Trading coins is like driving; those who constantly run red lights will eventually get into trouble.
As an old hand who has been through ups and downs in the crypto world for many years, I've seen too many people come in with dreams of getting rich, only to leave in disappointment because they couldn't control their trading. Today, let's talk about the pitfalls of frequent trading and share my own real experiences.
Data speaks: low-frequency traders actually earn more
Did you know? Data shows that low-frequency traders (the lowest 20% of trading frequency users) have an annualized return rate of 18.5%, significantly higher than the 11.4% return level of high-frequency traders.
Every time I see someone in the group sharing records of dozens of daily trades, I want to ask: after deducting fees and slippage, are you really making money? Frequent portfolio adjustments not only easily miss key upward trends but also continuously erode profit margins due to trading friction costs.
Why can't we control our hands?
Behavioral finance research points out the five major psychological barriers that cryptocurrency investors find most difficult to overcome: frequent trading, full position betting, blindly chasing uptrends, greed for profits, and stubbornly holding on to losses.
These irrational behaviors not only lead to significant losses in returns but may also cause permanent loss of principal. I have also experienced this stage, where I felt itchy to act when seeing market fluctuations, always thinking that if I don't act, I would miss out on hundreds of millions. The result is often that I make a little money and run, but when I lose money, I stubbornly hold on, and my account balance becomes thinner and thinner.
The risks of cryptocurrencies themselves are already high
It must be recognized that cryptocurrency prices fluctuate greatly, with severe volatility, often used for speculative trading and illegal activities such as pyramid schemes. Recently, Bitcoin dropped from a high of $120,000 to below $85,000, with a daily maximum drop of over 7% being clear evidence.
In this market environment, frequent trading is like taking chestnuts from the fire. Not to mention that our country's financial management authorities have clearly warned that any virtual currency and related business activities carry risks and are not legally protected.
Two practical methods I use to combat frequent trading
After years of exploration, I have summarized two methods that are useful for myself:
The first is to adopt a grid trading strategy, using automated tools to achieve staggered profit-taking while retaining the basic position, ensuring that you do not miss out on potential trending markets that may arise later. This can help avoid emotional interference, making strategy execution more rational.
Secondly, set a clear trading plan, including entry points, stop-loss points, and target prices. Only act when the market trend aligns with expectations and do not arbitrarily change the plan. As investment master Stanley Kroll said, "First-class strategies and tactics are the key to successful trading."
Have more reverence and less speculative mindset
The biggest fear in cryptocurrency investment is losing the sense of reverence. When you start to feel that the market is your ATM, the risk is right in front of you. The volatility of the cryptocurrency market far exceeds that of traditional financial assets, making the risks and challenges faced by investors particularly significant.
My current approach is to maintain a proper distance from the market and not to constantly focus on short-term fluctuations. Everything has its cycles, and the trends of cryptocurrency products will also have ups and downs. The market will not always rise, nor will it always fall.
Investment is a psychological battle, and to do well in long-term investment, having a good investment mindset is very important. In the high-risk market of cryptocurrency, surviving longer is more important than making money quickly.
I hope my shared experiences can be helpful to everyone. Remember, the essence of trading in the cryptocurrency market is not about who is smarter, but about who is more disciplined. Control your hands, maintain a sense of reverence, and we can survive in this market.
Feel free to share your trading insights and confusions in the comments section, so we can communicate and improve together! Follow Xiang Ge for more first-hand information and precise points in cryptocurrency knowledge, becoming your navigation in the crypto world; learning is your greatest wealth!#巨鲸动向 #加密市场观察 $ETH
