The Haven Interview With LANCE BREITSTEIN

Below interview with Lance courtesy of The Haven, one of the leading educational platforms for crypto traders, they are also Alpha Mail’s go to for all things education. Lance spent over a decade at Trillium where he was one of the best intraday traders on the street. Lance managed Trillium’s Chicago office, trained dozens of traders, and was the firm’s Top Trader in 2020 and 2021 with back-to-back 8-figure PNL years. In 2022, Lance stepped down so he could share his knowledge with the trading community. Lance is Trading Advisor to SMB Capital in addition to running his non-profit, The Impact Competition. The Impact Competition challenges students to solve issues for local non-profits and then gives them the seed money to implement their ideas. His dream goal is to promote The Impact Competition to the trading world while live on CNBC.

What attracted you to trading?

The Market Wizard books were what really helped me fall in love with the idea of being a trader and trying to beat the market. The meritocracy, the challenge of it, the competitiveness of it… the ability to build up this skillset that allows you to compound money seemed like an ultimate skill to build!

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What’s your take on whether the markets are PVP?

This is a tough question to answer because ultimately, markets are nothing more than the aggregate of its participants, weighted by the dollar value of their positions. Without the individuals, you don’t have the market. So you can get into a debate of semantics. But if I had to answer, I’d say our job is to beat the market rather than any specific participant. Because many individuals can make a correct decision for their strategy or their timeframe. Someone can sell a stock for tax reasons and win, even while I buy the stock from him and win as well.

The other important reason why I don’t think wish to define trading as PvP is because I believe in teamwork. And I believe that the sum is greater than the parts. PvP mindset fosters too much lone wolf mentality. Too many traders trade independently and alone when they would be better and win more if they formed up in pods. We can spot more opportunities, make better decisions, be more informed when we operate as groups.

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Ultimately, markets are nothing more than the aggregate of its participants, weighted by the dollar value of their positions.

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How long have you been trading and what markets have you traded over your career?

I was professionally trading equities for about 11 years. I continue to trade part-time and do equities, options, and futures.

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Have you ever been tempted to trade crypto?

I was heavily involved trading crypto between 2012-2018. A friend and I were one of the first to build algos that arbitraged crypto across exchanges, made markets on various exchanges, as well as trade the coins directionally. I was there for the fall of Mt. Gox, I took the ‘haircut’ when Bitfinex socialised their losses from the 2017 hack. I was printing money for many years trading crypto but stopped due to partnership issues and the toll a 24/7 market takes on you. This info takes many by surprise because I am a fairly vocal hater of crypto nowadays. 

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I was there for the fall of Mt. Gox, I took the ‘haircut’ when Bitfinex socialised their losses from the 2017 hack. I was printing money for many years trading crypto but stopped due to partnership issues and the toll a 24/7 market takes on you.

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I have seen the same bull arguments for crypto for over a decade, yet none of them have come to fruition beyond the same old niche cases. A decade later and still no real adoption has occurred of using crypto for everyday transactions, crypto wasn’t an inflation hedge, and the reality is that crypto doesn’t need to have intrinsic value to utilize the technology it’s based on. Blockchain, beyond how it already existed, has in no way had any affect on my (or almost anyone’s) life. I view crypto as one of the greatest ponzi schemes of all time because the price is almost all driven by speculation as opposed to true demand for any use.

I’ll still dabble in trading crypto during the massive panics or breakouts, but I don’t trust a lot of the exchanges. It’s hard to hold meaningful assets on most exchanges with such opacity around counter-party risk. 

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How long did it take you to become profitable? Were there any major milestones where things just started to click?

I was negative every month of my first year. But then things started to click slowly but surely. Sizing up conceptually made sense to me, so then it was just rocket fuel. I very quickly started having $100k+ months.

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Were there points in that first year where you thought of giving up?

The beauty of being employed by a reputable prop shop is that they gave me all the capital I needed and were very patient in the training process. Not only did I think about giving up, but 1.5 years in I even started to interview elsewhere. I truly questioned whether I’d ever make it. I was putting in so much effort and trying so hard. But my progress was just so slow. Thank god I didn’t get the job I had interviewed at. Those next few months were when everything turned around for me and things finally started coming together.

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What does a typical day look like for you?

Nowadays my life is a hodgepodge mix of following and trading the markets, providing free trading education content, running my non-profit, and managing various business I’m involved with.

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Tell us about your non-profit

My non-profit, The Impact Competition, is my small way of trying to make a better world. I sponsor competitions at Universities where we challenge students to learn about the social issues facing a local non-profit and then to provide solutions to help that non-profit be more effective. We then seed the winning solution so the students get to actually implement their winning ideas.

It is amazing because students learn about real issues in the world around them and are shown that they can make a difference when they tackle them in a local actionable way. We have tackled everything from housing insecurity to mental illness to gun safety. Hundreds of students have been inspired by these competitions to make the world a better place over the course of their lives.

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Who did you look up to when you first started trading?

I had nobody to emulate but my boss. I was in a small satellite office. I saw on some days the ludicrous money he would make and all I would tell myself was “no matter what I need to sacrifice, no matter what it takes… I NEED to make it at this job and make even a fraction of the money this dude is putting up!”

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no matter what I need to sacrifice, no matter what it takes… I NEED to make it at this job

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What kind of a trader was he?

He was very strict and had a fiery temper. To this day, I haven’t seen too many people flip out like he would. But above all, he was a caring teacher who gave me all the tools to succeed. I could ask him any question about any strategy. He had crafted such an incredible system of technical analysis through endless hours of his own study. He was  so detail-oriented and this was an amazing trait to model after. Most importantly, I was role modeling a trader that was extremely aggressive. He always thought big and pushed limits. There is no way I’d have become the trader I did without him.

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Is there any trade that was particularly formative in your development as a trader?

One of the most memorable trades I had was an exhaustion gap short in TSLA. Which is funny, because the stock is probably up 100x since. Tesla had been running up and getting overextended over multiple days then it had a really euphoric gap-up. This was a pattern I had seen many times and was one of our favorite patterns. It was also a pattern that I was able to strategize for.

This was occurring at a time when I was starting to lose faith in myself. I had been interviewing elsewhere, questioning whether I had what it takes. Knowing my back was up against a wall and that I might not see such an amazing opportunity again given how rare this pattern was, I gameplanned and made the conscious decision to bet big on this. Extra confidence also came from knowing my boss was going to be betting big too.

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This was occurring at a time when I was starting to lose faith in myself. I had been interviewing elsewhere, questioning whether I had what it takes.

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Sure enough, the play worked EXACTLY as expected and I think I made $10k in one day which was an unfathomable amount for me at the time. I think my previous best days were a few grand. So with that win, I bought myself a ton of time, but more importantly the trade gave me the recognition that I could learn from past misses and correct my behavior to capture the opportunities in the future.

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What’s the best trading advice you’ve been given?

I’ll cheat and not really answer the question. Atomic Habits by James Clear is the Bible I wish existed when I started my career. Many of the major principles I operate by and learned independently, ended up being perfectly summarized and gift-wrapped in that book.

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What drives you to keep trading?

