Four Key Points for Trader Success

A FOF investor with extensive family office experience shared his insights on the success of traders. After observing hundreds of fund teams over a period of five years, he summarized four core elements for successful trading.

This investor initially started his career during the booming period of the mobile internet and has since been responsible for asset allocation at a family office with a technology background for the past five or six years. During the cryptocurrency bull market in 2020, he began to pay attention to this field and invested a small amount of capital in several venture capital projects related to digital assets, achieving remarkable returns.

His unique market perspective stems from his background, enabling him to gain a top-down insight into the overall market, understand how different participants engage in the market, and identify the changing trends of profit-making strategies over time.

Common Characteristics of Successful Traders

When selecting funds and general partners, this investor primarily focuses on three core factors: performance, team, and strategy.

Regarding performance, he emphasized the need for reliable data support. In the secondary market for cryptocurrencies, the authenticity, sustainability, and attribution analysis of past returns are particularly important due to the lack of information transparency.

Regarding the team, he raised three key points:

1. Integrity is crucial. Whether it's proprietary trading or asset management, the principle of honesty must be upheld.
2. Lead by example. Even after achieving success, core trading personnel should remain lean, and the person in charge must be personally involved.
3. Have a global perspective and continuously evolve. When changes occur in the market structure, the founder must have the courage to make adjustments and execute them firmly.

In terms of strategy, it is necessary to align with current market demands and industry development trends. He pointed out that there is still a significant gap between the secondary market for cryptocurrencies and traditional secondary markets in areas such as backend setup, customer management, strategy complexity, and compliance, but this also means huge opportunities.

Methods for Traders to Continue Improving

1. Maintain communication with the market while staying true to yourself. Excellent traders can remain focused amidst the flood of information and are not easily influenced by others.

2. Cultivate a higher-dimensional perspective. Observing the positions and thought processes of different participants from a bird's-eye view can help solve many difficulties.

3. Cultivate "Street Smart" qualities. Great traders are often able to get to the essence of things, relying on practical buying and selling decisions and value judgments rather than overly depending on long-term theories.

4. Learn from the excellent. In the current environment full of uncertainty, it is especially important to seek high-dimensional guidance.

Institutional Allocation of Cryptographic Assets

Institutional allocation strategies for cryptocurrency assets vary based on the characteristics and preferences of the funds. This investor personally prefers secondary market investments.

He divides the secondary cryptocurrency market into four categories:

1. Mining and long-term holding
2. Technical trading, including chart analysis and quantitative trading
3. Trading based on subjective judgment and "value"
4. DeFi investment is more akin to the mindset of a product manager.

Current Well-Performing Investment Strategies

1. Currency-Based Enhancement Strategy:

   • TVL Games: Stake and Claim Airdrops
   • Quantitative Trading

2. Buy Bitcoin at a discount or participate in mining

3. A phased strategy to outperform Bitcoin, such as CTA (Commodity Trading Advisor)

Quantitative trading is the asset class that this investor is most optimistic about, as it has good liquidity, large capacity, and controllable risk-return characteristics.

Recommended Reading

1. "Principles of Professional Speculation": A systematic explanation of trading systems
2. Books related to the history of central banks, monetary policy, and banking, such as "The Alchemist"
3. Literary works that explore human nature, such as Chinese Ming and Qing novels and French short stories.

These readings help to understand trading skills, how financial systems operate, and the role of human nature in complex interest relationships.