Some of my investment reflections
1. Investment is a science
2. Investment is a high-risk operation
3. How to avoid risks
4. The two biggest irrational demons in investment: greed and fear My investment advantage
I started the industry with 100,000 yuan. I am Lonely Volcano, and I come from the technology and game industry. I entered the cryptocurrency circle by chance in 2017, when Bitcoin had just broken the 10,000 yuan mark.
In the following four years, I had many outbursts and almost returned to zero many times.
After so many ups and downs, it is inevitable to have some thoughts, which I would like to share with you here so that we can inspire and learn from each other.
Like many friends who have just entered the industry, I knew nothing at the beginning. Basically, I bought whatever coins recommended by my friends who introduced me to the industry. At that time, my friends recommended two coins, one was NEO, which was called Ant Coin at the time, and the other was BTS, which is the public chain created by BM, the famous founder of EOS.
Newbies certainly don’t dare to invest too much money right away, so I first got 100,000 yuan to test the waters. At that time, domestic exchanges could also deposit and withdraw fiat currency, and could recharge money to the exchange’s company account. The exchange’s trading pairs were all RMB trading pairs, and the RMB earned from cryptocurrency trading could be directly withdrawn from the exchange to a personal bank card. I really miss that time.
My first deposit was made on “BitEra”, the leading altcoin exchange at the time.
After recharging the money, how much should I invest in each of the two projects? After careful research, I found that Antcoin was developed by a Chinese team and had a mediocre reputation at the time; on the other hand, BTS is a project of a foreign industry giant. BTS can not only issue coins on the chain like ETH, but also has its own internal exchange, similar to "E-De" which was later the largest decentralized exchange on ETH.
Before the ETH explosion, BTS looked like a god-level project. So I decided to invest 90,000 in BTS and 10,000 in NEO. At that time, BTS seemed to be around 2 yuan, and NEO was less than 8 yuan.
However, when the bull market came, NEO soared by more than 1,000 yuan, up more than 100 times, leaving BTS far behind. I got NEO at the highest point, which was the first 100-fold coin I got in the cryptocurrency circle. 10,000 yuan directly turned into more than 1 million yuan, which was exciting!
However, I didn’t sell at the high point. Later, in the bear market, the price dropped back to 20 or 30 yuan. Although I still made money, this roller coaster ride was more exciting! What happened to the NEOs I held all along? I will talk about it later.
I made money in the first test, and it seemed easy. With my technical background, I quickly understood the underlying things of Bitcoin and blockchain. I felt that I had understood the industry. After paying attention to the market for a while, I found that almost all coins were rising. Even if a coin did not rise in a short period of time, it would definitely rise later. In this case, why not buy all coins?
So I gradually became bolder and started to increase my capital investment.
At that time, there were more than 30 altcoins on the Bitcoin era, and I bought 5,000 yuan for each of them. People in the group jokingly called me the Big Market Brother, because every day I only needed to look at the changes in the total assets in my account to know whether the overall market was rising or falling.
Of course, in the context of a bull market, the market basically kept rising. Just when I felt that I had found the secret to making money and was feeling complacent, the market suddenly experienced a big correction, with a correction range of about 40%.
Because I had too many coins, I didn’t have time to sell them when the price dropped, so I lost money for the first time.
At this point I finally came to my senses. When investing, one should seriously research the project and not just do it blindly because it seems to be too easy to make money.
After suffering a loss, I became more cautious and did not increase my investment until the industry was reshuffled in 1994. At that time, the country found that the currency circle was too much. After ETH matured, ICO raised money almost crazily, and the lower limit was getting lower and lower!
Therefore, seven central ministries and commissions jointly issued a document on September 4, 2017, ordering all domestic exchanges to close within a certain period of time and refunding all previous ICO funds. For a time, the domestic cryptocurrency circle was struck by lightning, and many people thought that the cryptocurrency circle was completely over.
At that time, all the coins plummeted, and some coins went straight to zero, but these were child’s play. The key point was that how could we play if we couldn’t trade in the future?
As a result, many people desperately sold their stocks at the lowest point and left the market, and the cryptocurrency circle completed the largest turnover between the East and the West.
However, after studying the underlying logic of Bitcoin, I firmly believe that the purpose of the birth of Bitcoin is to fight against the modern legal currency system. If you believe that any government alone can completely strangle Bitcoin, then don’t play it!
