Many people in the crypto world never understand certain things in their lifetime, so let's do some calculations!
You invest 1 million, it rises by 100%, becoming 2 million, but then it drops by 50%, returning to the original point.
You invest 1 million, it drops by 50%, becoming 500,000, then rises by 50%, becoming 750,000. Miraculously, you've lost 250,000.
These two calculations illustrate that controlling drawdowns in trading cryptocurrencies should always be the top priority.
In the practical arena of cryptocurrency trading, there are indeed people who can achieve miracles of doubling their profits in the blink of an eye. However, if we broaden our perspective to a longer historical timeline, experiencing a 50% shrinkage in assets can almost erase past glorious achievements.
For this reason, blindly chasing short-term high profits is not a wise choice; only by pursuing long-term stable returns can one stand firm on this path.
Imagine holding a fortune of one million. If you can steadily progress with an annualized return of 25%, after one year, your assets will soar to a new height of 1.25 million.
After another year of compounding, this number will expand again, reaching 1.5625 million; by the third year, it will approach 2 million, achieving an astonishing growth of nearly doubling the assets.
This set of data is like a beacon, illuminating the infinite charm of stable annualized returns, guiding us towards a more solid and long-term path of wealth accumulation.
The reason Buffett is revered as the stock god is not because he achieved astonishing results in a short time, but because he has consistently maintained an annualized return of over 20% for more than forty years.
Indeed, for many, achieving over 20% profit in the short term may not be difficult, but sustaining such performance like Buffett for five, ten, or even longer years is extremely challenging, akin to a rare treasure.
Therefore, we need to maintain a calm mindset, take each step steadily, and unwaveringly believe in the magical power of compound interest. It is like a snowball, growing larger over time, ultimately creating a remarkable wealth legend.
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