Navigating Supercycles: A Risk Management Perspective

When markets enter a supercycle—those explosive growth phases where euphoria can override reason—the biggest danger isn't usually missing gains. It's blowing yourself out entirely.

This was the core warning from Three Arrows Capital's founder during an early 2021 discussion on market dynamics. The lesson hits harder than it sounds: even experienced traders get liquidated during bull runs because they underestimate volatility and over-leverage positions.

The math is brutal. If you're 10x leveraged and the market drops just 10%, you're wiped out. It doesn't matter if you were right about the direction—bad risk management kills winning trades before they mature.

So what separates survivors from casualties? Position sizing. Knowing your liquidation level. Keeping dry powder. And perhaps most critically: accepting that you won't catch every move. Missing a 20% rally is survivable. Getting blown out is not.

In supercycles, the winners aren't always the greediest traders. They're the ones still standing when the music stops.