A fierce operation like a tiger still can't escape the curse of "holding onto losses and selling at a loss"?

Author: 1912212.eth, Foresight News

This bull market has finally come true as you and I wished. After the market downturn in March this year and a long wait of six months, we have finally welcomed a market explosion. With the Federal Reserve cutting interest rates, Trump being elected, and the SEC chairman about to resign, the entire market is filled with high trading sentiment. On December 5th, Bitcoin even broke the $100,000 mark for the first time, and the market generally believes that a bull market peak may occur in the first half of next year.

However, a better market does not mean that every trade will be profitable. As the saying goes, a good buyer is just a novice; a good seller is a master.

The author analyzes the mistakes made in trading based on the failed lessons from two past cryptocurrencies, to help newcomers avoid pitfalls.

Be Cautious of New Coins at the End of a Bull Market; Do Not Have Overly High Return Expectations

By the second half of 2021, the market was already at the tail end of the bull market, and DYDX gained attention due to its massive airdrop and being a leader in the derivatives sector. At that time, I entered around $10, and within just a week, it doubled. The market was boiling, and it kept pushing upwards. However, I thought it would continue to rise, only to find that the big market peaked in early November, and the returns on new coins were disappointing. The market began to plummet, and due to holding on too long, I missed the best selling opportunity and had to painfully cut losses around $2.

After this failure, unwilling to accept it, I determined that the probability of DYDX dropping below $1 was low. Then, during the market recovery in mid-2023, I kept buying spot, and with the favorable news of dYdX V4, the market indeed came back, and DYDX eventually broke through $4. It was November 2023, precisely when the market began to rise broadly. I thought DYDX was about to start a phase of upward movement, but interestingly, at the beginning of 2024, it dropped to half of its peak, and I ended up exiting with only a third of my maximum profit.

In hindsight, there were significant issues with the targets I chose in the past. First, the CEO of the team had an attitude of "what does the token price matter," and even left to pursue "ideals." Although there was an upgraded tokenomics, it could not stop the continuous selling pressure from VCs and mining. The speed of launching new coins had also been slow and lacked enthusiasm, causing its price to remain dormant from June 2022 until now.

Secondly, at the end of a bull market, one should not have overly high return expectations for new coins. In the last cycle, the only loss I incurred was from buying the new coin DYDX at the end of the bull market. In contrast, early entries like DOT and NEAR, upon reflection, were much easier to hold and yielded decent returns.

Waiting for the Wind Can Be Harder Than Chasing It

At the beginning of 2024, while screening CoinList projects and VC lineups, I selected the RWA token ONDO, with an average cost of about $0.3 and a heavy position. ONDO has always been one of my HOLD positions, and I did a few swing trades later, resulting in a reduction of several tens of thousands of coins. I then made the painful decision to stop swinging. However, the subsequent operations became one of my worst heavy position trades in recent years.

During the recent meme coin wave, countless meme coins surged, while my ONDO remained stagnant. Additionally, since ONDO was listed on Binance contracts at the beginning of 2024, it has not been listed on Binance spot, leading to limited price increases in the RWA sector during each rise, which was quite disappointing.

This constant torment eventually turned into doubt. Holding onto the last returns based on that trend might not yield as high as meme coins, so I decided to split my position into three parts: BONK, FLOKI, and ZK.

I chose ZK because Ethereum had clearly started to rise, and OP and ARB had already skyrocketed, while ZK seemed to have great potential. This argument was later proven not to be wrong, but the timing of entering the meme coins was extremely poor.

Who would have thought that just after switching positions, the music of meme coins would abruptly stop? Except for ZK, the positions I switched to began to decline continuously. The most painful part was that ONDO, after being sold around $0.99, soared just a week later, peaking at around $1.95.

At the beginning of the new bull market, missing out on a 100% increase in a heavy position had a significant impact on my mindset.

Upon reflection, my mindset was overly restless. After a long time of holding a heavy position without growth, while other coins surged wildly, it was easy to become shaken. The market sector rotation was extremely fast, and funds flowed rapidly from meme coins to L1, DeFi, and RWA.

Many choices are made in an instant, and these decisions are often subtly influenced by past experiences.

The long-term rotation of meme coins led me to doubt the return potential of VC coins, resulting in a mindset imbalance and missing out on substantial profits, serving as a punishment for my impatience.

Summary

In the cyclical fluctuations, there are several key points to note:

First, try not to buy new coins at the end of a bull market, or if you do, do not have overly high expectations for returns. The larger market cycle is very important; once signs of a bearish trend appear, slow exits can lead to significant drawdowns.

Second, during sector rotations, do not easily switch positions to chase hot spots. In a bull market cycle, when a particular hot spot suddenly becomes popular, with many calls on Twitter, the market sentiment can be explosive, while your position remains stagnant for a long time. When you are ready to switch positions, if the market suddenly changes direction, it is easy to get trapped, and in times when you need composure, you must have the ability and courage to filter out noise.

Third, when trading, you must first convince yourself of the true reasons that move you. Are these reasons simple, direct, and compelling when you explain them to others? If many conditions do not match, then this target may not be suitable from the start.

Planning in trading is also very important. What stage is the market currently in within the bull market? If it is just the beginning, then after selling everything now, are there better targets that can outperform the current holdings? Why is now a good time to sell? If the reasons are too casual and based solely on KOL calls without your own thinking, it is easy to be swept away by the K-line chart, chasing hot coins and getting trapped at high points, which affects your mindset.

Everyone's aesthetic in the market is different, and the size of funds and risk preferences vary greatly; others' choices may not necessarily be suitable for you.

The honing of skills and mindset in trading is always ongoing. Finally, even if you do not sell at the top, there is no need to be overly entangled, as no one can sell perfectly at the top every time.