On the surface, the cryptocurrency world looks glamorous, but behind it are the countless corpses of retail investors.
I have been in this market for ten years. I still remember when I first entered the market in 2015, I was also stirred by those stories of 'becoming financially free overnight.' Ten years have passed, and I am still in the cryptocurrency world, but I am no longer that blind novice chasing after rising prices and selling in panic.
Today's cryptocurrency market is still filled with various wealth creation myths, but it is also full of the wails of countless liquidators. The reality is: this market can help you quickly accumulate wealth, but it can also make you lose everything in an instant.
The true face of the cryptocurrency world
In the cryptocurrency market, trading happens 24 hours a day without limits on price fluctuations, often resulting in thousands of dollars in significant volatility. Coupled with leveraged tools like futures and options, this market is filled with opportunities as well as dangers.
In my view, Bitcoin is a high-risk asset, fundamentally lacking actual value support, not possessing the sovereign credit of fiat currency, and lacking broad application scenarios. Although it is hailed by enthusiasts as 'digital gold,' its value foundation is extremely fragile compared to real gold. Changes in regulatory direction, trades by several investment giants, or even a single sentence from someone can lead to drastic price fluctuations.
Criminals often use the anonymity and decentralization characteristics of virtual currencies to carry out 'money laundering.' Virtual currencies represented by certain tokens have become tools for criminals. Some even issue their own virtual currencies to attract others to invest in a Ponzi-like manner, defrauding them of money.
My trading insights
Over the years, I have summarized some experiences worth sharing:
1. Use leverage sparingly and hold more spot
In the early days, I was also addicted to the thrill brought by high leverage, but after experiencing several liquidations, I came to realize that leverage is the number one killer for ordinary traders. A 28-year-old professional trader once shared that he now primarily focuses on spot trend trading, with contract trading as a supplement, and the purpose of contract trading is to earn coins rather than excessive profits. This strategy is highly stable; once a trend is established, it can remain in a safe state for a long time.
2. Do not blindly try to catch the bottom or top
At the end of 2018, Bitcoin dropped from $6000 to $3200 in a week. I correctly judged the direction of the drop and shorted at $5800, but I did not expect the drop to be so severe. I started trying to catch the bottom repeatedly at $4800, and the price eventually fell to $3200. This lesson taught me not to easily try to catch the bottom or top; it is more prudent to trade on the right side.
3. Focus on mainstream coins to reduce risk
I once faced liquidation overnight due to an XRP contract, and even though the leverage was only 5 times, I couldn't withstand a drop of over 20% in mainstream coins. Since then, I basically only trade Bitcoin because only by being sufficiently familiar with one kind can one have a good grasp of its price movements.
4. Trading mindset determines success or failure
With the accumulation of experience, I increasingly agree that 'trading relies more on mindset, and is not much related to technology or strategy.' When indifferent to price fluctuations, one may earn the most. Experienced traders understand that not being attached, greedy, or gambling, not chasing highs, being able to hold cash, and daring to take profits is not being Zen; it’s self-preservation and respect for the market.
Practical application of the pyramid adding strategy
The pyramid adding strategy I use involves adding funds to profitable positions. When the market moves in the direction of your trade, it proves your judgment is correct. At this time, appropriately adding positions can increase profit potential while controlling risk.
The core of this strategy is: only use it in strong trend markets, define support and resistance levels in advance, and maintain a reasonable risk-reward ratio. After each position addition, move the stop-loss based on the new position to manage risk, and keep the scale of each addition consistent.
Importantly, this strategy is not frequently used. If you find yourself attempting to add positions multiple times within a month, you are likely deviating from the essence of the strategy. Every trading strategy has its applicable scenarios, and seizing such opportunities can lead to significant success.
Advice for beginners
I do not recommend inexperienced individuals to enter the cryptocurrency space. Bitcoin investment is high-risk, facing many uncertainties both at the policy and project levels, and lacks effective regulation.
Even experienced investors should not play with high leverage, as the risks are very high. A senior trader in the industry also advises all young people: 'Bitcoin is a high-risk asset; you must use less leverage and hold more spot.'
Virtual currency trading activities are not legally protected in our country. From recent judicial practices, courts across the country have ruled invalid trading contracts based on announcements regarding cases involving virtual currency transactions, and the consequences and risks stemming from such transactions are borne by investors themselves.
The cryptocurrency space is not a place where one can easily get rich; it is a professional market that requires professional knowledge, a calm mindset, and strict risk management.
True veterans have a mindset that is very 'neutral'—not attached, not greedy, not gambling; not chasing highs, able to hold cash, and daring to take profits. This is not being Zen; it’s self-preservation and respect for the market.
To survive in this market, I rely not on luck but on continuous learning and strict discipline. The seemingly 'foolish methods' are often the most reliable.
In this industry, you need to remain vigilant against threats/scams. The cryptocurrency space is like the Wild West; you must be highly alert to vulnerabilities, fraud, smart contract risks, etc.
In my ten years in the cryptocurrency space, I have witnessed too many myths of overnight wealth, as well as more tragedies of losing everything. Those who can truly survive in this market for the long term are not the smartest, but those who understand how to control risk.
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