Web3 Breakdowns Ep 77 - CL207 - The Chemist Turned Crypto Trader
Primer: How did CL of eGirl Capital get started in trading? What is his edge? How did his life change after he had made it? What are his thoughts on VR? Let’s find out in this exceptionally interesting Web3 Breakdowns episode.
Background
Is an underground chemist
Started trading crypto. Made no money for the first two years
Has evolved into an extremely thoughtful and intelligent trader
“I love to blow things up. I was a pyromaniac as a kid and I was always interested in these high explosives.”
- CL207
The Idea Of Creating An Avatar
Creating an avatar is a common thing among streamers who want to stream anonymously
In 2019, another big trader called Lightcrypto DMed him a bunch of cat pictures
He used the cat picture as his profile picture
When COVID came, people put on hazmat suits
Got an artist to draw a cat in a lab coat
Conviction With Trading
In 2018, he bought some Bitcoin
Bitcoin went up but he had to sell it in order to buy food
Realized he had to make a lot of money
Started trading on BitMEX. Over time, he learned how trading works
The best part about trading Bitcoin was that there were no fundamentals. It was about people’s positionings and general market sentiment
His Edge
It’s a bit of intuition
Everyone that trades builds up their intuition over time
The quantitative part is to watch orders come in
Every week, he tries to memorize every position he has opened
Have a mental risk model
How He Looks At Funding Rates
At every long, people will say they will short
In reality, market makers are not going to be degenerates and take on directional risks
Most firms are delta neutral or, if they are exposed, a very short amount of period
A while ago, a profile of the average amount of leverage used is 10x
People come up with terms like stop-loss hunting, but they are not real
Getting Back Into Trading After A Vacation
Would not straight-up trade, unless it’s something stupidly obvious
Would look at the price of everything
It’s not as simple as how much buying/selling, because the buying can be hidden in the form of a bid
The trade history would show up as a sell because they kept chasing a bid
His Holding Period
The average holding position is days/weeks
People in crypto are mostly short-term traders using leverage and spending a lot of premium on options
What Has He Learned From Trading?
He lost everything he deposited on BitMEX
He was wiped out 5 times and thought he would never make it
Noticed that he took positions randomly because he was impatient
Over time, he realized he has gotten more used to accepting that he is wrong
In 2021, retail investors were in a bubble, getting more greedy betting on low-cap shit coins or low-cap stocks
Going more extreme was how people got rekt
He never takes a position where he can just lose it all
Try not to sell options as the power of trends and herd mentality can go very far
Decreasing Risk-Taking After You Have Made It
His mum gave him a few grand to trade and he lost half of it
Traded his laptop for collateral
Cannot imagine losing everything as that means he would have to get a job
Has spent years in his room just trading
After he made it, he started going out and socializing
Has considered trading more to build even more wealth and thinking if he would regret it if he stops now
Having An Edge In The Market
Will we reach a point where there’s no edge to be found in the markets?
There is always an edge to be found
In the stock market, people would see some weird buying/flow happening at a specific time and take advantage of it until it disappears
In crypto, it’s just pure positioning
Everyone who was early to Bitcoin profited in 2021 and knew that this edge existed
For the average new trader, it was hard to convince them because this seemed random
It’s getting competitive but there’s still a lot of edge
Where Does He Get His Alpha/Edge?
Rarely got it from chats/other people
When he started, he did it all on his own
Did talk to people, which helped shape his views
Most of his trading is around his own mental model
A lot of people trade on narratives, which he hates because it is hard to buy into a position that everyone is getting into as well as it is risky
He has never made too much money trading off altcoins
His trading has always been stacking up percentage moves on Bitcoin or Ether
“Ultimately, I've always had this very strong belief that if you cannot build your own thesis while you're getting into a position or you don't have your own ways of trading, then you're just copying others.”
- CL207
What Changed In His Life After Wealth?
Got disgusted by the volatility in his net worth in 2021
Back then, SNX and AAVE grew from 2% of his net worth to 15%
He started going out and realized that this was a lot of money
He had no concept of money, no concept of spending, and it felt fake to always be in his room
“If you're just good at trading, it might be worth just to stay inside one, two or three more years, just don't realize it's real money, you might just keep making more and more. Once you do realize, you can do a lot with this money, then I feel like your risk appetite really changes.”
- CL207
Got into other hobbies (fashion and art) and hang out with different kinds of people
How Did The World Open Up To Him?
Started dating some girls
He could not describe what he was wearing
Started browsing random stores
NFTs boomed and people changed their profile picture, identifying with it
Slightly disliked the profile picture NFT trend because he wished people to be themselves/original
Started to get interested in social sciences, behaviour, and psychology because of trading and the profile picture NFT trend
On Anonymity
It’s different for every anonymous character
There’s a lot of freedom in what he can say
If people know him, he may get a bit of good treatment in real life
Was cool when it first started. Now he feels it’s more of a hassle
His Cat Avatar
His avatar allows him to express most of the basic emotions
Don’t think his avatar is refined enough for every micro-expression
The tech is improving. He has seen some higher quality, really well-made ones
How Did He Grow His Twitter Account?
Has always been genuine
A lot of people on Twitter have some motive (e.g. write threads, gain followers, do affiliate shilling)
There will always be a distribution of people (good, bad, normal)
Did He Ever Regret Not Staying In Chemistry?
He still loves chemistry
Where Did He Get His 2 Parenting Advice?
His 2 parenting advice:
Giving your kid money to trade Fortnite skins and hoping they get rugged
Teaching them how to find first principles information
He just made up those 2 pieces of advice
So much of the economy is online now
10 years ago, it used to be cringey
Now, if you get views on YouTube, you get respect
If your kids are restricted from this world, they will have to learn it the hard way later on
Think that people should get used to being scammed online as it’s a good learning process
Thoughts On VR
Has always been intrigued by VR
Sees it as a very long-term trend
His friend took him into VRChat and he was blown away
Everyone has their own avatar, most of which were original characters
His friend brought him into a super-exclusive VR club. Some of the people were really good dancers
The bonding experience in VR is completely different from texting someone. The academic term for this is presence
There are multiple studies on presence. As long as the input to the brain seems realistic and has depth, your brain will interpret it as real even though you know it’s a fake
eGirl Capital hired a therapist and the therapist conducted the sessions in VR:
The environment was manipulated to be more peaceful
As they are behind avatars, people tend to talk about things more openly
The sessions went really well
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