Trading Lessons

Hopium – The Most Dangerous Drug in Crypto

My goal with this post may be doomed from the start… but I’m at least going to try.

Most people, including myself, just have to go through an entire cycle and get their asses kicked to learn this lesson firsthand.

However, my hope is that at least one person out there will read this and not have to learn these lessons the hard way… decimating their trading accounts in the process

That lesson is… don’t get drunk on hopium.

If you haven’t been around crypto for long, then you probably have no idea what the hell I’m talking about.

So, let me explain.

What is Hopium? 

Hopium, in short, is when you’re in a position that’s moving against you, and instead of getting out or coming up with a new plan, you simply “hope” the price will go back up.

“Hope” is not a strategy.

That “hope” becomes a drug you use to lie to yourself, sedating your fears.

Hitting the hopium den is how I blew up a $300k account in the last cycle.

I started with a little over $7k, traded that up to just under 300 thousand dollars, and then bag held through the crash.

When I finally admitted it was over and sold, I had a little under $50k left. 

Pathetic.

There’s nothing more shameful than allowing yourself to indulge in that sort of greed mentality. 

All the OG accounts always said to take profits and never marry your bags, but I didn’t listen.

They also said that everyone has to get blown up in their first cycle to learn that lesson, and they proved to be right. 

At least in my case.

I’m hoping you can avoid that fate by learning from my mistakes.

Usually, hopium is accompanied by a lot of rationalizations such as:

  • “This is such a good project; everyone will recognize it soon!”
  • “It’s just a temporary dip, it’s going to go back up”
  • “Weak hands are just being shaken out”

These rationalizations will keep you in a trade far longer than you should be.

They’ll also cause you to give back an upsetting amount of your profits to the market.

What’s fucked-up though, is all of those things COULD be true.

You MIGHT be sitting on an amazing project that just hasn’t gotten recognized yet.

The price COULD be going down simply because early buyers are realizing profits, and then the march upward will resume.

Context is everything in trading.

You need to know what the landscape of this coin is, not just the price.

Things like,

  • How old is the token
  • What is the current market cap
  • Did it have a presale
  • Has it made it to the YouTube shill circuit

If you don’t know the answer to any of these then you’re not speculating, you’re just playing scratch off tickets, more or less.

You’re a blind gambler, not an investor.

Understand why you’re buying, what your target sell price is, where levels of support and resistance are at, and what criteria would tell you it’s time to exit the trade for a loss.

When to Sell?

Knowing when to take profits is just as important knowing where your stop loss is.

A lot of “knowing when to sell” just comes down to gut feel that you can only develop with time in the market, watching these types of plays happen over and over. 

That being said, I do have a few tips to help you protect those hard earned gains.

The first tip is for when you’re early in this game, and you’re still trying to get a feel for things. 

This tip is very simple. 

When you double your money, or get a 1x, sell half of the position. That way, even if the coin goes to zero 20 minutes later, you’ll still have the initial money you invested, so you at least won’t take a loss.

I don’t use this strategy anymore, but if you’re new it’s a great idea. 

My second tip, if you get the urge to take a screenshot of your gains, or tell your friends about how much money you’ve made, sell AT LEAST half.

But really you should just sell it all. 

Time and again this ends up being a top signal.

I don’t know what powers of the universe align to make this phenomenon play out so predictably, but I’ve seen it happen to myself and others countless times. 

If you’re really confident it has more upside, take 75% off the table and let the remaining 25% ride. But absolutely take profit while you can if you start catching yourself thinking about what the color of your new boat will be once you get another 2x out of this coin.

It may suck watching it go a little higher, but just trust me on this. Your account will grow far more rapidly if you heed this advice.

Profits aren’t actually profits until you sell, and there’s no worse feeling than watching the price of a home evaporate before your eyes. 

Until next time,

Fractal

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