The wisdom contained in this veteran's investment experience in the cryptocurrency world is indeed thought-provoking. Its core logic revolves around risk control, trend following, and discipline execution, forming an interesting complement to traditional value investing or technical analysis. Below is a breakdown and extension of their strategy:
1. Core strategy: The counterintuitive 'dumb method'
Don't make small profits, don't incur large losses
Pain point: Human nature inherently dislikes loss (the pain of losing 1 yuan > the pleasure of gaining 1 yuan), leading investors to easily take profits too early (afraid of giving up profits) or stubbornly hold onto losses (expecting to break even).
Solution:
Set clear profit-taking/stop-loss rules: For example, do not let a single trade lose more than 5% of the principal, and take profits in batches after reaching 20% gains.
Distinguish between 'trial-and-error cost' and 'main position': Use small positions to test trends, confirm before adding to positions, and avoid large losses due to heavy positions on mistakes.
Example: If you open a position at 20,000 and it rises to 21,000, you could first sell 50% to lock in profits, then set a trailing stop-loss (for example, taking profits if it drops below 20,500), avoiding missing out while also controlling drawdown.
Only choose mainstream coins that have 'dropped deeply'
Logic:
Mainstream coins (such as BTC, ETH): High liquidity, strong risk resistance, suitable for long-term holding; new coins or altcoins have extreme volatility and can easily go to zero.
'Dropped deeply' standards: Can be judged with technical indicators (such as RSI oversold, volume shrinkage) or market sentiment (such as fear index), but avoid the trap of 'catching the bottom'.
Operation:
Gradually build positions: Initially buy 10% base position; if the price continues to drop by 10%-15%, add to the position to lower the average cost.
Ignore short-term fluctuations: The long-term trend of mainstream coins is often driven by macro factors (such as monetary policy, technological breakthroughs), while short-term noise can be filtered out.
Increase positions after confirming the trend
Principle:
'Right-side trading': Wait for the price to break through key resistance levels (such as moving averages, previous highs) before increasing positions, avoiding being trapped by left-side bottom fishing.
Position increase ratio: Adjust according to risk tolerance, for example, increase positions by 5% for every 10% rise, but the total position should not exceed 50% of the initial capital.
Risk: Beware of 'false breakouts' (price briefly breaks through and then retracts). You can validate trends by setting stop-loss orders or combining with other indicators (such as MACD, trading volume).
Profit reinvestment and risk isolation
Method:
Extract principal: Sell part of your position (e.g., 50%) after each wave of increase, transfer the principal out, and continue to gamble with the remaining profit.
Diversified holdings: Even if you are optimistic about a particular cryptocurrency, do not invest all your capital; allocate mainstream coins across different sectors (such as DeFi, Layer 1).
Psychological advantage: After securing the principal, investors will face fluctuations more calmly, avoiding irrational decisions driven by fear or greed.
2. Underlying logic of the strategy: Probability and discipline
Accept market uncertainty
The cryptocurrency space is greatly influenced by policies, technology, and public opinion, and no one can accurately predict short-term trends. The essence of the veteran's strategy is to combat uncertainty with discipline, reducing the randomness that erodes returns through rules.
Accumulation of compound interest effect
Assuming initial capital of 100,000 yuan, with a stable annual profit of 50% (achieved through taking profits in batches and controlling drawdowns), after 10 years, the capital will grow to 5.76 million yuan (compound interest formula: 100,000 × (1 + 50%)^10). Even if the annualized return drops to 30%, it can still reach 1.37 million yuan after 10 years.
Avoid the 'smart person's trap'
The cryptocurrency space is filled with temptations of 'insider information', 'high leverage', and 'contract wealth', but these paths often come with high risks. The veteran's 'dumb method' may seem conservative, but it actually achieves long-term survival by reducing the probability of failure.
3. Applicability and limitations
Target audience:
Investors with lower risk tolerance, seeking stable returns;
Newcomers lacking professional analytical skills (strategy is simple and executable);
Patient 'long-termists' who can strictly adhere to discipline.
Potential risks:
Missing out on a bull market: If the market continues to rise unilaterally, taking profits in batches may reduce returns;
Enduring a bear market: Mainstream coins may remain flat or decline for a long time, and you must bear the opportunity cost;
Black swan events: Systemic risks such as policy bans or exchange collapses cannot be avoided through strategy.
4. Advice for ordinary investors
Test with small funds: Use 10%-20% of your capital to validate the strategy's effectiveness, and gradually increase your investment.
Keep a trading log: Review the decision-making logic and emotional state of each trade, optimizing your rules.
Combine with other tools: For example, use dollar-cost averaging to smooth out costs, or hedge extreme risks through options.
Keep learning: Pay attention to industry trends (such as ETH upgrades, regulatory policies), but avoid being disturbed by short-term noise.
Conclusion
The essence of the veteran's strategy is 'defensive to attack': by controlling drawdowns, following trends, and locking in profits, transforming the cryptocurrency space from a 'gambling house' into an 'ATM.' This does not negate technical analysis or value investing, but rather provides a survival rule better suited for ordinary people—living longer in a highly uncertain market is more important than making quick profits.#加密市场回调
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