So, after careful consideration, I decided to buy Bitcoin at the bottom of the last day when the exchange was closed with a capital of 1 million RMB. We believed that Bitcoin would not only rise again, but also that the problems of deposit and withdrawal and trading would definitely be solved by someone, so it would not be a problem at all.
The last deposit was made in BitTimes, which was the last exchange to close among all the well-known exchanges at that time. An era ended with its closure. How will a new era begin? Two words: Binance!
Binance is a new type of coin-to-coin exchange that was launched in 2017. The so-called coin-to-coin exchange means that all trading pairs are tokens, such as NEO/BTC. I remember that at the beginning, there was not even stablecoins such as USDT. If NEO and BTC fell at the same time, it would be doomed!
In fact, I was not optimistic about this model at the beginning, so I did not participate in the private placement of Binance platform coin BNB at about 2 cents. Later, BNB opened at a low price, and CZ was broadcasting on Yizhibo at the time, and was criticized like a dog!
Oh, by the way, let me mention here that many people think that the exchange platform coin gameplay was first invented by Binance. In fact, it is not. There have been platform coins in the Bitcoin era, but the platform coins in the Bitcoin era are in dividend mode, while BNB is in destruction mode.
Although Binance did not have a good start and was even a little out of tune with the mainstream of the industry, it was blessed by God. 94 came and within a short period of time, all of Binance’s major competitors were administratively closed! Moreover, since Binance is a pure currency transaction and does not involve fiat currency business, the policy pressure is much smaller. In addition, CZ is a Chinese Canadian, so if it doesn’t work out, he can just go abroad to continue his business. Therefore, Binance has been open and has never been closed in accordance with the policy.
During the vacuum period of one or two months, almost all the remaining leeks in the Chinese cryptocurrency circle could only go to Binance to trade. As a result, the number of Binance users began to grow explosively, and Binance's technology was also very good. During the period of rapid expansion, there were no major problems, so BNB also began to rise in price.
Seeing this epic opportunity, I just couldn’t sit still, and after carefully studying BNB, I exchanged all my BTC for BNB. At that time, BNB was less than 8 yuan, and I exchanged about 35,000 in total. If I had held on to it, the peak point of the last bull market would have exceeded 100 million!
The article about BNB written at that time was still highly praised by many people. Friends who are interested can take a look (using BNB as an example to talk about how to verify the value)
Everyone knows what happened later. As I expected, the industry returned to its previous rhythm of overall skyrocketing after all the negative effects caused by the policies were exhausted. Bitcoin rose from the 16,000 yuan bottom of the 1994 policy to more than 100,000 yuan, and other random coins were even crazier. I remember that BNB rose to around 150 yuan at its highest, and NEO even exceeded 1,000 yuan. Justin Sun’s TRX rose directly from 1 cent in the private placement to 2 yuan, a 200-fold increase.
At that time, I participated in the TRX private placement on Binance and bought more than 10 million. Unfortunately, in 1994, I didn’t dare to continue holding it because I felt that Sun Wukong was too deceptive and unreliable. I returned all the original prices. In addition, a large number of coins such as Quantum Chain, Gongxinbao, VeChain, etc. have emerged one after another, with ten times, a hundred times, or even a thousand times increase. The most powerful one is an Internet of Things coin called IOTA, which has increased by tens of thousands of times. The industry celebrity Ozora Tsubasa who participated in this project directly turned his 100,000 yuan principal into billions! These myths of getting rich quickly will definitely be considered as deceptions by people outside the circle. Even if you really make so much money on paper, you can’t turn it into cash. Only those who are in it will really believe that the concept of Bitcoin and the wealth-making ability of the blockchain industry are really beyond common sense.
The entire industry is even crazier than before 1994. The closed exchanges have changed their names, registered new companies overseas and reopened, and even worsened. The three major exchanges used to only deal in a few mainstream currencies such as Bitcoin, Litecoin and Ethereum. After 1994, all of them began to learn from the former Bitcoin era and the current Binance, and became a hodgepodge of altcoin exchanges. They are even crazier than before when they cut leeks. In this process, I insisted on holding BNB in the first half, and kept holding it from 8 yuan to the highest point without selling it. I only cleared my position when it fell back to 90 yuan, completing the first ten-fold coin in the currency circle, and my book wealth skyrocketed. When BNB rose the most, I woke up one morning and found that my account had increased by more than one million!!!
