Rules for trading in the cryptocurrency world: Stay away from leverage; the survivors are kings. The crypto space is an extremely restless place, arrogant and extravagant, with the greatest consensus being to become rich overnight. This extreme greed for wealth will ultimately turn the word 'greed' into 'poverty.'
1. Small bets amuse, big bets harm, and excessive gambling leads to destruction. In June 2019, the founder of BitE, Hui Yi, allegedly misappropriated 2000 bitcoins from clients and shorted with 100x leverage, leading to a massive loss of over 100 million RMB, ultimately choosing to commit suicide at the age of 42. However, no amount of bloody lessons can curb a gambler's endless desires. The bloody history will repeat itself countless times, and this time is no exception. For example, the heartfelt confession of this liquidated trader became popular in the crypto world, evoking deep sorrow. This trader was a staunch supporter of BSV and was initially wary of leverage, but ultimately succumbed to temptation and ventured down the path of leverage. Due to their faith in BSV, they continued to add margin even during sharp declines, attempting to preserve every BSV coin, and eventually faced liquidation in the middle of the night. The latter part of the content also reveals the truth; the moment one plays with leverage, liquidation becomes a matter of time. Those who walk along the riverbank often get their shoes wet. Even the prominent futures traders either go bankrupt or commit suicide; how many can survive in the futures market? If the big players are like this, what about us small retail investors?
2. Should one use leverage in investments? The cryptocurrency market can be seen as a probability game; the future trajectory of large cycles can be predicted, but the specific timing and points are entirely random and cannot be forecasted. Many people, after this sharp decline, try to find reasons. In fact, most declines have no reason, just like the Dark Forest theory in the Three-Body Problem; you cannot predict when someone will fire a shot. The addition of leverage turns time into your enemy; as risks increase, it becomes increasingly uncontrollable. Many people are left dumbfounded when facing extreme market conditions; they don't even know what they are thinking. Manageable investments ultimately devolve into frenzied gambling.
1. The biggest danger of leverage: addiction. In the crypto world, we often see many people flaunting their contract profits, as if making money is too easy. There is no doubt that using leverage makes it easier to earn money, which is the greatest harm of leverage. A moment of leverage feels good, but continuous leverage creates an illusion that drastically reduces your vigilance against leverage and makes you accustomed to it. Leverage is addictive, just like gambling; those who initially succeed with leverage often repeat and increase their previous successful experiences based on Pavlov's conditioning theory. Successful individuals will raise their leverage bets, leading to catastrophic failures. Leverage itself is not wrong; it is merely a financial allocation tool in investment. The root of the problem lies with the users of leverage.
2. The biggest risk of leverage is unrelated to the multiplier. The risk of leverage is not about its height; high leverage is not necessarily high risk. High risk comes from high leverage combined with heavy positions and going against market trends. Similarly, low multipliers do not imply low risk. High multipliers with heavy positions: no grave to bury you. Low multipliers with heavy positions: stop-loss set too far or no stop-loss, extreme market conditions can wipe you out. High multipliers with light positions: if it blows up, it blows up; the cost of loss is not significant. Low multipliers with light positions: you won't gain anything. Therefore, reasonable control of position size is the correct method for managing risk, rather than merely reducing leverage. In summary: If you're not an expert, using leverage is like poison.
3. In the crypto world, the survivors are kings. Short-term market fluctuations follow completely random patterns; this is a fundamental consensus among all Wall Street big shots. Most people play with leverage convinced they can predict short-term market trends; please stop that foolish fantasy immediately. However, it is not difficult to predict long-term cycles. People ultimately cannot escape the word 'greed' because no one wants to become rich slowly. Investing is a marathon; you can only be considered a winner after completing the entire race. Any breakout in between has no relation to the final result and may even drain you completely. It can be said that greed and fear are the two major enemies of investment. How to cope? Respect the market; never let your guard down unless you have already exited. The trading market is filled with speculators, large players, and market manipulators, where the weak are preyed upon by the strong every day, and its brutality is no less than the Amazon rainforest. Only by maintaining a sense of reverence can one survive in this market. Summarize experiences, improve skills. No one is born a perfect trader; all successful individuals have experienced failures and walked step by step toward success.
Having been in the cryptocurrency market for ten years, transitioning from a novice to an investor with some gains, this journey has been full of hardships and rewards. Looking back, I have many insights to share with everyone:
1. Retail investors + common pitfalls to be wary of: Most retail investors frequently make the mistake of refusing to cut losses when they are losing money, yet they take profits too early when they are in the green. This operational method is akin to planting a time bomb for oneself, which can easily turn hard-earned wealth into nothing in an instant.
