Cryptocurrency Industry Lesser-Known Facts

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In the cryptocurrency world, there are some little-known facts or techniques that, although rarely mentioned, are crucial in actual operations. Today, I will share a few experiences that are extremely helpful for investors:

Cost Averaging Is Not Just Simple Calculation

For example, suppose you invested 10,000 U when a cryptocurrency was priced at 10 U, and then you added another 10,000 U when the price dropped to 5 U. Your average cost is actually 6.67 U, rather than simply thinking it is 7.5 U. This situation is very common in market fluctuations, and understanding the correct way to calculate costs is essential for position management.

The Amazing Power of Compounding

Assume you have 100,000 U, earning 1% daily and exiting in time. If you can maintain stable returns over 250 trading days, your assets will grow to 1,323,200 U after a year. If you continue for another two years, your assets could even exceed 10 million. This result relies on stable returns, and the biggest challenge is how to maintain this compounding growth.

The Relationship Between Probability and Take Profit/Stop Loss

If your investment success rate is 60%, and you set a 10% take profit and stop loss every time, after 100 trades, your total return could reach 300%. The key is that you must strictly adhere to your trading plan and not let market fluctuations affect your emotions, especially maintaining calm in a highly volatile market.

Greed is the Biggest Enemy

Suppose you start with 10,000 U and earn a 10% return each time. By the 49th day, your assets will reach 1 million U, surpassing 10 million on the 73rd day, and by the 97th day, you may even exceed 100 million. However, in reality, almost no one can achieve this goal because most people cannot control their greed during the process, leading to setbacks along the way. This also explains why many traders, even when profitable, cannot maintain long-term gains.

Contract Trading and Position Management

In contract trading, position management and capital management are key to success or failure. Many people will use 20%-30% of their principal as a base position, but it is personally recommended to keep the position controlled at 2%-5% and use 20x leverage. This can effectively diversify risk and avoid making emotional decisions due to excessive market fluctuations.

If mastered properly, these little-known facts and techniques will greatly increase the success rate of investments.

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