Traders in the financial markets all hope to accurately predict future trends. So, if you could travel back to March 12 and knew that BTC would rise to $110,000 afterward, you would make a huge profit, right?
The answer is no. Even if you traveled back to March 12, your returns would be the same as today, or even worse than today's returns.
This involves two important theories: the "Butterfly Effect" and Soros's "Reflexivity."
The Butterfly Effect refers to the sensitive dependence on initial conditions. In this case, a small change in the state of a deterministic nonlinear system can lead to significant differences in later states. This is akin to the Chinese saying "a slight error leads to a thousand miles of deviation." Therefore, it can be said that if you traveled back to March 12 and went all in, investing your entire fortune in BTC, not to mention your entire fortune, even the act of buying 1 BTC could change the initial variables. Even if this change is just a hundredth of a decimal, BTC would not rise to $69,000. The initial trajectory might be similar, but after multiple iterations, it could become vastly different. In fact, your purchase could even lead to a further decline. Thus, prediction is meaningless unless you predict but do not trade, meaning you do not change the initial variables.
Soros's Reflexivity: The English term Soros uses is Reflexivity, which indicates that the thoughts of participants and the events they are involved in are not completely independent. The cognitive function and the participatory function have opposing effects; they not only interact but also mutually determine each other, with no symmetry or correspondence. I believe understanding the theory of reflexivity is not too complicated; it can actually be summarized in one sentence: things influence each other. Simply put, your trading itself will affect your thoughts, meaning very few people can stick to their trading plans, especially when there are significant unrealized gains.
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