How to Develop Investment Strategies and Outperform the Market

The formulation of investment strategies needs to take into account both personal and market perspectives. From a personal perspective, the following aspects need to be considered:

1. Total investable assets, not restricted by loan repayment or time liquidity.
2. Investment Goals and Expected Returns
3. Risk Tolerance
4. Investment Time Span
5. Personal Liquidity Arrangement

From a market perspective, it is necessary to pay attention to:

1. The current stage of the market cycle
2. Reasonable position control

To outperform Bitcoin, the key lies in timing and selecting coins.

Coin Selection Strategy

Choosing small-cap coins with growth potential often presents a better opportunity for high returns than Bitcoin. The growth potential of a project can be assessed from the following aspects:

1. Growth indicators: such as TVL, number of wallet addresses, trading volume, etc.
2. Profitability: Protocol revenue, profit analysis, etc.
3. Market Attention

You can train your coin selection ability by observing the exchange rate changes of small coins relative to Bitcoin over a long period. An ideal asset should outperform Bitcoin during market uptrends and have a smaller decline during downtrends.

Timing Strategy

The core of timing is "buy when no one cares, sell when the crowd is loud." Here are some timing suggestions:

1. Buy during market downturns and accept short-term fluctuations.
2. Seize short-term trading opportunities brought by major events
3. Long-term allocation, regularly sell to take profit

Determine Selling Points

1. From a quantitative perspective, we can observe whether the growth rate is slowing down.
2. From a qualitative perspective, analyze whether the reasons for the market's rise still hold.
3. Pay attention to changes in market sentiment

Market Driving Force - Crust Theory

The core driving force behind market changes is emotion. The crust theory compares the market to the structure of the Earth:

• The Core: Market sentiment, the starting point of energy.
• Mantle: Project fundamentals, price performance, short-term event-driven
• Surface: The external manifestation of market prosperity.

Understanding this theory helps to gain deeper insights into the nature of market changes.

Determine Market Sentiment

Market sentiment can be assessed in the following ways:

1. Fear and Greed Index
2. ETF Capital Flow
3. Price fluctuations outside of trading hours
4. Open Interest, Perpetual Contract Premium, Funding Rate, and other indicators

Continuously Discover New Alpha

1. Actively embrace and understand new things
2. Step out of the cryptocurrency circle and look at the problem from a higher perspective.
3. Maintain curiosity about the world and explore the driving forces behind price movements.

Trader Self-Growth

Recommended reading includes "Reminiscences of a Stock Operator" and "Financial Alchemy" among other books. Continuously learning and improving cognitive levels, and applying what you have learned to trading.

Finally, finding a trading strategy that suits you and continuously practicing and improving it may bring a sense of joy from continuous growth that can motivate traders more than monetary rewards.