first part

first part

First of all, I want to understand one thing, the purpose of our coming to this market.

Some friends may say, of course it is to make money. Well, if it’s for making money, put aside things other than making money, and don’t let side effects affect your thinking.

Let me talk about two basic methodologies about investment:

First, complex models cannot derive accurate results.

The complexity and correctness of the model are not proportionally increasing.

A hand-painted picture is basically this relationship. At the beginning, as the complexity increases, the effectiveness will also increase, and then there will be more and more dimensions, and the single-point research will become deeper and deeper, reaching the bottleneck, and then the complexity will continue to increase, but the effectiveness will decrease instead.

Disclaimer: This is just a summary of my experience, not a profound theory, and the complexity is only complicated in the eyes of ordinary people. Please don't use the Renaissance company model founded and led by mathematician James Simons to describe how exquisite it is. How complicated and how high the benefits are to refute the argument of this article, because you and I are still a light-year away from others, and his method is not suitable for ordinary people.

Second, the model should be concise enough and have a certain probability of being effective. .

If it is not concise enough, how can efficient decision-making be done? For small projects in the currency circle, when we finish our research, the enthusiasm for the project will pass. How else to speculate to make money? Therefore, "the only thing that is not broken is fast". This is a behavioral decision after weighing the pros and cons.

Studying the white paper and understanding the economic model is of course a preliminary step, but the most important thing is the feeling of the market. For students who have been speculating in stocks or coins for a long time, this is also called "sense of the market" (feeling about the market, or about the market). handicap feeling). In fact, project research also has a sense of disk.

the second part

the second part

Let me tell you about my investment cover experience:

I invested in Cover when it was 0.64ETH, and I got back the principal after it rose by 50%. Cover continued to rise, and then forced me to pay attention to more information. Distributed in batches.

The above is the whole process. Why is there not enough chips invested at the beginning? Why do you want to get back the principal after earning 50%? Why did you increase your position at 1.5ETH?

At first, because this is a project related to Andre Cronje (referred to as AC project), so I tested the water with a small position. After getting back the principal, I saw that the community was big and active, and then wrote a valuation model, and then invested according to the model.

The community has a basic standard. The number of twitter followers of an early project needs to exceed 7,000 people. This is experience.

coverprotocol has reached 7,000 people, and it was not early when I saw this project (well, I have always been very slow), the cover price was already 0.64ETH, and then I invested some ETH and left it alone.

Because my big positions are in BTC and ETH, this kind of VC (venture investment) behavior, I didn’t study too deeply at the beginning, AC has become popular recently, and the number of Twitter is OK, NXM in the insurance field does not meet my standards , Vote for some, it doesn't matter. At that time, I also told my friends that if you have an NXM position, you can move half of the position to Cover, and NXM will not work.

After getting back the principal, the rise was gratifying, so I manually made a valuation model.

Remarks: Now many mathematicians like to use paper and pen to calculate, and the computer is used as an aid. Returning to the beginning of the article, I am here to make money and profit, not to make a complex and detailed model. I will give you a matlab 3D economic model, which will make everyone feel amazing. Powerful, and finally lost money.

The words are not good, sorry.

The content of the above picture is my thought process of investing. Valuation cannot be done directly, but only indirectly, to compare the current market value with that of NXM to make a relatively reliable (or unreliable) valuation.

It is somewhat possible to double, and it is more likely to increase by 50%. When the increase is 25%+, the position will be reduced, that is, the cover will start to reduce the position when it reaches 1.9ETH. At 2.2 ETH, the position has been basically cleared, and the subsequent ups and downs have little to do with me. It is money that cannot be controlled by risks.

the third part

the third part

The above analysis on Cover may surprise traditional analysts, but I don’t care too much, because the part above the dividing line is the key to this article. The examples given are just the process I experienced recently, and the experience is not reliable. It is a probability game, and the most important thing in the probability game is position control. The underlying logic of position control is "treat the enemy's victory with one's own invincibility".

I often tell myself:

First, when investing any money, first ask yourself how much loss you can bear, regardless of how much the project can earn, first ask yourself how much you can lose;

Second, losing money depends on strength, making money depends on luck, and making money when strength does not allow it.

Why so cautious? So pessimistic?