After the market downturn in March 2024, after waiting for half a year, a major explosion finally arrived. The Federal Reserve cut interest rates, Trump was elected, and the SEC chairman was about to resign, igniting market trading enthusiasm. On December 5, Bitcoin broke through the $100,000 mark for the first time, with the market expecting the bull market to peak in the first half of next year.
However, a bull market is not guaranteed to be profitable; knowing how to buy is just the basics, and knowing how to sell is key. This article uses two trading mistakes as examples to expose trading traps for beginners.
1. The risks of new coins are high at the end of a bull market; do not set expectations for returns too high.
In the second half of 2021, towards the end of the bull market, DYDX gained attention due to a massive airdrop and its leading position in derivatives. Haocen entered at $10 and doubled his investment within a week, initially thinking the upward trend would continue. However, in early November, the market reversed, and due to his stubborn holding, he missed the best selling point, ultimately selling at $2. By mid-2023, as the market warmed up, Haocen bought DYDX spot again, coinciding with favorable news for dYdX V4, pushing the price above $4. Yet, at the beginning of 2024, the price dropped back to half, and he finally exited with only one-third of his maximum unrealized profit.
Reflecting on the mistakes, first, the DYDX team's issues were prominent, with the CEO not paying attention to the token price and even temporarily resigning. Although there was new token economics, continuous selling pressure from VCs and mining, slow new coin issuance, and low enthusiasm led to a long period of price stagnation since June 2022. Secondly, at the end of the bull market, expectations of new coins should not be too high; early layout coins like DOT and NEAR have more holding value.
2. Waiting for the right moment tests patience; frequent position changes can lead to losses.
At the beginning of 2024, after selecting CoinList projects and VC lineup, Haocen heavily invested in ONDO at a cost of about $0.3. During this time, operational mistakes led to a decrease of tens of thousands of coins, and he decided to stop the trading. However, during the meme coin craze, ONDO remained inactive and did not list on Binance spot, resulting in limited gains when the RWA sector rose. Haocen's mindset wavered, and he switched his position to BONK, FLOKI, and ZK. As soon as he switched, the meme coin market sharply turned downward, with all coins except ZK declining. Meanwhile, ONDO skyrocketed to $1.95 within a week after selling at $0.99, missing out on a doubling of value, significantly affecting his mindset.
The root cause lies in a restless mindset, easily shaken by prolonged holdings without increases and surging other coins. The market sector rotation is rapid, with funds quickly circulating between meme coins, L1, DeFi, and RWA.
3. Summary of trading points.
1. Be cautious about buying new coins at the end of a bull market; do not overestimate returns. When there is a major cycle reversal, slow runners can significantly reduce profits.
1. Do not easily switch positions to chase hot trends during sector rotation. When hotspots arise, there are many calls on Twitter and emotions run high, but chasing positions can easily lead to being stuck when the trend changes. It is essential to maintain composure and eliminate noise interference.
2. Clearly define your reasons before trading and whether you can persuade others. If the reasons are insufficient, the target may not be suitable. A trading plan is crucial; one must assess the stage of the market, consider the timing of selling and target selection, and avoid blindly following the crowd, being swayed by the K-line.
In the market, everyone's capital and risk preferences differ; trading skills and mindset cultivation have no endpoint. There is no need to be anxious about not selling at the peak, as no one can predict accurately.