David Malka, the co-founder of YieldFarming.com, profited millions playing professional poker prior to starting his $500million AUM vacation rental fund. After exiting in 2019, he turned full time Yield Farmer, often educating his vast network on the world of DeFi.
The requirements for long-term success in poker and crypto are astonishingly similar. But there is no need to play an infinite amount of hands of Texas Holdem to profit from the lessons.
Here are 7 ways to be successful in crypto long-term and outperform the market as if you’re holding a royal flush at the poker table:
1. You’ll Never Win Without Proper Bankroll Management
A poker player who can’t manage their bankroll is nothing but a gambling addict. No matter how great the cards you get dealt or how fantastic you play, swings and variance are part of the game. Even if you have four of a kind, and the math is in your favor, another player could be sitting on a straight flush. Making the theoretically correct decision is not an immunity to loss.
In crypto, no matter how promising a project is, there is always a possibility something goes wrong. That’s why it's borderline stupid to go ‘all-in’ on an investment. Utilizing bankroll management (risk-adjusted capital management) is crucial to never face the risk of complete financial ruin. And in the case something does go wrong, like a rug pull out of your control, don’t let your frustration lead to bad decision making. Managing your bankroll is how you prevent yourself from being taken to the cleaners.
Bankroll management is #1 on the list because it's that important. It’s a way of life. Always have an emergency fund with 6-12 months of living expenses. Don’t keep all your funds on a single exchange or wallet. Never store your seed phrases in one place. Own assets outside of crypto so you can keep a cool head whenever there is a dip. Profits go up. Profits go down. It’s part of the game. And don’t check your portfolio 30x a day. Instead, zoom out and see the bigger picture in the long haul.
2. Don’t Underestimate How Much a Whale Can Bully You
A chip bully in poker plays overly aggressive pre-flop or raises the stakes at every hand. Since he has the most chips, he can essentially bully the other players to either fold or play extremely conservatively. Naturally, this puts him at a massive advantage and makes him a feared opponent – even if he’s sitting on a suboptimal hand.
The average retail investor in crypto has no idea how much of an edge a whale has. They get early access to deals and projects, are more easily exposed to insider information, and not to mention, move entire markets of small caps.
Crypto is an unregulated place and 99% of people underestimate the power whales have. In DeFi, they can enter a farm and cause liquidations for the small traders with leveraged bets on the opposite side. It’s not an equal game and it’s crucial to be aware of this.
Realize this before you jump into your next project. Poker is player vs. player. Someone has to lose for you to win. Most people underestimate how similar the crypto space can be. By the time you’ve heard about a protocol, the early savages are dumping. And in that case, you better hope they’re not billionaire whales.
3. Always Be Cautious of Ulterior Motives
Gambling attracts the students of human nature, and poker is no different. Players at the table will try to exploit your weaknesses with ulterior motives. A professional poker player will sit across the table and analyze his opponent's throat to check his pulse and see if he’s nervous. And won’t hesitate to “fake swallow” himself to bluff his nerves to his table enemy.
In crypto, who are you listening to? What’s their incentive? And do they really have your best interest at heart? Think of the YouTuber whose job is generating viral views and clicks. Are they in the top 5% living off their investments? Or are they getting paid to promote the next moonbag, often practicing questionable ethics in doing so?
People will purposely mislead you with “This unknown coin will explode 200x 😱 🤑 ” and then dump on you as soon as they get the chance. Be aware of who you’re taking advice from and what their motives are.
4. The Importance of Table Selection
Stu Ungar was one of the most feared poker players in the 80s and 90s. A master psychologist who understood the mental game of poker better than anyone else at the time. When he didn’t face his demons in his personal life, he’d shake money out of people like no one had ever seen before. People at the Last Vegas tables would often leave the second he showed up.
Would you rather play Stu Ungar in his prime or drunk billionaires who want to blow off some steam? Table selection is crucial and you should always strive to find games you can beat. But no games are won without any inherent skills. With the rapid growth of crypto, it's not enough to just be a hodler. If you want to beat the market, focus on your best skills and turn yourself into a specialist.
Do you understand meme culture and have an eye for spotting artistic trends? Then you could make a killing flipping NFTs. Do you have ice in your veins and access to advanced algorithmic bots? You could be part of the 5% of crypto traders who don’t lose money. Perhaps you have a massive pot to play with but live a hectic life. Then you’d probably love the returns from stablecoin farming. Or maybe you don’t have large sums but a lot of free time on your hands. Then you can be in all the Discords and Telegram chats to find the most lucrative upcoming airdrops.
These are just a few examples. The point is, play to your strengths and always improve your skills and don’t rely on pure luck as that will, most likely, never make you profitable in the long run.
5. The Power of Not Playing Too Many Hands
New players love the rush of sitting at a poker table and never miss a chance to check or raise the stakes. But the professionals know it’s more intelligent to be patient and wait for a solid hand. In crypto, few things will cost you more money than FOMO. It’s better to be patient and wait for well-grounded projects before you invest.
The thrill of a ridiculous 100x return might score you internet clout points on Twitter. But investing in hundreds of random shitcoins is not the strategy the most successful investors in crypto follow. The vast majority of the time, the stablecoin farms and bluechip projects will outperform the random coins you’ve never heard of.
Spectators love to obsess over the crazy all-ins watching poker from the sidelines. But they don’t understand how the game works. It’s the small wins that add up. Crypto is the same. Don’t underestimate the possibilities of small victories and how much they can profitably compound long-term.
6. Fix Your Leaks and Know When to Quit
A leak is a fundamental flaw in your game that consistently loses you money. Constantly making -EV plays and not having the self-awareness to catch yourself until it’s too late. Calling or folding based on the strength of your hand and ignoring all other information. Or simply just playing when you’re tired, distracted, or angry.
There are lots of leaks in poker and crypto is no different. Do you always get wrecked after buying the top based on random calls on Twitter? Do you miss doing your due diligence and consistently get scammed? Or do you have a hard time cutting your losses?
A common bad habit many poker players have is they try to win back their losses before quitting a session. Anyone who’s done any form of gambling knows how quickly this eats away at your bankroll. And it’s just a recipe for turning an off day into a disastrous one. Crypto is no different. Just because a project has gone down 90% doesn’t mean it can’t go down another 90%. Even if it seemed like a great project at first, it’s crucial to know when to cut your losses and move on.
7. Find Your Edge to Beat the Market and Win in Crypto
Poker is a brutal bloodbath for the player who never finds his edge. Perhaps it's mathematically calculating the odds of either you or your opponent winning the hand in any situation. Or your psychological abilities to read your opponent across the table. Find your edge and double down on it.
The harsh reality of crypto is that you simply won’t win without an edge. It’s not because you’re stupid but how the game is designed. You’re at a major disadvantage with a tiny bankroll, a hectic professional life, and zero access to a network feeding you informational arbitrage. Compare that to the whale with millions of dollars, dedicating over 80 hours per week, and capitalizing on opportunities before everyone else as his network hands him information with a significant edge.
One of our personal advantages at YieldFarming.com is our network with billionaire access, where one insight ended up giving us a 30x return, which is just one of many examples.
A great friend of our co-founder, David Malka, disappeared for a full year. He’s a billionaire who’s read every single whitepaper and understands crypto on a fundamental level most people can’t comprehend.
On his monk mode research quest, he discovered something no one, at the time, was talking about. The battle of layer 1’s. And his conclusion was an extremely bullish stance on LUNA. He had crafted a short PDF and shared it with David why he believed LUNA would explode. The conclusion in that report had thousands of hours of research by a crypto billionaire. We never blindly follow anyone's advice and recommend you don’t either. But after our own due diligence, the LUNA call made sense.
As of writing this article, LUNA has 30x. That was our edge. Access to extremely intelligent and high-performing crypto people with an insane talent for spotting where markets will move. The LUNA investment was never a guarantee for anything but we jumped on it because it was a +EV decision, which is the mental model of billionaires we follow.
Jumping into ten different random coins and accidentally catching a pump is NOT an edge. It’s just luck. And a bad strategy to begin with. That’s why we recommend you find your real edge as soon as possible to start winning in crypto. But also, don’t be surprised when an 18-year-old kid apes into a meme coin and outperforms you. It happens. And it’s part of the crypto game. But at the same time, it’s what makes this space so incredible, to begin with. Anyone can win. You just have to maximize your chances of doing so.