While most people were getting liquidated, my account was growing. This wasn't because I was smart, but because I learned how to take advantage of the market's 'collective mistakes.'
On November 8, 2022, the day before the FTX crash, a strange atmosphere filled the entire cryptocurrency world. I watched a very confident 'contract god' in real-time positions, seeing him without hesitation heavily invest in a long ETH position at $8900.
In that moment, I could almost feel the blind confidence on the other side of the screen. And I chose the completely opposite direction—opening a 10x leveraged short position at the same spot.
A few days later, news broke that FTX had halted withdrawals, and the price of ETH plummeted. When the price fell to around $1200, I closed my position and made a decent profit. But this joy was quickly replaced by a heavy feeling: what I earned was the real money lost by those blindly following trades.
Copy Trading Trap: The shortcut you think may be a pit
In my years of experience in the cryptocurrency market, I have seen too many scenes of dreams of overnight wealth shattering. Many newcomers are attracted by various 'signal teachers' as soon as they enter the market, thinking they have found the key to wealth. Little do they know that many of these teachers do not genuinely aim to help you make money.
A common tactic is that these 'teachers' first build their own positions, then publicly call for trades to attract a large number of retail investors to follow, thereby pushing up the price. When the time is right, they quietly close their positions and leave, while the followers become the bag holders.
In April 2023, I uncovered a prominent trader's tactics. He went long on MATIC in advance and then loudly called for trades on social media. Sure enough, the price was pushed up in the short term, and he closed positions in three batches over the next three days. Most of those who followed him ended up standing at the peak.
Reverse Trading: Survival Rules in a Cruel Market
The core logic of reverse trading is simple: most participants in the market ultimately incur losses. Data shows that over 90% of contract traders eventually lose their principal. Therefore, if we can identify those ‘reverse indicators’ who consistently make wrong judgments and bet against them, theoretically, we can profit.
But putting it into practice is not simple. My approach is to create my own 'reverse indicator list'; KOLs who make three consecutive judgment errors automatically qualify. In addition, I also observe their movements after they stop losses, as that often marks the real starting point of the market.
However, even reverse trading requires strict risk control. You must set stop losses, as even the most reliable 'reverse indicators' may encounter an 'outrageously wrong' market, leading to extreme situations where both parties are liquidated.
Survivor Bias: What you see is just the tip of the iceberg
Many people only see the successful cases of my reverse trading but do not know how many failures lie behind. I have meticulously recorded my trading data, and in the fourth quarter of 2022, my reverse trading strategy had a win rate of only 47%. Yes, not even half.
So why can you still make a profit? Because the profit amount far exceeds the loss amount. This is essentially the nature of trading: you don't have to be right every time; you just need to earn enough when you are right and lose enough when you are wrong.
This phenomenon of survivor bias is particularly evident in the cryptocurrency space. What we see are all success stories, while countless failures have quietly left the market. Last year, I witnessed a college student who borrowed money to follow a prominent trader, only to be liquidated and completely disappear from the community. The money I earned through reverse trading was precisely the money he lost.
Zero-Sum Game: Every profit comes at a cost
Now, I have locked that 1.2 million profit in a cold wallet, not using it or distributing dividends. It feels like a thorn, constantly reminding me: contract trading in the cryptocurrency space is essentially a zero-sum game. Every bit of my profit comes from someone else's loss.
This is also why I always maintain a sense of awe towards the market. Many times, market sentiment swings like a pendulum, oscillating between excessive optimism and excessive pessimism. And smart traders learn how to utilize this oscillation rather than be led by it.
Heartfelt words for newcomers
If you are new to the cryptocurrency space or are considering trying contract trading, please understand the following points first:
1. Do not blindly trust any 'big shot' or 'teacher'
In this unregulated field, many so-called experts have ulterior motives. The profit screenshots they show may be fabricated, and you will never see their real trading records. Remember: truly stable profit traders rarely waste time showcasing their trades on social media.
2. Learning basic knowledge is always more important than copy trading
Understand the basic principles of blockchain, master the fundamentals of technical analysis, and develop your own trading plan and risk management system. These seemingly dull things are the foundation for your long-term survival in the cryptocurrency space.
3. Never bet all your wealth
No matter how tempting an opportunity looks, do not invest money you cannot afford to lose. The cryptocurrency market is highly volatile, and surviving is the most important thing.
4. Know when to leave at the right time
It's not just about knowing when to exit, but also knowing when to completely leave this market. If you find that trading is seriously affecting your emotions and life, maybe it's time to consider taking a break.
Having struggled in the cryptocurrency market for many years, I have increasingly realized that investing is ultimately about monetizing your understanding. You can never earn money beyond your cognitive range; even if you make money by luck, you will lose it back through your skills.
Reverse trading is just my survival strategy in this crazy market, but it’s not suitable for everyone. More importantly, it makes me deeply understand the market's cruelty—my profits are real pain for others.
This awareness keeps me humble and vigilant. In this market, today you may profit because you are right, and tomorrow you may lose because you are wrong. The only constant is change itself.
True wisdom is not about predicting the market, but about knowing oneself, understanding where your boundaries are, and then acting within those boundaries.
After all, preserving wealth is much harder than acquiring it, and living a long life is far more important than living a glorious one. Follow Xiang Ge to learn more first-hand information and precise points of cryptocurrency knowledge; becoming your guide in the cryptocurrency space, learning is your greatest wealth!
