First, forget about the ten bucks and let go of Bitcoin and Ethereum.
Funds below 100,000u are not suitable for buying ETH and BTC, as you really can't turn things around with BTC and ETH. Above 100,000u, you can allocate 10% to BTC and ETH. As your capital increases, for example, at 1,000,000 dollars, you can allocate up to 90%, and for tens of millions of dollars, up to 95%.
Every phase of funding has different ways to play and survive. Don't blindly learn from anyone.
In the stage from 10,000 dollars to 100,000 dollars, if the market is bad or too good, you will try to short contracts and get stuck halfway.
Because they see hope and want to achieve greater success, they don’t want to waste the downward market, believing they are trading geniuses, or that a certain influencer’s direction on Bitcoin is 100% truth and trade contracts accordingly. Then unexpectedly, things don't go as planned, leading to being liquidated or a reverse surge.
Waking up close to liquidation, you still firmly believe that your chosen direction is correct, continuing to add margin until you’ve transferred all the u from your spot account to the u-based contract account, only then realizing you have no way out. You only need to bear this most difficult phase of the market; all losses will definitely come back.
You are no longer thinking about making money but just hope to break even. Looking at the contract with a -266% return, you can’t even sleep, checking your account every few minutes, fearing you’ll get liquidated. Nervous, you just want another cigarette and a sip of water to calm your anxiety, your back tight.
You’ve been tortured back and forth around your liquidation price for a few nights, feeling that dawn is approaching.
With a dazed look, you just woke up, opened your account and saw that you are alright, not liquidated. You got up to relieve yourself and wash your face, fearing your position might really liquidate. While washing your face, you couldn’t help but take another glance; thankfully, you’re still okay.
At the moment you closed the bathroom door, your phone in your pocket vibrated three times. You hurriedly opened your phone, and the screen showed three messages: two reminding you to add margin and one indicating liquidation. Your brain felt dizzy; you still didn’t want to believe it. Unwillingly, you opened that app that kept you up all night, and it was gone.
The contract interface shows no open orders, just white. You don't want to accept this reality, so you slap your head and grab your hair, switch to total assets, 0.3u... You smoke a cigarette, refresh the app, 0.3u... You opened a loan app and remembered there was still a limit to borrow, but the online loan had no limit, then you checked WeChat and saw the micro-loan, which said you still had a limit of 15,000. You were unwilling and applied, but it said this product could not serve you at the moment.
Thinking about the various loans to be repaid this month totaling 26,000, while your monthly salary is only 7,000, you lower your head and ask your good friends and older siblings. You dare not say you are trading coins; you only tell them you are renovating and need a few thousand dollars, successfully borrowing 30,000. You think after paying off this money, you’ll still be broke and dive back in.
Looking at the 5000u in your account, which was originally a 10x contract, thinking that if you quickly recover the lost money, you directly opened a 20x position, believing this is absolutely the top and it won’t rise anymore. After opening the position, you pretended to be calm in the group chat.
Suddenly a Twitter notification pops up: BlackRock has increased its holdings by 20,000 BTC today. You immediately switch to the app and only see a big bullish candle close to 4%. At the same time, your phone vibrated three times in succession. You know it's too late; everything is too late... countless debt collection messages, various loan platform calls bombarded you.
Questions from your parents: have you borrowed a lot of money? ... Regret, self-blame... You rummage through all the accounts, addresses you’ve ever used, looking for any missing funds, searching through bank cards to see how much you have left.
Start making up stories to deceive those around you... No longer is your lively figure active in the group, the you who could speak eight hundred sentences in a day has not appeared again, and there is no more commentary on the upcoming market trends. They even think you bought some coins and stopped trading... well, you indeed stopped trading... and have no money to trade.
Years later, after a cycle of bull and bear markets, you finally breathe a sigh of relief outside. Your debts are mostly resolved, but you are still obsessed with the losses in the cryptocurrency market, firmly believing it's the only place to turn things around. "What I lost, I must get back!"
You are back... carrying the lessons of past losses, reaccepting the baptism of this market! Cautious and careful, after many hardships, you stand back at 100,000 dollars! You have turned back into that confident cryptocurrency trader boy, but you remain haunted by a lingering fear of contracts.
If you want to survive with a small amount of capital, the first thing is not to open leveraged contracts with all your funds, and do not touch Bitcoin and Ethereum. It’s best to operate altcoins based on the peak and trough of Bitcoin.