Welp, I guess I’m not too driven anymore now that I no longer do so full-time. I find it interesting to still keep up with the markets and sadly still get seduced by the opportunity cost of me otherwise not trading.

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Would it be fair to say that you were first driven by the money, but then by the mastery/competition element to become the best?

I’d say money was a big factor, but it would be an oversimplification. I loved the appeal of the stock market and what a performance sport it was. I loved the challenge of doing the impossible and beating the market. I loved the culture, the work environment, and level of autonomy you were provided. So there were many factors that made trading so appealing to me. But yes, money was certainly a big factor having grown up and seen what a stressor finances can be and how much people can struggle to stay above water.

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I loved the challenge of doing the impossible and beating the market. I loved the culture, the work environment, and level of autonomy you were provided. So there were many factors that made trading so appealing to me

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Would you say you’ve ‘made it’? If not, what does ‘making it’ look like to you?

I’m not sure when I would say that I “made” or even what it means to “make it”. Because everything in life tends to happen gradually and then all at once. Maybe my first Top 10 trophy. But even then I think you are always refining and trying to improve your game and always just trying to be better the year ahead. Or maybe I made it when I no longer had to worry about rent or feeding myself? Who knows.

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TRADING:

What’s the most important quality in a trader and why?

Trick question. There really isn’t a most important quality. There are a zillion different qualities that come together in various ways to make one a successful trader and no two traders are alike. It’s hard to put people into boxes. I’ve seen traders succeed of all different personality types and skill sets. 

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OK, what about overlooked qualities?

I think the ability to change one’s behavior or to make concrete progress after a goal. What I would call “coachability”. How receptive is someone to feedback? How quick is someone to incorporate feedback? How stubborn or arrogant is someone? There is a fine line between confidence and overconfidence. The smartest people I’ve ever hired often ended up being some of the worst traders because they weren’t malleable. They thought they were too smart to struggle or be coached.

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The smartest people I’ve ever hired often ended up being some of the worst traders

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How would you describe the way you trade?

A lens for technical analysis. Interpreting all the nuances of the chart and the level 2 box in a fairly systematic way despite still being a discretionary trader.

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Do you feel most beginners should stick to being purely systematic?

After training dozens of traders, I think most certainly would be better off starting purely systematic. Just because it is simpler and rule-based. It is less cognitively intensive. It is much easier to teach someone to do X when Y occurs. People can practice and gameplan that more easily as well.

The more experienced someone gets, the more it becomes an art rather than a science. They know the rules but have the experience to know when to break them. There is no one answer for when to break them, that is part of what makes the great discretionary traders so great. They have decades of experience whispering to them in their subconscious.

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The more experienced someone gets, the more it becomes an art rather than a science. They know the rules but have the experience to know when to break them.

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Has the way you trade changed over time?

Yes and no. The technicals and principles always remain the same, but at the same time, markets and strategies and ourselves are always evolving. We must improve at our craft, faster than the competition / market becomes more efficient.

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Do you think AI will disrupt trading?

I’m not sure AI will disrupt trading a great deal. If it does, it’ll be slowly and gradually because trading is so heterogenous. There is no one strategy or one way to make money. Plus the markets are always changing and adapting. Technology and algos and HFT and AI has slowly been disrupting over time yet discretionary traders still exist. Since the beginning of electronic trading, every year people have claimed that humans have lost their edge in trading. Yet every year human traders still are out there crushing it. It will be a show-me story until the end.

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Since the beginning of electronic trading, every year people have claimed that humans have lost their edge in trading. Yet every year human traders still are out there crushing it.

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Why do you think you have success trading?

I outworked people, I avoided limiting beliefs, I had the cognitive abilities to better grasp the principles, I was hungrier and more competitive, had more grit, more curiosity. It is a zillion factors that makes a trader successful.

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What’s the worst thing about trading and why?

The bad days feel far worse than the good days feel good! In behavioral finance world, this is called prospect theory. I think every trader would agree with what the behavioral science researchers are finding out much later than us. 

The other downside of trading is what it does to your stress levels and how the stress leads to poor sleep patterns. I’ve had to put a lot of time and effort into re-learning how to sleep again and not wake myself up to check markets are ruminate on positions.

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What’s something you’ve learned in the last 6 months that has made you a better trader?

I’ve been developing a set of principles and rules to keep me safe with a new options trading strategy I’ve been doing. Essentially building a way to safely sell vol during huge price spikes. Key is always to size small and stay safe.

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How would you describe your relationship with risk?

Everything in life comes down to risk and opportunity cost. The risk of one job vs another. Spending your time on health vs wealth vs relationships. I think the smartest and most successful people recognize this interplay and how integral risk is to every aspect of our life. They recognize how finite time is and make sure that they are allocating it for the greatest return.

So, regarding financial risk, I’m always handicapping the odds and trying to make the smartest decisions I can. What do I stand to gain if right? What will I lose if wrong? I’m a huge fan of taking massive risks, but only when I know the odds are hugely skewed in my favor and that I can endure the loss if wrong.

Life is nothing but a series of risks and the winner is the person that takes the smartest risks given the hands they are dealt. Financially or otherwise.

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Life is nothing but a series of risks and the winner is the person that takes the smartest risks given the hands they are dealt. Financially or otherwise.

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What’s the mistake you find hardest to avoid when trading?

I think most people always tend to overestimate their edge. As a result they are overconfident. They play way too many trades. They bet too much on most plays. Most traders would do better by being far less confident in the number of hands they play and their edge in any one spot.

The best way to avoid this bias is to always leave a buffer for extra uncertainty or what I call employing “the 20% heuristic”. As humans we tend to be overconfident and overlook a lot of biases. I try to assume that my win rate on a trade or my reward will be 20% less than i expect and my risk will be 20% more than i expect. This helps me be more selective and conservative. You always need to handicap extra the fact that things go wrong more frequently than we otherwise expect.

If I ever still fall into a trap, it is because I get sucked into a trade that isn’t as selective as I need to be. Much like in poker, the worst thing you can do is get emotionally and financially committed to a hand that isn’t going to hold its weight in the end.

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If I ever still fall into a trap, it is because I get sucked into a trade that isn’t as selective as I need to be.

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If you could give someone starting trading tomorrow one piece of advice what would it be and why?

Really make sure you’re all-in or else don’t even bother stepping into the Thunderdome. The failure rate is incredibly high and the job is not meant for most people. No matter who you are, it is so difficult to survive, let alone thrive. It never gets easy.

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No matter who you are, it is so difficult to survive, let alone thrive. It never gets easy.

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Reminder that you can join a group of like minded traders at https://microefutures.com – https://equitiesetc.com/

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Consistent Profits with Day Trading Futures – Roy Williams

Are you a day trader trying to make consistent profits trading futures?
Haven’t learned that trading is a constant battle between the highs of making money and the lows of losing money, yet?

Well, you are not alone!

I’ve taken plenty of spankings in this business. I’ve found myself struggling to keep up with
profitability, which can be an incredibly stressful situation. My job as a trader is to achieve
consistent profits, and if the job is not making me money, well, it’s really not a job, right?
As a day trader, I know how hard it can be to maintain consistent profits. It’s a stressful situation
that many traders find themselves in, and sometimes it feels like you’re just spinning your
wheels. But let me say this: keep that grit! Don’t give up yet – with the right strategies and
tactics, you can become more consistent and increase your chances of success. In this blog
post, I’ll share some of my tips for achieving consistent profits.

