Let me share my self-reflection after losing 1 million and being in debt: I realized one truth, that only one type of person can get rich from trading cryptocurrencies!
In the cryptocurrency circle, a day is like 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 unrestricted price fluctuations in cryptocurrency trading fulfill many people's dreams of overnight wealth, which is one of the reasons why it is so popular and why losses in this area have become a common phenomenon.
Every investor who enters the cryptocurrency circle will experience significant losses, exit positions, and the transition from profit to loss in their trading career. The only type of person who gets rich in the cryptocurrency army is someone who has experienced bankruptcy, learned from it, and has a strong mindset. Without experiencing liquidation and major losses, one will never understand what stop-loss means. Without experiencing profit turning into loss, one cannot truly appreciate the change in mentality between heaven and hell. Survival is the first principle. Sun Tzu said: Those who are good at war first ensure they cannot be defeated, and then await the enemy's vulnerability. Achieving no major losses is simple; it starts with survival as the first principle. When dangers that obstruct this principle arise, abandon all other principles.
Because, regardless of how many 100% excellent performances you have had in the past, if you lose 100% now, you will have nothing. Once your funds are depleted, you are destined to be eliminated. To play this game well and achieve ultimate victory, all systems and rules must prioritize preserving the principal. Correct capital management means that each success only allows you to take a small step forward, but a single failure can cause you to take a large step back. This large step hinders the accumulation of capital. Capital accumulation requires opportunity and time. Human nature is always such: the pain of losing 1,000 yuan is far greater than the joy of gaining 1,000 yuan. The loss of a large sum of money can easily affect an investor's mindset.
A loss of 1 million with a 50% decrease becomes 500,000. When 500,000 appreciates to 1 million, it requires a 100% profit to succeed. It takes an hour to walk from the first floor of the Empire State Building to the top, but jumping off the roof only takes 30 seconds to return to the ground. You cannot control the market's direction, so there is no need to waste energy and emotions on situations you cannot control. Do not worry about what changes the market will bring; worry about how you will respond to the market's changes. Judging right from wrong is not important; what matters is how much profit you gain when you are right and how much loss you can bear when you are wrong.
Every time I see many people haggling over the price of a piece of clothing for half a day or shopping for half a day, yet for investors, their decision to buy often takes less than a few minutes. This is a common trait among many people and is not what someone who wants to achieve great success in the investment market should do. To earn substantial money in the market, investors must be cautious and guard their accounts as if walking on thin ice.
When entering the market, have a clear operating system:
(1) How much do I plan to earn in this wave of market?
(2) What is the maximum loss I can accept? If the market withdraws, how much loss must I exit immediately?
(3) I must secure a portion of the profits from each operation.
(4) Gradually increasing positions to avoid trading with all funds, continuously raising profit stop-loss levels as profits increase, and never allowing already gained profits to turn into losses.
(5) Always give yourself another chance to trade, strictly operating according to your trading system. The trend is the best friend; the biggest enemy in trading is the patience to wait for a clear market trend and overtrading.
A bull market does not end in a day, nor does a bear market. Trading in the cryptocurrency market is a place I have seen where it can be dormant for three years and then profit for three years. As long as you have patience and wait for a clear market trend to emerge, find leading stocks, and hold onto them until the end of the entire bull market without overtrading, you can achieve unexpected profits.
When a trend arises, respond and follow it. When there is no trend, observe and remain calm. Overtrading is also a major enemy of investment. Those who engage in arbitrage trading can only earn a small profit but cannot make big money. Let's calculate the transaction fees for overtrading: Currently, virtual currency exchanges charge a transaction fee of 0.2% for buying and selling, making a total of 0.4% for each transaction. If a trader operates once a day for 365 days, they will lose 4/1000 * 365 = 140%. You may think this is 1.4 times, but think about how Buffett strives for a 30% gain; what about you? Your annual trading fees amount to 140%! Another aspect that traders often overlook is that the more frequently a person enters and exits the market, the more likely they are to 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; and if you do nothing, you won't make mistakes.' However, excessive trading can result in missing out on major market movements. Strategize before acting, based on obvious price breakpoints, market sentiment, trading conditions, and capital inflow situations to determine the arrival of a trend. Maintain a broad perspective on market trends and do not be misled by short-term fluctuations.
Mental quality is the core of trading. Trading violates human nature; it is a game that allows only a few to profit, while the majority merely provide funds for others to play. Strong mental quality is required in trading; a mindset and perspective that can handle the universe of liquidation is essential. If you enter the market with 10,000 yuan and your heart races for a fluctuation of 100 yuan, I advise you to leave this market as soon as possible. This ensures your personal safety. If you have the mindset to earn 100 million, then fluctuations within 1 million will not affect your mentality because what I ultimately want is 100 million; 1 million is not within my consideration. This mindset increases the opportunity for significant profits.
Trading is not only about battling large institutions, market makers, and retail investors but also about battling oneself. As the ancients said: fighting against heaven is enjoyable, fighting against earth is enjoyable; the highest state of struggle is battling oneself. Trading is a constant psychological struggle where you keep questioning yourself: should I sell at this price or hold on? What should I do? This is a psychological game that requires strong mental quality. Additionally, good mental quality must be paired with good physical condition; health is key. Why do people live? Living is merely the process of having a healthy body and continuously refining one's soul in this world.
The trading path that suits you represents the logic of things, while skills represent methods and approaches. As the saying goes: having principles without skills is still acceptable; having skills without principles leads to confusion. The emergence of an individual trading path represents the combination of a person's knowledge, insight, and courage. Through constant ups and downs in the market, one eventually grasps the basic logic of trading, which is in accordance with the rules.
The greatest enemies of investors are: hope, fear, and greed. Having your own trading path requires overcoming human weaknesses: hope, fear, and greed. When the market is about to decline, investors should feel fear, yet they are often filled with hope. Conversely, when the market is rising, they fear a pullback, at which point they should be filled with hope but instead become afraid. This is why traders cannot earn substantial money. Having your own trading path, forming a trading system, helps you overcome human weaknesses. When the market comes, let profits run; when there are losses, let yourself stop-loss and exit. This is the foundation for a person to achieve great wealth.
Finally: In the cryptocurrency market, only this type of person makes money. It is not about what techniques and methods are used but about your self-discipline. Trading is sometimes not a battle of strategy but a contest of time and patience.