I was having dinner with a friend recently, and I heard that a mutual friend's contract had nearly 10 million liquidated. His own operation was the type that used a large leverage. In a one-way market, he could easily make money due to his good skills. But he would fail in a negative market. This time, when BTC broke through 70,000 a while ago, he directly rolled over to the tens of millions of RMB at a cost of tens of thousands of RMB. As a result, when the market was not good, he could not help but continue to open orders, losing hundreds of thousands every day. After such a long period of continuous decline, all his money was lost. In one month, he went from a multi-millionaire to penniless.
Although he may be able to turn things around when the market comes with his skills, what I want to say is that I have summarized some trading principles from his operations and similar experiences I have heard of in the past, which we can learn from:
Avoid frequent trading
This friend is actually good at short-term unilateral market. When the market is good and the direction is right, plus the operation skills are good, it is easy to roll up the position. But the volatile market is not suitable for his trading style. When he finds that the market is not right, he must control his hands and cannot continue to trade. Although he had expected this volatility, he did not reduce the frequency of opening orders and positions, which led to losses. Livermore once said: "When you do nothing, those speculators who feel they must buy and sell every day are laying the foundation for your next speculation, and you will find opportunities to make profits from their mistakes."
Learn to diversify your investments
Diversify your investments and don't concentrate all your funds in one field/coin. Coin speculation is not a love affair. There is no coin in the market that only rises and never falls, or only falls and never rises. Any coin has an upward phase and a downward phase, and it is crucial to correctly grasp the buying and selling points. It is not about blindly holding on to it or repeatedly operating only one coin. It is necessary to flexibly operate in combination with market hotspots, policies, and the actual situation of the currency, otherwise you will always "take the elevator" back and forth. Charlie Munger said: "Don't be rich twice in life." In fact, 99% of people can't be rich twice. To maintain achievements, you need to diversify your investments. From a probability perspective, you can't win the lottery twice in your life. After accumulating a certain amount of wealth, you need to consolidate the results. You must make a transition to reduce the rate of return and increase stability, otherwise it is easy to fall back to the starting point.
Don’t spread your losses
In fact, many of us do the opposite. First of all, we should control a certain base position, and increase the position when we make a profit, rather than constantly adding to the position after a loss. Otherwise, sooner or later you will be unable to move. Cryptocurrency trading is a game of pursuing high probability, and big profits and small losses are the true meaning. As long as the principal is there, there will always be opportunities. There is a ceiling for rising, but no bottom for falling. Sometimes I myself have an obsession with a certain coin, and I keep adding to the position when it falls, but the results are not very good.
Withdraw cash appropriately and enjoy the fun of life
"The cryptocurrency world is full of money, but life is a patchwork." Many times, we seem to have put the cart before the horse in terms of making money. Making money is obviously for a better life, but making money makes life a mess. I even saw a guy who lost a lot of social and living skills because of professional trading. When you make money, relax yourself, reduce your desires, and get in touch with life more, so that the operation will be smoother.
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I like spot trading, I want to roll my money together, and I want to buy spot trading in the bull market.
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In the current ups and downs of the market, blindly going it alone will never bring opportunities!!!
