Most people do not really take control of this but let the market dictate their emotions and thoughts about it. For example, your goal is to take profits when $BTC hits 100k$, but when $BTC rises to 108k$, you tell yourself that 120k$ is the peak of the cycle because everyone views it that way, and you will take profits at that level. Another case is when your portfolio has reached a target, for example, 200 million VND (8k$), and you tell yourself that the market is still in a bull run and you will take profits when it reaches a round 10k$. Many people cannot really let go of this.
It is quite certain that many of you here, including myself, have reached an amount of money that can help you live comfortably without financial worries for the next few years. But then you lose it all because of the two words GREED MORE and more. Many people, just a few months ago, had accounts of several billion VND, and now they only have a few tens of millions. Shitcoins, memecoins, futures,... I have witnessed many people with million-dollar accounts collapsing (emphasizing more than 26 billion VND).
You will never know if the market has reached its peak. The way you make a lot of money in the initial phase will be the reason you lose all your money in the later phase. In the easy mode phase, you are Risk On, accepting higher risks, and this has helped you earn huge profits during a good market moment. These behaviors are continuously reinforced positively by easy victories. Unintentionally, you will become blind and accustomed to the current force, which will severely deplete your account during a bad market moment. You should remember that a downtrend takes many months to form, and market peaks occur only in a few days, especially after exponential growth.
When you realize you have lost a lot: you start to value and remember what you had in the past more instead of focusing on the current number and thinking about how to optimize that amount. Risk management depends on the market. You can clearly feel when it is the time to be risk-on or risk-off.
You can be Risk-on when: ETFs are approved, when the FED starts cutting, Trump wins,... clearly, these major catalysts positively affect the Crypto market, and you can clearly feel that.
Risk-off is the current market phase, where PvP traders try to liquidate each other, there is no new cash flow, and the market is frustrated,... -> You also realize that the market is hard to play and often want to take a break during this phase.
Risk management and portfolio allocation must combine (1) the state of the market and (2) personal life circumstances; it cannot be just one of the two. Most people only focus on (1) and look at other people's wallets, then set targets for themselves based on others' situations.
As long as you survive, love the game, and focus on progress, money will be an inevitable reward when the market returns to Easy-mode. To achieve this, you must always have skin in the game and learn continuously. If you stop for a while and come back when the market is in an uptrend, it is quite certain that you will never earn life-changing money from Crypto.
