Why Compounding Crushes the Moonshot Mentality
The Problem with the Moonshot Mentality
The moonshot mentality feels great.
That’s the problem. It taps into your dopamine circuits. It lights up the same part of the brain as gambling - because it is gambling. You don’t just want to make money. You want to be right.
You want the narrative to unfold exactly how you imagined it: The rebound. The rally. The vindication. It’s intoxicating.
But it sets two psychological traps that destroy portfolios quietly - and completely.
1. The Inertia Trap
You bought a coin because it looked promising. It dropped. But now you’re emotionally anchored. So, you hold. Maybe it’ll recover. Because maybe the team will deliver. Maybe you’ll get your money back.
Meanwhile, setups with actual edge appear - and you ignore them. Or worse, you never see them
You’re stuck in limbo, pretending that conviction is the same as strategy. But it’s not. It’s inertia. And that inertia is costing you.
2. The Sunk Cost Trap
You’re already down 60%.
Selling now would mean locking in the loss - and admitting you were wrong. And admitting that you were wrong would feel too bad. So you hold on. It’s easier to just keep refreshing those charts. Or to just not watch them at all.
But waiting isn’t free. Every minute your capital is stuck in a low- Expected Value, EV trade, it’s not being deployed into a better one.
That’s the hidden cost of the moonshot mentality:
It kills your ability to pivot. To pivot into a higher quality, higher EV setup.
Compare this to how compounders think.
They:
Take partial profits when risk/reward deteriorates.
Cut losers fast, without ego.
Reallocate capital into new trades with fresh probabilities and clean setups.
One mindset is reactive. The other is strategic, agile and constantly assessing the market for higher potential returns.
One clings to hope. The other compounds edge.
What It Looks Like in Practice
The Setup
· Portfolio size: $25,000
· Bet size on AVAX: $5,000
· Why 20% of the portfolio? Because AVAX scores in the top 15% of tokens in the universe of the EdgeVector system, as measured by edge
· Stop Loss: 5%
· Risked: $250
The price chart of the AVAX token: Oct 2023 - Feb 2025
Trades executed
-> October 2023, AVAX crosses from below the EdgeVector Line to close above it. Entry at $11.02
-> April 2024, AVAX crosses from above the EdgeVector Line to close below it. Exit at $39.50
-> Result: 258% (3.58x) win
-> November 2024, AVAX crosses from below the EdgeVector Line to close above it. Entry at $26.50
-> Feb 2025, AVAX crosses from above the EdgeVector Line to close below it. Exit at $36.01
-> Result: 36% win
Final Result:
5,000 * 3.58 * 1.36 ≃$24,500 = 4.9x = 390%. Banked. Having risked $250 to start.
Now let’s compare that to a dollar cost averaging (DCA) approach during the long accumulation phase throughout 2023.
Let’s say that you thought Avalanche was a project with a bright future, and you wanted to establish a position in it and hold it for the long haul. So, you spend 2023 accumulating – and your average is somewhere between $13 and $15
As of today, you’re sitting on a roughly 50% unrealized gain. Not bad.
But dreadful when compared to the realized, banked, 390% gain from earlier. That’s the difference between turning $5,000 into $7,500 (with the trade still live and at risk) versus turning that same $5,000 into $24,500 in the bank.
Opportunities for outsized gains in crypto are short-lived. But they are abundant, if you know where to look.
The Bigger Picture: Why Moonshots Are Exit Liquidity
Let’s be blunt here: If you’re holding a coin hoping for a 10x without a clear exit plan, you’re not investing. You’re donating liquidity to the smart money.
Because every compounder needs a moonshooter to sell into. Every disciplined exit needs someone to FOMO in to pick up their bags.
So when you say “I’m holding AVAX until it hits $100 again.”, the market hears: “Thanks, I’ll be exiting my 260% position into your hopeful little bag.”
That’s how this game works.
So What Should You Do?
If you want to play the moonshot game - fine.
Just recognize it for what it is:
High-risk
Low-probability
Emotionally exhausting
Built on hope, not edge
Moonshots feel exciting. They give you the illusion of control, the dopamine rush of potential, the hopium.
But the longer you play that game, the more likely you are to:
Miss better setups
Ignore opportunity cost
Get wrecked by drawdowns
Want to play a different game?
That’s what the EdgeVector Line is built for:
Ranking trade setups by quantified edge
Scoring trade setups based on statistical EV
Sizing bets dynamically based on your edge
Recalibrating your trading approach as the market dynamically shifts
Because, as the players in the crypto game got more sophisticated, it’s not enough to just react. You need to:
Know when edge is present.
Rank your trade setups based on your probabilistic advantage.
Size your bets to maximize upside and protect downside.
Compounding gains may not be “sexy.” It won’t moon your account overnight. But it works - because it lets you stop hoping and start compounding.
Over time, the compounding path turns traders into capital allocators. And capital allocators aren’t playing for a single moonshot.
They’re playing to win the whole table. That’s the difference.
And it’s why EV-based trading isn’t just smarter - it’s survivorship trading in a game where most blow up chasing the next hype coin.
Final Thought: What Game Are You Really Playing?
At the end of the day, it’s about the game you choose to play.
Moonshotters bet on narratives:
They chase the next big story. Even if it turns out to be total BS.
They anchor to price targets that sound good on Twitter.
They convince themselves that diamond hands beat data.
Compounders bet on math:
They stack high - EV trades over time.
They size positions based on risk, not gut feel.
They don’t need a home run - they just keep hitting doubles.
Leave their emotions at the door, shut out the noise and open – minded on what the price of anything may or may not do.
One is fueled by hype, hope, and headlines.
The other is powered by probabilities, process, and discipline.
You can YOLO and get lucky. We’ve all done it.
But the question is: Can you do it again? And again? And again? Compounders don’t need luck. They just need a system that works - and the patience to let it play out.
You moonshot. I compound.
And over a hundred trades, a thousand trades, a lifetime of capital allocation?
I will win. You will be my exit liquidity. And you will lose. Don’t take it personally. It’s just math.
I’m not swinging harder, I’m just betting smarter. Because in this game, edge isn’t what you say. It’s what you prove – one trade after the other.
Want to see what edge-based trading actually looks like?
Check out the EdgeVector Line - where EV, Game Theory, stochastic calculus and trading discipline meet.