The Mental Blueprint

This is going to be a straight to the point Journal, explaining the different emotions you will all be going through. When you anticipate them, you can plan out your actions.

The ultimate goal of being in a bull-run is "exiting with as much profit as possible". The only way one can do that is by knowing thyself.

Take a look at yourself from the outside in.

Expect the Unexpected

First and foremost, we all have ideas as to how a bull-run will advance. No matter how much experience one has, we all project some sort of scenario and things NEVER go exactly as anticipated.

The NUMBER 1 Rule: Expect things to NOT go as planned - Stay Agile

Let me give you an example:

A few weeks ago, as Bitcoin relentless ripping higher through $42,000 we shared that we were beginning to DCA out of BTC for 14 days because the euphoria was getting too hot in the market. Our expectation was a continued run to $50,000-$60,000 (irrational exuberance) before a dump back down. What happened instead?

A few days after we begun DCAing out, Bitcoin topped and dropped to $30,000. That move invalidated our "irrational exuberance" theory. What did we do? We bought back the BTC we sold at a cheaper price and now have more BTC.

Why did we buy back? Because the dump simply reset the euphoric sentiment and people were once again no longer trusting that Bitcoin can actually keep going up. Doubt was there again, which is exactly what is needed for longevity of a run.

We adapted, we flowed with the market.

"Do you want to make money or do you want to be right?" The correct answer is: I WANT TO MAKE MONEY, always.

You WON'T buy the bottom nor sell the top

This is where a lot of people mess up. Everyone wants to buy the dip until they see the red candles and everyone wants to sell the rip until they see the green candles.

 

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Here is exactly what happens in someone's mind who says they want to buy the dip:

X is down a lot today, I want to buy it but what if it keeps going down? What if I put in $1,000 and they become $600 tomorrow? What if instead of buying 1,000 units I get to buy 1,200 units?

They then proceed to procrastinate on taking action. If X is fundamentally good and begins going higher they think:

Yesterday $1,000 got me 1,000 units, today they buy me 800 units only, yesterday I could have more. I'll wait, as soon as it goes back down I'll definitely buy.

It then keeps ripping, until one day the person FOMOs.

The bad result is obvious, but what is the underlying reason for this bad result? Expecting to buy the absolute bottom.

More often than not, YOU WILL NOT CATCH THE BOTTOM. You do not need to catch the bottom to make money and that is the beauty of it.

 

Now for the other side of the story: Selling at a profit

Here are there are two potential scenarios:

1. Be rational and sell where one pre-planned to sell: sticking to the plan. But after they sell, price keeps going higher and they begin to mentally calculate how much more money they could have had if they sold now instead of yesterday. Leading to FOMOing back in and that surprisingly tends to be near the top. That person re-entered with no plan, more often than not that second investment ends up being a losing one.
2. Market rips and dips on high volume giving reversal signals. The thought process

At the peak I had $500,000 now I only have $350,000. $150k is a lot of money for me, I'm going to wait until my capital goes back to $500,000 and sell.

The market keeps dipping and they sell for $250,000.

The end result is obvious here as well, the underlying reason behind that result is: Expecting to sell the absolute top.

The Antidote

The antidote comes in two parts:

1. Knowing that these are mental situation you'll face
2. Dollar-Cost Averaging (in & out)

Accept the fact that you will not be catching the bottom nor will you be selling the top, but work on yourself to be as close to them as possible (check this Pro Journal).

Dollar-Cost Averaging is not done over years, you can DCA into a position over 2-4 weeks by buying a little bit everyday to get the average price. Just like you can sell a little bit everyday to DCA out where you believe a top is beginning to form.

The Emotional Spectrum

In this part we will talk about our personal experience with emotions.

As we write this, ETH/BTC is challenging a resistance it has not seen in three years and ETH is trading at $1,350. Having bought ETH at $100, $320 and $500 we are euphoric. But we know what the market is in now, a bull-run which means we definitely will not be caught selling early. The odds of this being the ultimate top are very very thin. We remain patient throughout it and wait. We've been relentlessly working for years, we certainly won't cut our rewards short.

When we were buying dips: $100, $320 and $500 in the case of ETH, it certainly didn't feel good. You feel uncertainty, the "what ifs" play out in your mind. We personally countered it with "What if ETH is trading at 4 figures in a few months?" (we're already there lol). In those times, most people were screaming bear market, we cut the noise out and just focused on our thoughts and analysis. Rationality wins.

Mental Health & Emotional Analysis

One grand method to remain rational is to meditate on a daily basis, even if it's only 5 minutes in the morning. Meditation does not mean your mind has to empty, let your thoughts flow but observe them as they come in and leave. If you are not generally well from a mental perspective (life stress, etc.), you'll likely face a tough time taking the right decisions. Take care of your mental health and always analyse your emotions like an outside person observing; why are you euphoric/fearful/numb?

Humility

Stay humble or the market will do it for you.