𝗠𝗮𝘀𝘁𝗲𝗿𝗶𝗻𝗴 𝘁𝗵𝗲 𝗧𝗿𝘂𝗲 𝗘𝘀𝘀𝗲𝗻𝗰𝗲 𝗼𝗳 𝗖𝗿𝘆𝗽𝘁𝗼𝗰𝘂𝗿𝗿𝗲𝗻𝗰𝘆 𝗥𝗲𝘁𝘂𝗿𝗻𝘀..

Many people, even after years of experience in crypto trading, still struggle to grasp the nuances of profitability. Let’s break it down with simple examples:

1. If you start with 1 million yuan and make a 120% gain, followed by a 55% loss, you’ll end up right back at 1 million yuan.

2. If you begin with 1 million yuan and suffer a 55% loss first, followed by a 55% recovery, you’ll have just 742,500 yuan left. Similarly, if it rises by 55% and then drops by 55%, the result is also 742,500 yuan.

These examples reveal a crucial lesson: controlling losses is essential. While many traders achieve quick profits of 100% or even 300%, if their portfolios experience a 55% drawdown, all gains can evaporate. Without proper risk management, even impressive profits can revert to zero.

Now, let’s look at the power of steady returns. If your 1 million yuan portfolio earns a stable 35% annual return, it will grow to 1.35 million yuan in one year. After two years, it compounds to 1.82 million yuan. This demonstrates how consistent growth, driven by compound interest, can far outperform the volatility of high-risk trades over time.

The key takeaway from these scenarios is the importance of sustainable returns. What makes Warren Buffett legendary is not explosive short-term gains but maintaining a 25% average return annually over nearly five decades. While anyone can earn 20-30% in the short run, sustaining it over 10, 20, or 40 years is rare. Success lies in patience and discipline—understanding that compound interest is the true secret to wealth. Stay grounded, trust the process, and explore the magic of compounding. Keep following, as we’ll dive deeper into strategies for harnessing this power in the next article.

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