In the cryptocurrency circle, there are some little-known facts or tips that are often overlooked but are very important. Today, I’d like to share a few:
1. Cost dilution is not as simple as imagined
For example, if you invest 10,000 U when the coin price is 10 U, and then add another 10,000 U when the price drops to 5 U, your average cost is actually 6.67 U, not the 7.5 U that many people think. This situation is very common in market fluctuations, and understanding this cost calculation method is helpful for managing positions.
2. The power of compound interest is astonishing
Assuming you have 100,000 U and earn 1% daily, you would exit the position. If you can maintain 250 trading days in a year, your assets will grow to 1.3232 million U after one year. Continuing for two years, your assets could even reach the tens of millions level. Of course, this result is based on stable returns, but the hidden challenge is how to continuously maintain this compound interest.
3. The relationship between probability and take profit/stop loss
If your investment success rate is 60%, and you set a take profit and stop loss of 10% each time, after 100 trades, your total return can reach 300%. But this premise is that you strictly follow your trading plan and are not emotionally affected by market fluctuations, especially in highly volatile markets.
4. Greed is the greatest enemy
If you start with 10,000 U and earn 10% each time, by the 49th day, your assets could reach 1 million U, by the 73rd day, you could break through 10 million U, and by the 97th day, you might even exceed 100 million U. However, in reality, almost no one can achieve this because most people cannot control their greed during this process, leading to a crash halfway. This is why many traders find it difficult to maintain profits over the long term, even if they are profitable.