Often overlooked yet critically important investment and trading skills!

1. The Complexity of Cost Averaging

In the field of investment, cost averaging is not as straightforward as it seems. For example, when the price of a cryptocurrency is $10 and you invest $10,000, then when the price drops to $5 and you invest another $10,000, your average cost is not intuitively $7.5, but $6.67. This method of calculation is especially important in an environment where market prices fluctuate frequently. Understanding and applying it correctly can help you manage positions and control risks more effectively.

2. The Astonishing Power of Compound Interest

Compound interest, a seemingly simple mathematical concept, actually contains enormous growth potential. Suppose you have $100,000 in capital and only need to earn 1% each day before stopping. Over 250 trading days in a year, if you can maintain this return, your assets will grow to an astounding $1,323,200 after one year. If you continue for another two years, your assets may even exceed ten million. Of course, this requires you to have stable profitability, but more importantly, how to consistently maintain this compound growth is a challenge every investor must face.

3. Probability Management and Setting Take-Profit and Stop-Loss

In trading, probability and the setting of take-profit and stop-loss points are equally crucial. Suppose your investment success rate is 60%, and you set a 10% take-profit and stop-loss point for each trade. In 100 trades, if you can strictly adhere to this strategy and not be swayed by market fluctuations, your total return could reach 300%. However, this requires a high level of self-discipline and calm judgment, especially when market volatility intensifies; one must maintain a clear mind.

4. Greed: The Biggest Stumbling Block on the Investment Path

Greed, this difficult-to-overcome weakness of human nature, is often the main reason for investment failure. Imagine starting with $10,000 and earning a 10% profit each time; by the 49th day, your assets could multiply a hundredfold to $1,000,000, surpassing ten million by the 73rd day, and even potentially over a billion by the 97th day. However, the reality is harsh, as most people cannot control their greed during this process, ultimately leading to investment failure. Therefore, learning to control greed and maintaining a rational investment attitude is key for every investor on the path to success.

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