Underestimating what we can get done in the long term while overestimating what is actually doable in the short term is one of those common cognitive biases that trips up even the most disciplined among us.
Part of me still believes that a lot can be done within a relatively short amount of time via employing leverage or other forms of force multiplication.
In some sense, there's an uneasiness with conforming to this above mentioned belief as it also somehow mirrors taking a shortcut even though it may actually not be a shortcut at all.
I can't remember how many times I've missed a good opportunity through this assumption that leverage is dangerous. If I hear there's leverage involved in xyz, the first reaction is always to avoid it with a tenth foot pole, so to speak.
For example, leverage trading is quite a skill that requires disciplined risk management and an honest assessment of one's own psychological tolerance for volatility.
I've only engaged in leverage trading a few times in the crypto market, got some success and failures, but the failures weren't me getting liquidated because I remembered to place a stop loss.
The successes were nothing much to write home about, but did learn percentage increases compound differently when you're working with borrowed capital, both in your favor and against you.
Chasing Patterns on Tokens That All Look the Same
Some will agree that they are comfortable just holding spot positions, given the peace of mind that comes from not having to monitor liquidation thresholds.
It is said you can sleep well at night with spot holdings lol.
I personally wouldn't want to hold much of a spot position apart from a few tokens that I've built authentic conviction on. I'd rather just trade the plethora of tokens that seemingly almost look very alike when you observe their chart patterns side by side.
I've started to really understand how certain altcoins mirror BTC in terms of price action and momentum as they're essentially beta plays on the broader market sentiment.
My cautious approach to leverage in trading stands in stark contrast with how I think about leverage in other domains.
We leverage tools, systems, and networks all the time to accomplish what would be impossible through sheer effort alone.
A recent example that I've done is reaching out to someone in my network who had specific expertise I needed for a project. A twenty-minute conversation saved me weeks of trial and error and opened up two other collaborative opportunities I hadn't even considered.
Such is the kind of leverage that costs nothing but a bit of vulnerability and has asymmetric upside with virtually no downside risk.
The difference is control and understanding.
The Wisdom That Arrives Too Late
In trading, leverage amplifies both edge and ignorance. If you don't have a genuine edge(most of us don't) then leverage just accelerates the path to learning expensive lessons.
Short-term overestimation playing out in real-time via thinking you can compress years of market wisdom into a few highly leveraged trades.
The long-term underestimation is also equally real. Proper position sizing, consistent risk management, and genuine pattern recognition built over time can make employing leverage more as a potent tool instead of a dangerous gamble.
I think it's just that the "long term" in trading is usually longer than most people's patience allows, myself somewhat included.
I haven't quite made the clear separation in terms of leverage for speculation versus leverage for building.
And by the time I've learned enough to use market leverage "safely", I've probably also learned enough to not need it as much.
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