Do you understand the account of cryptocurrency trading?
Many people speculate in cryptocurrencies without ever understanding what they are doing.

If you have 1 million yuan, and it first increases by 100% and then decreases by 50%, how much will be left?
The answer is 1 million yuan.

If you have 1 million yuan, and it first drops by 50% and then rises by 50%, how much will be left?
The answer is 750,000 yuan.
If it rises 50% and then falls 50%, how much is left?
The answer is also 750,000 yuan.

If you have 1 million yuan and the stable annual rate of return is 30%, how much will you have left after one year?
The answer is 1.3 million yuan
How much will be left after 2 years?
The answer is 1.69 million yuan.

What do the first two examples illustrate? They illustrate that in cryptocurrency trading, controlling drawdown is always the most important thing. In real life, many people may be able to achieve 100% or even 200% profit in the short term, but in the long run, as long as the profit drawdown exceeds 50%, the final result is still to be beaten back to the original shape by the drawdown, and it is all in vain.

What does the third example illustrate? It shows that a steady annualized rate of return is not inferior to a high rate of return with higher volatility. A steady return of 30% per year is already quite impressive! On this basis, compounding interest every year, over a longer period of time, the returns will become very impressive!

From the perspective of a stock market master, why can Buffett become the stock god? It is not because he can easily double his money in the short term, but because he can maintain a profit of more than 20% for 47 years

Many people may be able to achieve a profit of more than 20% in the short term, but it is rare to be able to maintain it for more than five or ten years. Therefore, we should all keep a normal mind, be down-to-earth, and always believe in the power of compound interest
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