Trading cryptocurrency is a game that foolish people cannot play, lazy people cannot play, psychologically unstable individuals cannot play, and adventurers who seek to get rich overnight cannot play. In the world of financial markets, successful trading relies not only on knowledge and skills but also on how to face uncertainty, manage risks, and accumulate experience and opportunities through long-term trial and error.
In the book (Antifragile)+, Taleb presents a profound perspective: the world is full of uncertainty, and those who can benefit from uncertainty often become the winners in the market. For any trader, these principles are not only guidelines for investment but also important rules for managing market fluctuations and protecting account safety.
Here, I will integrate the ideas from (Antifragile) to explore the five core principles of trading. These principles apply not only to traditional investment markets but also to the currently risk-prone cryptocurrency market. Below is my understanding and summary of practical experiences regarding these core principles:
1. Uncertainty: Face risks and learn to accept uncertainty.
In any financial market, especially in a highly volatile market like cryptocurrency, uncertainty is always the main theme. As Taleb said: 'If you can predict the market a minute in advance, you can be as rich as a king.' But in fact, no one can foresee 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 based on past data to predict the future, while no model or formula can account for all possibilities.
Thus, as a trader, the most important ability is to recognize the uncertainty of the market. Many investors are influenced 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 adjust their positions and risk management continuously to respond to market changes.
Taleb's (Antifragile) emphasizes the value of uncertainty itself—antifragility. Simply put, when the market fluctuates, some people can benefit from it because their strategies become stronger amid volatility. This is not only a fundamental principle of investing but also the key to profiting in the cryptocurrency market.
2. The trading rule of Convexity: Let profits run, cut losses. To achieve long-term profitability in the market, the 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 right entry and exit points but about maintaining flexibility in market fluctuations and making adjustments under different circumstances.
The concept of 'Convexity' is a very important trading idea proposed by Taleb, with the core idea being to let profits have no upper limit while controlling risks within an acceptable range.
In simple terms, we need to 'cut losses 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 sometimes offers unexpected explosive opportunities. And 'losses are limited'; no matter how the market fluctuates, stop-loss orders must be set to avoid significant losses. Simple and effective trading rules are based on maintaining antifragility while maximizing returns and avoiding significant losses.
3. Capital management: Ensure survival, avoid going all-in.
In the market, the most important thing is not how much you earn but how to ensure the long-term survival of your account. Especially in high-risk markets like cryptocurrency, traders often face rapid market fluctuations and extreme market events. At this time, excellent capital management plans are particularly important.
One of the core strategies is the Barbell Principle. The core idea of the Barbell Principle is to divide funds into two parts: one part remains highly secure and stable, while the other part takes on higher risks. In the cryptocurrency market, this means that 90% of the 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 the maximum loss, especially during severe market fluctuations or black swan events, so that traders do not lose all their assets due to a single failure. Regardless of how the market changes, ensuring the safety of capital is always the most important.
4. Repeated trial and error: Accumulate experience in failure and embrace opportunities.
Trading is a long-term game; successful traders do not always profit every time, and many times their win rates are quite low. In fact, many excellent trading systems have win rates typically between 30%-40%. This means that out of every 10 trades, there may be 6 to 7 that result in losses.
However, as Taleb emphasized, successful trading does not rely on each success but on continuously accumulating experience through repeated trial and error. Each failure can help you understand the market more clearly and comprehend how your trading system works under uncertainty.
Through extensive repetitive operations, you will find that true profits do not rely on perfect predictions but on making appropriate decisions at the right time.
Therefore, successful traders are often those who can patiently wait, are willing to experience failures, and learn from them, rather than those who attempt to get rich overnight.
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 also 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 incidents, lucky traders can take the right actions in a timely manner, while unfortunate traders may suffer losses due to missing the opportunity. Therefore, while we can reduce risk by improving our trading skills, sudden market changes can be the key to determining trading success or failure.
Through the book (Antifragile), Taleb shows us how to build a trading system that can survive long-term and continuously profit in a market filled with uncertainty.
Understanding uncertainty, establishing effective trading rules, managing capital well, accepting the trial-and-error process, and maintaining humility in the face of luck are the five core principles that any trader who wants to profit in financial markets must master.
Therefore, in the cryptocurrency market, we need to build a trading system, consistently do the right things, and ultimately wait for our luck. That is to say, once we do our part: we do our best and leave the rest to fate.
These days, I am preparing for the imminent launch of a strategic order!!!
Comment 168, let's get on board!!!
Impermanence brings impermanence brings impermanence!!!
Important things should be said three times!!!
