Pareto's Razor

trader tryna trade

[Pareto's Razor @ParetosRazor]

It's incredible how much clarity you can get from 2 moving averages on a chart

Might be the most overpowered bang-for-buck indicator there is

[Pareto's Razor @ParetosRazor]

@exitpumpBTC Is there a reason you don't include CVDs in these screenshots, isn't that the other half of the demand/supply equation

[Pareto's Razor @ParetosRazor]

The most cancerous rhetoric I keep seeing on this app is that "you're 1 trade away from changing your life"

This mentality is no different to the people you'd consider retards for buying lottery tickets. Except with the lottery at least you have a rough idea of your winning odds

A fundamental requirement of profitable trading is repetitive execution of an edge. Sample size. Not relying on one trade to escape the permanent underclass

But alas there will be one example of sometime winning the lottery and the timeline parading it as a triumph with the justification that you can do it too

Before you donate your money to your favorite KOL, ask yourself why you're even here

Do you want to be rich? Or do you want to be a trader?

Because I promise you there are easier ways to get rich.

[Pareto's Razor @ParetosRazor]

Bears have bad a lot of time to make these charts look like shit and they're failing. Chop likely resolves higher

[Pareto's Razor @ParetosRazor]

The past 2 months I've been obsessing over how go maximise the EV of my positions

What do the best setups look like?
How can I minimise my losing trades?
How can I maximise my winning trades?

Figuring out how to add to winners has been the hardest by a margin

From my experience, adding to any position just because it's "going in your favor" is kinda sloppy

The secret sauce is only adding to positions that instantly let you know you're very correct

[Pareto's Razor @ParetosRazor]

Unironically HYPE LIT and ZEC are the best looking coins in the market, every other shitter looks like shit

[Pareto's Razor @ParetosRazor]

@PickeeP29 @0xaporia @blknoiz06 “If it falls DCA”

What if it keeps falling lol

The value of trend is that your inval is the break of the trend

What’s your inval if the reason for entering is that price is “cheap”

[Pareto's Razor @ParetosRazor]

No legendary trader worth mentioning stuck to intraday scalping and small-cap shorts forever. All your goats are swing traders for a reason

[Pareto's Razor @ParetosRazor]

Bearish on reading comprehension because CT doesn't understand what the word 'downside' means

People getting defensive over an objective truth about liquidity constraints

[Sqalef @sqalef]

the downside to memecoins that no one talks about is that it is an unscalable skill

even if you are a top trencher it only gets you to low-mid 7 figs

the skills also dont translate over to perps which is the endgame because its infinitely scalable

[Pareto's Razor @ParetosRazor]

On what it means to trade

“Repeatedly entering +EV positions with good risk management”

1. +EV positioning

Price action (“what”) > Order flow (“how”) > Context (“why”)

You need an edge. Fortunately it’s the easiest part because what makes money in markets isn’t a secret anymore, basically just abuse trend/momo effects and you’ll be fine

EV = (% win * R of avg win) - (% loss * R of avg loss). This tells you the avg unit of risk you can expect to gain/loss per trade

Price action — Eg: to trade momo, it actually needs to exist on the chart. Typical indicators like RSI/MACD are just derivatives of PA to easily quantify the existence of these effects

Order flow — It’s wise to check if the move is backed by meaningful volume/aggressive buying (good momo rallies need ‘activation energy’ to shift the regime). Study the CVDs of recent crime coins (BANK, SYN, LAB etc.) and the pattern isn’t hard to spot

Context — intuition, narrative, market regimes etc. is largely discretionary and honed overtime, but is the difference between mid and supernatural returns imo

2. Good risk management

Invalidation > Position sizing > Tail-risk

Invalidation — Defines where the position is wrong. Good invals have 3 characteristics:

- discrete/objective
- relatively close to entry
- direct rejection of the reason you entered

Eg: breakout trading enters at a confirmed close/break of a discrete level, inval is a close below that level

The objectivity of an inval is important because it prevents you from psyoping yourself into holding a losing position. One of reasons trend trading > mean-rev for retail, very easy to hold a losing mean-rev position when price going against you further reinforces the reason you entered the first place

Position sizing — Two things to know:

- How much risk your strategy can stomach
- How much risk your stomach can stomach

You can guesstimate the first by doing some back-of-envelope EV and Kelly ratio calcs. Be pessimistic and half the number

The second is personal, if you’re in crypto you’re probably fried so this won’t be your bottleneck

Tail-risk — people forget it exists until their account no longer does. How to mitigate depends on trading style but there are 2 simple ways, especially if you’re swing trading shitters:

- Always have a hard stop
- Never full-port your margin

Sometimes even a hard stop will not save you (study 10/10) so the latter is generally wiser

3. Repetition

Systemisation > Conviction > Patience

Systemisation — you can’t repeat what isn’t systemised. You need hard rules to define your filters, sizing, entry and exit conditions. You don’t need be a quant but the more discretionary your trading is the harder being consistent will be

Conviction — you need to keep clicking even when it hurts, which it will. There is no shortcut for building it, you kinda just need to believe. It can be data-driven (weakest), from building the systems with your own hands, to making money with it yourself (strongest)

Patience — edge needs reps to make money (if you have one, most don’t so “trade less” is unironically good advice). Lots of fear-mongering about “time running out” to make money, it’s largely psyops, as long as people build the infra and the money is owned by someone, markets will always be imperfect and there will always be money to be made. Keep clicking

[Pareto's Razor @ParetosRazor]

Think I've just spent this year figuring out how to pvp the perp cartel

[Pareto's Razor @ParetosRazor]

might be time to start walking the walk on this account, no other way to prove youre in the trenches

[Pareto's Razor @ParetosRazor]

I've recently been in a state of knowing I've already won but I'm just waiting for the results to catch up

[Pareto's Razor @ParetosRazor]

The level gives you a static and discrete level to enter, and more importantly, invalidate that is grounded is sound rationale. This allows you to actually systemise cutting losers short and letting winners run, and thats the real value of the trading style imo

[Pareto's Razor @ParetosRazor]

80% of the edge in breakout trading is just trend & momentum. The evidence for breakout trading itself having edge is very weak, the reason it's been a successful strategy for so many traders is because the breakout acts as a frame of reference to systemise risk management