Is it possible to heavily invest when prices are rising and lightly invest when they are falling?

Before discussing this issue, I want to express a point of view.

Everyone has heard that when lightning strikes, you must be present. Why? In fact, not only does our social wealth conform to the 80/20 rule, that is, 80% of the wealth is in the hands of 20% of the people.

In the cryptocurrency world, there is also a clear '80/20 rule', meaning that 80% of the time is actually wasted time, and only 20% of the time is profitable.

There is a book that mentions the 'Lightning Theory'. The author analyzed Bitcoin's returns from 2010 to 2020 and was shocked to find that if the 30 days with the largest gains were removed, the annualized return would drop by more than half. Through data analysis, he concluded that 80% of investment returns come from 20% of the time.

Because you can't predict when the lightning will strike, you must ensure that you are always at the table. Therefore, it's not that you are empty before the rise and fully invested after; it doesn’t work that way. You can only do your best to ensure that you heavily invest when prices rise and lightly invest when they fall.

Most people actually do the opposite. They use an inverted pyramid approach to increase their positions, meaning that the higher the price, the heavier the position. When the price is rising from the bottom, your position is light, but as the price gets higher, your greed intensifies, and you start to increase your position. Once it reverses, you will fall heavily.

This is similar to gambling. When you are up, you bet 100 or 200, continuously making money. Then you suddenly make a big bet of 10,000, and it drops, possibly wiping out all your previous gains. Investing according to human nature feels good, but it doesn't make money. There’s a saying that’s been overused: when others are fearful, I am greedy; when others are greedy, I am fearful. When prices are high, and everyone is scrambling for it, you should give your chips to others and pick them up when prices are low.

This counterintuitive investment approach might be hard for you. But think about it, the ones making money are the minority. Most people follow their instincts; you can only dig into others’ pockets by going against human nature.

Where does greed come from? When a coin is rising, you may think that by holding this coin, you can make up for your previous losses. So, the higher it goes, the less willing you are to sell. This kind of thinking is extremely wrong and is typical gambler's thinking. Eating fish means enjoying the middle part; the head and tail are not tasty. You must learn to let go.

So, the story of ordinary people is often: starting with a small position, then it rises, and then they keep adding to their position. Later, with a loud crash, it falls, and all the profits are lost. You are unwilling to accept this, so you hold on, getting deeper into a loss, and you become even more unwilling to let go. Having never gained anything, you are not sad; having gained something, you lose it, and you will feel restless. Then, you hold on, turning short-term trades into long-term ones, a one-night stand into a marriage. After waiting for a long time, one day you suddenly realize that you are out of the loss, you quickly sell, feeling relieved, and then it takes off...

Don't ask how I know this; if you haven't been repeatedly tortured, you can't discuss the cryptocurrency world.