Maximizing Success in Day Trading Futures Through
Screen Time and Risk Management

When it comes to day trading futures, consistency is key. That means having the right mindset
and understanding what works best for you as a trader. It also requires keeping track of your
trades, analyzing why certain ones worked or didn’t work, and learning from those experiences.
This will help you develop better strategies for future trades, which will ultimately increase your
chances of success.

Another important factor is risk management. When trading futures, it’s essential to use
stop-loss orders to control losses and limit your risk exposure when things don’t go your way:

● A stop-loss order is an important risk management tool that traders use to limit potential
losses when trading futures.
● It works by setting a threshold price at which your market order will be triggered, helping
you to stay in control of your positions even when the markets are volatile.
Setting realistic goals based on past performance will also help you maintain consistency in
your trading patterns by allowing you to adjust accordingly if needed. As long as you have a
good plan and stick with it, then chances are that the results will follow suit in time.

Now ask yourself, how much time do you spend in front of the screens?
How much screen time am I getting a day, a week, or a month?

Active participation is crucial for success in day trading futures. Being actively involved in the
markets means staying on top of news events that could affect prices or movements within them
as well as monitoring charts for any changes or trends that may emerge over time. Doing so
helps ensure that you are well-informed before making any decisions about trades so that they
are calculated rather than impulsive or reactive moves made without much thought behind
them.

In my experience, screen time is the most crucial of all strategies, because it’s what helps
develop your strategies into consistently profitable outcomes.

Achieving Success as a Day Trader: Strategies and
Commitment

Now it takes a lot to make money in this business.
Some of the strategies I discussed above are just entry-level understandings a day trader must
know. There are other skill sets involved. Consistently achieving success in day trading futures
takes dedication and commitment – but if done correctly, it can pay off greatly over time! Taking
the right steps such as having the right mindset, tracking your trades closely, managing risk
appropriately, setting realistic goals based on past performance data, and actively participating
in the markets (screen time) will all help lead to greater success as a day trader over time.
Remember, results take time to measure. Good luck!

A Day In The Life Of A College Student & VC (Venture Capitalist) – Ernestine Fu

23-year old Ernestine Fu joined VC firm Alsop Louie Partners as an associate while in college and made the cover of Forbes magazine in her young but impressive career in the Venture Capitalist industry. She’s already made a name for herself as the youngest VC in Silicon Valley. She started her career at 20 years old while still a student at Stanford University. (reprinted from Business Insider)

Monday mornings are partner meetings for Alsop Louie Partners. I have to wake up and be ready early to participate!

Two months into the job, I found a team of Stanford PhD’s and convinced my firm to fund them $1.3M. Qwhisper’s still in stealth mode! I talk about them in the meeting.

I got to downtown Palo Alto to Philz Coffee, which just opened a few weeks ago. It’s my favorite spot to hold meetings with young entrepreneurs.

Meet my favorite baristas making my usual drink: soy chai with honey.

Ok, got to get back to campus for class!

I got into Stanford’s graduate school during the beginning of my 3rd year of undergraduate year at Stanford. So I have a lot of work to do.

Between class and meetings, I am trying to get some work done.

Today, I’m working on physics homework – analyzing trusses, calculating moments, and graphing shear forces. Fun!

I also teach, so I have to get the course syllabus ready for my entrepreneurship course. My printer ran out of ink a couple times when I tried printing out all the documents. Pretty exciting!

I’m taking a study break and reading up on news. As a student representative to the Board of Trustees and voting member on the Committee of Lands & Buildings, I was a part of this. (It’s crazy seeing the impact of my decisions!)

Sushi = best study break ever. (I’m working on inventing the Ernestine roll; there’s going to be some mango, salmon, and more.)

Time to head back to the dorm.

Got a surprise. Popcornopolis!

Finishing some regular household chores. Oh, laundry.

Thank you for taking the time for our readers to get to know a little bit more about you and a typical college day in the life of a VC.

Beyond The Trades is Sponsored by the Trading Community at https://microefutures.com/

Interview with John Hoagland – TopStep Funding

For those wishing to Learn More About Getting Funding to Trade using 100% of TopStep’s money, visit http://tracking.topsteptrader.com/SHOz

Topstep is the world’s first and most established funding opportunity for futures traders. Founded in 2012 in Chicago, Topstep enables traders to grow and profit in the financial markets without risking their own capital. Pass our objective evaluation, the Trading Combine®, and Topstep will give you proprietary capital to pursue your strategies. You keep 80% of the profits — we take 100% of the losses. Guaranteed.

QUESTION – Thank you for taking the time to participate in the Q & A session. Would you like to share with everyone who you are, your background (current and previous career, education, etc). And your role with Topstep?

My name’s John Hoagland, Senior Performance Coach at Topstep and Chicago born and bred. My Dad was on the floor of the Chicago Board of Trade for over 40 years. Personally, I went to art school but ultimately didn’t want to starve for my art and got my first job on the trading floor of the CME and the rest is history. I got to start and learn from professionals, which is something that is missing for traders today. I am a married Father of 2 great people, a musician, and a foodie.

QUESTION – For our readers who may not know. What exactly is Topstep and how do you serve the trading community?

Topstep is exactly what the industry is missing. With electronic trading being available to just about everybody, I think there are too many people funding their own personal accounts with little or no knowledge of what it takes to be profitable as a trader. It’s never easy, and it breaks my heart to hear the losses so many have taken. A random SIM account does nothing to prepare a new trader as there are no rules, accountabilities, or consequences. Without that sense of duress you have no idea how you will respond when you have real risk. Topstep gives traders the sense of having that skin in the game, in a much smaller way, some basic risk management rules everybody needs — and on top of
that, funding. Topstep is the first, and only place for traders.

QUESTION – Can you explain your rules that you have for potential traders who join your firm. With such strong rules, how can the average trader thrive and make money with Topstep? Explain the pros and cons of them for better understanding.

All of our rules are based on creating good risk management habits. Professional traders have loss limits, and we all should. I have blown up accounts because of 3 little words, “But what if.” It is vital to understand when your strategy is not in alignment with market state, or if we are personally compromised by emotion and can’t follow your process. As a performance coach, I have spoken to thousands of traders, and almost all of us have something in common. We are hardwired in our
brains to respond to the market and risk in the exact opposite way that successful traders respond. In losing trades we default to “I’ll just wait, the market will come back” or any number of rationalizations, and after creating some large losses the next winning trade is cut too soon, just to “feel better.” I had the benefit of family in the industry and I can still hear my Dad telling me “Learn
how to take a loss.” Performance coaching has me creating good risk managers and changing the “wiring” of traders to cutting losses quickly and letting winners run. To me it’s all about math. Winning trades twice what your losses are, be right half the time. Another “Dad” wisdom,”Money is easy to make, easy to lose, and hard to keep.”

QUESTION- Now some non-trading questions. What personal or professional failure/setback haveyou experienced in your life that has set you up for this success?

