The Seven Weapons of a Trader Series — Trust in Practical Operation (Part 1)

How to Replace Faith with Data?

The previous operation article covered basic actions like position sizing, stop-loss, take-profit, and record-keeping.

In this article, I want to talk about: What analysis did you do before opening a position?

Many people lose money not because of operational mistakes, but because they didn't do their homework before opening a position. They are attracted by price fluctuations, driven by KOL calls, or motivated by the feeling that "it's going to rise," then rush in, only to be quickly schooled by the market.

So the core of the "Trust" weapon is not "what you believe in," but "why you believe."

You don't believe in a particular coin, a particular person, or a particular KOL's call. You believe in verified data, traceable logic, and patterns that have been tested by history.
Although I have been liquidated four times, in the past eight years, I have never lost money by choosing the wrong coin for spot trading.

I. The Ability to Read a Whitepaper

A whitepaper is the "instruction manual" of a project, but not all whitepapers are worth reading, and not all whitepapers tell the truth.

The purpose of reading a whitepaper is not to "finish it," but to "verify." Verify whether the project team has truly thought through what they want to do and why they can do it.

Essential Whitepaper Reading List (7 Core Questions)

1. What problem are they solving? — Is this problem real, or is it manufactured?
2. What is the solution? — Is the technical path reasonable? Or is it still at the conceptual stage?
3. Why blockchain? — Is blockchain essential to this solution, or is it just added to raise funds?
4. What is the role of the token? — Is the token truly needed to run the system, or is it just a "fundraising tool"?
5. Who is the founding team? — Do they have previous project experience? Is the team's background verifiable? Can LinkedIn, GitHub, and past experience be cross-verified?
6. What are the fund uses? — Where do they plan to spend the raised funds? (Development, marketing, liquidity, or "team incentives"?)
7. Is the roadmap reasonable? — Are the milestones overly optimistic? Or have they reserved sufficient safety margins?

Judgment criterion: If after reading the whitepaper, you still cannot explain what the project does in one paragraph to someone who hasn't read it — then the whitepaper is poorly written, or the project itself hasn't thought things through.

Beginner's Guide to Pitfalls

If a whitepaper is full of "grand narratives" but lacks specific technical details, be cautious.
If the core team is anonymous or cannot be traced on LinkedIn/Google with past resumes, be cautious.
If the whitepaper contains content or data that is clearly plagiarized from other projects, skip it directly — a project team that plagiarizes the whitepaper does not deserve to be called a project team.
If the last update of the whitepaper on GitHub is more than a year old, it means the project team hasn't been seriously working for a long time.

II. Team Analysis: Where the People Are, the Path Lies

Projects can change directions and narratives, but the team is the core asset. To judge whether a project is worth holding long-term, first ask: "Who is doing this?"

Five-Step Method for Team Analysis

1. Check the career trajectories of core members. LinkedIn, GitHub, past project experiences — see what they have done before, whether they have successful project experience, or if their resume is blank.
2. Verify their technical background. Do core developers have records of contributions to open-source projects? What is the submission frequency on GitHub? This information is public; not checking is irresponsible to yourself.
3. Pay attention to the team's update frequency. If they haven't made a public appearance or technical update for half a year, the project is likely in "maintenance mode" or even abandoned.
4. Observe the team's crisis response ability. How does the team respond when the market experiences significant volatility or negative news? Do they communicate actively and face it honestly, or do they choose silence and avoidance?
5. Check the core members' position changes. If the founder has been continuously reducing holdings over the past few months without any public explanation, why should you believe they will help you make money?

III. Investment Institution Analysis: Who Has Your Back

The level of involvement by investment institutions is an important reference dimension for judging project quality. But don't blindly trust institutions — they can also misjudge and get trapped.

Key Points to Focus On:

· Participation of top-tier institutions. Involvement by a16z, Paradigm, Pantera, Coinbase Ventures, Multicoin, Polychain, etc., at least indicates the project has gone through a professional due diligence process.
· Ratio of lead investors to follow-on investors. If only small institutions or none are involved, it means big money is unwilling to enter.
· Token lock-up period. Do the tokens obtained by institutions have a long lock-up period? If institutions can unlock and cash out immediately after listing, it indicates the project team lacks confidence in long-term value — because a truly confident team would not allow early investors to sell on day one.
· Institutions' buying and selling behavior. If early institutions have been increasing rather than decreasing their holdings after the project goes live, that is a very strong signal.
· Resource injection by institutions. Institutions not only invest money but also bring resources — such as partners, market makers, ecosystem support, media exposure, etc. If an institution invests money and then completely ignores the project, the project likely won't go far.

IV. Economic Model Analysis: How Tokens Flow

The economic model (Tokenomics) determines the long-term value of a token — not by "faith," but by "flow."

Economic Model Checklist

Supply cap: Is there a cap? Or is it unlimited issuance?
Circulating supply percentage: What percentage of the total supply is currently in circulation? When will the remaining portion be unlocked?
Unlock schedule: How many tokens will be unlocked in the next 12-24 months? Are the unlock times concentrated? If a large number of tokens are unlocked at the same time, it will inevitably create short-term sell pressure.
Inflation rate: What is the issuance speed? Is there a deflation mechanism (e.g., buyback and burn)?
Supply and demand relationship: What are the sources of demand for the token? Is it used to pay gas fees, for governance voting, or purely as a speculative tool?
Token distribution: What is the percentage of total supply held by the top 10 addresses? If this number exceeds 50%, it indicates high concentration.

Pseudo-Narrative Identification Points

If the circulating supply is only 10%-20% of the total supply, and the unlock schedule is overly aggressive, there is a high risk of "peak at listing" — early investors sell after unlocking, and the price is pressured long-term.
If the inflation rate of the project is much higher than its actual revenue growth rate, the token price will trend downward over the long term. Simply put, if its "money printing speed" exceeds its "money-making speed," the token will eventually be diluted to worthlessness.

For example: In 2024, I issued posts warning about TIA, HOOK as narratives, and criticized DOT and FIL for modifying issuance mechanisms.

In 2025, I warned about ZRO, ICP, AR, etc. Speculating correctly can certainly make you rich, but data analysis can help you go further.

Data doesn't call, doesn't FOMO, and doesn't tell you "this time is different" at the top. Data just lies quietly on the chain, waiting for you to read.

"Trust" means: You no longer trust your intuition, emotions, or sixth sense. You trust verified data, traceable logic, and patterns repeatedly tested by history.

Writing is hard work. I hope everyone will follow, like, bookmark, and leave comments to discuss. I will reply.