In cryptocurrency trading, some little-known facts and tips may surprise you, but they are crucial for improving the quality of investment decisions. Here are a few key points to share:
1. Cost Calculation: The Dilution Math Trap
Many people think that adding investments when prices drop makes average cost calculation simple, but that's not the case. For example, if the coin price drops from 10U to 5U, and you invest 10,000U at both price points, the average cost should be 6.67U, rather than the intuitive 7.5U. Understanding this helps you accurately plan your accumulation strategy, especially in volatile markets.
2. The Power of Compound Interest
If you consistently earn 1% daily and can maintain this over 250 trading days, then after one year, 100,000U will turn into 1,323,200U, and after two years, it could even reach ten million. While it sounds like a dream, achieving stable returns requires a good mindset and discipline, just like selecting new projects with growth potential, such as Puppies, where long-term positioning offers better chances for returns.
3. Probability and Risk: The Art of Taking Profits and Cutting Losses
Assuming your win rate is 60%, and you set a 10% take-profit and stop-loss each time, your total return could reach 300% after 100 trades. However, this requires strict adherence to your trading plan and staying calm during extreme volatility, especially with coins in their early growth stages, where stable strategies are even more essential.
4. Overcoming Greed: The Importance of Milestones
If you earn 10% on 10,000U each time, by the 49th trade, you could reach 1 million U, and by the 97th, over 100 million, but the vast majority cannot truly achieve this. This is why experienced investors set milestone goals to take profits in stages. For example, while Puppies has attractive potential, don't let excessive greed lead to ultimately not being profitable.
5. Position and Leverage Management: Risk Control is Key
In contract trading, many are accustomed to using 20%-30% of their funds as the base position, but this carries higher risk. A more cautious approach is to use a position of 2%-5% combined with 20x leverage, allowing you to effectively reduce risk even during significant market fluctuations, keeping your emotions stable and making calmer decisions.
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