Well, it’s not just one, it’s the whole journey. I quit almost every day for a while but I always kept coming back. I learned a lot of hard lessons and I consider those lessons to be priceless. I don’t really feel successful because I know this can end any time, so I just keep trying to enjoy the ride and it’s a rollercoaster. I like the rollercoaster.

QUESTION : This is becoming a favorite question for many – plus readers get some good gift ideas from it. What purchase of less than $100 have you made in the past year that you simply could not live without now?

Oh boy, okay. My wife and I recently reupholstered our kitchen chairs. So a spring loaded staple gun
was not doing the job so I bought a pneumatic staple gun, I think it was about $80. Now I think about what I can upholster next, and the chairs look great! I don’t need much, at one point in my life, everything I owned fit on the back of a motorcycle.

QUESTION – If you could choose three dinner guests dead or alive, who would they be?

— Jesus
— My Dad
— John Bonham (drummer Led Zepplin?)

QUESTION – Can you explain the markets today versus the markets from years ago, decade ago, etc. And where do you see it five years from now?

Without being too obvious, the way the transactions are established has forever changed. I can’t see my competitors eye to eye. Markets are just about 24/5. I remember sweating in a position all night because I couldn’t get out. 8:30-3:15 was it. On top of that and to reiterate we are all alone out here. We can’t see our direct competitors. In the future I see more self-directed investors and traders, and I
shudder to think of the consequences for some of them.

QUESTION – What advice would you give to your younger self and to someone just coming out of school (college or high school)

10% rule. Save and invest 10% of every dollar you make, no if, ands, or buts.

QUESTION – What are your thoughts on cryptocurrency and will your firm have any role in them down the road?

I’m of the age that I am very distrustful of them. I feel like the governments of the world are going to find a way to either delegitimize or take them over, and if the government gets involved, they’ll screw it up like they do everything. Topstep is looking at adding it as a tradable product as we want traders
to have access to it, but I don’t have any kind of timeline.

QUESTION – Thank you for taking the time for this interview. How can our readers contact you,including on social media. And is there anything else you like for our readers to know about you?

You can share any messages for me at support@topstep.com. Come say hello during Topstep’s daily Market Forecast at 7:45 AM CT and Market Recap at 3:00 PM CT on Youtube, or during our free Group Coaching sessions every Monday and Wednesday at 1pm CST!

For those wishing to Learn More About Getting Funding to Trade using 100% of TopStep’s money, visit http://tracking.topsteptrader.com/SHOz

From The Desk of Trade Beautiful – Bottom, Bottom, Bottoms!

$TWTR is making me feel like I am in a Lizzo video right now.

Let’s talk about Bottoms and whether or not we are in one.

Just as in real life no one likes a flat bottom. The rounder the bottom the better and it looks like the $SPX has not stepped foot in the gym in months.

First things first, unless someone hires me as a TA this is just for educational and informational purposes only.

Let me preface this by saying there is always a bull market somewhere. Energy and grain have been doing extremely well. A lesson for newer traders or maybe stubborn ones, it is ok to leave your beloved tech and growth stocks and move over to a new sector when they are not working. I give you permission.

In a sea obsessed with bottoms everyone is looking to “nail” the bottom. Let them at it. A broken clock can be right twice a day. Our job is to, especially if you want to stay in this career long term, figure out the truth by reading what is in front of us. The charts.

Today I am not going to speak on inflation, CPI, QE, Investors reevaluating based on P/E or anything to that nature. These are all lagging imho. All that matters to me is what the charts are telling me. I really don’t care why. My time is better spent elsewhere.

So what pattern were technicians looking at wayyy before CPI etc?

What’s that? Try again.

You Got it. Classic topping pattern Head & Shoulders.

Looking at the chart we can clearly see the H&S forming and the confirmation of the break was 4300.

3800 has been a massive talking point between experts, because it is the 38.2% retracement area. I adore measured moves. It is like ballet. Poetic justice if you will lol.

So taking into account the March 2020 lows we can see the 50% retracement would put us at 3500. This doesn’t mean we cannot bounce around.

Let’s take a quick look at the largest weighing company in the S&P $APPLE.

With 7% of the S&P , trading 26x its forward earnings and having just broken support conforming a double top formation I can safely say this adds to the case of the bottom is not in

Take a look at the measured move targets below on the break of $151.50.  Bullish case if reclaims this level and holds, as there will be a lot of trapped shorts expecting more downside.  

Remember, we let the charts tell us the story and we allow the patterns to work themselves out.  Every rally begins with an end to selling pressure and every selloff comes after bullish action, so it is important to not get tied into a bias.  

I really hope you have enjoyed this quick article!

Please feel free to reachout to me on Twitter https://twitter.com/tradebeautiful to chat stocks, trading, technical analysis, and to let me know if you would like more . Send me a message or tweet of what you would like me to cover next!

Til next time.

Trade safe. Trade Beautiful.

Les xoxo – @tradebeautiful (Twitter)

Beyond The Trades is sponsored by our good friends at Microefutures.com / EquitiesETC.com

Trading in Uncertain Market Conditions – from the Desk of vwaptrader1

Trading in uncertain market conditions – from the desk of vwaptrader1

The market has changed drastically.  We have to adapt our style of trading and manage risk and expectations.  To thrive in uncertainty follow these rules as a start and remember that risk management is the MOST important thing in these trying times.

1.  Time of day.  For new traders with limited skills in trading, the market open in RTH is not wise.  Let the market open and let the order flow establish itself.  This means letting the big traders do the work and take on the fast volatile new orders that come in off the open.  For more seasoned traders who have the skill and account size, size down so you don’t get whipsawed with SIZE.  New traders should trade Globex where the price action is slower and you can see moves coming and reacting.
2. Before trading watch the market. Figure out where inventory is.  Where longs or shorts are trapped.  Look at the structure and how the price action is.  Is the market moving fast or slow? Is the price jumping around or is it stable?  Where are the stops? How is price acting at the stops?  How many stops are sellouts taking out? Make notes of all this before you execute
3. When looking to buy dips remember we have SUPPLY in these markets now.  This means the market will take the lowest stop before stabilizing and making a move higher.  Short sellers KNOW there is supply and will not bid the market as aggressively as they did last year when there was no SUPPLY.
4. Make a plan for your out/ safety stop BEFORE you enter a trade so you are not caught off-guard.  
5. Let the size traders work at extremes when markets sell-off, remember there is more supply now, let those big-money accounts take the risk, then look to execute. Being patient is allowing those big-money accounts the time to do their business.  Getting in the way means getting unnecessarily stopped out.
6. Remember it takes TIME to clean up supply after a sell-off.  If a market has been over VWAP for 4 hours it is going to take longer than 5 minutes to clean it up when it breaks VWAP as not everyone who is trapped long over it will sell at the same time.  Allow time for the sellers to all realize they are trapped and head for the exits
7. Be aware of margin call selling when you are taking longs.  When markets cannot hold settlement we will have margin calls.  When other asset classes sell-off we get cascading margin calls as funds sell whatever they can to avoid sending money to their brokers.  What this means for you the retail trader is DON’T GET GREEDY on longs. Sell into strength!  If you are long and the market cannot take out the first upper stop above you get out and get paid.  Always trail stops when in profit in case of selling that will hit the market like a rogue wave.  Your stops are your lifevest, do not go into storms without one.
8. If you cannot figure out the trade, wait and watch the market will tell you what is going on.  Resist the urge to jump in and boredom trade or revenge trade.  If you have trouble doing this, reach out to one of the moderators in our room.  We are here to help.
9. Use Globex trading to put together information so you can build trades in RTH.  Be disciplined and always make sure you think risk before reward. The markets are not going to treat bad decisions and greed kindly.  Govern yourselves accordingly.
10. If you are having trouble with a market, size down and trade less.  The emotional wear and tear of losing money and blowing up accounts can be avoided by not pushing trades.  We have to be vigilant and smart now.  Anyone can make money in a bull market with no supply.  We have a two-sided market now so remember we have to be smarter, faster executing, and more patient to allow trades to develop.  Do not get upset if you miss a trade because you hesitated and chase it.  There will be thousands of trades for you.  
11. Admit you are wrong when you get it wrong and get out fast!  Do not let that “ oh it may turn” get in your head.  Be savage and cut losses quickly this preserves capital.  If you get stopped out 3 times take a break and review what you got wrong.
12. Stay flexible and learn to adapt to different market dynamics. We will see many in the upcoming weeks.

