I made a lot of mistakes in 2017, and the biggest loss was not my lack of fundamental analysis, but emotion. What prevents us from profiting? What makes us miss 100 times coins? Also emotions.

Fundamental analysis has always been one of my investment strategies, but today we will not talk about how to do fundamental analysis. This article mainly introduces what kind of response we should make in the face of market fluctuations.

casino effect

A gambler enters a casino and starts winning. He wins 1 hand, 2 hands, 5 hands... After each win, the probability of losing increases exponentially. Ultimately, the banker always wins because the longer you play, the more likely you are to lose.

This is very similar to investing in digital currencies.

Suppose you find a potential coin with a market cap of around $500,000 and you plan to invest in it. If this coin is to be multiplied by 10 times, then its market value will reach 5 million US dollars, and this volume will rank more than 400 on Coinmarketcap. This is not impossible, and many projects have come this way.

But if you want to double it by 10 times, then the market value will reach 50 million US dollars. This volume ranks more than 200 in Coinmarketcap. This means it is one of the top 200 performing projects globally.

But if it is increased by another 10 times, the market value will reach 500 million US dollars, ranking 23rd, almost behind Ethereum Classic.

But just like long-term gambling in a casino, every 10 times, the greater the possibility of losing money, the less likely it is to win money.

If the current No. 20 project doubles 10 times, it will rise to No. 4 in market value, ranking between XRP and BCH. I'm not saying it's impossible, but you have to realize that the percentage of gains is getting smaller and the percentage of losses is getting bigger and bigger.

Lessons from 2017

In investing in cryptocurrencies in 2017, I learned two things, there is nothing stronger than the market and nothing stronger than emotions.

Most of the time, novice investors will follow suit and invest because the project is rising. This is the nature of human beings to seek profit, but often this time, you should be more careful and withdraw when the time is right, otherwise it will disappear soon. Even if the tokens on the account are worth 100 million, if you don’t withdraw in time, then these are not real money, and may be worthless over time.

If you don't believe me, look at this example, there was $16 billion at the peak, but now, it's only $300 million in market cap.

This is just one example. Top 10 coins are no safer than others.

So trust your research and not your emotions when investing. If you want to make a profit, please keep calm in the bad market, many people often fall at the moment before making a profit.

If you bought a pretty good coin, but the price of the coin has been going up and down, the transaction volume is average, and no one is smashing the market, everything is flat. Faced with this situation, many investors have a feeling of exhaustion. The more you do this, the more you need to calm down, double-check what you know about this coin, and find out why it has not risen.

admit that i'm not perfect

Most people cannot buy at the lowest point, nor will they escape the top at the highest point. Don't get bogged down by this question, it's actually a huge waste of time and energy.

Many newcomers will ask: I have reached this number, will it continue to fall?

Let's think about it in another way: if you find that a coin that has fallen by 20%-30% is actually a very good project, then I believe you will not ask me if you want to buy it.

That's why I don't advocate stud as soon as you come, but hope to accumulate slowly (such as regular investment).

It's like breaking your purchases into smaller pieces and buying them back every once in a while. This approach minimizes risk rather than hoping for a perfect entry point. In fact, this strategy allowed me to maintain liquidity even when the market was very bad.

So how does it combine with selling?

There are generally two types of selling: 1. You want to get back the money you made, 2. You want to sell it and buy it back at a cheap price.

So the question is, when will it be sold?

I'm hoping there's a simple answer, but this is a very complex question because it takes so many factors to consider.

The most important factor is the market. When FOMO (fear of missing out) came in 2017, the first to be crushed were those who sold too early. I also made such a mistake. When some coins rose 5 to 10 times, I killed them again.

There is nothing stronger than the market, never forget that. You can buy junk coins at the right time and make a profit, or you can lose money with value coins at the wrong time.

Let's take a look at the following pictures again:

There are two periods you can miss: first, when projects are in the "potential" stage; second, when project prices are experiencing a slow but steady decline with no signs of recovery in sight.

In both cases the chances of profit are extremely slim.

These two trend charts are almost identical. Both have risen close to 90 degrees, but since then they have never broken through the previous highs, and they are showing a slow downward trend. The only difference is that one is in 2017 and the other is in 2019. Year. It also shows that history repeats itself, and market movements driven by sentiment and other circumstances always do.

Now let's look at the situation with Bitcoin:

Looking at Bitcoin in 2019, it doesn't seem to fit this pattern, it seems to start a new cycle.

Many people have seen this "Wall Street Cheats", but what many people don't know is that this cycle has neither started nor ended. It's a never-ending cycle that starts with doubt and ends with doubt.

If we repeat the same pattern, we find that things go like this:

This means that in the present time, investors are often selling prematurely to get out of trouble, and the next rise may be 6-12 months away.

sell in batches

Similar to slowly accumulating above, you can choose to sell slowly, that is, you will sell 10-20% of your position every time you reach a stage.

I made a lot of mistakes in 2018, mainly because I resisted for too long and waited for a rebound, but I never got it. To be honest, I almost broke down.

But then I got hold of my fear and tried to analyze the situation at hand.

One of the beautiful things about bear markets is that everything is on sale. Bear is not picky, every project is down 80%, 90% or more.

This gave me a perfect opportunity to switch positions, dump the bad ones and buy the best. There is a saying in the investment world: "The best time to buy is when blood is spilled on the streets—even if some of your blood is your own." During that time, I survived by exchanging blood day after day.

Let's sum it up:

Understanding fundamentals is key, and your emotions can get in your way.

Holding encrypted assets is similar to the casino effect. Every 10 times, the greater the chance of losing, the smaller the chance of winning.

Holding a top 20 asset is not a safe investment, don't fool yourself into thinking you are safe. In the final stretch of 2018, many people swapped assets for top 20 projects, and it didn't help them.

Trust your research, not your emotions.

The time to profit is usually the shortest, and the time to get hit is the longest. Keep calm at all times!

Market cycles repeat themselves, but be aware of where you are.

No matter how bad the situation is, there must be an advantage in it, dig it hard and try to implement it.

(Original text: tehMoonwalkeR Compilation: Marshaka)