I started my business before, and it took me nearly 10 years to make my first million. This is more than one million in one night. It's so exciting. 35,000 BNBs are worth millions. It took me more than two days to sell them without crashing the market. This is the first time I know that it is not so easy to sell on the market when the book value is too large. The depth of BNB is already very good, but it is still like this.
After BNB hit its high point, the overall market actually showed signs of turning around, but I still caught a few waves at the end of the market. I got about 3 times the price of GTC, 6 yuan from 2 yuan to 6 yuan from BTM, 90 yuan from 30 yuan to 90 yuan from EOS, and more than 20 yuan from 2 yuan to Ripple. In the end, the total book assets were just a little less than 10 million! How arrogant was I at that time? Well, I had already started looking for luxury houses in Shanghai, haha!
10 million was almost reduced to zero. While I was still immersed in the joy of reaching the 10 million mark, the market trend had actually quietly turned around and a big crash was brewing. But I had completely lost my mind at that time. Earning 10 million was not enough, I wanted to earn 100 million. I even began to envision Bitcoin rising to 1 million and NEO rising to 5,000 yuan. When it comes to judging the market and setting goals, people have begun to make decisions based on their own needs and desires, rather than making objective and rational analysis. When you calm down and think about it, this state is essentially no different from that of a gambler.
I believe that people who have not experienced this will definitely find it incredible. Many people will say things like "If I could make 10 million, I would have cashed out long ago." But the reality is that most of the people around me who made money at the time, especially those who were new to the industry, were basically in the same situation as me. Greed is a temptation that most people cannot resist, and the more you make, the greedier you become. When you didn't make that much, it was hard for you to believe that you would be so greedy.
In the field of investment, I have verified a truth countless times: when people are the craziest, it is usually the time of the greatest crisis, and it is also the time when most people will lose money. As the money in my hands increased, I became more and more radical and blind, and dared to invest in all kinds of messy projects. In the end, I was too lazy to read the white paper, and just looked at who supported the platform. At most, I invested in dozens of projects, and the slightly better projects started with tens of millions.
At the end of the bull market, most people were as crazy as me. There were a lot of messy projects, and even "Space Chain" came out, saying that it would use satellites to build a blockchain network. Moreover, these projects can only be invested through agents. They give money to people and ask for it. Many of these agents ran away later, which was very deceptive. When Bitcoin almost broke through the 20,000 US dollar mark, the market suddenly plummeted. This was actually a very dangerous signal, but most people were still immersed in the madness of the violent bull market and thought that this was still just a correction. Since I have never experienced the fear of being dominated by a bear market, and I was unwilling to pull back more than 2 million overnight, and I had a lot of projects on hand, even if I wanted to run, it would be too late, so I chose to play dead like many newcomers, and I also called it "I have experienced big winds and waves, and I don't care about the rise and fall, this little pullback is nothing", and even laughed at those old leeks who fled in panic, which is very similar to the scene where the new DEFI leeks in the last bull market and the recent BRC20 new leeks laughed at the traditional old leeks.
The consequences of playing dead are predictable. When the cryptocurrency market rises, it is beyond imagination. When it falls, it is also beyond imagination. After falling 50%, it can fall another 50%. Although there are rebounds in the middle, it can't break through the previous high every time. I am reluctant to cash out, and the loss aversion is extremely serious. At the beginning, I always wanted to return to 10 million. Later, the profit retreated more, and I felt that it was about to fall to the bottom. I didn't want to sell my stocks, but I ended up getting deeper and deeper.
In the process of continuous decline, the cryptocurrency circle can be said to be a mess, what with the real estate chain, voting chain, film and television chain... a mess of public chains... and a lot of BTC fork coins... Those projects that were once high-end and exaggerated have collapsed one after another. Some directly returned to zero, some fell 90% and then fell another 90%, and some ran away directly. This process is of course accompanied by the bankruptcy of many people and various quarrels. Various articles and recordings exposing the inside story are flying all over the sky, which makes the leeks dumbfounded!
However, in the early days of the bear market, some good projects occasionally appeared. I mainly grabbed a metaverse project. Of course, there was no concept of "metaverse" back then, and it was still called "virtual world", similar to MANA abroad, but MANA was only for land speculation at the time, while this one in China was directly available for play. I also knew the team of this project and knew it was relatively reliable. In addition, I really like the blockchain game track, so I focused on participating in it from the very beginning. At the beginning, I only invested 200,000 or 300,000 yuan, but as the project became more and more popular, my investment continued to increase, eventually reaching about 2 million yuan, and the highest book profit was about 5 million yuan.
