⌠ Reflection and Lessons Learned After a Major Loss ⌡

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It's been a while since I wrote an article. I just came back from traveling recently, and a few days ago, I also made a very poor secondary market trade. I rarely trade in the secondary market, so I won't go into details about which coin it was. Honestly, my mood is quite normal. I found that I don't feel much discomfort when facing large losses. The last time I got burned during a pump, it was the same. But I can still share my thoughts afterward, as it was still a significant loss for me. Here's the reflection and insights I’ve gathered.
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The total loss was about -180k. To be honest, I rarely see such a large drawdown. My memory has a few similar instances: about two years ago, UsualMoney had a drawdown of 200k profit, and a few months ago, $BNBHolder and $GIGGLE each had a drawdown of 100k profit. But this trade wasn't a profit drawdown; it was a pure loss of this amount.
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However, I always set stop-losses before each trade, controlling the maximum loss within my acceptable range, meaning I plan for the worst-case scenario. I didn't expect this time to be worse than I imagined. Fortunately, I stuck to the stop-loss; otherwise, the situation could have been even worse 😂
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What I feel fortunate about is that this trade process really taught me a lot. I believe this tuition fee will serve as a lesson for a long time. I’ll list some key points and deeper thoughts I think we can learn from:
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1️⃣ Always prepare for the worst before trading. The situation can be much worse than you imagine, so be sure to set logical stop-losses to keep the situation under control and minimize drawdowns.
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2️⃣ When trading, I believe you must be firm, confident, and believe in yourself. Sometimes, a bit of stubbornness helps. I also highly recommend discussing with friends you think are better than you; they might point out things you haven't considered. Having an extra perspective and way of thinking is very helpful. My friends helped me a lot in this trade.
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3️⃣ Information advantage is extremely important. This is also why I focus on Level 1 data. Level 2 data, project data, token unlocks, circulation, events, etc., can all be found. The more data you consider, the more advantage you have over others and the better your overall view. Your ideas can also be more flexible.
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4️⃣ Try not to trade during travel, or at least avoid making very important trades. I happened to be in Hong Kong during this trade. Making money was manageable, but losing money can easily affect your mood. When you're in a bad mood, you're more likely to make irrational trades.
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5️⃣ I don’t know about other tokens, but because I carefully observed the data and details of this trade, I found that market making indeed follows cyclical patterns. For example, after work at 8:30, and back to work at 2:00 PM, based on price, OI, fee data, etc., you can observe these patterns. It definitely helps with trading (though each market maker has a very different style).
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6️⃣ Forget about "getting back to even." Before this trade, when I experienced small losses, I actually sensed something was wrong based on data—going against my initial thoughts. I was traveling and not very rational at the time. I had the crazy idea of "just break even and run," which was the worst part of this entire trade. In the end, a slight price movement prevented me from exiting early, and I had to bear the worst-case scenario I set.
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That’s roughly my takeaway. Actually, I thought of other insights while taking a shower yesterday, but I can't recall them now. I’ll come back and add more once I have new realizations. Trading is truly a form of cultivation.
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In terms of asset ratio, this loss was within my reasonable risk control range. But in absolute numbers, it still stings quite a bit—after all, this money could have bought a Porsche 718. Without this loss, my December assets would have hit a new ATH. Now, I need to work even harder 🤣
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With more than half a month left at the end of the year, I haven't been in front of my computer in Taiwan much. My Level 1 trading has been a bit chaotic, and I need to find my profitable rhythm again. Luckily, Binance has launched spot trading, and I guess the book title will come out soon (or maybe just called Binance Life?). Anyway, I hope this article can serve as a warning to everyone. Wishing everyone prosperity!
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#CharmingPost