A common phenomenon in the cryptocurrency circle is referred to as the "80/20 rule", which means that 80% of the time the market is relatively calm, while the real opportunities for profit are concentrated in only 20% of the time. Since we cannot accurately predict the timing of market fluctuations, it is essential to maintain a certain level of market participation at all times. This means that position management is crucial, rather than choosing to stay fully out of the market waiting for an upward trend or fully in the market chasing highs—such opportunities are extremely rare. A more ideal strategy is to keep a heavier position when the market is rising and to lighten the position as much as possible when it is falling.
However, in reality, many people adopt the opposite approach, presenting a "reverse pyramid" style of increasing their positions. That is to say, they hold lighter positions when the price is low and gradually increase their positions as the price rises. Greed causes them to invest more at high prices, and once the market reverses, this strategy can lead to huge losses. This approach is similar to gambling: being cautious when making profits, only to earn a meager profit, but when betting large sums, a market downturn can erase all previous gains.
Investing in a way that aligns with human nature may feel comfortable, but it is difficult to truly make a profit. As the often-repeated saying goes: "Be greedy when others are fearful, and be fearful when others are greedy." When the market is at a high point and everyone is rushing to chase it, you should decisively sell; when the market is sluggish and others are avoiding it, you can buy in calmly. This contrarian investment approach may feel uncomfortable, but it is the key to profiting for the few. Most people follow human nature, while only by going against it can one stand out in the market.
The root of greed often lies in the hope of compensating for past losses through a certain rise. Therefore, people often become increasingly unwilling to sell as prices rise, which is a typical gambler's mentality and extremely dangerous. Wise investors understand that "when fishing, aim for the middle section"; while the fish head and tail may seem tempting, they are often not tasty. Knowing when to let go is the wisdom in investing.