Why did I invest so much in this project?
There are four main reasons:
1. They think they understand the team and the game track, so they feel more confident and bold in investing;
2. Because the overall market was in a bearish trend at that time, I gradually sold many unreliable projects and invested in this project which was relatively more certain for me. After all, most of the other projects at that time were losing money, only this project made money. This process lasted for a year, and eventually the accumulation of small amounts made a lot;
3. This metaverse game is quite fun. I got into it without realizing it. Once, in order to complete the industrial layout and maintain the reputation of the guild, I directly invested more than 300,000 RMB to "fight" with others. Investment made me play it as consumption, and losing money was almost inevitable;
4. In the later stage of the project, that is, one year later, the price of the currency continued to fall, but more than a year made me have a lot of irrational feelings towards this project. I always hoped that the project would not fail and could really realize its grand design. For this reason, I invested a lot of time, energy and even money to save it. In the end, the investment made me play "entrepreneurship". This mixed mentality of "investment + entrepreneurship" was my first experience, and I did not avoid the new pit again.
As the price of coins continued to fall, I not only did not sell a single coin, but I also continued to support the market. After investing around 2 million, because the cryptocurrency market was already in a deep bear market at the time, my funds could not continue, and I was ultimately unable to recover.
At the lowest point, less than 200,000 yuan was left of the original capital of 2 million yuan!
Oh, by the way, at the beginning of the article I mentioned my first 100x coin NEO in the cryptocurrency circle. I bought this coin in my wife’s account at the time, and her operating style is to hold on to it.
She has held NEO since she bought it for less than 8 yuan. Even if she had not sold it for more than 1,000 yuan, she would still have more than 100 yuan now, which is a 10-fold return. However, because she participated in the Metaverse project, which allowed her to play with NEO, she ended up losing all her NEO. This has become a grudge for his wife, especially when NEO rose again in the last bull market.
After this Metaverse project gave me the heaviest blow in the bear market, coupled with the continuous shrinkage of other projects, at the lowest point of the deep bear market, my book funds went from nearly 10 million at the peak to less than 1 million. Moreover, due to the exhaustion of liquidity in the bear market, it was difficult to cash out all of it, and it can be considered to be zero. What’s more exaggerated is that I didn’t cash out a penny during this process! If it weren’t for the ability to make money off-site, I would probably have a problem even making a living!
From 250,000 to 5 million. If the bull market in the cryptocurrency circle is hot and 24 hours a day, then the bear market in the cryptocurrency circle is icy cold and silent! Many of the former star projects have completely disappeared, and the remaining ones that are lingering on only send some coping operation reports intermittently. Many big Vs who were surrounded by people in the bull market have also disappeared collectively. The WeChat groups that used to send 999 messages are now silent, and even started to send random advertisements. I heard that one of the most popular exchanges has only a few thousand active users per day. Many people have temporarily left the industry, including myself. After the Metaverse project failed, I also did social e-commerce for a while, because during the deep bear market, the blockchain industry really couldn't find any opportunities to make money, whether it was investment or work. This really opened my eyes as an investment novice. I couldn't imagine that the bull and bear markets in the cryptocurrency circle were so different before!
The time came to March 12, 2020. Affected by the sudden outbreak of the new crown epidemic, the global capital market collapsed, and Bitcoin was not immune. In a short period of time, it plummeted to a historical low of more than 3,000 US dollars. Countless people were liquidated, and the industry history called it the "312 Tragedy"!
The COVID-19 pandemic caused many people to be unemployed and stay at home. I took the opportunity to expand the scale of social e-commerce and manage a team of thousands of people. Many people called for consultation every day. I was often busy from early in the morning to three or four in the evening. I had no time to pay attention to the market of the cryptocurrency circle and did not make any operations. In fact, 312 is the best time to buy the bottom. According to my operation style, I should not miss such an epic opportunity, just like when the exchange was closed in 94, I dared to buy the bottom with 1 million directly.
