In the vast universe of cryptocurrency contract trading, there is a widely accepted '80/20 rule.' It serves as an invisible boundary that divides traders into two camps. The top 20% of elite traders, like brilliant stars in the night sky, stand firm in the tumultuous market, reaping enviable wealth through extraordinary wisdom and decisive decisions. The remaining 80% of traders, however, are like ships lost in a vast ocean, constantly searching for the faint light that guides them forward.
In this sea full of unknowns and challenges, I have a friend who also went through a long and winding exploration journey. He tried to gain insights into future market trends through fundamental analysis, but reality was like a cold mirror, ruthlessly reflecting his failures and frustrations. He spent a lot of time and effort collecting data on spot prices, supply and demand balance sheets, and the economic environment, but two years of losses felt like a loud slap in the face, forcing him to reassess his trading strategy.
Subsequently, he turned to technical analysis, hoping to capture market turning points by drawing lines and studying technical indicators. However, after a year of effort, he was still battered and filled with doubts and frustrations. He began to question whether these technical indicators and patterns could really provide him with a trading advantage.
In despair and confusion, he tried analyzing the financial situation, attempting to judge the future direction of the market by changes in open interest and trading volume. But the results were still disappointing; he felt trapped in an unsolvable maze, unable to find an exit.
However, fate always brings opportunities when least expected. By chance, he read an interview about a successful trader. This trader claimed that his trading method was exceptionally simple—just a moving average. At first, the protagonist was skeptical and even thought it was nonsense. But out of curiosity and a deep-seated unwillingness to accept failure, he decided to try this seemingly simple yet mysterious trading strategy.
He asked a colleague to help program the moving average strategy and loaded it onto the cryptocurrency contract trading chart. When he saw that moving average weaving smoothly across the chart, each crossover accompanied by clear opening and closing signals, he felt as if he was struck by a mysterious force. In that moment, it seemed he saw the fragmented knowledge he had accumulated over the years in trading being linked together by this moving average, forming a complete and powerful trading system.
He began to realize that true trading is not about predicting market trends, but about learning how to handle the uncertainties that follow holding positions. Although the moving average trading method is simple, it implies a profit-making approach that aligns with the essence of the market. When the price trend is above the moving average, he chooses to hold long positions; when the price trend is below the moving average, he holds short positions. The key to profitability lies in how cleverly one manages stop-losses during losses and holds during profits.
To verify the effectiveness of this strategy, he conducted quantitative backtesting. The results were astonishing; this seemingly simple moving average strategy actually surpassed 80% of traders and turned out to be a profitable trading method over the course of a year.
He understood that the core of trading is not in predicting market trends, but in how to manage the relationship between risk and reward. To remain undefeated in the market, one must build a trading logic and system of their own. From then on, he embarked on a new trading path, no longer blindly pursuing market trend predictions, but focusing on how to better handle the uncertainties that follow holding positions. He learned to decisively cut losses during downturns and patiently hold during upturns, allowing profits to run naturally. And all these transformations stemmed from that seemingly simple yet wise moving average.