Different people have different views on investment. Recently, I saw a saying: some people will spend 90% of their time learning and researching, and only 10% of their time on actual operations and transactions; while others will spend 80% of their time on operations and transactions, leaving only 10% of their time for learning, and they may regret the remaining 10%.
This statement may not be completely correct, nor can it cover all investors. But perhaps we can use it to test our own investment style.
Based on this statement, we can roughly divide investors into two categories: traders and investors.
Investors are those who, after investing their money, rely on long-term waiting to gain appreciation potential. Therefore, their investment goal is to select valuable assets with long-term appreciation potential.
Traders invest money and then sell it when the price goes up to earn the difference and make a profit. Therefore, this type of investment mainly targets assets with frequent price fluctuations or short-term price increases.
Based on the basic concepts of the two different styles, we summarize their different characteristics and focuses:
1. The most important thing for investors is to discover potential projects and assets, so they need to spend a lot of time researching these assets and projects before investing, and predicting their future appreciation and development space; traders make profits through trading, so when they find assets with large price volatility and relatively large volatility, or after a sharp rise in prices in the short term, they act decisively and seize the opportunity to buy low and sell high.
Generally speaking, the possibility of an asset's price rising in the short term is small, and it is not easy to seize this opportunity. In most cases, the profit margin of short-term operations is low, and the possibility of making a lot of money through one or two operations is small. Therefore, more people accumulate the proportion and total amount of profits through multiple transactions. On the whole, the operation frequency of traders is much higher than that of investment traders.
2. From the perspective of buying and selling strategies, investors make profits by gaining asset or project appreciation in the long term. Therefore, after selecting the target and before the profit reaches the expected level, it is necessary to focus on the fundamentals of the project and the overall trend of industry and economic development, without paying too much attention to the price fluctuations during the process, and there is no need to buy and sell frequently due to these factors.
Moreover, traders will focus on trading, pay more attention to short-term price fluctuations, and the impact of various information, emotions, market and other factors on short-term price trends. They pay less attention to the value or future potential of projects or assets, and some people don't even care whether the investment product is valuable, as long as they can make money by buying low and selling high.
3. It is actually very difficult to make money in these two types of investments. For investors, the most difficult thing is how to hold on to the assets or tokens they hold, because there is a long period of time between buying and selling, and the pace of currency markets and trends changes faster than in the real world. Buying high-quality assets is a test, and holding it before the expected arrival is a more severe test. Therefore, finding out where your confidence comes from and constantly strengthening it may be the most effective way to deal with it.
For traders, short-term trading opportunities are fleeting, and coupled with short-term fluctuations, it is easy to cause large fluctuations in their assets. Therefore, psychological endurance is a great test. In order to cope with psychological and emotional interference, the more common practice is to formulate a trading strategy in advance, train yourself to operate according to the strategy, and strive to overcome the weaknesses of perceptual psychology and emotions with a more calm and rational training method.
The main purpose of our analysis of these two investment methods is to understand their money-making logic and operating principles, and to use them to test and adjust ourselves.
In fact, many investors have both styles. They are both investors and traders. They hope to obtain long-term profits through the accumulation of time and short-term speculation, while also hoping to obtain short-term gains.
In fact, both ideas are correct, and it is okay to want to take both benefits into account at the same time. The problem is that when we confuse these two investment logics, we often use the wrong method to operate.
There are some relatively strong feelings about this in recent short-term operations.
Whether it is my own operating experience or everyone’s comments, it is mentioned that the easiest way to lose money in short-term operations is to chase rising prices and sell falling prices.
First, chasing the rise: As the name suggests, it means chasing highs when you see prices rising, and then buying at a relatively high price.
Why do you chase the price? If you are just worried about missing out, then why do you worry about missing out? It is because you don’t have the money, or you haven’t bought enough, and you are worried that there will be cheaper money to buy later.
So why worry about not being able to buy it? The first reason is the fear of making more profits after not having enough to eat.
It will be more interesting to analyze it. Do you find the problem? Hoping to make more money later has actually deviated from our short-term logic. The main purpose of long-term investment is to make money in this wave. As for the profit later, it should be considered in the next operation.
The problem is that we put the goal of investment style into the trading style, or put it in a more understandable way, that is, we use the long-term investment of hoarding coins as a short-term goal. In the absence of the psychological need to increase the number of coins, it is unlikely that we will have the idea of chasing high prices. At most, we can wait for a while before operating.
Therefore, for the problem of chasing high prices in short-term operations, our countermeasure is to thoroughly understand our short-term goals and logic. If we want to obtain future returns, we should obtain them through medium- and long-term investment methods. Moreover, the goal of short-term operations should be to make money in the short term. The simpler the goal, the less likely it is to be disrupted. Therefore, the logic of short-term operations is to find a range of buying low and selling high, and learn to seize opportunities to make money.
If you want to get more money through short-term games, the best way is to invest a certain amount of money earned from each short-term game into a long-term investment account and continue playing with only the short-term principal. This is to avoid having to pay back previous losses after a single mistake.
Let’s look at short selling: As the name suggests, it means that when prices fall, you sell at a price much lower than the purchase price regardless of cost losses, resulting in capital losses.
The reason for the decline is simple, because people are worried that the price will continue to fall and they will lose money. In fact, there is nothing wrong with our short-term logic, because the purpose of short-term operations is to make money every time, at least not to lose money.
For this problem, according to short-term logic, the easiest way is to set a stop loss line. If your loss tolerance is 20%, then setting a stop loss line within 20% can prevent greater losses.
From another perspective, we can borrow the long-term investment logic on this issue. When the stock price drops, we can store the coins as a long-term investment, wait for the price to rise, and then return to the short-term operation logic, and sell when the profit reaches the expected level.
The reason for this type of operation is to avoid a rapid rebound in prices after selling within the stop loss line, because it is easy to chase higher prices at high prices after the chips have been lost, resulting in double losses. After all, the price of the currency market changes too quickly, and there is no obvious pattern. But this also has a prerequisite, that is, you must understand the currency you are operating. For those projects that have no value or you don’t know their value, the risk is very high, and it is very likely that when you hold the currency, the price will not rise for a long time, or even fall lower and lower. If you don’t understand the investment target, you will be more panicked at this time and it is easier to sell when the price falls.
To invest, you must first be calm and have brains, and to figure out your own investment style and investment goals is to have brains.
Based on this, reflecting on whether each operation has clear goals and logic is an important step towards rationality and the basis for us to establish our own investment system.
The views in this article are for reference only and do not constitute investment advice. The cryptocurrency market is volatile, so investment needs to be rational. #币安合约锦标赛 $BTC
