Understanding whether you are investing, trading, or speculating.
Author: Game
Compiled by: Deep Tide TechFlow
Fear of "this is the last cycle" + uncertainty about how long good times can last + social pressure from others performing better. These three factors create a deadly combination that undermines the decision-making ability of many people.
Possible Consequences:
Distraction: Blindly chasing every hot trend while neglecting the necessity of focusing on key trades.
Pessimism and Hesitation: Losing confidence due to uncertainty, leading to an inability to hold any asset long-term, or even completely withdrawing from the market.
Lack of Belief: Insufficient in-depth research on projects, making it impossible to build enough confidence to handle market fluctuations.
Lack of Profit Strategy: Fearing the end of a trend, hastily liquidating positions during minor Bitcoin pullbacks, missing out on larger profit opportunities.
Suggestions for Coping:
- ### Focus on Key Areas:
Concentrate on one or two specific areas or hot narratives within a blockchain.
Make a clear choice: on-chain trading or secondary trading, focusing on one direction.
If you think you can dabble in all areas simultaneously, you are just deceiving yourself. Concentrate your resources and energy on the areas that align best with current market conditions and can yield the highest returns. Combine your capital size, advantages, and market environment to find the direction and strategy that suit you best.
- ### Clarify Your Approach:
Understand whether you are investing, trading, or speculating; these three have essential differences and should not be confused.
A simple judgment framework can help you distinguish these approaches and formulate corresponding strategies.
- ### Stick to Your Plan:
Develop a clear action plan that includes the following elements:
Market Cap Range: Determine the market cap range in which you will enter the market.
Profit Plan: Establish rules for taking profits in stages rather than liquidating everything at once out of fear.
Target Estimates: Set target prices that your assets may reach, along with a timeframe for achieving those targets.
Stop-Loss Conditions: Clearly define when to partially or fully stop-loss, which can be based on changes in fundamentals or technicals, or adjustments due to macroeconomic changes (such as upcoming important data releases). For example, in uncertain macro environments, it may be appropriate to take profits and wait for lower prices to re-enter.
- ### Know Yourself:
Identify your weaknesses: Do you lack experience? Are there technical skill deficiencies? Do you have tendencies toward excessive optimism or pessimism? Are there issues with poor capital management or insufficient time?
If you find that your weaknesses in these areas are greater than others, decisively withdraw from competition in that field. Choose directions where you have advantages and focus on areas where you excel.
- ### Continuous Improvement
Reflect seriously after each trade—what actions were successful, what were failures, and why? Is the problem in the process or decision-making, or was the decision itself reasonable but the outcome unsatisfactory?
Your goal is to continuously reduce errors in operations, gradually improve your win rate through experience accumulation, and appropriately increase position sizes when your hit rate is higher.
If you neglect this process, you are likely to fall into a long-term cycle of indecision, making it difficult to achieve real progress both psychologically and in terms of profit and loss performance.
- ### Don't Go It Alone
In the market, reliable partners are crucial. They not only hold you accountable for your actions but also help you compensate for your shortcomings.
Truly high-quality trading opportunities often arise from mutual support within a team—you cover their weaknesses, and they help you improve yourself.
Quality over Quantity: The number of partners is not necessarily better when it comes to trading. You need those high-hit-rate, trustworthy traders who are at your level or even better in the areas you focus on.
Broaden Your Perspective: Build a small circle that differs from your main area; these individuals can provide you with important information about macro trends, market cycles, and other insights beyond your immediate focus. These insights will ultimately feed back into your overall market understanding, helping you formulate better strategies.
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