Recently, many friends have sent me private messages to discuss whether they should clear their positions when they are stuck, and whether the bull market can still rise after being stuck. Today, I would like to answer these two common questions based on my personal experience.
First of all, when we think about these problems, we cannot just start from the current phenomena or existing results. We cannot treat the symptoms without addressing the root cause. Just like the friends I helped before, although the contract explosion or leverage liquidation temporarily solved the problem, it is very likely that the scar will heal and the pain will be forgotten, and the same mistakes will be made again.
I understand the anxiety of being deeply trapped and worrying about whether the currency you hold will rise in the future. However, the more you want to solve the problem immediately, the easier it is to make mistakes. Especially when you encounter unreliable advice or people who are incapable of solving the problem, the result may be even worse.
Two key core issues:
First: The ability to screen currency fundamentals
The most important thing is whether the currency you hold has actual value. If the currency itself lacks fundamental support, it may not perform well even in a bull market. For example, FIL has fallen by more than 90% since the last bull market. If you hold such a currency, it will be difficult to turn around in a bull market.
Second: Choice of entry timing
Understanding the trend changes of the market, especially distinguishing the timing of the transition between the bull market and the bear market, can effectively determine the bottom and the top. For long-term investors, if the entry time is not to chase highs and they have a deep understanding of the currency, then being temporarily trapped is not terrible. As long as you wait patiently, subsequent profits are a matter of time. If it is a short-term transaction, but it is forced to switch to a long-term one due to losses, it means that there is a mistake in the entry strategy.
In this case, we need to have the ability to adjust our positions instead of blindly insisting on them. If we fail to make timely decisions, we may fall into deeper difficulties. In the final analysis, we still need to improve our abilities in currency selection, market trend identification, and position management.
Third: Position management and asset allocation capabilities
Why do many retail investors like to “cast a wide net”?
There are two main reasons:
Greed - They think they can make a lot of money by buying anything in the bull market, and may even come across coins that increase by 100 times.
Unprofessional - Lack of confidence and understanding in the selected currency, so they dare not invest heavily and would rather cast a wide net and try their luck.
In fact, concentrating funds on a few currencies will be more effective than diversifying investments into dozens of currencies. In a bull market, it is more important to grasp the big trends rather than focusing on the small profits in front of you. The same funds, concentrated on three or five targets, are far more efficient than diluting them into dozens of currencies.
In addition, the timing of the bull market peaking for different currencies is not consistent. If you hold too many currencies, it will be difficult to monitor them in real time, which may eventually lead to nothing after the bull market ends.
Summarize:
To solve the current situation, we must first calmly think about the limits of our capabilities. We must clearly recognize our shortcomings at this stage and work hard to improve. If we still rely on luck, expect a bull market, and have a fluke mentality, the risk is very high.
Ask yourself: If the worst-case scenario happened, would I be able to accept it?
This is true for any industry, including the crypto. If it is not achieved through one’s own ability, it will not last long. There is still a chance to remedy the current situation, but if the opportunity is missed, even gods may not be able to save it in the future.
Finally, there are still many things that are not written down, such as specific opportunities and specific decisions. These things are often not something that can be summarized in one article.
If you want to know more about the secrets of wealth or have any questions, please follow the official account: Dongchen Navigation
