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?

๐Ÿ”„ #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. Thatโ€™s why we must shift our mindset from โ€œThis will happenโ€ to โ€œThis might happen.โ€

There are no guarantees in crypto โ€” only possibilities.

๐Ÿ“Š #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.

โš ๏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:

โ€œAm I emotionally okay if I lose this amount?โ€

If not, reduce your risk size further until your mind feels calm and confident.

๐Ÿ“ˆ #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:

  • Youโ€™re 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.

๐Ÿงฎ EV Cheat Sheet:

  1. EV > 30% โ†’ Excellent

  2. EV 15%โ€“30% โ†’ Good

  3. EV -5% to +15% โ†’ Acceptable

  4. EV -5% to +5% โ†’ Neutral

  5. EV -15% to -5% โ†’ Bad

  6. EV < -15% โ†’ Very bad

โœ… Final thought: In crypto, we donโ€™t predict, we prepare. Probabilistic thinking helps you stay grounded, reduce overconfidence, and make smarter decisions โ€” no matter where the market goes.

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