Deep Dive With MySexyLife

Last week, we learned some important trading psychology lessons by studying experienced traditional investors. Today’s newsletter is similar, but we’re taking a different approach.

MySexyLife is here to share some insight on how to trade profitably without exposing your portfolio to excessive risk. It’s super important to have a winning mindset that helps you succeed in the crypto market.

BB: Hey! Thanks for joining us this week. We’re excited to have this conversation with you. Let’s get familiar with you. Tell us a bit about your Web3 journey so far.

Hey, happy to be here! I started in 2012, when I heard about Bitcoin. I loved the idea and the concept of it from the beginning, and I got myself a few bitcoins. Unfortunately, I rugged myself because I completely forgot about it and lost my private keys!

My second encounter with crypto was in 2018, when I wanted to purchase something online and used BCH for it. I was impressed by how fast and user-friendly it was, so I stuck with it this time.

Later on, I started to experiment with DeFi protocols. This basically only consisted of lending and liquidity mining back then. And the big NFT hype and everything that comes with it pulled me in as well.

BB: One of my favorite aspects of your brand is how you combine DeFi education with content about mindset. Do you think there’s a significant relationship between these two areas?

Yeah, absolutely. You're not going to make it without the right mindset! You can have incredible knowledge of finance and markets, but if you can't control your emotions, you will definitely lose. You may get lucky and make some cash, but you won’t keep it.

OK, let's get down to business. What is the single most important lesson every newbie trader should learn before diving into DeFi trading?

Have rules and execute them like a robot. Only adjust them according to the markets, not your feelings.

BB: You have very strong opinions on DCA strategies. Could you share some insight on how you approach this?

Well, you’ve probably heard the saying that you won’t be able to hit the bottom or the top. And that’s true.

I talked to so many people when BTC was around $16k and ETH was at $1k. The majority of them were anticipating lower prices, and we all know what happened next.

I DCA weekly into coins in specific areas when I think the bottom is close and do the reverse at the top area.

BB: Do you only DCA into blue chips, or is there a little degen in you that loves to dance on the edge of a cliff with alts?

ETH makes up the biggest portion of my portfolio, and I like things that bring me cash flow. But what kind of person would I be if I didn't get some spicy stuff as well?

For that, I have strict rules and a specific budget. And I’m only willing to risk an absolute maximum of 1% of my portfolio.

BB: Speaking of blue chips, what is the defining characteristic of a “blue chip” to you?

For me, blue chips are the big ones: BTC, ETH, and the old schoolers like Curve or AAVE. So basically the ones you expect to still be around in three years. And for NFTs, the ones you buy for other things than numbers usually go up.

BB: Let’s talk about yield farming, especially with respect to stable coins. How does this work, and how does it fit into your long-term investment strategy?

I love yield farming, but a lot of people do it wrong. You don’t want to accumulate a bunch of highly inflationary tokens. You want the real yield.

Fortunately, we have a lot of tools that help us. Yield aggregators do magic! They sell the worthless tokens and auto-compound them so your pool just grows.

When it comes to stablecoins, I diversify through different stables and pools. So there’s everything from low risk to high risk in my portfolio, but the risk-to-reward ratio has to be right.

I switch some pools on a constant basis when the yield drops too much. But I don’t only focus on liquidity pools. Lending can also be very lucrative, and usually it’s safer when done with the right protocols.

In times of uncertainty, I have a larger portion in stablecoin pools, and I shift them to other pools with barely any impermanent loss (e.g., wstETH/ETH) whenever I expect some upside.

By the way, non-USD stables are getting more traction currently, and I’m looking at EUR and CHF. I also believe the USD has reached its peak for the time being, and that other currencies will benefit as a result.

Liquidity pools can be used for hedging, similar to options, etc. But that’s an entirely different topic altogether.

BB: You talk about leverage quite often. It’s like a knife: in the hands of a master, it becomes a deadly weapon. Hand it to a baby, and it’s a recipe for disaster. What’s the best way to use leverage when trading and farming stables?

Leverage is amazing if done right. Unfortunately, it’s easy to get greedy. But of course I have a rule for that. Never use more than 5x leverage, even when I’m 100% sure.

Usually I go with 1.5x–3x. Whatever you lose, you have to earn back. Believe me, your portfolio will grow much faster without big losses.

BB: Could you share some of your go-to platforms to get the best value from a yield farming strategy?

There are quite a lot, but the ones on which I always fall back are: Beefy Finance, Acryptos, Autofarm, Sentiment, Aave, and Convex Finance.

BB: Thanks again for dropping by with these knowledge bombs! For anyone who’s itching to apply the strategies you shared, can you share some resources to get started?

To find good pools, use the standard services like DeFi Llama, Nanoly, and Stable.Fish. Always understand the basics and research the pools before you dive in.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.