1. Uncertainty: Face risks, learn to accept uncertainty
In any financial market, especially in highly volatile markets like cryptocurrencies, uncertainty is always the main theme. As Taleb said: 'If you can predict the market a minute in advance, you could be incredibly wealthy.' But in reality, no one can predict future market trends, including so-called market experts and various analytical methods. The market is a complex system, and all analytical methods and tools are used to predict the future based on past data, while any model and formula cannot exhaust all possibilities.
Therefore, as a trader, the most important ability is to recognize the uncertainty of the market. Many investors are swayed by various market analysts and news, blindly trusting predictions and technical indicators while ignoring the randomness and volatility of the market.
Truly smart traders know that in the face of uncertainty, their strategy is not to predict the future but to continuously adjust their approach.
Position and risk management to cope with market changes. Taleb's concept of 'antifragility' emphasizes the value of uncertainty itself—antifragility. Simply put, when the market fluctuates, some people can benefit from it because their strategies become stronger in volatility. This is not only a fundamental principle of investing but also the key to making profits in the cryptocurrency space.
2. Convexity Trading Rules: Let profits run, cut losses short
To profit in the market over the long term, the most basic requirement is to set reasonable entry and exit rules, which is known as 'trading rules.' However, excellent trading rules are not just about finding the timing to enter and exit; they also involve how to maintain flexibility amid market fluctuations and adjust in different circumstances.
The concept of 'convexity' is a very important trading thought proposed by Taleb, whose core idea is to allow profits to have no limits while controlling risks within an acceptable range. Simply put, we aim to 'cut losses short and let profits run.' For example, a common trading rule is to buy when the price breaks through a key level and sell when the price falls below a support level. The key to this rule is that 'profits are unlimited' because the market can sometimes offer you unexpected explosive opportunities, while 'losses are limited' as stop-losses must be set to avoid significant losses regardless of market fluctuations. Simple and effective trading rules aim to maximize returns while remaining antifragile and avoiding large losses.
3. Capital Management: Ensure survival, avoid going all-in
In the market, what matters most is not how much you earn, but how to ensure the account survives in the long term. Especially in high-risk markets like cryptocurrencies, traders often face rapid market fluctuations and extreme events. At this time, an excellent capital management plan is particularly important.
One of the core strategies is the barbell strategy. The core idea of the barbell strategy is to divide funds into two parts: one part remains highly safe and stable, while the other part takes higher risks. In the cryptocurrency space, this means that 90% of funds can remain in cash or low-risk investments, while 10% is used for high-risk speculation.
The advantage of this approach is that it limits maximum losses, especially in times of extreme market volatility or black swan events, preventing traders from losing all their assets due to a single failure. Regardless of how the market changes, maintaining the safety of funds is always the most important.
4. Trial and Error: Accumulate experience through failures, embrace opportunities
Trading is a long-term game, and successful traders do not always profit. Often, their win rate is quite low. In fact, many excellent trading systems have a win rate typically between 30%-40%. This means that out of every 10 trades, 6 to 7 may result in losses. However, as Taleb emphasizes, successful trading does not rely on each individual success, but rather on continuously accumulating experience through trial and error. Each failure helps you understand the market better and comprehend how your trading system works in uncertainty.
Through extensive repetition, you will find that real profits do not rely on perfect predictions but on making appropriate decisions at the right moment. Therefore, successful traders are often those who can patiently wait, are willing to experience failures, and learn from them, rather than those who seek to get rich overnight through quick wealth.
5. Good Luck: Success requires the right timing, location, and people
Finally, even if you master all the above skills, achieving ultimate success in the market still requires a bit of luck. Market fluctuations cannot be fully predicted, and often, successful traders do not always profit solely based on their judgment and analytical abilities; luck is also an important factor.
For example, during significant market events or black swan occurrences, fortunate traders can take the right action promptly, while unfortunate traders may incur losses due to missing opportunities. Therefore, while we can reduce risks by improving our trading skills, sudden market changes can be the key determinant of trading success or failure. In the next strategic direction, I will guide everyone to aim for high-profit opportunities in altcoins, especially those with great potential, where a tenfold increase is not an issue. If you want to make big money in a bull market, like and comment, and I'll lead you to layout the entire bull market!
