You’re reading this because you’re interested in joining crypto signal groups. Perhaps you’ve even spent your hard-earned dollars on one that went and didn’t deliver on its lofty promises. And you may be asking yourself if you’ve been bamboozled. Well, I’m here to tell you, with extremely high confidence, that you in fact did.

These shady Telegram groups, filled with bots boasting 90%+ accuracy rates and guarantees of lambo-infested wealth, are taking advantage of your FOMO. Don't fall for it. We know the crypto space is already littered with scams. Usually, these signal groups are another layer of the same stinking onion.

One Number To Rule Them All

Forget the hype. Never mind the doctored screenshots of winning trades (which are relatively easy to fake, by the way). There's one metric that cuts through the noise and exposes the truth: The Risk-Adjusted Return.

Now, I know what you’re thinking. "Risk-adjusted return? Sounds complicated." Well it isn’t, and I’m going to break it down so your grandma could understand it. This isn’t rocket science, it’s common sense, applied with a pinch of math.

Think of investing like running a business. You need to factor in the costs. In trading, your real “cost” isn’t just in commission you pay, it is all the risk you are putting at stake with each trade.

There are many ways to go about calculating risk-adjusted return. Sharpe Ratio is all well and good but I like the Information Ratio better. It’s better designed for judging active management performance. Further, it measures the quality or consistency of the excess return relative to the risk taken.

Information Ratio = (Portfolio Return – Benchmark Return)/ Tracking Error

Because a group can get lucky. Or they are able to knock down a few big winners in a row and then appear to be geniuses. But luck runs out. The Yardstick that Measures Skill The Information Ratio Number one, it lets you know if their success is really due to skill, or just stupidity luck.

  • Portfolio Return: The return you get by following the signal group’s calls.
  • Benchmark Return: What you would have gotten by simply holding Bitcoin (or Ethereum, or whatever the group primarily trades) over the same period. This is crucial. They might be making money, but are they actually beating the market?
  • Tracking Error: This is the standard deviation of the difference between your portfolio's return and the benchmark's return. It measures how consistently your portfolio's performance deviates from the benchmark. Higher tracking error means more volatility.

Let’s pretend a signal provider presents you "proven outcomes" at a 95% win rate. Sounds amazing, right?

Dodging The "Verified Results" Trap

What if those wins were all little, and the 5% losses were gargantuan? What if they’re just using crazy leverage to juice those returns, exposing your capital to extraordinary risk. Leverage, as we’ve mentioned before, is a double-edged sword. It amplifies both your relative returns and your losses.

Luckily, the Information Ratio takes all of this into consideration. It punishes ultra-volatile strategies and profits those that have better risk-adjusted performance through consistent outperformance without increased volatility.

You don't need them. We believe the single smartest investment you can make is in your own financial education. Understand how to read candles charts, recognize and work with market cycles and build your own successful trading strategy.

Crypto signal groups are frequently marketed as an easy path to wealth. In truth, they often just take you right down the road to insolvency. They take advantage of our longing for something for nothing and our fear of missing out.

Now, I am definitely NOT suggesting that all signal groups are scams. Okay there may be some truly talented traders but they’re the exception, not the rule. But actually locating and tracking them is akin to locating a needle in a haystack of shattered dreams. Even if you could identify someone worth following, would you even want to just copy their trades without question? It’s important to know what they are deciding and why they are deciding it.

  • Below 0.4: Forget about it. You're better off buying and holding.
  • 0.4 - 0.6: Okay, maybe there's something there, but proceed with extreme caution.
  • Above 0.6: Now we're talking. This suggests a skilled trader or team with a sustainable edge. But still, do your due diligence.

The Bitter Pill of Independence

Don’t get me wrong, the libertarian in me is screaming that you should never blindly trust anybody with your money, particularly in the Wild West that is crypto.

So, next time you're tempted to join a crypto signal group, remember this: Calculate the Information Ratio. Demand transparency. And, most importantly, trust yourself. Your financial future depends on it. Independence to manage your own money is true independence at its finest. Just don’t give it over to some Telegram wizard who tells you he’ll deliver the stars and cookies. You're better than that.

I'm not saying all signal groups are scams. There might be a few genuinely skilled traders out there. But finding them is like finding a needle in a haystack filled with broken dreams. And even if you find one, are you really going to blindly follow someone else's trades without understanding why they're making those decisions?

The libertarian in me screams against blindly trusting anyone with your money, especially in the Wild West of crypto.

So, next time you're tempted to join a crypto signal group, remember this: Calculate the Information Ratio. Demand transparency. And, most importantly, trust yourself. Your financial future depends on it. The freedom to control your own finances is the ultimate form of liberty. Don't surrender it to some Telegram guru promising you the moon. You're better than that.