to $1200 worth. I really encourage you to check them out.“Given a 10% chance of a 100 times payoff, you should take that bet every time.” — Jeff BezosThe idea of taking bets with asymmetrical upside is nothing new. As I discuss often, poker players will push all of their chips into a pot when the odds are against winning the hand because the “pot odds” favor the move. If you have a 30% of winning the hand, but only have to bet $100 more dollars with the chance of winning $1000, you make that bet every single time.The caveat to Bezos’s quote is that you can’t make this bet with all of your capital. And an important nuance it is! A poker player might push in all of the chips they have on the table, but they likely only have about 1-2% of their entire bankroll in play.If you put your entire portfolio into a single investment that only has a 10% chance of success, the odds are irrelevant. 90% of the time you will be left destitute.The spirit of the quote is correct, but the context is important. This is why traders ONLY TRADE with a small part of their portfolio, keeping the rest in stronger long-term investments. You can make the “Bezos bet” with a small percentage of your portfolio many times over without blowing up your entire portfolio.Never go truly all-in on a bet with a low chance of success - rather, risk what you can afford to lose on the chance that the small position becomes a life-changing investment.To accomplish this, you need to be really good at riding the highs and cutting the lows.“Selling your winners and holding your losers is like cutting the flowers and watering the weeds.” – Peter LynchInvestors and traders are often drawn into a strange, seemingly counterintuitive phenomenon - letting their losers run while cutting their winners short. This seems strange but can be explained easily in the context of the emotional side of trading. In an effort to be “right,” traders will take profit too early in fear that they will eventually be “wrong” if they let it run. On the flip side, realizing a loss on a trade is also an admission that they were “wrong,” therefore compelling a trader to continue losing in an effort to eventually be “right.”We all know what we SHOULD do, right? We should cut the losers early and let the assets that are performing well keep going to continue to pay for those small losses. It’s a few huge trades a year that make a trader most of their money. These huge trades can’t happen if you cut them short.Strong hands always prevail.To my free members (I love you!) - paid members receive emails like this one 5 times a week - Monday through Friday. Every Wednesday I chart any request sent by my paid members, often over 30 charts. It’s a ridiculous amount of work, but I do my best to add real value to anyone who subscribes. If you would like to join the paid side, you can do so for $15 a month here.In This Issue:Asymmetric BetsBitcoin Thoughts And AnalysisAltcoin ChartsLegacy MarketsIs Bitcoin A Speculative Asset? From IntoTheBlockSHIB Momentum Explained From IntoTheBlockChart RequestsThe Push For A Bitcoin Spot ETF ContinuesShiba Inu Community Is Petitioning Amazon New York City Elects Bitcoin MayorHoloride Brings Metaverse To Every Car With Elrond The Wolf Of All Streets Podcast Ft. Alex KrügerMy Recommended Platforms And ToolsIF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.CO