Reminder that @vwaptrader1 teaches and trades live at Microefutures.com / EquitiesETC.com Trading Room Community

Interview w/Martin Papp – Alpha Trading Country Club

QUESTION – Thank you for taking the time to participate in the Q & A session. Would you like to share with everyone who you are, your background (current and previous career, education, etc).

Answer:
I’m Martin Papp.

I grew up in the Colorado mountains, spending much of my childhood and teens outdoors. I studied Political Science at St. Lawrence University, graduating in 2009.  I then moved to China to learn Chinese and immerse myself in at the time the fastest growing economy in the world.
There is no doubt that when I moved to China 12 years ago, living in a big city was fun, but I didn’t want to lose my connection with nature. In 2015 I founded PAPP’S TEA with the idea that tea and other herbs bring enormous value to our identity, and the relationship we have with them should not be lost in our fast-paced urban lives.
After receiving venture capital funding from BitsxBites in Shanghai, we grew to become a multimillion-dollar tea and kombucha business.  Currently PAPP’S TEA provides tea to over 400+ locations throughout China including cafes, restaurants, hotels, and ecommerce store on Taobao.  
When my son was born, my wife and I decided to relocate to United States.  Since 2020, I have become a fulltime stock trader and crypto trader as well as continue to monitor tea operations in China.  I joined a great group of traders at TrueTrader.net and learned to become a self-sufficient trader.

I launched myself into NFTs six months ago, seeing it much as an extension of my trading career and venture capital intentions for the future. I co-founded Alpha Traders Country Club, a community specifically for stock traders, crypto investors, and NFT enthusiasts.  Mint day is coming soon. LFG!

QUESTION – For our readers who may not know, you are heading up a very unique vision like NFT and Trading project called “Alpha Traders Country Club”. I will not do justice trying to explain it, so please go into detail for our readers.

Answer:

ATCC is an exclusive club of sloths expertly trained in the art of trading and finance.  A group so elite and elusive their country club can only be joined by owning an NFT from the highly coveted ATCC collection.

ATCC is a community of traders and investors that support each other, learn from each other, and help each other become better traders.

Membership is granted via the mechanism of a profile picture NFT collection of trading desk sloths expertly trained in the art of trading and finance.  One must be a holder of a Alpha Trader NFT in order to be part of the elusive country club nestled off the tropical coast of Costa Rica.

Think of our club as a cross between WALL STREET BETS and BORED APE YACHT CLUB.

We talk about all things trading, inviting industry professionals to speak on our livestream events and also host in real life events where people can mingle and make real world connections.

QUESTION – How long have you been trading (stocks, crypto, NFT’s). And are you more of a day trader, swing trader or longer term investor? What have been your biggest challenges to date?

Answer:

I personally have been trading stocks fulltime since 2020. My preferred method of trading is swing trading.  I also have long term holdings in stocks and crypto.

I started investing in NFTs at the end of 2021.

Biggest challenge of trading has been learning how to focus less on the monetary gains and more of capital preservation.

QUESTION–  What personal or professional failure/setback have you experienced in trading AND your life that has set you up for later success?

Answer:

I think my perseverance and my Dunning-Kruger exuberance has helped me never feel I fail.  Everything has always led to the next.  Sure there are many things I did not do perfectly or even well, but I did them, and that stupidity (some call courage) has led me to be successful in a lot of things I do.

In terms of failed businesses, yes, I have had two startups fail prior to successfully launching my tea company in 2015.
In 2007 I co-founded a coffee company called Buywell Coffee. We operated a few years before eventually closing.
In 2011 I co-founded a real estate investment company in China for investment in Mongolia.  Project did not take off and stopped in end of 2011.

QUESTION : This is becoming a favorite question for many – plus readers get some good gift ideas from it. What purchase of less than $100 have you made in the past year that you simply could not live without now?

Answer:

Hands down this:
https://www.amazon.com/dp/B015FH0XKE?ref_=cm_sw_r_cp_ud_dp_EBNH52E2PYKGBG3TRERW

I got three of them now and have gifted all my family at least one!  Best $20 dollars I’ve spent in a long time.

QUESTION – If you could choose three dinner guests dead or alive, who would they be and why?

Answer:

Elon Musk – b/c he is the goat of entrepreneurship

Lionel Messi – b/c he is the goat of soccer, the sport I love. (play three times a week)

Robin Williams – b/c he made me laugh my whole life growing up and I would want to tell him that.

QUESTION – What are your goals for the future. Say in 5 to 10 years as the metaverse becomes more of an everyday reality for us?

Answer:

I think the entire economy will be revolutionized through tokenization of goods and services.  The assetification of all items will become prominent in mainstream businesses.

I’m not fully sold in the Virtual Reality thing taking off, but I am very bullish on Augmented Reality.

QUESTION – What advice would you give to your younger self and to someone just coming out of school (college or high school)

Answer:

The environment you surround yourself in is everything.  You become what the environment lets you become.  If you are NOT happy about where your life is or is heading. MOVE! Get yourself somewhere that will change you into a different person.

Immediately graduating from college I had a hard time finding a job. It was 2009 and job market was not great. I found a job a car sales rep in my hometown.  Did that for three months and was miserable. I read the book OUTLIERS by Malcolm Gladwell and really helped changed my perspective. I quickly realized I needed to leave the United States for the sake of my career trajectory.  Moving to China in 2009 was one of the best and most life changing decisions in my life, all based on the principle that environment dictates your success way more than most people are willing to admit.  Do you think Elon Musk could achieve what he has achieved staying South Africa? Not impossible, but highly unlikely.  Elon finding success in Silicon Valley is not a coincidence.

QUESTION – If you could have a big billboard with your favorite saying or message on it, what would it be?  And where can our readers find you on social media?  Thank you for taking the time with this interview, is there anything else you like to share with our audience?

