In the cryptocurrency world, 90% of people are just buying the dip for nothing! Let an experienced person break down the real cost calculation for you, and talk about the painful truths of investing—after reading this, you might avoid a lot of pitfalls.
Let's talk about buying the dip; it’s not just a simple calculation of 'average price' and that’s it.
For example, if you bought 10,000 worth of coins when the price was 10, and then it plummeted to 5, you grit your teeth and invested another 10,000. At this point, you might think your average cost is (10+5)÷2=7.5. Wrong! The real cost is actually 6.67. Why? Because when you bought at 5 the second time, with the same 10,000, you got twice as many coins, significantly lowering the average price.
But don’t celebrate too soon; while the cost looks lower, that doesn’t mean it’s 'safe.' If you hesitate to stop loss when needed, you can still get stuck deeper; this point must be understood clearly.
Now let’s discuss that dream of 'earning 1% daily and multiplying tenfold in a year.'
With a principal of 100,000, if you earn a steady 1% every day for a year (based on 250 trading days), compounded interest could turn it into 1.32 million—sounds tempting, right? But in reality? Those who can earn a steady 1% every day are rarer than giant pandas. Most people celebrate a 5% gain today, only to lose 10% tomorrow, toiling away only to end up with nothing. Ultimately, self-discipline in investing is more effective than any flashy strategy.
There’s also a counterintuitive concept: a 60% success rate can still be profitable?
Assuming you make 100 trades, earning money 60 times with a 10% profit each time, that totals a 60% gain; losing money 40 times with a 10% loss each time totals a 40% loss—if you calculate it this way, you still end up with a net profit of 20%. The problem is, most people are eager to run after making a little money, but stubbornly hold on when they lose, no matter how high the success rate, blind operations will still lead to a waste of effort.
As for 'from 10,000 to 100 million'? Theoretically possible, if you earn 10% each time and win 97 times in a row. But in reality, don’t dream!
Many people feel ecstatic when they earn 10%, wanting to make more, only to lose 20% the next time; after a few consecutive wins, their mindset inflates, leading to bolder operations, and ultimately losing everything in one go. Investing is not a simple math problem; it is fundamentally a test of human nature.
Let me speak from the heart: to survive in the investment market, you first need to recognize these truths—
About buying the dip: Low cost ≠ safety
Buying the dip can indeed lower the average cost, but fundamentally it’s just a mathematical game. How many people think 'lower cost means safety' and then let their guard down, resulting in deeper losses? My principle is: when buying the dip, you must set a stop-loss line in advance; otherwise, it’s no different from gambling.
About compound interest: The ideal is very appealing, but the reality is stark
A daily 1% compound interest sounds beautiful, but with such large market fluctuations and people easily swayed by emotions, those who can execute steadily are few and far between. My advice is: don’t hold onto unrealistic fantasies, aim for 'small gains and small losses, with occasional big gains,' and slowly accumulate—that's the proper way.
About win rate: Even with a 60% success rate, you can still lose money
Even if the win rate is over 50%, if you earn little when you win and lose a lot when you lose, you will still end up losing money. My strategy is: enforce strict stop-losses and let profits run freely—this is how to make the math truly work in your favor.
