Today I will share my painful lessons with everyone, hoping you can avoid the pits I have fallen into.
My core viewpoint: The most terrifying aspect of the cryptocurrency market is not volatility, but the 'greed mentality' and 'cognitive blind spots' of retail investors. Volatility is the norm in the market, while greed and insufficient understanding can cause you to lose direction amid fluctuations, ultimately being eliminated by the market. Many people trade cryptocurrencies only thinking about 'making big money', but never considering 'how to control risk'. This is a typical 'retail investor mentality'.
The correct approach is to set a 'take profit line' and a 'stop loss line' and to strictly enforce them. I generally set my take profit line at 20%-30%. If the cryptocurrency rises to this range, I will sell half to lock in profits; the stop loss line is set at 10%-15%. If it drops below this range, regardless of profit or loss, I will sell directly to avoid greater losses. Remember, take profit and stop loss are not restraints, but a protection for your 'safety belt'.
The second painful lesson: Do not 'blindly follow the trend and trade based on hearsay.' Back in 2018, I often listened to others recommending coins in various communities; whatever others said was good, I would buy, never researching on my own. Once, someone said a new coin would skyrocket, so I hurriedly invested heavily, and within a few days, this new coin just disappeared, and I lost over a hundred thousand. Later, I realized that in the crypto market, most 'news' is often delayed; by the time you hear the news, the major players have already completed their layouts, just waiting for you to take over.
The correct approach is to establish your own 'research system.' Before buying a coin, you must research its white paper, team background, technical strength, application scenarios, market competition landscape, etc. Do not just rely on others' recommendations or only look at candlestick charts. My habit is to create a detailed research report for each coin, and only if it meets my investment criteria will I buy it.
The third painful lesson: Do not 'operate with a full position, leaving no way out.' Back in 2018, I was too greedy and invested all my money into the crypto market, even borrowing some money to leverage. As a result, when the market suddenly corrected, I was liquidated and lost everything. Later, I realized that operating with a full position is like 'gambling'; if you win, it's fine, but if you lose, you have nothing left. In the crypto market, you must always leave yourself a way out.
The correct approach is to allocate positions reasonably. My position allocation principle is: 60% of funds invested in mainstream coins to ensure the safety of the principal; 30% of funds invested in promising quality projects to pursue higher returns; and 10% of funds as reserve to deal with unexpected market situations. This kind of position allocation ensures the safety of the principal while also providing opportunities for higher returns.
In fact, many experienced traders have gone through these lessons. The crypto market is like a 'trial ground for human nature'; it amplifies your greed and fear. Only by overcoming these human weaknesses and continuously improving your understanding can you survive in this market for the long term. If you currently feel helpless and confused about trading and want to learn more about the crypto world and get first-hand cutting-edge information, follow me@标哥说币
