In the experiment by paulwei @coolish, the four control groups (whether to fully experience T1~T10) are based on the concept of traversability.

🎰 100,000 people each bring 1,000 yuan to participate in a coin toss game, winning 80% on heads and losing 50% on tails, which sounds like a guaranteed win.

However, after 100 rounds, their average wealth shows exponential growth, but most are nearing bankruptcy, leaving only a few survivors.

❓ Why is this — the traversability in trading.



What is #Traversability?

Traversability refers to the concept that in a random process, if we observe for a long enough time, its time average can equal the average of the overall population at the same time.

However, due to the irreversible events like liquidation and going to zero in cryptocurrency trading, once encountered, one can no longer participate in market trading, leading to a loss of traversability. Therefore, the average of the group in the crypto circle does not equal individual fate, and there exists a survivor bias.

The aforementioned coin toss game is a typical non-traversability trap. Mistaking the group average for individual fate, one always thinks that just one more round will allow them to turn the tables, one more trade will change their destiny, one more game will lead them to victory.

Below, through a trading competition, we'll help everyone understand better.

🆚 The rules of the trading competition are as follows
Initial capital: 100,000 yuan
Goal: To steadily increase the capital to 1,000,000 yuan

📑 Requirements
> Each trade must be all in
> Sell after holding for 1 day
> Exit once capital reaches zero

🪙 Asset
> Meme Tokens: Daily return rates are evenly distributed between 0% and 10000%, but there is a 1% chance of going to zero.
> BTC: Daily return is fixed at an annualized 20%, calculated over 365 days, resulting in a daily return of about 0.05479%

🤔 Question: Which asset should you choose to steadily increase your capital to 1,000,000 yuan?


Some hope to achieve freedom by continuously hitting a few quality Memes, but most people cannot traverse Memes; with limited capital, losing a few times results in complete exit.

I posed this question to Grok, and the conclusion is that $BTC is the better choice for steadily reaching 1,000,000 yuan, because repeatedly trading Memes will lead to a rapid decline in long-term returns.

Did you make the right choice?




Don't exit, but don't just watch either.

#Kelly Criterion provides the optimal betting ratio, avoiding the situation of being forced to exit the market due to extreme conditions after over-betting, while also preventing slow growth from under-betting, finding the balance that allows for the most long-term profit while still surviving.

Assuming you believe a certain token has a 60% win rate and odds of 2:1, the Kelly Criterion will tell you to bet only 20% of your capital, rather than going all in. This way, even if you fail, you still have chips left to make a comeback!

Inevitably, people's trading strategies are mixed with irrational factors; sunk costs, loss aversion, excessive self-reflection, and other issues may lead you to make a desperate wager on the brink of going to zero, and once you fail, the whole game is over.

The outcome of James and the mat is a great counterexample.
🤡https://x.com/JamesWynnReal/status/1930816065145078117



After struggling in the market for 5 years, I increasingly believe that the secret to long-term success is learning to control the ratio of bets.

Trading is not about who can achieve a higher return rate, but about who can stay in the market longer; as long as you are not eliminated at critical moments, you can continue to act in future rounds.

Just like the trading master who knows when to retreat, @thankUcrypto, who chose to withdraw part of his funds from the table today, in contrast to James @JamesWynnReal, who switched between long and short positions endlessly until losing everything, the difference is clear.

Don't go all in chasing wealth; instead, control your position based on the odds, so even if you fail, you still have chips left to make a comeback.

Time is the strongest backing for traversability; only by surviving can you explore all possibilities and welcome a reversal. 💗


#Trading Mindset #Trading Strategy
https://x.com/thankUcrypto/status/1934821800757874850