2. Go with the trend is key: In investing, the most important thing is to 'go with the trend.' When the price of a coin is in an upward trend, thinking about shorting during a pullback is simply self-destructive. Adding leverage on top of that is undoubtedly a way to self-destruct. Once a market trend is established, it often has powerful inertia; going against the trend is like a mantis trying to stop a car.
3. Do not impose your will on the market: The direction of the market is a comprehensive reflection of the expectations of all participants; it will not change because of one person's thoughts. Never impose your will on the market; we can only go with the market's rhythm, not try to make the market accommodate us.
4. Winning rate is not the key to profit: Many people mistakenly believe that the higher the trading win rate, the more profit they will make, which is fundamentally wrong. The profitability of a trading system is unrelated to the win rate when opening positions. Seeing others earn a few points makes you envious, yet you don't know that they also have periods of losses behind them. What we should do is patiently wait for our own opportunities, rather than blindly following the crowd.
5. Not every bullish candle can yield profits: There are many types of bullish candles in the market, but understand that not every bullish candle can make you money. Some bullish candles may seem enticing but are actually traps; impulsively entering the market can easily lead to being trapped.
6. Opportunities come to those who wait patiently: True investment experts, like excellent hunters, are never impatient. In a volatile market environment, frequent trading makes it hard to earn big money; only by patiently waiting for clear big opportunities can one strike effectively.
7. Diversify your trading methods: In the secondary market, do not think that 'buying' is the only operation. Closing positions, reducing positions, and remaining out of the market are also important operational techniques. Flexibly using these operations according to market conditions can better control risks and achieve profits.
8. Overcome your own fear of missing out: For retail investors with a few million in funds, do not always think that there are 'main forces' targeting you in the market. In reality, your biggest enemy is your own inner greed and fear. When greed takes over, you may blindly chase high prices; when fear arises, you might hurriedly cut losses, and all of this is detrimental to investing.
9. It’s hard to find long-term winners in the secondary market: In the secondary market, we often see some people rising to fame and becoming dazzling stars in a short period. However, very few can maintain long-term profitability and become 'long-term winners.' Investment is a long marathon, not a short sprint of a hundred meters; steady and continuous profit is the path.
10. Most people lose money in the market: It is crucial to recognize a harsh reality: 70% of people in the market are losing money; there aren't that many so-called experts. So, do not be blindly confident, thinking you can easily beat the market.
11. Respect the market and maintain rationality: In the face of the market, regardless of how much capital you have or how experienced you are, we are all like fragile vegetables. You must remain rational and respect the market. Those seemingly rich opportunities often hide tremendous risks, so it’s better to be cautious.
12. Correctly view trading profits and losses: Some trades may ultimately result in losses, but from the perspective of trading strategy and logic, they may have been correct; conversely, some trades may make money, but it could be due to luck, and from a long-term investment perspective, they are wrong. We should summarize experiences from every trade, rather than just focusing on profit and loss results.
13. Risk control is crucial: In the investment process, compared to pursuing returns, it is more important to do a good job of risk control. Only by ensuring the safety of funds first can one stand firm in the market and continuously obtain profits.
As an experienced trader in cryptocurrency for ten years, unafraid of storms, having navigated bull and bear markets, I have survived in the market.
It relies on these five laws! They are the accumulation of my years of experience! Take your time reading through, fill in the gaps, and I believe you will gain something!
1. Quick rises and slow falls indicate accumulation.
Rapid price increases but slow declines indicate that the market makers are accumulating chips in preparation for the next round of increases.
2. Quick declines and slow rises indicate distribution.
Rapid declines but slow rises mean that the market makers are gradually selling off, and the market is about to enter a downward cycle.
3. Do not sell at the top when there is high volume; if there is no volume at the top, run quickly. High volume at the bottom may continue to rise, but if the volume at the top shrinks, it indicates insufficient upward momentum; exit as soon as possible.
4. Do not buy at the bottom when there is high volume; continuous volume indicates you can buy. High volume at the bottom may indicate a continuation of the decline and needs observation. Continuous volume indicates that funds are constantly entering, and buying can be considered.
5. Trading cryptocurrency is about trading emotions; consensus is reflected in trading volume.
Market sentiment determines price fluctuations, and trading volume reflects market consensus and investor behavior!
These days, I am preparing for the launch of an amazing deal!!!
Comment 777 to get on board!!!
Imminent chaos!!!
