LRCUSD After Action Review – 31.5X in 4 trades
• That was a nice and enlightening series of trades on LRCUSD. Let’s do an AAR for self-improvement purposes. ** marks areas for improvement.
• Some background first. I’m an amateur long-term trader who utilises both FA and TA. FA to identify investment opportunities. TA to add precision to when/where/how to make trade decisions.
• My overall trading strategy is heavily influenced by the RPG Darkest Dungeon (en.wikipedia.org/wiki/Darkest_Dungeon). Trading is stressful, more so when you are “in the dungeon”. Stress reduces one’s trading efficacy, so I try my best to minimise stress by doing due research before taking action, and by minimising the number of trades I take. I don’t leverage trades.
• I’m a technologist in my day job, and FA is a large part of what I do. In essence, FA is simply the identification of problem statements, use cases and the estimation of commercial potential.
• For TA, I avoid fancy stuff and rely on simple patterns to identify trends, E-Waves and Fib levels for potential levels, and RSI for momentum and tops.
• Fundamentally, LRC tries to address the iron triangle of crypto. Very similar to other industries (eg quality, cost and accessibility in healthcare), in crypto, there is 3 traits that are valued—decentralisation, security and speed—but it is only reasonable for any blockchain to be good at at most 2. This is the problem statement. ETH focuses on decentralisation and security, and needs to outsource speed to layer 2 blockchains. LRC’s use case is to serve as ETH’s L2. However, even though L2 is required, L2 does not need to be tokenised. The only reason why L2 is tokenised as LRC is profit-making, and we should view her accordingly with clear eyes. It is eventual that LRC is acquired by ETH, or ETH may even build its own parallel L2 and eventually phase out LRC. Any partnership with GME is done more out of desperation and diversification than anything. Let’s be brutally honest with ourselves and not be blinded by ideology.
• Some background first. I’m an amateur long-term trader who utilises both FA and TA. FA to identify investment opportunities. TA to add precision to when/where/how to make trade decisions.
• My overall trading strategy is heavily influenced by the RPG Darkest Dungeon (en.wikipedia.org/wiki/Darkest_Dungeon). Trading is stressful, more so when you are “in the dungeon”. Stress reduces one’s trading efficacy, so I try my best to minimise stress by doing due research before taking action, and by minimising the number of trades I take. I don’t leverage trades.
• I’m a technologist in my day job, and FA is a large part of what I do. In essence, FA is simply the identification of problem statements, use cases and the estimation of commercial potential.
• For TA, I avoid fancy stuff and rely on simple patterns to identify trends, E-Waves and Fib levels for potential levels, and RSI for momentum and tops.
• Fundamentally, LRC tries to address the iron triangle of crypto. Very similar to other industries (eg quality, cost and accessibility in healthcare), in crypto, there is 3 traits that are valued—decentralisation, security and speed—but it is only reasonable for any blockchain to be good at at most 2. This is the problem statement. ETH focuses on decentralisation and security, and needs to outsource speed to layer 2 blockchains. LRC’s use case is to serve as ETH’s L2. However, even though L2 is required, L2 does not need to be tokenised. The only reason why L2 is tokenised as LRC is profit-making, and we should view her accordingly with clear eyes. It is eventual that LRC is acquired by ETH, or ETH may even build its own parallel L2 and eventually phase out LRC. Any partnership with GME is done more out of desperation and diversification than anything. Let’s be brutally honest with ourselves and not be blinded by ideology.
Comment:
• I got interested in LRC around Jun’21 during BTCUSD’s mid-cycle consolidation phase when we were all having a breather and had more time to do research.
• I found out about the relationship between LRC and ETH, and formulated the strategy above.
• However, LRCUSD was still indecisive when BTCUSD was at her 1.618 Fib level (where BTCUSD generally bottoms during her mid-cycle consolidation phases, and I did not take action.
• I found out about the relationship between LRC and ETH, and formulated the strategy above.
• However, LRCUSD was still indecisive when BTCUSD was at her 1.618 Fib level (where BTCUSD generally bottoms during her mid-cycle consolidation phases, and I did not take action.
Comment:
• *Trade 1* However, when LRCUSD formed a double bottom in Jul’21, it would be silly for me to not buy LRC. So I started DCAing in, averaging LRC at $0.21.
• *Trade 2* This eventually formed a cup and handle, and I sold at the mini-peak, averaging out at $0.75. This gave me around 3.57X.
• *Trade 2* This eventually formed a cup and handle, and I sold at the mini-peak, averaging out at $0.75. This gave me around 3.57X.
Comment:
• I was then looking at BTCUSD and BTC.D to identify when the winds will blow bullish, so when BTCUSD bounced off the 20W SMA, I estimated alts to swing positive in the week of 11 Oct’21.
• The reasoning is simple. 2HFY21 has started, budgets have been approved, but time is needed for administrative processing to effect purchases.
• *Trade 3* I bought LRC then, averaging at $0.38.
• The reasoning is simple. 2HFY21 has started, budgets have been approved, but time is needed for administrative processing to effect purchases.
• *Trade 3* I bought LRC then, averaging at $0.38.
Comment:
• The last trade was frustrating. I got overly excited, and over complexified my analysis. Today (11 Nov) is my wife’s birthday, and I was hoping to close this trade as a birthday gift for her (the titles of the 3 analyses were inspired by her morning habits). Paralysis by analysis never helped anyone. To master nature, one must first obey her.