Here I have learned a lesson. When investing, you don’t need to spend too much time paying attention to the market. There are actually very few important opportunities and operations, but you can’t ignore them completely, because even if new opportunities come, you will lose sensitivity to the market and the industry and easily miss them. After I missed the bottom, I was very upset, but I didn’t dare to chase the high easily, so I continued to pay attention.
From March to November, BTC continued to fluctuate upward steadily, from the lowest of more than 3,000 US dollars to the historical high of around 13,000 US dollars. People in the industry know that breaking through the historical high will generally start a new wave of big market, which is the biggest sign of the return of the bull market. Later, with the riot of a wave of altcoins, old currencies such as Ripple and Litecoin also soared. I finally couldn't sit still again, and I deeply felt that a new wave of bull market has started!
But due to family reasons, I had urgent cash on hand and couldn't move it, and I didn't want to miss the big market, so I used Alipay and WeChat to get a 200,000 loan to buy 100,000 yuan of ETH and 100,000 yuan of BNB. At that time, ETH was more than 500 dollars and BNB was more than 30 dollars. Then I looked at the accounts of various exchanges. Some coins that had fallen to almost zero are now worth some money. I collected another 50,000 yuan. I opened a contract with 2x leverage to roll over ETH, LTC, XLM and ZEN.
The so-called rolling position is to use profits to continuously increase positions, and the 2x leverage rolling position is to maintain the 2x leverage ratio of a 50% drop by increasing positions. In this way, the actual profit effect is actually much greater than the 2x leverage. This method is suitable for the market that has been rising in the early stage of the bull market. As long as there is no sudden 50% plunge, I will not be liquidated, and I can maximize the profit. And God is more favored. The new round of bull market is really very stable. There has not been a big callback, unlike the previous round of bull market, which often cut in half. So I kept rolling, and finally 50,000 rolled into more than 1 million. At the high point, BNB broke through 600 dollars, ETH reached about 2,000 dollars, and then I used 100,000 yuan of principal and 10 times leverage to catch the increase of the demon coin FIL, and directly increased the total book funds to more than 5 million!
5 million was almost zero again Because I have experienced a bear market, I know that investment products cannot keep rising and it is terrible to be trapped in a bear market, so this time I have been thinking about "stop profit" from the beginning. When the total funds on the books reached 1 million, I took out 300,000, paid off the loan first, and used the extra 100,000 as a reward for life. Then every day, in addition to studying projects and market conditions, what I think about most is when I should withdraw. If I really can't figure it out, I will withdraw in batches. At that time, I thought very well that for every 1 million increase in the account, I would withdraw a certain proportion. However, when I was actually operating, the account increased too fast, giving me an illusion that as long as I persisted a little longer, I could return to the peak of 10 million!
So the greedy demon was not suppressed again, and staged another unforgettable scene. On the eve of Coinbase's listing, I had a hunch that this might be a turning point in this round of bull market, because this round of bull market was obviously started by American capital, and Coinbase's listing was the biggest hype gimmick of American capital, and it was also the best time to exit. Moreover, the bull market has been rising for a long time. If there is a need for a correction, this is also the best opportunity. So before Coinbase went public, I closed all my leveraged positions and converted them all to BNB spot. Originally, this operation was a god operation under rationality, and Coinbase's listing was indeed the dividing point of this round of market. But the pitfall was that two days after Coinbase went public, the market not only did not fall as I expected, but it exploded again. Influenced by the greedy demon, in order to hit the knot of 10 million, I clearly felt the breath of danger, but still chose to fight for the last rise, and because I knew it might fall soon, I added a stop loss and put the leverage to 10 times, so that as long as it rose a little more, I could complete the target retreat.
However, as expected, the market cuts greedy people like me. Just before I was about to run away, 519 came and the market suddenly plummeted. My 10x position was stopped out instantly, and the spot and contract book funds were directly wiped out by half, leaving 2 million BNB spot. I wanted to make up for the loss again, so I opened a 1.5x coin-based long position to grab the rebound. I thought, even if there is no rebound, it has already fallen by about 30%, it is impossible to fall another 50%? But I underestimated the automatic selling ability of robots caused by DEFI liquidation. The market really almost fell by 50%. BNB fell from the highest position in 2 days to about 75%. At the lowest point, as long as it fell by another 10 US dollars, my position would be completely liquidated and returned to zero.
