Recently, I've felt that many crypto friends are anxious.
After two days of live streaming, my impression is that many people are either stuck in spot positions or in contract positions.
This bull market feels unrelated to me!
BTC, at a high position, is too valuable; one BTC is worth a fully equipped BMW 5 Series, which ordinary traders won't buy. I can only look at the funds of those who are always profitable and envy them.
Altcoins are afraid of falling. Recently, Bitcoin is very high, and I can't afford BTC, but I'm afraid of falling with the altcoins I bought. Various big influencers in the community constantly warn about risks, stating that there might be sudden drops that could trigger a crash in altcoins. This is indeed the case, but excessive interpretation can be somewhat harmful. It is the responsibility of influencers to warn about risks, and that is certainly correct. However, we retail investors need to view this issue rationally, treating it as risk awareness! Many community members have been discussing with me their concerns about black swan events. I want to emphasize one point: I was once liquidated by a black swan event back in March 2013. Afterwards, I used a method of splitting positions to hedge against such events.
1. Diversify funds; allocate most to spot for medium to long-term positioning. Allocate a small portion to contracts for small position setups.
2. Contract allocation must be done gradually. Full allocation has very high capital utilization and fast turnover, but it can't withstand sudden events; there are many failure cases. Do you think you're a genius trader? Or did you just get lucky with smaller liquidations? Gradual liquidation risks will only impact a portion of your margin, not the entire amount.
3. Since you hold spot, don't sell casually. Choose your entry points for spot. I've mentioned many times before: don’t buy in at low points; wait until the main players have absorbed enough before entering. It’s best to enter after a shakeout. Although the profit might be smaller, the risk is much lower. Dance with the market makers. Many people use stock market thinking to buy spot and believe that when the price drops very low, it’s a value investment! In crypto, this notion doesn’t exist; delisting, removal, and destruction are the final solutions.
4. When new coins launch, I wrote a post in November analyzing the success rate of spot coins on the platform. It’s only 20%. After listing, many that you can buy at a higher price drop by more than double, while others just fall! So you can calculate the success rate for spot purchases yourself. Of course, this excludes people from the project team! I won’t elaborate further; I won't criticize, but I will participate in short-term contracts. I go where there is volatility.
Core principle:
For spot trading, buy at high market cap levels and enter on the right side. If you don’t know how, you can leave a message or ask me to help you find entry points. For contracts, engage in short-term trading with popular, trending assets that have strong backing. Don’t participate in the lifeless ones; consider the time cost. The methods boil down to buying low and chasing high! Experienced traders understand the pros and cons of these two methods, but newcomers won't get it even if I explain. So I won't elaborate. Don't talk about various win rates in contracts; feeling pleased about catching a peak or a trough means nothing for your profit. It’s just self-deception. Control your drawdown and calculate your stop-loss levels. Managing losses is the hardest part of contracts, also known as capital management. My entry and exit strategies are quite casual. I don’t pursue precision too much.
Also, when dealing with contracts, one must observe market sentiment. If the sentiment is good, trade more; if not, trade less. If there's nothing happening, stay in cash!
Many new friends in crypto want to get rich overnight, betting everything in the hopes of quick gains. Of course, many people in crypto have such myths, but they remain just that—myths. They merely encountered favorable market conditions. Always believe that profits come from the market, not from how brilliant or skilled you are. We should take what the market gives us, and before anything else, we need to focus on practicing one skill: capital management!
Today, there isn't much sentiment. I tested a few things during the day, and they weren't great. Currently, I'm holding CHEEMS 1000CAT BABYDOGE. I only added other positions after seeing some profit in the initial position. If the first position was a loss, I wouldn't increase other positions.
I hope this is useful for everyone. Please like and comment!