Answer:

“There is no such thing as paranoia, even your worst fears will come true if you chase them long enough.” – Hunter S. Thompson

“Don’t be so humble, you’re not so great.” – My high school teacher, Professor X

LinkedIn: https://www.linkedin.com/in/martin-papp/

Personal Twitter: @genalphatrading
Alpha Traders Country Club Twitter: @alphatradersNFT
http://www.alphatraderscountryclub.com

Reminder Beyond The Trades is sponsored by our good friends at Microefutures.com / EquitiesETC.com

Interview with Mansion Room’s very own Eric “E” from Staten Island

QUESTION – Thank you for taking the time to participate in the Q & A session. Would you like to share with everyone who you are, your background (current and previous career, education, etc). 

Answer: Thank you for having me on, My name is Eric most in the Microefutures.com room just call me “E”. Living in the forgotten borough aka Staten Island, NY. In terms of careers, I feel I have done it all from being a private life guard, Helping run a Bounce House company, Delivering pizza (still doing currently), working with contractors on home repair, to now working in Quality Assurance testing software. I graduated Pennsylvania State University in 2013 with a Major in Business Management and minor in Information Technology and was lucky enough to land the position I am in currently fresh out of college.

QUESTION – For our readers who may not know, you are the so called “Captain” of the Mansion Room at Microefutures.com / EquitiesETC.com Trading room. Care to explain what exactly that is – and what is the concept of the Mansion Room in this trading community?

Answer: I am honored the Mansion room considers me the “Captain” although I do not consider myself a captain at all lol. The Mansion Room was created off an idea from a previous BYT interviewee  Matthew Mickey. When Mickey joined Microefutures.com he came with an open mind and ready to absorb every detail that was given to him. We had many one on one conversations and said we should do something where after the true Captain of our Room JJ (vwaptrader1) finishes his morning session at 11am est were traders can still watch these funky charts known as TPOs. I was all for it and soon after the Mansion room was created. 

The Mansion room is an open discussion and self moderated room that is used within the Microefutures discord channel. It is open to all users where we stream live Market Profile charts on ES, NQ, and discuss what we are seeing in the market throughout the day. As most users may not have the ability to watch TPO or may feel lost after JJ finishes in the morning. I stream in the Mansion Room and talk about what I am seeing happening with terms of inventory and price action. I do tell everyone in there I never worked on a trade desk or within Wall Street I am just hear to reiterate everything JJ has taught us.The room however is open to anyone who wants to stream and it does not have to rely on me I think they get a kick out of my heavy New York Accent. I have even had some say they are understanding and retaining more of what JJ teaches by watching the streams in the Mansion room. 

QUESTION – How long have you been trading. And are you more of a day trader, swing trader or longer term investor? What have been your biggest challenges to date?

Answer: I started my trade journey back in late 2016, I was sitting at my desk in Jersey city when a colleague of mine walked by and said have you heard about this bitcoin it’s really on a move. I replied no I never heard of it and he started to show me and tell me. So I began doing research and watched videos of candle patterns and everyday we would step out and talk about these crypto coins and try to make a few bucks flipping them. We would step out and grab a coffee and a smoke and he would go did you see Coin “NEO” and I would reply with na man check this one “TRX”. We did this for a couple of months then Dec 2017 Bitcoins big drop. Was completely wiped of all profits I made because I was chasing the rush of winning. He later left our company and haven’t talked to him since he lives in Cali. A few years passed and I was thinking to myself man there has to be another way to build a secondary income as I just started dating my now fiancée and thought if I could get back to making a few extra dollars it would be nice to put away. The year was 2018 and that is when I found option trading thanks to YouTube and google algorithms. Having the addictive personality I figured I would dive right in and see what it was all about. I saw that I can use the same candlestick patterns I studied in crypto and use them on stocks but didn’t need a whole lot of cash to get started. I was back in the market but this time instead of coins it was calls and puts. As I continued this journey I stumbled upon JJ on twitter and was so intrigued by these Market Profile charts that I dove in and he told me its the futures market and what it is all about which brings me to where I am now trading ES, NQ, and now learning the bonds. Haven’t traded crypto since that drop in 2017 and now rarely dabble in Options. 

I consider myself a scalper/day trader, I want to be in and out I am not a big fish so definitely don’t want to be swallowed by one. A quote from a YouTube video I stumbled upon once was showing how traders traded on the floor went like this “That position you are trading right now I flipped it twice, 3 times, maybe 10 times without you even knowing it happened” Thats how I trade in/out on to the next. 

Some of the bigger challenges I face is trying to overthink the market, as we discuss in the mansion the market is very simple concept of supply and demand and when trading it I tend to lose sight of that concept by thinking “okay what if this happens?” or “what if that happens?”. The over complicating a simple task is what has been my biggest challenge

QUESTION–  What personal or professional failure/setback have you experienced in trading AND your life that has set you up for later success?

Answer: 

My biggest setbacks have always been chasing the high when in profit. I have been getting better thanks to the room and the coaching that Microefutures provides for us. When I am trading the movie quote from Top Gun sticks with me always. The line when goose goes to maverick “Every time we go up there, it’s like you’re flying with a ghost.” I keep that quote written down as a way to say don’t chase the high. If we chase the high then that’s where the overtrading and revenge trading steps in and clouds judgement and miss solid entries. 

QUESTION : This is becoming a favorite question for many – plus readers get some good gift ideas from it. What purchase of less than $100 have you made in the past year that you simply could not live without now?

Answer: This is a great question and the one thing I bought myself last year was a simple exercise mat and few dumbbells. When the pandemic hit I felt trapped inside our 1 bedroom apartment, my morning routine was thrown off since we couldn’t go to the gym or anywhere. So in the winter months we bought a simple yoga mat and some dumbbells just to stay active. I feel when I lift or exercise before the day starts my mind is clear and in the right place.

QUESTION – If you could choose three dinner guests dead or alive, who would they be and why?

Answer: 3 Dinner guests that I would love to sit down with. First would be JJ (vwaptrader1) just to meet the gorilla of house street. He has helped me so much in becoming the trader I am today. My second guest would be Jesse Livermore, after reading the book “Reminiscences of a Stock Operator” multiple times I would love to have a conversation with him and see how trading was done before computers. (Maybe bring my laptop and have him watch some globex tape with us). My last dinner guest would be Mark Cuban, After watching his interview with JJ and Ray on “Confessions of a Market Maker” he just seems like a great guy to hang out with and learn from his experiences. 

QUESTION – What are your trading goals – Do you always want to trade or branch out into other directions in your life?

Answer: My trading goal is to always trade but do it to my leisure. As of right now I trade as a way to make another income, down the road I want to look into more passive strategies that way I don’t need to be actively sitting at the screen to make profit. 

QUESTION – What advice would you give to your younger self and to someone just coming out of school (college or high school)

Answer: Always be humble, whether it’s in business, the market, or just in everyday life. Because the minute you think you are better than someone else is the minute you will be humbled. 