Moreover, the exchange was stuck during this process, and nothing could be done! Although I was mentally prepared for a zero return from the first day of playing the contract, after experiencing this scene, I was still frightened and my scalp was numb! Fortunately, God was kind and I didn’t get back to my original state. The market rebounded slightly, and my account returned to 500,000. I gradually regained my rationality. At this time, I faced two choices:
1. Psychologically, they cannot accept a large drawdown on their books, and they want to completely close their positions like in the last bear market;
2. Stop in time. Even if 5 million becomes 500,000, as long as there is life, there is no fear of running out of firewood. After a little hesitation, I chose the latter. I closed all the contract positions and switched to BNB spot. Although the market did rebound later, if I did not close the position, I could quickly return to millions, but before the official rebound, there was indeed another big drop, falling below my liquidation position. At this time, I was really very fortunate and felt a sense of accomplishment. For me personally, this sense of accomplishment of defeating greed is greater than making millions!
I kept 500,000 Fire Seeds at that time. I could buy at the bottom when the market went down, and even if it went up again, I could buy again at any time. Being able to attack or defend is the choice a mature investor should make. A mature choice may lower my upper limit in the short term, but it can also increase my lower limit. The latter is actually more important.
From 500,000 to 2 million. The last round of bull market finally formed a double-top structure. In the subsequent big rebound, I was optimistic about the opportunity to make another move. Small and medium positions successively stepped on several star projects such as AXS, SAND, and WEMIX, which brought me about 10 times the return. Blockchain games and the metaverse are my profession and hobbies. This wave of market is mainly concentrated in these two fields. It is really God's blessing that my total account funds have reached more than 1 million again!
After experiencing the punishment of greed twice, I dare not be greedy anymore. First of all, in terms of investment, I dare not go all in on any good project this time.
Then, as for profit-taking, when Bitcoin rebounded to 55,000 USD, I only kept one BTC spot, and I liquidated all other currencies and exchanged them into USDT, locking the book funds at about 1.5 million, until BTC fell to the lowest point of 15,000 in this bear market. During this process, I did not make any more moves. However, during this period, I played the first blockchain game "Legend 4" with a large number of real players and consumption support in depth. I originally wanted to see if there was any opportunity to make money, but I became addicted to it. I led the NASH guild to fight against South American players. I was so excited that I spent hundreds of thousands of krypton gold. Who said that no one spends krypton gold on blockchain games?
For a true game lover like me, when I come across a good game, I can't resist the urge to spend money -_-!! This time, my original capital returned to more than 1 million.
After Legend 4, I didn't do anything until Wemix switched from Klay to its own mainnet, which triggered a token issuance storm and was delisted by the four major exchanges in South Korea and OK. I studied it carefully and found that there was no big problem, so I started to buy the bottom from $0.6 and kept buying it up to $0.15 (the lowest price was $0.12).
It has risen to $3-4 now. But I started to sell in stages from $2, and cleared my positions at around $4, earning more than ten times on average, but because my position was small, I didn’t get rich overnight. Later, when FTX finally crashed, BTC reached more than 15,000. I thought the historical bottom might have come, so I decisively bought one-third of my positions in BTC, ETH and BNB!
In addition, I recently invested in a few blockchain games with a small position, which also yielded good returns. In the end, my capital reached about 2 million! The dawn of the bull market has illuminated the sky again. This is the third bull market I have experienced. At the beginning of this bull market, I had 2 million principal. Compared with the last bull market when BTC exceeded 20,000 US dollars, I only had 250,000 principal, which is much more comfortable. At the beginning of the last bull market, I invested 100,000 in ETH, 100,000 in BNB, and 50,000 in contracts.
200,000 of them were loans. I only wanted to avoid losing money, and then make money. In the end, BNB got 20 times the return, which directly reached a new level. This is what is often said in the investment field: "Aim for the middle, and take the best!" To be honest, I really didn't think that BNB could rise from 30 dollars to around 700 dollars! So in this bull market, my principal is 10 times more, and I plan to still use the strategy of the last bull market. I will choose a suitable position later, and 80% of my position will be directly bet on several mainstream coins.
20% of my position is invested in the blockchain game track, which I am very optimistic about and good at! As for contracts, I will not play them this round. This round of bull market focuses on stability!
Then if I have extra time and energy, I plan to do something in the blockchain game track, because I think the real timing of the blockchain game track has come! It was too early before, and there were no good games. It will be too late in the next bull market, and many opportunities may have been occupied. This bull market is just right for doing something!
