Back then, Duan Yongping spent $620,000 to secure a chance to dine with Warren Buffett. During the meal, Buffett told Duan Yongping: the fundamental principle of value investing is don't do what you don't understand.
I think this sentence best represents his investment philosophy: four words: Don't understand, don't do.
Many in the crypto world blindly incur losses and face liquidation, even though they want to learn technical analysis, etc. Beginners in the crypto world need to follow two rules to learn crypto trading techniques; you don't even need to learn how to analyze project fundamentals or technical analysis, nor do you need to know about the movements of on-chain whales, contract holding values—none of that. The profound truth is often simple.
That is, having the courage to buy during a drop, selling during a big rise, and holding cash during unfavorable market conditions.
What is the essence of trading? If you have an information advantage, it's about cheating in trading to take money from others' pockets.
You have no information advantage; trading is a gamble for you. You must first admit that the essence of trading is gambling because you can never be certain whether the next candlestick will rise or fall. What you can control is holding onto what you believe is right and selling what you believe is wrong. This is the only behavior you can control.
Some people have a whimsical idea: ordinary people are bound to lose when trading contracts, right? So if I go against them, won't I make money? Just randomly find someone to trade against, and I’ll profit, right?
They have not grasped the true nature of trading. Going against the grain doesn't mean countering a specific action; even if you try to counter it, countless others in the market are doing the same, and you will ultimately lose. Some of the people you see making money in the market are merely those who temporarily profited by going against the grain.
Going against the grain means acting contrary to the consistent behavior of the inexperienced traders; their uniform behavior is to take small profits and hold onto large losses. The truth of going against the grain is: cut losses and let profits run.
As mentioned above, trading is gambling, so if you lose the gamble, you must walk away. If you win the gamble, hold on to it and take a portion of the profits to cover the losses from previous gambles.
If you are really right, shouldn't you be making money? And if you made money, it shows that you are indeed right.
As for the quality of the trading targets, you don't need to choose or study projects at all. Just look at the top ten market capitalization rankings, the top ten trading volume rankings, and the top ten popular rankings. The targets that frequently overlap among those three attributes are good targets, all selected by the market; you don't need to select them yourself.
Having the courage to buy during a decline means buying these targets at low levels. When the price has already risen significantly, don't chase it. You can also buy as soon as you notice signs of a big rise; it's just a matter of a little on the left side or the right side. The left side has a lower success rate but a higher cost advantage, while the right side has a higher success rate but a lower cost advantage. My conclusion is that in a bull market, you can lean toward the left, but in a bear market, you must lean toward the right.
The reason for not daring to buy during a drop is because the market is fearful or in a bear phase. From my observations, I've concluded two things: one is that you used too much force and ran out of bullets; the other is that you lack fundamental understanding of market laws and targets, which makes you afraid to buy when prices drop too much.
Having the courage to sell during a big rise means you must have a set of selling discipline and be able to execute it resolutely. Many people think about how wonderful it would be beforehand, but completely fail to execute afterward. The highest point of the rise is just a show for you; it's not your money. There is no such thing as selling too late; if you can sell too late, it's not money within your trading system, and you won't make money. Wealth isn't built through a single trade; it is completed through multiple accumulations. Without small steps, you cannot reach a thousand miles. There is no perfect trade, only profitable trades; as long as you make a profit, that's good.
When the market is unfavorable, you should hold cash. For example, if your strategy has clearly been losing money recently, and you incurred a significant loss, it's time to take a break. True experts rest after making a big gain because the market conditions may soon become incompatible with their strategy, and what they previously earned may be consumed. James Wynn made a big profit but didn't stop, and when he faced a massive loss, he also didn't stop. The reason he made so much money is that his strategy and technical skills are undoubtedly solid; it's just that the market no longer favors him. Without holding cash to hedge against the market, the market devoured him.
The so-called trend-following strategy is when you find that your strategy happens to align with the market trend, and you make money by following that trend, not by claiming to see through the market trend and changing your strategy at any moment to follow it.
Staying in cash preserves your emotional strength in trading and keeps your bullets ready. This way, when the next opportunity arises, you'll have the bullets to fire.
A regular investment strategy is one that keeps you equipped with bullets at all times. You don't need to feel anxious; if the price drops and you want to add a little, you can. If you don't want to add, just don't. You're always earning, either in coins or in money, or both at the same time.
There isn't much to say about the targets; we need to have a super macro perspective to view the issues. No matter how skilled the experts are, can they change the direction of crypto? It's Bitcoin that makes the experts successful, not the other way around. It is the trend of crypto that allows the financial market to develop more completely, gradually consuming the inefficient financial market. In the face of such a trend, even the experts are just a speck of dust. Whatever they shout or whatever strategies they propose shouldn't cause panic. There may be a temporary impact, but it merely causes your account to fluctuate a bit. If you are trading in shorter cycles, we also need a small macro perspective. Those targets that have been selected by the market don't require us to study the fundamentals or the news; reasonable allocation should not cause major issues. For instance, you can just buy 1-5% of your assets. No matter how they perform, they won't harm your foundation. Or you can choose not to buy, and that wouldn't be a big issue either. If the targets you buy make you too anxious and you find yourself searching for news every day, you might be buying too much. Wealth requires a light touch; it's like sand that often slips through your fingers.
If you currently feel helpless and confused in trading and want to learn more about the crypto world and cutting-edge information, click on my avatar and follow me, so you won't get lost! Clear understanding of the market allows you to operate with confidence. Steady gains are far more practical than fantasizing about sudden wealth.
