The road to growth of small capital must go through three stages!
When my winning rate is very high, I always feel that enlightenment is just around the corner. However, as time goes by, the capital curve is pushed back outside the door of enlightenment, and this torture repeats over and over again.
A large part of this phenomenon is due to the different stages of cognition.
The first realm: seeing mountains as mountains and seeing water as water.
For traders, this stage means: not knowing that you don’t know.
Friends who have just started trading are still ignorant and confused about the cryptocurrency world. When they see a K-line, they only know it is a K-line, and when they see a price increase, they only know that the coin price has increased.
Often, listening to the wind means the wind, and listening to the rain means the rain; following the trend in trading, explosive gains and losses are the norm.
The biggest problem at this stage is not knowing what you don’t know; what you see is just the surface, observing phenomena without seeing the essence.
In my shallow understanding, every time I learn a new piece of knowledge, I feel enlightened, and then I apply it to trading, perhaps making a profit once or twice, but in the end, without exception, I lose money.
For example, friends often leave messages sharing their trading logic, which is often one-dimensional. Seeing a strong market leads them to believe there is capital buying in, so they follow suit.
Seeing large orders supporting the price during a downtrend leads to the belief that there is capital maintaining the currency price, using this as a reason to hold.
At this stage, the obsession with technical indicators is the strongest, such as the golden cross and death cross of MACD combined with the price trend.
It was like this when I first entered the market; every new piece of knowledge felt like a treasure, but later my trading understanding was constantly challenged by the market. Repeatedly facing this led to self-doubt, and then confusion began. Once you enter confusion, you start to enter the next stage.
Second realm: seeing mountains as not mountains and waters as not waters.
This stage for traders is: knowing that you do not know.
Recognizing one's own shortcomings is a difficult process, as human nature tends to find reasons to turn the unknown into the known. Having come this far, you have already crossed a precarious bridge over countless corpses.
You will find that the world of trading has opened a window; after correctly recognizing your shortcomings and weaknesses, you will humbly seek knowledge and learning, no longer obsessing over specific techniques and methods as before.
Comprehensively learning trading knowledge, including technical analysis, cycles, chip distribution, and the mental state of funds inside and outside the market, during this process your trading system will also be built up unconsciously.
Seeing rising currencies no longer leads to impulsively chasing prices, and holding currencies will not cause panic when they drop.
With multi-dimensional cognition, you are getting closer to the truth of the market. As your understanding increases, you become more and more contradictory.
It often happens that two versions of yourself are fighting; they are equally powerful, and neither the true nor the false Monkey King can defeat the other.
When the technical side indicates a selling point, the overall perspective tells me that the trend is not over yet; didn’t we agree that we should open our horizons? I blame myself for not listening while selling at a loss and curse myself when trapped.
When you start to doubt yourself again, congratulations, you have progressed; you will enter the third realm.
Third realm: seeing mountains as mountains and waters as waters.
If the first two realms are about addition, this realm begins with subtraction. Knowing what you know, but not necessarily doing it.
After practicing through the first two stages, you have opened up your meridians, excelling not only in technique but also in emotional management, mindset, and position planning, surpassing the vast majority of people.
Your trading is not constrained by strategies and methods; short-term, mid-journey, ignition, and buying low are all done effortlessly. At this point, you are formless and surpass the formless; you won’t wait for opportunities to walk into your ambush before taking action, but will instead create corresponding trading strategies based on different market conditions, keeping yourself always on the advantageous side.
In the trading under high vision, your overall perspective will also form at this stage.
The cryptocurrency market is like a battlefield; the art of war can be considered profound. The guiding ideology of guerrilla warfare during the land war revolution is the basis for the formation and development of overall strategies and tactics: 'When the enemy advances, I retreat; when the enemy is stationed, I disturb; when the enemy is tired, I strike; when the enemy retreats, I pursue.' This ideology has greatly influenced my trading.
When the bears are strong, I actively reduce my position or go flat to avoid their sharpness.
When the bears show signs of exhaustion, I take a chance and test the direction of a new cycle.
When the bears are utterly defeated by the bulls, I will make a heavy investment, regardless of chasing highs or buying lows; fully participating is the core demand.
The Tao Te Ching states: man follows the earth, the earth follows heaven, heaven follows the way, and the way follows nature.
So the mountain is still that mountain, and the water is still that water, but you are no longer the person you once were.
Thus, these are the three most important stages I have experienced since I started trading, which I believe most people must go through.