With the emergence of blockchain games that have real players and consumers, such as Legend, MapleStory, and Blockchain version of Diablo, and with Tencent, NetEase, Ubisoft, Wemade and other leading game companies in China, the United States, Europe, Japan and South Korea, the quality of blockchain games has been significantly improved compared to the last bull market, and even reached the standard of traditional games. As the vanguard of blockchain landing and out-of-circle applications, blockchain games will definitely show their true charm in this bull market, just like WEB2 did in the past! I haven't figured out what to do specifically, but it's likely to be a blockchain game community, gathering friends who like blockchain games, connecting players, project parties and VCs, and playing together to achieve wealth and freedom!
Some of my reflections on investment: starting from 1 million → 10 million → 2 million → 5 million → almost back to zero → starting from 250,000 → 5 million → almost back to zero again → 2 million. In the six years since I entered the industry, although I have never achieved true financial freedom, I have experienced many ups and downs. There will always be some reflections, which may not be correct. I share them with you here for reference only.
1. Investment is a science Before entering the cryptocurrency circle, I can say that I had never participated in investment. It is a very dangerous thing to suddenly become rich because of good luck when one's own strength is insufficient. I have proved this truth again with my own personal practice. The money I earned by luck made me lose it back by strength. In this process, I gradually realized that investment, like entrepreneurship, is a high-risk industry. It is a very deep subject in itself. Only in practice can we gain true knowledge. I participated in entrepreneurship with only passion after graduating from university, and then failed continuously before I really made the first pot of gold. This process took a full 10 years. After jumping into various pits, I finally summed up a more reliable entrepreneurial mentality. From then on, I only made more or less money, and never lost money.
Now, investment is the same, it is also a science, and there are some basic principles that must be followed. Whenever I lose a lot of money, it must be that I have touched the red line in some investment field. I jump into all the big pits first, then summarize the experience, then systematically study the theory, and finally refine it into my own system. I don’t know if this approach is reliable or helpless because I have no talent! Anyway, from entrepreneurship to investment, I seem to have always been like this.
2. Investment is a high-risk operation Whether starting a business or investing, you must first realize that this is a high-risk operation! The risk is mainly due to a high degree of uncertainty. These uncertainties either come from cognitive blind spots, information barriers, or objective force majeure.
High uncertainty plus high investment will further increase the risk level. For most people, the only way to effectively control the risk is to reduce investment.
Although knowledge payment and various self-media are popular nowadays, it seems that information sources and cognitive improvement are readily available, but in fact not many of them are useful. I have always felt that true cognition must be gained through practice, otherwise it is easy to "have high expectations but low performance".
Therefore, I strongly recommend that ordinary people, especially those with average ability to make money off-site, must reduce their investment. This is the most effective way to reduce investment risks. If you cannot control your investment and even increase leverage, the consequences may be very serious.
Leverage can greatly disturb one’s mentality, and when combined with various pressures, one’s mental state is prone to problems. If this continues for a long time, one’s health will also be in danger. This is similar to starting a business, but it is weaker than starting a business because the sources of pressure for starting a business are very complex, while the pressure from investing is relatively single.
If you fail in the end after adding leverage, it will be a disaster. Many people may need many years to recover, or even never recover! Because the impulse of investing with leverage is much greater than starting a business, and the threshold for participating in investment is much lower than that of starting a business, ordinary people are more likely to fall into the trap of investment and be cut off!
Here is an example that many Chinese people have experienced but are not aware of: "In fact, buying a house with a loan is the biggest leverage behavior!" But why did many people not realize the risks of leverage three years ago? Because in the past few decades, housing prices have almost always risen. This is very similar to me directly opening a 10x leverage for cryptocurrency trading. An investment of 10,000 is equivalent to an investment of 100,000. If it rises 10 times, I will make 100 times, and I will directly break through 1 million from 10,000. Don't be too happy. Real estate was really so happy before! When this rise lasts long enough and enough people participate, everyone will relax their vigilance and even completely fail to realize the risks of leverage.
Of course, some people may have a fluke mentality, thinking that the country will not let house prices fall, and even if they do fall, the country will pay for it, otherwise they will defend their rights, just like the players who join the rights protection group after losing money in cryptocurrency speculation. From an investment perspective, there is no essential difference between real estate speculation and cryptocurrency speculation. The only difference is that most people think that houses are understandable and have the government to back them up, while Bitcoin and the like are incomprehensible and even a bit gray.
