BTCBull Market offers so many opportunities, why do some people still lose money?

Financial management is not only a combination of technology and luck, but also a comprehensive test of personal psychological qualities and discipline. Remembering this point, you can stand undefeated in the long-term market game. This article is from the article written by resdegen, compiled and translated by Baihua Blockchain. (Previous summary: Why is 'Bull Market most prone to losing money'? 15 survival rules for crypto world veterans) (Background supplement: How do retail investors in the Bull Market lose money?) In the current rapidly changing and fiercely competitive market, how traders maintain calm, rationality, and develop sound strategies has become the key to standing firm in the market and continuously making profits. Here are 8 psychological frameworks, combining market practice and psychological principles, aiming to help you penetrate market noise, enhance decision-making ability, and become a more sensitive, focused, and logically clear investor. 01. Perform '100% Cash Test' What is the '100% Cash Test'? The '100% Cash Test' means assuming that your allocation is all converted into cash (e.g., 100% into USDT), and then ask yourself: If you were to reallocate funds now, would you still buy the current assets in the same proportion? If the answer is negative, it means that your allocation may need adjustment. So, why not ask yourself: If all your allocations were converted into 100% USDT today, would you choose to redistribute the funds into the same positions? For most people, the answer may be negative. However, many people find it difficult to take action. Why? Because they are influenced by the following psychological factors: sunk cost fallacy, emotional dependency, fear of admitting mistakes. The sunk cost fallacy is a cognitive bias. People continue to invest (whether it is funds or emotions) because they have 'invested too much', even if it is no longer logical, instead of timely stop loss and reallocating to better opportunities. Going back to the initial question, if the answer is negative, you need to take action. It may initially feel overwhelming, but you can start small, such as choosing a position and asking yourself: If it were today, would I still purchase this Token in the same quantity? Then, continue to evaluate the second position. Although selling feels emotionally difficult, it seems like closing a door to certain potentialities. But stubbornly holding onto positions based on hope or fear only leads to stagnation and poor decisions. Brave facing the issue, decisively adjusting allocations, avoiding the mistake of not wanting to sink the cost, and remembering that sunk costs do not participate in decision-making. 02. Maintain Structured Allocation Achieve more efficient management through clear categorization: 1) Core positions Core positions refer to investments with high conviction, meaning you can withstand significant price fluctuations and hold for the long term. This does not necessarily require you to hold for the long term, as the opportunity cost is very high in this market, with frequent rotations. But if you think you can accurately capture every market fluctuation, that is self-deception, or you need to believe in the long-term value of something. 2) Trading positions These are short to medium-term opportunities used to capture specific trends or price fluctuations. This type of position provides more flexibility, allowing for quicker rotation and tighter stop loss. Everyone's trading style may differ, not limited to Perptual Futures accounts. For example, I can buy an on-chain opportunity, do a 4x swing trading (from 5 million US dollars to 20 million US dollars), and then exit. Even if its price continues to rise, I won't mind because I have already clearly identified the type of trade I am undertaking. If I believe it could reach 1 billion US dollars (e.g., due to the uniqueness of the project), it would be classified as a core position. I can accept a 50% price fluctuation, as I am aware that this fluctuation is the cost of obtaining excess returns. 3) Clear categorization, avoid confusion Mixing core positions with trading positions often leads to confusion and emotional decision-making. By separating them, you can have a clearer understanding of the purpose of each position, thereby reducing unnecessary regret. Therefore, categorized management not only helps you maintain rationality but also enhances the overall efficiency of the allocation and the confidence in decision-making. 03. Fewer, More Concentrated Layouts This is an underrated skill that only the most outstanding traders can truly master. Perhaps this is the secret to advancing from one level (e.g., 6 digits) to another (e.g., 7 digits). 1) Key points It has been proven that increasing positions with conviction and achieving rise through compound interest is more likely to help one maintain wealth in the long term compared to arbitrarily speculating on a Memecoin. Each trade should have a valuable impact on your allocation; otherwise, it is not worth doing. 2) Reduce layouts, optimize management Reducing targets helps manage allocations more efficiently while avoiding the biggest enemy in trading — indecision. When you need to manage 15 different positions simultaneously, the psychological burden will exhaust you. However, if you limit holdings to a few targets (e.g., up to 5), you will be more cautious and start to seriously think: 'Is this casually recommended Token really worth allocating?' Of course, there will also be opportunities for extremely asymmetric bets (e.g., taking on 1-2% risk but potentially bringing in 20-40% combined returns). The key is not to scatter funds randomly; maintaining focus and concentration can lead to greater returns. 3) Less is more A few people have achieved wealth rise through streamlined layouts, while others are obsessed with 'collecting' meaningless short-term price rises. I call these people 'rise collectors'. In short, either choose extremely asymmetric bets or decisively increase positions and utilize compound interest for rise on the basis of conviction. Strategies that fluctuate between these two are difficult to achieve true success. 04. Build Your Allocation Based on Goals Your allocation should always revolve around your financial goals. If your goal is to rise your assets from 200,000 US dollars to 2 million US dollars in this Bull Market (although 2 million US dollars may not be enough for retirement, it is still a worthwhile goal for most people), then every decision should bring you closer to this goal. Ask yourself: Does this trade substantially help me achieve my goal? Or am I blindly chasing rise because I fear missing out on the market? 1) Maintain focus, avoid judgment errors Lack of focus will drop your judgement. Investing a tempting amount in every opportunity, such as 5000 US dollars, should consider the following costs: ・This investment may have minimal impact on your overall allocation. ・It will consume a disproportionate amount of your time and energy (e.g., managing an investment that only accounts for 1% with 20% of your attention). 2) Abandon unrealistic fantasies Most people buy with the hope that a certain Token will achieve their 'magical number' in their mind: 'I need this Token to rise 10 times.' This wishful thinking will only hinder your judgement and will not help you achieve your goal. Instead, you need to clarify your goals and assess whether you are making efforts toward them. This is crucial and worth emphasizing repeatedly. In summary, before investing, clarify your goals first, ensure that every decision serves the goal, and not be swayed by market emotions. 05. Focus...