When the market sees tokens skyrocketing in value multiple times over in just a short period, the greed factor kicks in, pushing people to chase prices out of fear of missing out. However, compared to mainstream coins that are more evenly distributed among holders, altcoins and meme coins are often controlled by project teams, which significantly lowers the cost of pumping their prices.
Adding to that, the impact of funding rates can easily make retail traders who want to short at high prices buckle under pressure, ultimately fueling the price surge. Every time I mention this, someone argues that they can just go long to ride the wave, reaping the rewards of the upswing and also benefiting from the funding rates. Sounds great, right?
In fact, unless you're extremely disciplined, it's hard not to be influenced.
When you see the price swinging 30% in just a few hours, even if you take profits, you might feel bad for missing out on the subsequent rise. You might chase back in after a pullback, and when you see your account's floating profits changing rapidly, it's easy to hesitate to close your position. Suddenly, a large number of long positions get liquidated unexpectedly, combined with the project's team dumping their spot holdings, and this can create a cascading effect where bulls are stepping on each other. You could be sitting on millions in profits before dinner, and come back to a loss after.
Such stories play out every day.
Water Bro often reminds everyone that if you want to participate in these high-volatility coins, you should control your initial capital to not exceed 10% of your total amount from the start. Keep a steady mindset and set a protective stop-loss amount, so that even if the market reverses, you can still retain some profits.
The biggest taboo is not setting stop-losses and constantly holding onto positions, especially after successfully navigating a few times. Your mindset will tell you that you can handle it this time too, until a catastrophic moment hits, and only then might you realize, or you could repeat the same mistake next time.
Rather than constantly creating emotions, it's better to carefully consider whether there are things in your investment strategy that you initially reminded yourself to be cautious about and things you shouldn't do.
After all, there are always opportunities, but if you graduate, you leave this market.
