Opinion: Under what circumstances should you not buy a currency that has risen sharply and then plummeted?

Author: Chuan Mu Source: X, @xiaomucrypto

What we are talking about here is the surge driven by good news and not driven by bookmakers.

For us retail investors who want to maximize their winning rate every time, we need to work hard to overcome the greed after the surge and the fear during the trough. The position at the bottom is in place in one step. After the sharp rise, the position should be gradually reduced until the price reaches the expected price or far exceeds the expected price.

If the expectation disappears, do not participate even if it falls back to the original buying position or a lower price level again.

Take auction and bake as examples. Both of them were inspired by ido’s new career. Their valuation and growth drivers come from ido's new revenue. Once there is a loss or sudden drop in profits from a single or continuous play, it is basically time to leave the market. The auction is even more obvious. The profits from the previous launches of mubi and bssb have far covered the possible losses due to currency price fluctuations. Then there is reason to believe in the expectation of huge profits in the next launch, so the auction price has been pushed up to around 45.

Bake's surge is in line with three points, brc20 hits new expectations, auction compares similar trends, and Binance background. So from the initial 0.23, it started to explode all the way to around 0.9. In a few days, it quickly completed the two-month journey of autcion.

When the skyrocketing market value of tokens is amplified, for example, it expands from US$50 million to US$500 million. It is difficult to continue to rise against new types of coins. When the market value is 50 million U.S. dollars, as long as its ido currency is not very bad and 30% of the market value is involved, the possible return rate will be directly above 50% if the new market value is 10 million. It is almost impossible for the currency price to fall by 50% to 25 million, so it is close to A sure win. But when the market value reaches 500 million, and 30% of the market value is involved, if the new market value is still 10 million, the income will be less than 10%. If you include the hedging capital rate, you may still lose money. If the currency price fluctuates violently and falls at 500 million US dollars, Then you are basically bound to lose money. I made this mistake, so I lost more than 100,000 yuan by making a new bake. I didn’t understand it at the time. The new game ended at 0.6 points and the stock was cleared and left.

Looking back now, the trend is very certain. AUC and bake have continued to plummet, because the new players already know that they are losing money now. , then the expectation of rising prices will completely disappear.

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The surge caused by good news is also particularly timely. There are only two ways to make money by buying. The first is to obtain information as soon as possible, enter the market with short-term funds, and leave the market quickly at the same time. The second is the plunge that occurs in the distant future when the good news has not arrived, because the expected good news still exists.

Once the benefits are realized or the expectations corresponding to the benefits disappear, you can no longer continue to participate. We need to pursue the next thing that is more cost-effective. There are tens of millions of tokens in the market, and there is not only one coin that is skyrocketing every month. If you want to buy a coin that is at a high price that is several times the price, you must either control a very low proportion of the position to participate, or stay calm and wait for the next opportunity.

Don't regret any missed opportunities and don't always be nostalgic for coins that have achieved your expectations. There are too many opportunities. I have participated in ygg, gas, trb, and bake, which have increased many times, but I have no regrets. The wealth with the highest price does not belong to me.

You must wait patiently and reduce the number of times you take action. There are too many market opportunities and people's energy is limited. Take two or three opportunities every month. Over the course of a year, the rate of return will explode. If the opportunity is not very good, either participate in a very small amount or not participate at all, endure it, etc.

Loss is often caused by irrationality. When there is a sharp rise, you must reduce your position instead of adding to it, lower your cost line, and then leave the market completely when expectations disappear.

With so much water, if you want to make money this year, you should have a lot of patience and control your greed and fear at all times. I can't do it this year. effort.

Finally, I wish you all a good return and a safe pocket.

The above content has no investment value and does not constitute any investment advice.