Everyone, take a look at my tearful self-reflection after losing 1 million: I realized one thing, only one type of person can get rich from trading cryptocurrencies!
In the cryptocurrency world, one day is equivalent to a year in the stock market. Those who engage in trading cryptocurrencies will no longer have any interest in stock trading. The all-day trading and unlimited price fluctuations in cryptocurrency satisfy many people's dreams of getting rich overnight, which is one of the reasons why virtual currencies are so popular. This also explains why losses in the cryptocurrency circle have become a normal phenomenon.
Every investor who enters the cryptocurrency market will experience significant losses, liquidation, and the journey from profit to loss. Among the army of cryptocurrency traders, only one type of person can get rich, and that is someone who has experienced bankruptcy, learned from it, and has a strong mindset.
Without experiencing liquidation and significant losses, one will never understand what stop-loss means; without experiencing profits turning into losses, one can never appreciate the mental shift between heaven and hell.
Survival is the first principle.
As Sun Tzu said: 'The good fighters of old first put themselves beyond defeat, and then waited for an opportunity to defeat the enemy.' It is quite simple to avoid significant losses. Make survival the first principle; when dangers that hinder this principle arise, abandon all other principles. Because, no matter how many 100% excellent performances you have had in the past, now, if you suffer a 100% loss, you have nothing left.
Once your funds are depleted, you are destined to be eliminated. To play this game well and achieve final victory, all systems and rules must prioritize preserving the principal.
Proper capital management: each success may only allow you to take a small step forward, but a failure can set you back a large step. That large step hinders the accumulation of capital, which requires both opportunity and time. Human nature is always like this: the pain of losing 1000 yuan is far greater than the joy of gaining 1000 yuan. A significant loss of capital can easily affect an investor's mindset. A loss of 50% on 1 million becomes 500,000, while increasing 500,000 to 1 million requires a 100% profit. It takes an hour to walk from the first floor to the top of the Empire State Building, but it only takes 30 seconds to jump from the rooftop back to the ground. You cannot control the market's direction, so do not waste energy and emotions on situations you cannot control. Do not worry about what changes the market will present; concern yourself with what strategies you will adopt in response to market changes. Judging right from wrong is not important; what matters is how much profit you gain when you are correct and how much loss you can bear when you are wrong.
Every time I see many people in the crowd haggling over the price of a piece of clothing for half a day or shopping for half a day, yet they think about buying what they want as an investor for only a few minutes, this is a common trait among many. This is certainly not the behavior of someone who intends to make big moves in the investment market. To earn big money in the market, investors must be cautious and guard their accounts as if walking on thin ice.
There is a clear operational system when entering the market:
(1) How much do I plan to earn in this wave of market movement?
(2) How much loss can I accept at most? If the market pulls back and I incur a loss, I must exit immediately.
(3) Every time I operate, I must secure a portion of the profits.
(4) Gradually increase positions to avoid full-position trading. As profits rise, continually increase the stop-loss level to ensure that already acquired profits do not turn into losses.
(5) Always give yourself a chance to trade again, strictly following your trading system.
The trend is the best friend.
The biggest enemy in trading is patiently waiting for a clear market trend and excessive trading. A bull market does not end in a day, nor does a bear market. Trading in the cryptocurrency circle is a place I’ve seen where you can go three years without opening a position, and when you do, you can profit for three years. As long as you have patience, wait for the trend to clarify, find the leading stocks, and hold on until the end of the bull market without overtrading, you can achieve unexpected profits. When the trend comes, respond and follow it. When there is no trend, observe and remain calm.
Overtrading is also a major enemy of investment. Those who trade for small price differences can only make a small profit but cannot earn big money. Let’s calculate the transaction fees for overtrading: current virtual currency exchanges charge 0.2% for both buying and selling, resulting in a total of 0.4% for each transaction. If a trader operates once a day for a year (365 days), then due to transaction fees, this trader would have lost 4/1000 * 365 = 140%. You didn’t misread; it’s 1.4 times. Think about it, Buffett is still working hard for a 30% return; what about you? Your annual trading fees are 140%. Another point that traders often overlook is that the more frequently a person enters and exits the market, the more likely they are to frequently change their mind. As the saying goes, 'the more you do, the more mistakes you make; the less you do, the fewer mistakes you make; if you do nothing, you make no mistakes.' However, due to excessive trading, you might miss out on significant market movements.
Plan before taking action. Based on the clear price points, market sentiment, trading conditions, and capital inflow provided by the market, determine the arrival of trends. Maintain a broad perspective on market trends and do not be confused by short-term fluctuations.
Psychological quality is the core
Trading is against human nature; it is a game that allows only a few to profit, while the vast majority are merely providing funds to play. In trading, one needs strong mental quality and must have a mindset capable of withstanding liquidation. If you enter the market with 10,000 yuan and your heart races over 100 yuan's fluctuations, I advise you to leave this market as soon as possible to ensure your personal safety. If you have the mindset to earn 100 million, then fluctuations within 1 million will not affect your mindset, because what I ultimately want is 100 million; 1 million does not fall within my considerations. Only then will you have the opportunity to achieve large profits.
Trading is not only about competing with large institutions, with market makers, and with retail investors; it's also about competing with yourself. As the ancients said: 'Competing with heaven is enjoyable, competing with earth is enjoyable; the highest realm of struggle is competing with oneself.' Trading is a constant psychological struggle, always questioning yourself: should I sell or hold at this price? What should I do? This is a psychological game that requires strong mental quality. Additionally, having good mental quality also requires maintaining good physical condition. Health is key. Why do people live? People live merely to have a healthy body and to continuously refine their souls in this world.