The author of this article, tehMoonwalkeR, sums up a trading strategy based on experience and helped him to survive the bear market perfectly. The following is the body part:
I made a lot of mistakes in 2017, and the biggest reason for the loss is not my lack of fundamental analysis, but emotions . What prevents us from making a profit? What makes us miss a hundred times? It is also emotion.
Fundamental analysis has always been one of my investment strategies, but today we don't talk about how to do fundamental analysis. This article is mainly about introducing the market's volatility and what kind of response we should make.
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A gambler enters the casino and starts to win. He wins one, two, five… After every win, the probability of losing increases exponentially. In the end, Zhuang always wins, because the longer you play, the greater your chances of losing.
This is very similar to making a digital currency investment.
Suppose you find a potential currency with a market value of around $500,000 and you plan to invest in it. If the coin is to be turned 10 times, then its market value will reach 5 million US dollars, this volume will be placed on the Coinmarketcap will be more than 400. This is not impossible, many projects are coming like this.
But if you still want to turn it 10 times, then the market value will reach 50 million US dollars. This volume is more than 200 in Coinmarketcap. This means it is one of the 200 best performing projects in the world.
But if you increase it by 10 times, the market value will reach 500 million US dollars, ranking 23rd, almost behind the etheric classic.
But like the long-term gambling in casinos, every time you turn 10 times, the more likely you are to lose money, the less likely you are to win.
If the current 20th item is 10 times higher, then it will rise to the 4th position of the market value, between XRP and BCH. I am not saying that this is not possible, but you need to realize that the percentage of revenue is getting smaller and smaller, and the percentage of loss is getting bigger and bigger.
Lessons from 2017
In the 2017 cryptocurrency investment, I learned two things, nothing is stronger than the market, and nothing is more powerful than emotion.
Most of the time, investment novices will follow suit because of the rise in the project. This is a profit-seeking feature of humans, but often at this time, you should be more careful and withdraw at the right time, or it will disappear soon. Even if the token on the account is worth 100 million, if you don't get out of time, then these are not real money, and the time may be worthless.
If you don't believe it, look at this example, the peak is $16 billion, but now, there is only $300 million in market capitalization.
This is just one example. The top 10 tokens are no safer than other tokens.
So, trust your research when investing, not rely on your emotions. If you want to make a profit, please stay calm in a bad market. Many people tend to fall in the moment before making a profit.
If you buy a good coin, but the price of the coin has not kept up, the trading volume is average, and no one is arrogant. Everything is unremarkable. Faced with this situation, many investors have the feeling of exhaustion. The more you stop, the more you should calm down, check your understanding of the coin and find out why it has not risen.
Admit that you are not perfect
Most people can't buy at the lowest point and won't escape at the highest point. Don't be bothered by this problem, this is actually a huge waste of time and energy.
Many newcomers will ask: If you have reached this number, will you continue to fall?
Let's think differently: If you find that a coin that has fallen 20%-30% is actually a very good project, then I believe that you will not ask me if I want to buy it.
That's why I don't advocate Stud, but I hope to accumulate slowly (such as setting a vote).
It's like taking the things you buy into small pieces and buying them back every time. This approach minimizes risk and does not expect a perfect entry point. In fact, this strategy allowed me to maintain liquidity when the market was very bad.
So how does it combine with selling?
There are two types of sales: 1. You want to get the money back, 2. You want to sell it and buy it back at a cheap price.
Then the question is coming, when is it sold?
I hope to have a simple answer, but this is a very complicated issue because it requires a lot of considerations.
The most important factor is the market. In 2017, FOMO emotions (fear of missing) came, and the first person to be killed was the one who sold too early. I also made this mistake. When some coins rose 5 to 10 times, I sneaked in again.
Nothing is stronger than the market, never forget this. You may buy the junk coins in the right time and make a profit, or you may lose money with the value coins in the wrong time.
Let's take a look at the following figures:
There are two periods you can miss: the first, the project is in the “potential” phase; the second, the project price is experiencing a slow but steady decline, and there is no sign of recovery.
In both cases, the profit opportunities are extremely embarrassing.
The two trends are almost identical, both have a rise of nearly 90 degrees, but have never broken through before and have a slow downward trend. The only difference is that in 2017 and one in 2019. year. This also shows that history is always repeating, and market movements driven by emotions and other situations will always repeat itself.
Let us now look at the situation of Bitcoin:
Looking at Bitcoin in 2019, it doesn't seem to fit this pattern, it seems to start a new cycle.
Many people have seen this "Wall Street Cheats", but what many people don't know is that this cycle has not started or ended. This is a never-ending cycle, starting with suspicion and ending with suspicion.
If we repeat the same pattern, we will find that things will become like this:
This means that in the current time, investors usually sell off early to get out of trouble, and the next rise may have to wait for 6-12 months.
Sell in batches
Similar to slowly accumulating above, you can choose to sell slowly, that is, every time you go up to a stage, you sell 10-20% of the position.
I made a lot of mistakes in 2018, mainly because I resisted for too long, and I waited hard to wait for a rebound. The result has not been waiting. Seriously, I almost collapsed at the time.
But then I took control of my fears and tried to analyze the situation at hand.
One of the beauty of a bear market is that everything is discounted. The bears are not picky, and each project has fallen by 80%, 90% or more.
This gave me a great opportunity to change positions, throw away those bad, and buy the best. There is a saying in the investment community: "The best time to buy is when the blood splashes on the street – even if some blood is your own." I was relying on this day-to-day exchange of blood.
Let us summarize it below:
Knowing the fundamentals of analysis is key, and your emotions may hinder you.
Holding a cryptographic asset is similar to a casino effect. Each time you turn it 10 times, the chance of losing is greater and the chance of winning is smaller.
Holding the top 20 assets is not a safe investment. Don't fool yourself into thinking that you are safe. In the final phase of 2018, many people switched their assets to the top 20 projects, which did not help them.
Trust your research, not your emotions.
The time to make a profit is usually the shortest, and the time you are hit is the longest. Keep calm!
The market cycle is repeated, but it is important to know which stage you are in.
No matter how bad the situation is, there must be its advantages, try to dig it and try to implement it.
(Original: tehMoonwalkeR; Compilation: Martha Card; Source: Block Wave)