Curriculum·S207 Investing Frameworks (Unleveraged)·about 31 min
Entry and exit frameworks
By the end of this lesson you can
- →Write an entry rule that removes timing judgment from the moment of purchase
- →Define exit conditions before entry, including the one people never write down
- →Distinguish averaging into a plan from averaging down into a thesis that is failing
- →Read a divergence between informed and uninformed flow as a signal about your own position
Sophomore · enrolled learners
This lesson opens with Who added and who left, 7 to 9 May 2022.
- What happened
- As UST came under pressure in early May 2022, deposits in Anchor fell from about $14B to below $9B across a few days. Analysis of depositor behavior found the outflows were disproportionately driven by a handful of large depositors, withdrawing overnight on Saturday 7 May and in the late morning of Monday 9 May, with the second wave moving the peg meaningfully. Over the same three days, small depositors increased their exposure. UST subsequently fell without much resistance, reaching around $0.22 on one venue. Both cohorts were acting on the same publicly visible information, and their behavior is visible in the same on-chain data.
- The decision point
- The small depositors were not uninformed about the price; they could see it falling, which is why they were buying. What they were missing was a rule stating in advance what a broken peg meant for their position. Absent that rule, a falling price reads as an opportunity, and the decision gets made at the moment F106-02 identifies as least suited to making one.
What you will be able to answer
- →What is the point of an entry rule?
- →Which exit condition do people never write down?
- →What separates averaging in from averaging down?
- →What did the Anchor depositor split show?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://jumpcrypto.com/writing/the-depegging-of-ust/
- https://www.coindesk.com/markets/2022/05/09/investors-flee-terras-anchor-as-ust-stablecoin-repeatedly-loses-1-peg
- https://www.dalbar.com/PressReleases/doc/QAIB2024_PR.pdf
- https://corpgov.law.harvard.edu/2023/05/22/anatomy-of-a-run-the-terra-luna-crash/
Confidence medium·Volatility medium·Reviewed 2026-08-06·Owner unassigned
Contested
The depositor-cohort split comes from analysis of on-chain deposit flows and the classification of large against small depositors is the analyst's. The direction of the finding is well supported; treat the cohort boundary as a methodological choice.
Nothing here is a recommendation to enter or exit anything. The lesson is about deciding rules in advance, and P10 forbids implying that any entry or exit method produces a return.