Using Lean Startup to Create Your Crypto Trading MVP
When most people hear the letters MVP, they are thinking of velvet ropes, invitations in perfectly pressed envelopes and the royal treatment. However, for the startup founder, entrepreneur or someone immersed in technology, it means something altogether different.
The entrepreneurs’ MVP is the Minimum Viable Product. It is part of the lean startup approach to ideation, market validation, and developing a user base.
Being a startup founder and entrepreneur is, in many ways, similar to being a trader. After all, trading involves uncertainty, testing, research, market exploration – all things that are part of the startup experience.
Now, what if we take the lean startup process and apply it to the development of a crypto trading approach? What will our MVP look like?
Let’s have a look.
The human institution
Eric Ries, author of the Lean Startup, defines a startup as:
“…a human institution designed to create a new product or service under conditions of extreme uncertainty.”
Using the lean startup method, an idea for a product or service is taken out to potential customers and tested through a series of questions. These questions will be open-ended and exploratory in nature. The classic, what, where, why, how type of questions that provide you with important insights into your idea.
You want to know how significant the pain you are trying to solve is. How urgent a solution is required. And of course, whether they are willing to pay for it today.
Now your exploratory questions might result in a negative. That may be because the problem you came up with isn’t that big. It may be that the problem isn’t urgent or the customer is unwilling to pay for it.
That’s ok. You go back to the drawing board and develop your next hypothesis and test that through further customer interviews. Through your interviews, you might discover another problem. One that is urgent, painful and will have willing buyers. One that is different from the one you are exploring.
Then you have something to work on.
Trading, the other human institution
Like the startup founder, the trader will be developing a trading idea or system under “conditions of extreme uncertainty.” The idea will be based on research, observation and experience.
Who is the trader’s customer? Well, your customer, at least at first, is yourself. So your questions will be internal.
What is the problem you are trying to solve with cryptocurrency trading?
- >Perhaps you want more money or to be more independent
- >You may want to be your own boss
- >Maybe you want to learn something new
- >Discover what personal freedom and agency means
- >Perhaps you want some active entertainment
Understanding why you want to trade will help you develop an appropriate way to address that internal desire. The way to meet that desire will be your MVP. In trading terms, your MVP will be your trading plan.
For the entrepreneur, the Minimum Viable Product is the website, service, product or prototype. Once launched, it will show how potential customers interact with your idea.
The beauty of the MVP is that it need not be perfect or complete because it’s also an information-gathering tool. It will have flaws and lots of room for improvement. Those will be addressed with the ongoing development of your idea and feedback from your market.
The MVP stage is one of the most difficult because it is here that your idea is put to the test of the market. The need to be perfect is overwhelming for some. The desire for it to be successful or just “not suck” can be consuming.
That is why so many entrepreneurs struggle to put their MVP out there. They are trying to make sure everything is there. That nothing will go wrong.
So they delay…
And so it is with traders.
Your trading MVP
The trader’s MVP is the trading plan. Putting your idea to the test can be nerve-racking and exciting. It means offering your trading idea or approach to the uncertainty of the market. It is taking your money and putting it at risk in the market. It means you might be wrong, and you might lose money.
So you may hesitate and delay the execution. Fueled by analysis paralysis, you might feel like you have to do more research – driving further anxiety.
The only way to see if your idea is going to work is to execute the plan.
The only way to gather valuable information about your approach is to put the trade on.
The only way to become informed about your internal response to the trading process is to actually trade.
By following your plan and using the appropriate amount of capital, you can calm those voices inside and start to gather information.
As a startup founder or trader, all of the data points provided by your MVP will give you the necessary feedback for your next step: Iteration.
From the real-time feedback on the MVP, the startup founder will make adjustments. They will be finding ways to enhance user experience, correct obvious problems, and reduce the biggest risks first.
The entrepreneur will explore questions about their MVP like:
- >How was the service or product actually used?
- >Is the website easy to understand?
- >Do customers engage with it over a longer or shorter time?
- >Are they returning to or abandoning the site?
- >Is there unnecessary friction in the user experience?
The founders will work quickly to address and derisk these issues and retest.
For the trader, they will be looking at the external and internal information gathered by observing the trade and execution of their plan.
When you exit the trade, you will then evaluate the outcome. You will examine the context of the results relative to the research, thought process and execution. You may want to know if the trade produced a profit due to an unforeseen event. Or whether the idea was sound, but produced a loss. You will look at your position sizing and the entry and exit strategy based on the conditions.
Enhancing your balance sheet
The trader will also be asking: how was my internal emotional balance sheet?
Perhaps your selling strategy was too impatient, not letting the trade develop because you needed validation. Maybe you took the loss before your stop was triggered because you were nervous and didn’t want to lose more money.
The information gathered from the MVP, the trade, is then incorporated into the next one.
You iterate. Make the adjustment to your entry or exit. Widen or tighten your stop points based on the range of volatility. Perhaps you work on discipline by finding a way to keep to your stop loss, so you don’t miss out on a gain that follows a brief reaction.
Then you put on the next trade and repeat the process.
Before you can scale as a trader, you must develop your ideas, a plan and execute. Only then can you refine your approach and move forward.
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Start building your trading MVP by opening an account today.