Veteran Trader Peter Brandt Reveals His Secrets to Trading Uncertain Markets
“Hump with a Slump then a Pump and a Dump”
Crypto and prop trader Peter Brandt explains his strategy for navigating uncertain market conditions similar to the current ones. Brandt says a familiar price behaviour is back, what he calls the Hump…Slump…Pump…Dump or HSPD for short.
This pattern is often associated with market manipulation or speculative bubbles and is particularly common in less regulated markets or with assets that are prone to high volatility and speculation, like certain cryptocurrencies.
The “Hump” is an initial rise in asset price, often due to positive influences. This is followed by a “Slump,” a period of price correction or decline. Afterward, a “Pump” occurs, marked by a significant and rapid price increase, frequently driven by speculation. The cycle ends with a “Dump,” a sharp price fall, often leaving the price lower than the initial hump.
He suggests that inexperienced investors, referred to as “Chumps,” often fall victim to the FOMO (Fear Of Missing Out) during the Pump phase. They buy in during the rapid price increase, hoping to capitalise on the trend.
Lessons to be Learned
In basic terms, inexperienced investors or those acting on impulse end up buying assets when their prices are at their peak because they fear missing out on the potential gains. Then, when the prices sharply fall, they panic and sell their assets, often at a loss. This cycle of buying high and selling low is the opposite of profitable investing strategies and can lead to significant financial losses.
Brandt likely intended to make investors aware of these patterns and the HSPD cycle to become more strategic rather than emotional investors. Investors can take some pointers from Brandt here: