Probabilistic thinking is a mental model based on possibilities, not certainties โ a perfect fit for the world of crypto, which is full of volatility and unpredictability. So, how can we as retail investors develop this mindset?
๐ #1 Shift Your Mindset from "Certain" to "Possible"
The first and most important step is to realize: everything in the market is about probability, not certainty.
Even with the strongest thesis or technical analysis, you can still be wrong. Thatโs why we must shift our mindset from โThis will happenโ to โThis might happen.โ
There are no guarantees in crypto โ only possibilities.
๐ #2 Always Prepare for Bull, Bear, and Neutral Scenarios
Instead of sticking to one bias, create a scenario bracket in your mind.
Example:
Bullish scenario: 60%
Bearish scenario: 30%
Sideways: 10%
With this structure, you can adjust your investment allocation according to the probability of each outcome.
โ ๏ธ #3 Identify Potential Risks and Drawdowns
Based on your scenario bracket, size your positions wisely.
For example:
If bullish, risk Rp10
If bearish, risk Rp5
If sideways, risk Rp4
Now ask yourself:
โAm I emotionally okay if I lose this amount?โ
If not, reduce your risk size further until your mind feels calm and confident.
๐ #4 Use the Expected Value Framework
Use this simple formula to evaluate potential trades or investments:
Expected Value (EV) = (Win Probability ร Profit) โ (Lose Probability ร Loss)
Example:
Youโre considering investing in altcoin $ABC:
Probability of gaining 100%: 30%
Probability of dropping 50%: 70%
Then:
EV = (30% ร 100%) โ (70% ร 50%) = 30 โ 35 = -5%
This is a bad trade because EV is negative.
๐งฎ EV Cheat Sheet:
EV > 30% โ Excellent
EV 15%โ30% โ Good
EV -5% to +15% โ Acceptable
EV -5% to +5% โ Neutral
EV -15% to -5% โ Bad
EV < -15% โ Very bad
โ Final thought: In crypto, we donโt predict, we prepare. Probabilistic thinking helps you stay grounded, reduce overconfidence, and make smarter decisions โ no matter where the market goes.