offthebot

Off the bot # 4. Everyone asks what to buy. Almost nobody asks why, or with what money.
Until you know where your capital sits, what it's made of, and how much of it you can spend or lose, nothing else matters. You're not trading. You're playing a casino with the whole stack, and against yourself.
My rule fits in one line: no single failure should wipe out all my capital, or even a big part of it. Not a bank, not an exchange, not a wallet, not a position, not a price move. So I split it three ways.
Level 1: in what
Not one asset. That includes the dollar. I count my portfolio in $BTC , but I live on fiat, so my cash sits in several currencies: the ones I earn in and the ones I pay my bills in. My crypto isn't one coin either.
Level 2: where
Not one place. Banks, exchanges, wallets. Any of them can freeze, fail or lock you out, and 2022 reminded everyone. If one goes, I lose a part, not everything.
Level 3: for what
The level most people skip, and the one that matters most. Every part of the capital has a job:
– Reserve: months of expenses. Untouchable.
– Ammo: cash above the reserve, waiting for its moment.
– For buy-back: money from what I sold, waiting to become coins again.
– Trading: spot and futures. Losses here are part of the plan, and they can't reach beyond this slice.
– Long-term: investments. I count them in BTC: if my BTC balance grows, I'm doing it right. You can count in dollars or anything else.
A daily recurring buy isn't another job. It's a pipe from ammo into trading.
And every part splits further. My capital is a molecule: it's made of atoms, the atoms split too, and each piece has its own job. Trading alone holds spot, grids, futures margin and a small experimental cell for my bots.
How it plays out
On Oct 29 my futures bot was liquidated in $TIA : −$49. That bot lives in the experimental cell, a small part of the trading part. The loss hit that cell and nothing else.
A year ago, for the first time in my life, I sold all my alts and the BTC from the last rally, on a monthly close below the 12-month average, roughly the 365-day one. My old BTC stayed where it was. Today 89% of that portfolio is cash, not counting futures and old BTC. That's not running from the market. Every dollar has a job.
I'm coming back in drops, not in one move. In 2022 $BTC spent months below its 200-week EMA, so near that line I switched on a daily recurring buy instead of going all in at once. It buys double on fear, so I size it by that: what it spends if it buys double every single day.
Right now BTC is about 6% above that line, and CoinMarketCap's Fear & Greed index reads 26, fear. My recurring buy is buying double.
The panel
This is my capital allocator. The numbers on it are placeholders, not mine. What matters is what it does. I enter my cash, my coins and the job of each part, plus income and expenses. One screen then shows where I am and with what:
– the BTC cycle: last month against the 12-month average, and the distance to the 200-week EMA;
– every bucket in dollars and as a share, the reserve in months of expenses;
– trading against the target share for this phase of the cycle;
– what different daily buying paces leave me in 12 months, after living costs, and in a stress case where income drops;
– what's left to buy back from what I sold, and where I break even.
I built it to make these calls right on the chart. Mine has my numbers, and every day they answer one question: what job does each dollar have?
The blue stripes are the months BTC spent below its 200-week EMA this year. That's why I come back in drops.
Why drops? Because I don't know whether price will dip under the 200-week EMA once more or turn up from here. The last cycle ran from 16K at the low to 126K at the high. Sold at 126K, an average of 16K, 20K or 30K means ×7.9, ×6.3 or ×4.2. All three win. Only the first one needed you to guess the bottom. My own BTC from that cycle averages about 28K. Not the bottom, and it didn't need to be. I don't catch tops either. I build in drops and exit through a grid, for the same reason: I don't know where the low or the high is, and chasing either one is greed.
So why don't I hold TIA?
I see no reason to keep it in my investment portfolio. Why do I trade it? Because it's volatile. Same coin, different cell.
Why did you buy it?
Bought FIL or TIA? Then answer one question first: why. To hold, or to trade? The answer picks the cell, the size and the exit.
And leave emotions out of it. Regret a 10% take when the coin then ran 100%? That's greed for the top, the same as hunting the bottom. Next time set a trailing take that starts at +10% and go to sleep. Automate everything you can.
First the budget: your expenses and what covers them. Then a job for each cell. Then risk, but only the surplus, and with a reason, not with hope.
So, where's your money? Don't answer with the total. Answer for each part: where it sits and what job it has.
#money #RiskManagement #InvestSmartly #OffTheBot