If your funds are within 1,000u, you are not qualified to trade shitcoins and Bitcoin or Ethereum. You can only trade on exchanges with low fees, and people with this amount of capital often have very poor cognitive ability and safety awareness. It’s best to first trade on exchanges, and if you gain something, and by luck reach 10,000 dollars, then you can use 5% of your funds to try trading shitcoins on-chain. Although it’s risky, there’s no other way.
In this phase, whether making or losing money, one must run immediately and hold onto precious capital.
However, the potential in the cryptocurrency market is currently very high.
Compared to stock, forex, bonds, and other markets, cryptocurrency has only a history of over a decade. It is an emerging market with many new investment opportunities and extremely high volatility, which means potential returns are high. However, traditional financial markets like stocks and forex are very mature, dominated by institutions, and ordinary investors cannot participate at all. It’s already quite good that retail investors aren’t being harvested, let alone making a profit!
Low capital threshold.
Usually, the minimum purchase amount for cryptocurrencies is between 2-10 dollars, while buying stocks or bonds in certain regions generally requires over 300 dollars, and forex requires over 1000 dollars.
No time limit.
Stocks, bonds, commodities, etc. usually have regional restrictions and close for weekends. In contrast, anyone globally can buy and sell cryptocurrencies without restrictions, and trading is 24 hours, with no concept of closing.
How to play in the cryptocurrency world: what trading methods are there?
If you want to truly hold cryptocurrencies, you need to choose an exchange to trade.
If you want to short cryptocurrencies, speculating on prices to enjoy the profit from price fluctuations without holding the coins, contracts for differences would be a better choice. Because contracts for differences can be long or short, rather than being limited to gaining profits from price increases.
If you just want to make money through trading, you can choose any of them. Additionally, for investors who prioritize the safety of their funds, they should consider contracts for differences first, as they are often regulated, whereas cryptocurrency exchanges currently lack regulation.
What mistakes do beginners easily make when trading virtual currencies?
There are no born big shots; anyone starting anything begins as a novice, and investing and trading are no different. It’s just that some people make more mistakes and take more detours, while others make fewer mistakes and take fewer detours.
From the perspective of mistakes, investing is a path of continuous correction. One day, when you make fewer mistakes than others, the era that truly belongs to you for making money will begin. In reality, beginners inevitably make mistakes; timely corrections can prevent further losses.
So, what mistakes are beginners most likely to make when trading?
Frequent trading.
I believe many trading novices have encountered this. After a year and a half of trading, having mastered the basic operations, especially with a certain level of technical analysis, you constantly stare at the market, frequently trading, buying and selling in a minute, going long one second and short the next.
This not only requires paying a large amount of fees but also affects your judgment. Even if the directional judgment is correct, you cannot make money because you have already sold out or closed the position.
Not respecting the market.
No one can predict 100% accurately, so there will inevitably be times of misjudgment. However, many people, when faced with a market that contradicts their judgment, insist on fighting against the market. Ultimately, what they get is liquidation. During the LUNA incident, many investors could sense the risk but did not respect it, instead attempting to catch a rebound, only to find the drop exceeded imagination, making escape impossible.
Don't stop losses or take profits.
Wanting to earn more after making a profit, and wanting to break even after a loss, this is also a problem that beginner investors encounter. They never set stop losses or take profits, leaving their positions completely exposed to risk. Here is an example: during the 312 incident (the cryptocurrency crash on March 12, 2020), my friend opened a long BTC futures contract. At that time, he saw many people get liquidated, but he did not close his position because he thought that with a 1x leverage, it should be safe. In the end, unexpectedly, a spike came down and directly liquidated him.
How important is the take profit and stop loss function?
With investment comes risk. Beginner investors must understand that while risk is uncontrollable, they can effectively manage and reduce risk by flexibly using risk management tools. Whether trading cryptocurrencies or high-leverage forex margin trading, setting stop losses and take profits can help keep risks within a controllable range. Especially when the market experiences gaps, the take profit and stop loss functions will close positions at the next most favorable price relative to the target price.
In reality, beginners will inevitably make mistakes; this is unavoidable. The key is not to keep falling into the same pit repeatedly. After making a mistake, it’s essential to stop trading, exercise more, or find other ways to clear your mind. This way, you can confront the mistakes and find ways to cope.
Finally, I want to give everyone a piece of advice.
Making mistakes is not scary; what’s scary is not correcting the same mistake multiple times.
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