To be honest, from an investment perspective, taking out a loan to buy a house is essentially the same as borrowing money to open a contract to trade cryptocurrencies. Once your position is liquidated, your money will be back to zero, and you still have to pay back the loan and interest in reality. If you no longer have the ability to repay, you may never recover!
I mentioned the house because I want more people to realize that investment and leverage are high-risk behaviors. In any investment field, including real estate, if you have leveraged but you are not fully aware of it, and even make a lot of money, it is probably just luck, just like I hit a big market when I just entered the cryptocurrency circle. If you encounter market changes at this time, you may be confused and lose both your principal and interest.
3. How to avoid risks Only after fully realizing the risks and experiencing the consequences of risks can we really pay attention to how to avoid risks. My main experience is as follows:
1. Don’t go all in Since investment has very high uncertainty and very high risk, you shouldn’t go all in! If you go all in every time, there will always be a time when you will return to zero. I am the best example. Not long after I entered the cryptocurrency circle, I went all in on BTC and BNB, which quickly brought my account funds close to 10 million. But later, I went all in on the Metaverse project and contracts, which almost brought me back to zero twice. The principle of not going all in is actually basic common sense in the investment field. Many investment tycoons and books will tell you at the beginning, but I really made this basic mistake.
In fact, new investors generally don't go all in right away. I only invested 100,000 yuan at the beginning. The problem is that if a small-scale investment quickly gets a high return, the greed demon will be unconsciously released until it finally devours reason and leads to the all-in path. I am a typical example in this regard, and everyone should learn from me!
2. Be cautious when adding leverage. Unlike all-in, leverage should be used when it is necessary. In the face of relatively certain opportunities, especially the main rising wave, decisively adding leverage may lead to several steps. People who started to speculate in real estate with loans 10 or 20 years ago belong to this category. However, adding leverage is a high-risk operation among high-risk operations. What is more serious is that when people generally start to add leverage in a certain investment field, it must be when this field has long-term and high-speed growth. Everyone will see that those who add leverage around them have made money or even become rich, while those who do not add leverage seem out of place. Holding cash or being qualified but not taking out loans is the biggest idiot! This was not the case in China's real estate investment field in the past few decades. This situation will bring many blind investors. They lack basic knowledge of investment just like me six years ago. If you tell them about the risks of leverage, they will tell you impatiently that housing prices will never fall. If you ask why, in one sentence, China will not let real estate fall. Regardless of whether China's real estate will fall or not, the lack of awareness of leverage risks alone has pushed itself to the edge of the cliff from an investment perspective. As for when and where it will fall, it may only be a matter of time!
So how can we increase leverage prudently?
I think the three most important points are:
1) Leverage in the areas you are most familiar with. First of all, being most familiar with the field will lead to a better success rate. Secondly, leveraging is a test of mentality for most people. If you don’t know enough, it will be more difficult to keep a stable mentality, and you will easily make mysterious operations, making mistakes one after another.
2) Before using leverage, you must ask yourself again and again, when the worst happens, can you bear it? Only when the answer is certain, can you use leverage! You must be absolutely rational and extremely conservative here, and never deceive yourself, that is, you cannot blindly follow others, and don’t have the fluke mentality of gambling! For most people, the reliable approach may be to use small positions to leverage and win big with small!
3) Once you smell the smell of risk, you must immediately reduce leverage or stop loss, even if it is just a little smell! Losing money with leverage is much more exciting than making money with leverage. I believe that those who have experienced it will be unforgettable! Finally, I would like to emphasize that I am not encouraging everyone to add leverage, but I am emphasizing the risks of leverage and the issues that need to be paid attention to when playing with leverage. As for whether to add leverage or not, it actually depends on the person. As I said before, leverage is a high-risk operation among high-risk operations, which is more suitable for aggressive players with strong risk resistance. If you are not such a player, it is recommended not to play. Anyway, I almost don’t play now! But if you meet the criteria, play as soon as possible, just like taking risks when you are young and losing money as early as possible, because this thing is very test of human nature, and it is likely that you must lose a few times before you can mature. Human nature has been similar for thousands of years. Don’t be overconfident. There is a saying that goes: "Human nature cannot stand the test!" And I am also a living example. Before I accepted the test, I never thought I was such a greedy person.
