When the market crashes, the best weapon is not blindly bottom-fishing, but scientific position management.
Looking at the account full of green, does it feel a bit chilly in your heart? Recently, the market has been continuously falling, and many crypto friends have been trapped at high positions. Some choose to 'lie flat and pretend to be dead', while others start 'mystically bottom-fishing', but the result is often deeper traps.
I also came out of my experiences of being trapped. Today, I won't talk about complex theories, but will share three practical operations, all of which are experiences I obtained through real money.
1. Forget about the cost, see the situation clearly before taking action.
The market doesn't care about your cost price. Many people fall deeper after being trapped because they are too entangled with their buying costs, leading to missed opportunities for optimal loss reduction.
Previously, I entered Bitcoin at a high of $60,000, and when the price dropped to $50,000, I couldn't bear to sell at a loss, resulting in a deeper decline. Later, I understood that the first step to breaking even is to forget the cost price and objectively analyze the current market trend.
How to judge the trend? Simply put, look at whether the price is above the key support level. If the currency you bought is in a downtrend and the trend has been confirmed, action should be taken rather than holding onto illusions.
Two, average down in batches, rather than all at once.
Averaging down is a common method for lowering the average cost, but the key is how to do it. Many people rush to buy in full when the price drops, and this 'all-in' operation often puts them in a more passive position.
I am currently using the pyramid adding method: starting with a smaller initial amount, and if the market declines, gradually increasing the investment, but with a gradually increasing proportion.
For example, I initially invested only 10% of my funds. If the price continues to drop, I invest 20% the second time, and add more if it drops again. This avoids running out of ammunition too early and effectively lowers the cost.
Remember, averaging down is not about recovering losses all at once, but about lowering the average cost, making it easier to break even during a rebound.
Three, leverage strength against strength, learn to cut losses and switch.
Cutting losses is not giving up, but a strategic retreat. Many cryptocurrency friends view cutting losses as 'selling at a loss', which is hard to accept psychologically. However, in fact, a reasonable stop-loss protects your capital for future battles.
My principle is: a single trade should not lose more than 2% of the total capital. This way, even if I occasionally judge incorrectly, it won't cause significant damage.
Another strategy is to 'switch currencies'. If the fundamentals of the currency you are stuck in have deteriorated, it might be better to take the opportunity to switch to a more promising currency. It's like a broken-down car; instead of spending a lot of money to repair it, it's better to buy a new car with better performance.
The investment market is unpredictable, and being stuck is a necessary lesson for every investor. A true expert is not someone who never gets stuck, but rather someone who can respond calmly after being stuck and turn the situation around through scientific position management.
Emotional decision-making is the enemy of investment. Position determines mindset; if the bet is too heavy, you may lose sleep, while if it is too light, it may be uncomfortable. Finding a comfortable position is very important.
Welcome everyone to share their experiences of being stuck; let's analyze the way out together. In the crypto world, we do not seek to be right every time, but hope to smartly extricate ourselves after every mistake.
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