Guide to Creating Investment Systems in the Crypto Market

Making directionless decisions frequently in the crypto market can be exhausting. To achieve higher returns, the key is to master systematic thinking. This article will introduce you to how to establish an effective system in cryptocurrency investment, helping you avoid emotional influences on judgment and maximize investment returns.

What is systems thinking?

Systems thinking is a combination of behaviors and habits that, when practiced consistently, can drive you towards your goals. It's like finding the right path to your objectives. When I applied this mindset to cryptocurrency investment, everything changed.

Why Create a Crypto Investment System?

We often become victims of emotions and biases. Designing a system is like creating investment software for your brain that can simplify everything, making life easier while also allowing you to view your decisions more objectively. Here are 10 examples of applying systems thinking in cryptocurrency investment:

1. Develop a buying strategy

Cultivate the habit of regular investment, such as investing in some mainstream encryption currencies on the 1st of every month. Do not overly focus on technical indicators or try to predict market timing, but rather concentrate your energy on research and other aspects of life.

2. Portfolio allocation

Set target proportions for each part of the investment portfolio. When the share of a certain area is too high, sell promptly and rebalance.

3. Profit Strategy

Set clear profit targets instead of deciding based on feelings or time. For example, you can establish rules like this:

• Sell 25% of your position when the investment return reaches 100%.
• When the investment returns reach 200%, sell 25% of the position again.
• Sell 25% of the position when the investment returns reach 400%.
• Hold 25% of the position long-term

4. Income Withdrawal Plan

For projects that cannot be automatically reinvested, establish a fixed income withdrawal plan. For example, operate every Monday and Thursday afternoon. Schedule this task in the calendar and create a folder to record all the staked projects.

5. Data Tracking

Establish a systematic data tracking method:

• Create transaction logs
• Create a cost tracking spreadsheet
• Use asset management tools
• Learn how to track tax liabilities
• Track the operations of influential investors and verify their accuracy.

6. Investment Assessment Checklist

Create a checklist for evaluating protocols. Do not be easily influenced by social media or video content, but instead stick to your own evaluation criteria.

7. Information Intake Habits

Pay attention to the quality of the information you receive daily. Carefully select your information sources, including social media, podcasts, and newsletters, and eliminate unnecessary information distractions.

8. Research Process

Establish a formal research process:

• Read the project white paper and official documentation
• Research the founding team and their past achievements
• Check whether the project has been audited and the credibility of the auditing agency.
• Assess the level of community participation and activity

Every time I research a new project, I must strictly follow this process.

9. Develop habits

Establishing a system is not enough; you also have to develop the habit of executing these systems.

• Set a recurring task in the calendar
• Set a fixed time for specific actions
• Simplify the list to make it easier to complete
• Continuously improve the system based on new learning outcomes.

10. Utilize the system to protect profits

An investment system can help you make rational decisions during emotional fluctuations. For example, when a particular project performs well, you may feel excited and want to hold on, but if your system indicates that you should take profits, following the system's advice may help you avoid significant drawdowns later.

Summary

The core of systems thinking lies in reducing decision fatigue. By systematizing small decisions, you can focus more energy on more impactful matters. While systems thinking may not come naturally to some, once mastered, it will make your life and investments easier and more efficient.