QUESTION – We hear you are getting married. When, where and do you feel your full time work and trading schedule will be impacted (how will you balance is the question all)

Answer:  Yes I am getting married in August, we are very excited and can not wait. As far as balance after the honeymoon of course I don’t feel their will be a big impact as my fiancée works in a school, and since the pandemic I have not been back in my office so the balance should remain the same way it has been *knock on wood* will have to wait and see when I do return to the office.

QUESTION – If you could have a big billboard with your favorite saying or message on it, what would it be?  And where can our readers find you on social media?  Thank you for taking the time with this interview, is there anything else you like to share with our audience?

Answer: A saying that I try to live by is “Life every day to the fullest, tomorrow is never promised.” Thank you for having me as a guest. For those wanting to follow me on social media you can find me on twitter @_Eric24 and instagram e_herrmann24

Beyond The Trades Sponsored by https://microefutures.com/ https://equitiesetc.com/ Trading Room Community

Interview w/Trading Chick “Marina”

QUESTION - Thank you for taking the time to participate in the Q & A session. Would you like to share with everyone who you are, your background (current and previous career, education, etc). 

MARINA - Hi everyone, thank you for having me. 

As a Russian refugee during the Cold War I arrived in New York City with my parents when I was 6 years old.  20 years later I took off on a backpacking journey with no end in mind. While camping in the Tikal Mayan Ruins of Guatemala, I met my future husband, the first Guatemalan I ever met, who was camping in the next tent over. We’ve been married for over 19 years, living in Central America raising our 2 trilingual sons.I have been an entrepreneur for over 25 years. Starting out as a top fitness instructor in NYC gyms with a wanderlust, I  became a travel writer (and still host a popular travel blog today).  Combining my love of entrepreneurialism and social justice I took on the monumental project of becoming a TEDx organizer (one of the few that included teens in an outdoor venue). How do I do it all? I credit my simple “no fluff” Day Trading strategies as a professional day trader. Today, I am a sought after speaker and mentor to aspiring and seasoned traders. I stand out in the industry amongst the guru’s as one who embraces the spirituality of Day Trading and works hard to help others transform their lives one trade at a time!  I specialize in helping the true beginners to Day Trade with confidence and ease. For anyone who has a desire to learn Day Trading but has no idea where to start. I show you the best way to go from newbie to pro (trader) fast while avoiding the mistakes I made. 

QUESTION - For our readers who may not know, your are known as the "Trader Chick" on Twitter. Can you explain the story behind behind this moniker? 

MARINA - Day Trading has a lot of 'experts' , a lot of people that come for financial backgrounds, math and economic backgrounds. Which is great. However, the reality is listening to them can be intimidating, and complicated. Most of the time people get turned off by all this type of talk.

I personally did in the beginning. I was struggling for years, because of the complexities that went behind it all.

And after losing all my money several times, I had to step away. But day trading kept calling me, and I decided to erase all my charts and indicators and everything that I was being taught, and go back to the basics and simplify it. And that's when I realized day trading isn't complicated at all, and if explained in a fun way it can be accessible to everyone. 

I was a fitness instructor before a day trader and a travel writer, without any financial and math background.

Being a Trader Chick allows people to see that it's fun, and they too can do it. My monitor goes exactly with how I look at trading. And this allows so many people to also get into trading.

QUESTION - How long have you been trading. And are you more of a day trader, swing trader or longer term investor? What have been your biggest challenges to date?

MARINA - I've been interested in financial markets for over 30 years. However, day trading has been my passion for 10 years. I am a scalper. Which means I go in and out of trade positions within a few minutes. It's quick and fun and doesn't stress me out as long term holds for the day.
I've been interested in financial markets for over 30 years. However, day trading has been my passion for 10 years. I am a scalper. Which means I go in and out of trade positions within a few minutes. It's quick and fun and doesn't stress me out as long term holds for the day.

QUESTION-  What personal or professional failure/setback have you experienced in trading AND your life that has set you up for later success? 

MARINA - Day trading is one of the most in your face conflicting things you can do. It's the only one that will make you face your demons constantly. It humbles you and really makes you view the world differently. 

It shows you you either get your shit together mentally or continue living where your demons take over. 

After many losses and blaming the market, I realized that it has nothing to do with the market and it's all me. And when I decided to look at myself and work on myself everything started to change. 

I always say, Day Trading has been my greatest Master Teacher of my life. 

And when I started to work on bettering myself, mindfully, mentally I discovered a spiritualness to trading that has made me a better trader and person. 

QUESTION : This is becoming a favorite question for many - plus readers get some good gift ideas from it. What purchase of less than $100 have you made in the past year that you simple could not live without now?

MARINA - Oh that's a great question! A journal. This is my place to get out all my thoughts, frustrations, it's also a place where I write my goals and schedule. 

I refer to it several times a day and really am lost without it. 

QUESTION - If you could choose three dinner guests dead or alive, who would they be and why?

MARINA - Madonna - she was literally my (virtual) mentor from 11 years old to my mid 20's. Getting to the top and staying there is pure grit and I would love to learn from the source.

Byron Katie - Her book 'Loving What Is' changed my life. She is the only person that I would really love to do a workshop with or sit down and have a genuine chat with. And, interestingly enough right as COVID began, I was signed up for one of her intimate workshops and - of course we all know how things happened. It was canceled. 

Sara Blakely - She simply is a friend goal of mine. How she runs her family, business, life. She just seems like a person I'd love to hang out with.

QUESTION - What are your trading goals - Do you always want to trade or branch out into other directions in your life?

MARINA -Trading if done properly can be fun. HOwever, when I first began I was obsessed sitting in front of my charts for 8 - 12 hours a day, totally unsustainable. 

Today I trade 30 minutes - 1 hour a day, not even everyday, but when I feel like it. Because I'm so much more than just that. The goal always was to spend more time with my kids, start fun businesses that I love. Today I'm doing that. SO in a way, my trading goals are realized.

QUESTION - What advice would you give to your younger self and to someone just coming out of school (college or high school)

Learn work ethic. I don't care what your interests are in, without work ethic and structure you will really suffer. 

Nothing will ever beat work ethic. And unfortunately today, judging from my own kids schooling (and they go to a 'good' private school) this is something that is not taught. So go out of your way to learn this. And the rest will work out.

QUESTION - What are your thoughts on cryptocurrency - including NFT's & the Metaverse?

MARINA - I just got into crypto last year. It took me a while to stop resisting. I believe there is no way around this, it's here and I'm still at the point of learning myself. 

NFT's and Metaverse is totally new to me, and actually my kids and I are signed up for classes to learn. 

So my thoughts are, learn what this is, teach your kids about it. And then have fun with it.

QUESTION - If you could have a big billboard with your favorite saying or message on it, what would it be. 

Make Every Day An Adventure - there is no 'one day' make today day ONE. 

Thank you  for taking the time for this interview. How can our readers contact you, including on social media. And is there anything else you like for our readers to know about you?

MARINA - Thank you for having me. The best way to contact me would be via my website - https://thetraderchick.com



-- Beyond The Trades Interview Series is Sponsored by -- 

 https://microefutures.com/ - https://equitiesetc.com/

Why I’m Bearish on Ethereum – Ms Tascha

I’m bearish on Ethereum. – Article first appeared in TaschaLabs Daily eZine

But it may not be for the reason you think.

