Why can't you make money on Bitcoin?

I often have new friends ask me how to play Bitcoin. After I have talked about the history and principles of Bitcoin, they get a little impatient: Teacher, this is too profound. I just want to know how to make money with Bitcoin. At this time, I can only smile mysteriously and chant the eternal four-character mantra in my deep throat: Buy low and sell high.

Buying low and selling high is certainly the magic weapon that makes you invincible in the trading market. However, the magic weapon is not equal to actual operability. Today, the author deliberately summarizes some simple but easily overlooked phenomena to try to explain why you cannot make money on Bitcoin?

1. The principal is too small. After 7 years of development, the depth of the Bitcoin trading market has begun to take shape. Let's assume that on January 1, 2015, 10 million, 1 million, and 10,000 yuan were invested in buying Bitcoin. The price rose from 1,944 yuan at the beginning of the year to 2,761 yuan at the end of the year. The annual return on investment is also 42%, but the pleasure of making money is very different. The list is as follows:

If you want to know how to increase the principal, please refer to Article 4.

2. Fighting alone, with limited energy. As we all know, the Bitcoin trading market is a 7*24*365 model worker-like non-stop trading. Institutional traders work in shifts, but you are alone. Institutional traders have quantitative robots, but you are alone. Institutional traders get high in the middle of the night and stir up trouble, but you still have to drink three cans of Red Bull and two bottles of Black Card and fall asleep to take over.

3. Investing with funds that exceed your psychological tolerance. Cashing out a full Bitcoin warehouse, selling a house to buy a full Bitcoin warehouse, borrowing money to buy a full Bitcoin warehouse, impulsive investment and impulsive consumption often make you bear the consequences, greatly reducing your tolerance for price fluctuations; Bitcoin price fluctuations have a long periodicity, and the time cost of funds can easily force you to not survive the darkness before dawn.

Although Bitcoin is good, remember to invest with funds within your affordability. How to judge whether a sum of money does not exceed your affordability? First, see if the funds are expected to be idle for a long time before buying the currency, and second, see if you can eat sweetly during the day and sleep soundly at night after buying the currency.

4. Being too greedy and having unrealistic expectations for making money. What annualized rate of return do you hope for? The average annualized rate of return on investment of the well-known top investment masters Buffett and Soros is 20%. Can you outperform them? Unrealistic expectations are often the root cause of tragedy. Excessively high return expectations usually lead to extremely frequent transactions, hoping to catch every rise and avoid every fall. As a result, not only did the expected goal not be achieved, but the principal was cut off unknowingly. Does investment behavior based on a realistic rate of return make sense? Take a look at the following table:

The conclusion is: Yes! Time is also a good medicine to solve the capital problem.

5. Wrong entry and exit timing. Blind optimism and pessimism. In the cryptocurrency circle, there is an impetuous mentality that if the price rises by 100 yuan, it will reach 18,000 yuan, and if it falls by 100 yuan, it will return to zero. The trend of chasing ups and downs is prevalent, and it is easy to be exploited by the dealer. Not to mention that most retail investors have a hot-headed operation style, their brains cannot control their hands, their methods are arbitrary, and they are short-sighted. They forget that the journey of Bitcoin is to the stars and the sea, and the loss is large from the long-term probability calculation.

One way to avoid adverse timing is to make fixed investments, that is, to evenly distribute the investable funds on the time axis. According to the algorithm of netizen lyf20617, even if you buy bitcoins from the highest price of 8,000 yuan on November 17, 2013 to August 17, 2015, and invest an equal amount of RMB in Bitcoin on the 17th of each month, the final average price is only 2,305 yuan. The calculation formula for 22 periods is as follows:

22/(1/8000+1/4117+1/5073+1/3905+1/3845+1/3270+1/2771+1/3792+1/3841+1/3196+1/2904+1/2414+1/2368+1/1977+1/1268+1/1459+1/1787+1/1420+1/1460+1/1477+1/1767+1/1648)=2305 yuan.

If you deposit the purchased Bitcoin in a monthly account on HaoBTC.com, you can enjoy 4%-8.51% Bitcoin interest from the first month. It is so cool to participate in professional mining and earn money by Bitcoin, right?

6. Trust experts and gossip. Experts are all eloquent, but they always say things like "if it doesn't rise, it will fall; if it doesn't fall, it will rise; if it doesn't rise, it will fall; if it stays flat for a long time, it will break through." Newbies like to ask everyone: Will Bitcoin rise or fall? Asking others about short-term operations is worse than rolling the dice. As for what you hear on the street and insider information, you can only say that it is a rare opportunity. You only need to know one thing: institutional investors will always have a keener sense of smell than you.

7. Leverage addicts. Many friends participate in high-leverage transactions under the slogan of hedging risks, but they are actually deceiving themselves and are unwilling to admit that they are playing a gambling game with Big Brother. The strange thing is that many people do not think that they are lucky when they make money, but think that they are unlucky when they are liquidated. Once again, I advise individual investors: cherish your principal and stay away from futures.

Finally, the experience is summarized as follows:

For 98.18% of Bitcoin players in the market, it is almost impossible to succeed in obtaining excess returns by obtaining news information in advance, improving short-term operation skills, and choosing the right time to enter and exit the market. On the contrary, it is feasible to lower your profit expectations, clarify your tolerance for fluctuations, control the fluctuation of the net value of assets allocated in Bitcoin within your psychological tolerance, and insist on fixed investment to obtain long-term stable returns.

I wonder if the above experience can be inspiring to those cryptocurrency traders who dream of getting rich overnight?