The crypto market has its ups and downs, don’t let yourself lose your rationality due to “it won’t be long” and “people are making money”

Author: Game

Compiled by: Shenchao TechFlow

Fear of “this is the last cycle” + uncertainty about how long the good times will last + social pressure from others to perform better . These three make up a deadly combination that destroys many people’s decision-making abilities.

Possible consequences:

• Distraction: Blindly chasing every hot trend while ignoring the need to focus on key trades.

• Pessimism and hesitation: loss of confidence due to uncertainty, resulting in the inability to hold any assets for a long time, or even not participating in the market at all.

• Lack of belief: Lack of in-depth research on the project and inability to build up enough confidence to cope with market fluctuations.

• Lack of profit strategy: Because of fear of the end of the market, they rush to clear their positions when Bitcoin makes a slight correction, missing out on greater profit potential.

Response suggestions:

1. Focus on key areas:

• Focus on specific areas or hot narratives within one or two chains.

• Make a clear choice: on-chain trading or secondary trading, focus on one direction.

• If you think you can dabble in them all at once, you’re just kidding yourself. Concentrate your resources and efforts on areas that best align with current market conditions and deliver the highest returns. Combine your capital size, advantages and market environment to find the direction and strategy that best suits you.

2. Be clear about how you do it:

• Understand whether you are investing, trading or speculating. There are essential differences between the three. Do not confuse them.

• A simple judgment framework can help you distinguish between these approaches and develop strategies accordingly.

3. Stick to your plan:

Develop a clear action plan that includes the following elements:

• Market Cap Range: Determine in which market cap range you will enter the market.

• Profit Plan: Develop rules for taking profits in batches rather than clearing out all at once out of fear.

• Target Estimate: Set a target price that an asset may achieve, and a time frame for achieving the target.

• Stop loss conditions: Make it clear when partial or complete stop loss is required. This can be based on changes in fundamentals or technical aspects, or the strategy can be adjusted due to changes in the macroeconomic environment (such as upcoming important data). For example, when the macro environment is uncertain, you can take profits appropriately and wait for re-entry at a lower price.

4. Know yourself:

• Identify your weaknesses: Is it a lack of experience? Is there a lack of technical capabilities? Is there a psychological bias of over-optimism or over-pessimism? Are there issues with poor money management or lack of time?

• If you find that you have more weaknesses in these areas than others, then decisively give up competing in this field. Choose the direction where you have advantages and focus on what you are best at.

5. Continuous improvement

• Reflect carefully after every transaction - which operations were successful, which ones failed, and why? Was the problem the process or the decision-making, or was the decision itself sound but the outcome unsatisfactory?

• Your goal is: to continuously reduce errors in operations, gradually increase your winning rate through the accumulation of experience, and appropriately increase your position when the hit rate is higher.

• If you ignore this process, you are likely to get stuck in long-term entanglements, making it difficult to make real progress either psychologically or in terms of profit and loss performance.

6. Don 't fight alone

• In the market, reliable partners are crucial. Not only can they hold you accountable for your actions, but they can also help you address your weaknesses.

• Really high-quality trading opportunities often come from the mutual support of the team - you make up for their shortcomings, and they help you improve yourself.

• Quality over quantity: More partners are not always better. What you want are traders who are high-performing and trustworthy, who are at your level or even better in the areas you focus on.

• Broaden your horizons: Build a small circle of people outside your primary field who can provide you with macro trends, market cycles, and other important information beyond your immediate focus. These insights will ultimately feed back into your overall market knowledge, helping you formulate better strategies.