Transition from single chain to layer 1-layer 2 structure has large implications for ETH token valuation. And most people aren’t yet thinking this through 

First off I wrote abt how to value blockchain platform tokens like nation state currencies a while ago. I recommend a read cuz it’ll help you understand what I’m gonna say next, as it’s an application of same framework.

In short, think of L1 platforms like nation state economies. You need native token to pay fees in every transaction on platform just like you need USD in every economic transaction in US. The on-chain economic activities thus form fundamental demand for native token.

That means given any starting equilibrium of economy size & ETH price, if ethereum economic activities grow 10%, ETH token demand’ll grow proportionally (assuming stable token velocity). Since supply is relatively constant, that translates to proportional increase in ETH price.

This dynamic btw growth of economy & increase of token price is mechanical & doesn’t require belief in any revenue-based valuation assumptions, which are mostly memes.

Indeed data shows activity growth is single most important driver in ETH price over long run. Using # of txns as rough proxy for size of eth economy, you can see correlation btw txn growth & price growth is overwhelmingly significant— 10% txn growth implies ~13% price growth.

Note this is fundamental-driven long term relationship. Short-term price volatility is obv much bigger b/c of speculative cycles.

W/ this relationship in mind, is there any wonder why ETH price growth has stalled in last 6 mos? Tnxs have declined since May as high gas costs discourage activities & other alt L1s take off. Activity is now even lower than previous cycle peak.

Active wallets, another way to measure activity level, have also declined since May.

If it weren’t for EIP-1559 introducing token fee burns in August & putting downward pressure on supply, we’d have seen bigger ETH price drop given demand dynamics.

To solve scaling/congestion, ethereum is adding layer 2 rollups— to have eth L1 as security/settlement layer w/ contract & tnx executions done on L2s. It could boost speed & lower cost for end users, by a lot.

But as investor, all you need to care abt is this— is this structural change going to increase or decrease activities on eth L1? (Cuz activities—> demand for eth —> price growth, remember?)

By all considerations the answer is negative, at least in short-to-medium term.

Eth L1 does 1.3 million daily tnxs right now. ZK rollups can have 60k-80k tnxs in a batch before submitting to L1. If we move all end-user tnxs from eth L1 to rollups today & all L2 batches are full, that means # of tnxs on eth L1 could drop to 1/20 of current level.

You say, 1) proof verification is high value-add, complex tnx, which costs way more gas than most other tnxs.

2) there’ll be explosion of activities on L2s given lower cost. That’s the point of scaling. If L2 activities grow exponentially, it’ll boost verification needs, i.e. more activity on eth L1.

For 1), L1 verification cost per batch for zkSync rollup is 600k gas. Simple wallet tnx cost on current eth L1 is 21k gas. If a rollup batch has more than 28 simple wallet tnxs, gas cost on L1 is already lower than current. Batch has capacity for 80k tnxs. Do the math.

For 2), activity levels on popular alt L1s give useful benchmark for how much activity you can realistically expect on a new eth L2. Solana, the alt L1 w/ highest activity level rn, has a realized TPS (tnxs per second) of abt 1000 (not counting consensus voting tnxs).

Other chains have much lower realized TPS. E.g. Polygon, the success example all new eth L2s aspire to, has TPS of abt 85. Mind you, low realized TPS on these chains are not b/c of tech constraints (not yet). They can do much higher but there’s simply no higher demand from activities rn.

If one day web3 economy grows so big that numerous eth L2s operate at high capacity & continue growing at warp speed, yes that’d indeed increase activity on eth L1. But that day is not today & no eth maxi can tell you definitively when that day will be.

Btw today & promised L2 land, ethereum has to cross the no man’s land, where L2 growth is taking existing tnxs away from eth L1, while L2s don’t have enough business yet for their proof verification txns to more than compensate for activities they take away from eth L1.

While eth is crossing this no man’s land, activity growth on eth L1 would likely be stagnant or negative. That means to the left & down on our chart of activity vs price. Rational choice for eth ecosystem investor would be to sell eth & long high growth L2 tokens.

You say, what abt institutional investors? They prefer large caps w/ lower risk. So large waves of institutions coming to crypto in near future would shore up demand for BTC & ETH.

It may. But I wouldn’t keep hope too high for dumping bags on institutions, unless you truly have an abysmal opinion on their IQ.

B/c truth is people–whether institutions or individuals– are in crypto for returns, not safety, & large caps are not “safer”.

Here’s Sortino ratio for major L1s, which measures how much you’ve gained for each unit of downside risk you took. LUNA had the highest score in 2021. ETH & BTC both rank low.

There’s another concern abt ETH valuation that’s less obvious but no less important.

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The network effect of L1 tokens comes from wide ownership participation of those tokens. BTC & ETH become most popular collaterals in deFi b/c almost everyone in crypto owns them. Exchange volumes are high & liquidities ample.

But 180 mn eth wallet addresses are the result of the fact that for the longest time, to use smart contract you have to own some eth.

W/ alt L1s rising that’s already less true. W/ eth L2s coming you won’t need to own eth even in ethereum’s own ecosystem. You can buy, say, ZK tokens on centralized exchange, transfer to your ZK Metamask wallet & spend ZK in ZK L2 chain, all w/o touching eth token.

In other words, as ethereum transitions from B2C to B2B model, direct interaction w/ end users may drop, which would imply lower ownership coverage, liquidity & volume for eth token. All of those are important parameters supporting token valuation.

You say, as security layer of ethereum eco, importance of eth token is paramount & surely users would value that. Yes you’re right. But if “importance” is the decisive factor for token value, ChainLink & Graph would have higher mkt caps than Doge & Shib.

Truth is “face time” w/ as many end users as possible is a precious advantage for a token. (And you should consider this when thinking of investing in any crypto project that only serves “enterprise use cases”.)

This is not just a phenomenon in crypto. In tech stocks, for example, software companies w/ mass-mkt apps have higher P/E ratio than other IT sub sectors like system software or semiconductor. B/c the former get more eyeballs even w/o necessarily having higher growth prospect.

As average investor, it’s much easier to buy stocks of Zoom or Slack—cuz you know & use them often— than investing in something like, idk…”Paragon Database Solutions”.

For a L2 to compete w/ alt L1s they need native tokens for users to rally behind & share the gains of values created on L2 platform. That means they take eyeballs away from eth just like alt L1 competitors.

You say, but other modular L1 chains have same problem. E.g. an Avalanche subnet token would dilute value accrual on AVAX too.

Yes, but AVAX, ATOM or ALGO is not valued at $400 bn mkt cap. They’re much smaller & still on high growth path of their L1 eco, any L2 add-on is not a structural change of status quo like ethereum situation. The starting equilibrium matters.

Crypto is a fast changing industry & my thinking abt ethereum case will surely continue to evolve. But hope this gives you something to ponder on.

TLDR:

• Activity growth determines price growth for L1 tokens
• Shifting to L1-L2 structure may mean stagnant or negative activity growth of Eth L1 in ST/MT
• Transition from B2C to B2B model reduces exposure of Eth token to end users, negative for liquidity, volume, price

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