After 8 years in the crypto world, from a novice who initially paid tuition to now being able to trade cryptocurrencies full-time to support my family, I often have friends ask me: 'Mutual funds are clearly more stable, why are you stuck in the crypto world?' Today I will share my honest thoughts, and discuss the differences between trading cryptocurrencies and mutual funds, as well as the survival rules I've summarized through years of blood and tears.
One, giving up mutual funds for the crypto world: I value 'threshold' and 'efficiency'
Initially, I switched from mutual funds to cryptocurrencies for a very direct reason: low threshold, quick returns.
You can enter the market with just a few thousand, unlike some financial products with high thresholds; and the cryptocurrency market fluctuates quickly, seizing an opportunity can yield returns that surpass several years of mutual fund gains. Of course, I understand that high returns come with high risks— but for me at that time, wanting to change my situation quickly, this 'risk and reward correlate' model was more appealing than the 'slow heat' of mutual funds.
I just didn’t have anyone to guide me when I first entered, didn't understand blockchain, didn't understand risk control, and ended up paying a lot of 'tuition'. Now being able to achieve financial freedom through trading cryptocurrencies is all about the experience gained from previous losses.
Two, trading cryptocurrencies vs. mutual funds: one is a 'roller coaster', the other is a 'bus'
Many people are torn between 'trading cryptocurrencies or buying mutual funds', but in fact, neither is absolutely good or bad; they just fit different people. Two metaphors can clarify this:
Trading cryptocurrencies: like riding a roller coaster—exciting, but with a high level of danger
• Extreme volatility: it's normal for cryptocurrency prices to fluctuate by 30% in a single day, when you profit it can excite you to the point of insomnia, and when you lose, it can cause your heart to stop; if you don’t have some resilience, you can’t handle it.
• Sensitive to policy: some foreign regions have become compliant, but domestic regulations are still exploring. If policies change, you may face the risk of losing everything.
• The threshold is hidden: It seems like you can enter with just a few thousand, but without understanding blockchain and smart contracts, you can easily be cut by air coins or Ponzi schemes. Lacking the proper technology and knowledge is like 'giving away money'.
Mutual funds: like taking the bus—stable, but lacks a sense of 'control'
• Mild fluctuations: daily price changes are mostly within a few points, suitable for those seeking stability and not wanting to monitor the market constantly, without fear.
• Depend on a 'driver': the performance depends entirely on the fund manager's level, and you can't operate directly, which is like handing your money over to someone else to manage.
• Liquidity is limited: when you urgently need money, redeeming may coincide with market lows, and selling at a good price requires timing.
Simply put: those who dare to take risks and are willing to spend time researching may be more suited for trading cryptocurrencies; those who want peace of mind and stability should choose mutual funds. But no matter which one you choose, understanding your own risk tolerance is more important than anything else.
Three, surviving in the crypto world for 8 years: position management is more important than technology
I've seen too many people in the crypto world: some make a fortune through technical analysis, while others lose everything overnight because they didn't manage their positions well. What I want to emphasize the most is: technology is a 'weapon', but position management is a 'lifeline', and this is the key to long-term survival.
Sharing 4 positioning tips I often use, which beginners can also refer to:
1. Incremental building method: divide your funds into 5-10 portions, and invest only one portion each time. For example, if you have 100,000, buy 10,000 each time. Don't chase high when it rises, and have funds to average down when it falls, so as not to waste opportunities and control risk.
2. The iron rule of stop-loss and take-profit: set rules before buying—cut losses at 10%, take profit at 20% by selling at least half. Don’t think this rule is simple; it can help you avoid 90% of major pitfalls.
3. Funnel bottom-fishing method: when you think the market is about to bottom out, first test with a small position (e.g., 10%), add 15% if it drops 10%, and add up to 30% if it drops 20%. Buy more as it falls, but leave enough funds for subsequent purchases, suitable for left-side trading.
4. Pyramid averaging method: in a bull market, spot the trend, initially buy 50% heavily, add 30% after a 10% rise, and add 20% more after further increases. The higher it goes, the less you add, allowing you to ride the main uptrend while avoiding standing at high positions.
Four, three heartfelt words from seasoned investors
Finally, I want to share a few heartfelt words, lessons learned from years of pitfalls:
• Always keep 30% cash: this money is your 'backup'—in a bear market, you can buy the dip, and if the market suddenly changes in a bull market, it can also protect your principal.
• Don't trust 'insider information': 90% of 'insider news' is just a scam. Spending time to research projects and market trends is more reliable than anything else;
• When you make money, 'cash out': every time you profit, take a portion of the money out (for example, if you earn 100,000, take out 50,000), and leave the rest in the market. It's like using 'game chips' to gamble, which stabilizes your mindset a lot.
The crypto world has never been a 'sprint', but a marathon—running fast is useless; running steadily is the way to laugh last. Those who earn money by luck will soon lose it back by skill. I hope my experiences can help you avoid some detours.
