One, about returns
Assuming you have 1 million, when returns reach 100%, your assets will reach 2 million. If you subsequently lose 50%, it means your assets will revert to 1 million. Clearly, losing 50% is much easier than earning 100%.
Two, about price fluctuation limits
If you have 1 million, after a 10% increase on the first day, your assets will reach 1.1 million, and then after a 10% drop on the second day, your assets will remain at 990,000. Conversely, if you drop 10% on the first day and rise 10% on the second day, your assets will still be 990,000.
Three, about volatility
If you have 1 million, earn 40% in the first year, lose 20% in the second year, earn 40% in the third year, lose 20% in the fourth year, earn 40% in the fifth year, and lose 20% in the sixth year, your remaining assets will be 1.405 million, and the annualized return over six years will only be 5.83%, even lower than the five-year treasury bond coupon rate.
Four, about earning 1% daily
If you have 1 million and can earn 1% daily, then after 250 days, your assets can reach 12.032 million, and after 500 days, your assets will reach 145 million.
Five, about 200% each year
If you have 1 million and achieve a 200% return for 5 consecutive years, then after 5 years your assets will reach 243 million. However, such high returns are hard to maintain.
Six, about ten years 10 times
If you have 1 million and hope to reach 10 million in ten years, 100 million in twenty years, and 1 billion in thirty years, then you need to achieve an annualized return of 25.89.
Seven, about averaging down
Assuming you bought 1,000 at 10 yuan, and now it has dropped to 5 yuan, if you buy another 1,000 yuan, your holding cost can be reduced to 6.67 yuan, rather than the 7.5 yuan you might imagine.
Eight, about holding costs
If you have 1 million and invest in a certain cryptocurrency with a profit of 10%, when you decide to sell, you can keep 100,000 in market value, which means your holding cost will be zero, allowing you to hold long-term without pressure. If you are extremely optimistic about this cryptocurrency and leave 200,000 in market value, you will find that your profit will rise from 10% to 100%. However, do not get complacent, as if the coin later drops by 50%, you could still incur losses.
Nine, about asset allocation
Assuming you have 1 million, you can invest 800,000 in risk-free asset A (annual return 5%) and 200,000 in risky asset B (return -20% to 40%). Your worst return for the year would be zero, and the best return could be 12%. This is the prototype of the CPPI technique applied to capital protection funds.
Will the cryptocurrency circle be the only way out for ordinary people?
Having been in the cryptocurrency circle for a decade, I want to tell everyone that if you want to change your fate, you must try the cryptocurrency field. If you cannot make a fortune in this circle, ordinary people may truly have no more opportunities in this lifetime.
Traits of excellent traders
First of all, excellent traders must be patient people who can withstand prosperity!
Market cycle theory
"Five poor, six broken" happens every year. According to cycle theory, there are not many optimal times to trade cryptocurrencies throughout the year. "Five poor, six broken, seven may not turn around"; every year in May, June, July, and August, I usually stay on the sidelines.
So, when is a good time to enter the market?
1. Enter the market at the end of September, clear positions at the end of November.
2. Enter the market before the Spring Festival, clear positions in April.
3. Execute these two iron rules; of course, individual small-cap stocks' short-term operations are not included.
4. Next, you need to learn how to find hundredfold coins and achieve wealth during a bull market.
Adhering to these ten principles in cryptocurrency trading will surely yield abundant rewards.
Market trading principles:
1. Don’t easily let go of low-priced chips: maintain firm beliefs, prevent market manipulators from colluding to drive prices down.
2. Chasing highs and selling lows, entering and exiting fully is always a taboo: In a favorable larger trend, building positions in stages during declines is lower risk, lower cost, and higher profit than chasing highs.
3. Reasonably allocate profits: maximize the release of funds rather than just increasing positions.
4. Rapid increases to cash out, rapid declines to hold coins: Always maintain a good mindset; do not speculate, do not be impatient, do not be greedy, do not fear, and do not do things without preparation.
5. Rely on experience and judgment for ambush or private placement low-priced coins: Secondary market speculation requires technology and information; do not put the cart before the horse, or it will easily lead to chaos.
6. Position building and unloading should be layered: gradually widening price levels to effectively control risk and profit ratios.
7. Familiarize yourself with the correlation effects: each cryptocurrency does not exist in isolation; many tools can help view cryptocurrency information and consultation. Understanding these correlation effects is very important.
8. Asset allocation should be reasonable: the balance between hot coins and value coins is essential; you should not be too conservative and miss opportunities, nor too aggressive and face high risks. Value coins should focus on stability, while hot coins are volatile, potentially making you rich or losing everything in one go.
9. Having coins on the market, money in the account, and cash in your pocket: This is the safest and most reassuring configuration. You cannot go all-in; going all-in will lead to disaster. The grasp of risk control and the reasonable allocation of funds are key to your mindset and success or failure; investing with spare money is fundamental.
10. Master basic operations: learn to apply concepts, grasp the basic thinking of trading. Observation is the premise; remember each high and low point as reference data, learn to record and summarize materials, develop a reading habit, and cultivate the ability to filter and sift information.
Summary
By following these principles, combined with the cyclical nature of the market and reasonable capital management, I believe you will gain something in the cryptocurrency circle. Remember, opportunities and risks coexist in the cryptocurrency circle; only by mastering the correct methods and mindset can you stand undefeated in this turbulent market. I hope these experiences can help you.
Want to double the account, want to enjoy big profits, want to successfully break even
Stay close to rainy days and position yourself in the main uptrend of the bull market in advance!
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