Where do you think the roots of losses in cryptocurrency trading lie?
For example: suppose your assets are 1 million, and you invest 700,000 in a cryptocurrency.
On the first day, this coin dropped by 1%, and you lost 7,000 yuan. You didn't care about this, because you believed it would eventually recover.
On the second day, it dropped another 3%, and you lost nearly 20,000 yuan, still calm, thinking that you would break even sooner or later.
On the third day, it rose by 2%, you regained more than 10,000 yuan, feeling secretly pleased, thinking everything was under control.
On the fourth day, it suddenly hit the limit down, with losses approaching 70,000 yuan. You began to feel anxious, fantasizing about a limit up on the next trading day.
On the fifth day, it rose by 4%, and you breathed a sigh of relief, thinking that trading cryptocurrencies still has patterns to follow.
On the sixth day, it rose another 1%, and you started to expect even higher returns.
On the seventh day, it rose again by 1%. Although the increase was slow, you finally broke even, feeling somewhat satisfied.
On the eighth day, however, on the ninth day, it suddenly dropped by 8% and experienced a limit down. You began to panic, doubting whether you had made a mistake in choosing the coin.
On the tenth day, it fell again by 4%, and you finally felt anger and disappointment.
This experience reflects the emotional fluctuations and psychological traps during the process of trading cryptocurrencies: from optimism to panic, which often leads us to lose direction in the market. The fundamental issue with investing may lie in our inability to rationally treat each rise and fall, instead being led by emotions, resulting in poor judgment and financial losses.