• **I should not have tried to rush things, as there is no way I can accelerate this trade.
• Anyhow, it was clear from the beginning that LRCUSD will peak around $2.81 - $4.92. There are too many confluent factors (read the analyses). And it was clear that, I quote my last analysis, “LRCUSD will break out of the parallel channel she has been in since Mar’20 and enter heavy resistance between $3.48 to $4.92. We should be taking profits within this region.”
• **My second critical mistake was to put in too many Fib levels. It was clear that LRCUSD will temporarily break out of the parallel channel, peak and fall back in. If I were to keep to my original simple straightforward Fib levels (see main chart in this analysis), I would have set my TPs from $3.81 downwards instead.
• **I should not have tried to rush things, as there is no way I can accelerate this trade.
• Anyhow, it was clear from the beginning that LRCUSD will peak around $2.81 - $4.92. There are too many confluent factors (read the analyses). And it was clear that, I quote my last analysis, “LRCUSD will break out of the parallel channel she has been in since Mar’20 and enter heavy resistance between $3.48 to $4.92. We should be taking profits within this region.”
• **My second critical mistake was to put in too many Fib levels. It was clear that LRCUSD will temporarily break out of the parallel channel, peak and fall back in. If I were to keep to my original simple straightforward Fib levels (see main chart in this analysis), I would have set my TPs from $3.81 downwards instead.
Comment:
• Nonetheless, fortunately decisive action was taken when the break down was confirmed.
• *Trade 4* I market sold my remaining LRC then, overall averaging out at $3.3. Together with the 1st set of trades, this gave me an overall of 31.5X across 4 trades.
• *Trade 4* I market sold my remaining LRC then, overall averaging out at $3.3. Together with the 1st set of trades, this gave me an overall of 31.5X across 4 trades.
Comment:
• LRCUSD might pump again, or it might dump further. But frankly, I don’t care, it’s my wife’s birthday.
• Fundamentally, LRC is a dead end.
• And it seems LRC whales dumped LRC for ENS right exactly when LRC announced the ENS/ETH listing. (This was when I started thinking if LRCUSD would be peaking soon.)
twitter.com/loopring.../1458414865610121222
• Technically, LRC has been bleeding massively against ETH. LRC pumps precede ETH pumps by ~1 month, and ETH is undersold.
• Reiterating my overall intent behind these LRCUSD trades, I had originally aimed to 1) utilise LRCUSD as a canary bird; 2) maximise profits by swinging from LRC to ETH after LRCUSD peaks; and 3) derisk by swinging into ETH.
• LRCUSD peaking on 11 Nov’21 added strength to my hypothesis that ETHBTC will see some interesting action on 13 Dec’21.
• There just happened to be a dip in ETHUSDT, so I converted all profits to ETH (minus the original investment pre-Trade1).
• Fundamentally, LRC is a dead end.
• And it seems LRC whales dumped LRC for ENS right exactly when LRC announced the ENS/ETH listing. (This was when I started thinking if LRCUSD would be peaking soon.)
twitter.com/loopring.../1458414865610121222
• Technically, LRC has been bleeding massively against ETH. LRC pumps precede ETH pumps by ~1 month, and ETH is undersold.
• Reiterating my overall intent behind these LRCUSD trades, I had originally aimed to 1) utilise LRCUSD as a canary bird; 2) maximise profits by swinging from LRC to ETH after LRCUSD peaks; and 3) derisk by swinging into ETH.
• LRCUSD peaking on 11 Nov’21 added strength to my hypothesis that ETHBTC will see some interesting action on 13 Dec’21.
• There just happened to be a dip in ETHUSDT, so I converted all profits to ETH (minus the original investment pre-Trade1).
Comment:
Tldr:
1. Be relentless in your research. FA and TA complement each other.
2. Seek confluence.
3. Nature to be mastered, must first be obeyed. Be patient.
4. KISS.
1. Be relentless in your research. FA and TA complement each other.
2. Seek confluence.
3. Nature to be mastered, must first be obeyed. Be patient.
4. KISS.
Comment:
• To add:
• A huge part of research is to correctly choose which chart to analyse.
• Similar to other forms of analyses, the choosing, cleaning and curation of data are all important.
• Out of almost 20 LRCUSD(T) charts on TradingView, there is only one chart that shows both data from 2017 *and* the dump on Nov'17.
• Analyses based on any other chart are severely handicapped by being statistically underpowered, a cardinal sin in any analysis.
• A huge part of research is to correctly choose which chart to analyse.
• Similar to other forms of analyses, the choosing, cleaning and curation of data are all important.
• Out of almost 20 LRCUSD(T) charts on TradingView, there is only one chart that shows both data from 2017 *and* the dump on Nov'17.
• Analyses based on any other chart are severely handicapped by being statistically underpowered, a cardinal sin in any analysis.
• Nonetheless, as we can see, ETHUSDT pumps are usually preceded one month by LRCETH and LRCUSD pumps *and* dumps.
• We are nearing the end of this bullrun, so it makes sense to 1) utilise LRCUSD as a canary bird; 2) maximise profits by swinging from LRC to ETH after LRCUSD peaks; and 3) derisk by swinging into ETH.