Teach You the Secrets of Trading Cryptocurrencies: Go Heavy When Prices Rise, Go Light When Prices Fall
Speaking of trading cryptocurrencies, have you ever thought about how to go heavy when prices rise and light when they fall?
First, let’s discuss a viewpoint. You’ve all heard the saying, "When the lightning strikes, you need to be present." In fact, not only is 80% of the wealth in society held by 20% of the people, but the same applies to the cryptocurrency world: 80% of the time is wasted time, and only 20% of the time can you make money.
There’s a book that talks about the "Lightning Theory," which says that if you exclude the 30 days with the highest price increases over Bitcoin's ten-year history, the annualized return would be cut in half. This means that in investing, 80% of the profits come from 20% of the time.
Since you don’t know when the lightning will strike, you need to stay at the poker table all the time. It’s not a good thing to be fully invested just because prices are rising and to go empty when they fall. You need to try to go heavy when prices rise and light when they fall.
But most people do the opposite. The higher the price, the heavier the position; when the price is at the bottom, the position is light, and when the price rises, greed kicks in, leading to heavy investments, only to face a reversal and take a big hit.
It’s like gambling. When you win some money, you start placing big bets, and when you lose, you lose everything you won earlier. Investing in line with human nature sounds pleasing, but it doesn’t make money. You have to go against the grain: when others are fearful, be greedy; when others are greedy, be fearful. At high prices, give your chips to others, and pick them up again at low prices.
This counterintuitive investment approach may make you uncomfortable. But think about it, the ones making money are the few, while most people follow human instincts. Only by going against the grain can you reach into others' pockets.
When the price of a coin rises, you want to rely on it to make up for previous losses, and the more it rises, the less you want to sell. This is typical gambler thinking. To eat fish, you need to eat the middle part; the head and tail are not tasty. You need to understand the importance of letting go.
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