Stop Looking for Alpha on Crypto Twitter
By RunnerXBT - 29-Aug-2023
Anyone reading this article probably trades crypto. And anyone who trades crypto is probably on Twitter. After spending any time on Crypto Twitter, everyone quickly learns all of the subcommunities and chaos and cultural dynamics that are present.
Finding friends and a community on Twitter is great. But using Twitter as a source of alpha isn’t.
What Is Crypto Twitter Good For?
Crypto Twitter is full of lots of different cohorts of traders, researchers, analysts and other content creators. Some accounts focus on technical analysis, others cover fundamental research (a.k.a., “pumpamentals”), some accounts shill low cap coins on Uniswap, others trade options, intraday margin setups, weekly level-to-level charts, and on and on.
The point is: everyone has a unique trading style and approach to this market.
There is no “right” or “wrong” way to trade. There is also no correct way to teach or analyze this market. So, traders should not go looking on Crypto Twitter for such a solution. It doesn’t exist.
Trading is actually a very lonely journey. Friendships forged through trading on Twitter, Telegram and elsewhere can be beneficial. But everyone has different capital amounts, risk tolerances, context from their personal lives, and so on.
Seeing a chart with lines in a tweet does not include any of this context. A teenager in high school who managed to trade an account up to $30,000 trades much differently than a married person with two kids and a full-time job outside of crypto. Yet both of these traders may sit on Crypto Twitter and opine about narratives, price structure, and other trading information.
Searching for traders who have similar theses and styles may be beneficial for another trader looking for ideas, community, or whatever else. But in general: stop looking for alpha on Twitter.
Basic Rules for Crypto Twitter
For readers who are new to trading or new to Crypto Twitter or both, here are a few basic assumptions to keep in mind when scrolling the charts, arguments, analysis, and other content on Twitter.
First, no matter how friendly some accounts may seem, most people are cheerleading and engagement farming. Others have a hidden agenda, are being paid for the content they create, or are just broadcasting opinions without having a clue about the market in general. This description may seem harsh (and it certainly isn’t true of everyone), but it’s a healthy baseline to keep in mind when scrolling Crypto Twitter.
Also, just because an account has a lot of followers does not mean they have secret knowledge about what the market will do next. Every trader is human and makes mistakes, gets lucky, etc., but large followings doesn’t translate to genius or having alpha.
Twitter is also full of hindsight analysis. Some analysis is posted after a trader fills their position (a.k.a., “fill before shill”) and some trades are fabricated completely to seem real but played out before the account ever posted a chart or took a position.
Most importantly, no one on Crypto Twitter is responsible for anyone else’s trading. No one is in the business of charitable hand holding. Everyone has their own risk management, trading rules, and responsibility. Hand holding is also just impossible when someone is actually trading with real money.
There is no substitute for personal responsibility.
Don’t Outsource Alpha
Every trader should be their own alpha. Twitter can be helpful in some ways, but mentally outsourcing ideas to a Twitter feed can be very damaging in the short term and build unhealthy habits that are also damaging over the long term.
Every trader should focus on their own system instead. Learning from their own mistakes, previous trades, emotions, habits, etc. is the best way to actually improve and discover alpha. Coin Market Manager has great tools to start this journey through journaling, note taking, automated analytics, and more.
In summary, keep three things in mind when reading content from other traders.
- Don’t copy trade. They may rebalance their portfolio often, and blindly following them may result in being dumped on.
- Always assume another trader’s risk tolerance is different (higher or lower).
- Everyone is here to make money, not hold someone else’s hand. Never blindly trust pseudonymous Twitter accounts just because of a shared market bias, large followings, high engagement, or any other reason.
Trading Beyond Crypto Twitter
Any trader who wants to confirm their bias can go on Twitter and find someone who agrees – every time, no exceptions. But seeking bias confirmation is no way to improve as a trader.
Twitter can be a great tool for community building and educational resources. But Twitter is full of people who trade against each other, not a community trading with each other. After all, if a trader cannot rely first and foremost on themselves to find alpha, refine edges, develop ideas and improve edges… who can they trust?