1. The phenomenon of liquidation in the cryptocurrency contract market is common.
In the past month, we have witnessed up to 20 billion dollars worth of liquidations in the cryptocurrency contract market. This data prompts one to ponder: Does the cryptocurrency market really lack funds?
In the cryptocurrency space, it is not hard to find that funds are never the issue. What is truly scarce is that force capable of gathering all strengths for an upward momentum. This force is what every market participant desires; it is the key to driving the market forward.
So why is there such a scale of liquidations? Is it just small funds betting everything, trying to get rich quickly? The reality is not so simple. Whether small funds or large, the pursuit of getting rich overnight is a common goal. When we see those liquidation numbers, we should not simply attribute them to the impulsiveness of small funds.
Assuming that if 1 million retail investors flood into the contract market, then the 20 billion dollars of liquidated funds would average out to 20,000 dollars per person. But this is just an extreme assumption based on all retail investors participating in contracts and all contracts being liquidated. The reality is not so. Recently, the liquidation rate for those who went long was as high as over 90%, prompting us to reflect on the true state of the market.
From this perspective, liquidations are not solely the fault of retail investors. Billions in liquidations serve more like a warning: whether using 5x, 20x, or 100x leverage, there are significant risks involved. This risk is indifferent to the size of funds and can strike at any moment.
2. Establish a robust contract trading system to cope with market fluctuations.
Recently, why are so many people still hesitant and unwilling to take action to buy? After in-depth analysis, I found that different individuals have their unique insights, but more voices reveal the following mindsets:
The first is 'ammunition is exhausted', and lack of funds makes it impossible for them to re-enter the market.
The second concern is the doubt of 'endless decline', fearing that the market will continue to fall after buying in.
The third is the 'gain-loss anxiety' mindset, where one fears losses while also wanting to pursue victories, thus falling into the cycle of chasing highs and lows.
The fourth is 'watching without action,' missing out on good opportunities due to hesitation.
The fifth is 'lack of courage and determination', feeling fear of the unknown in the market and unable to act decisively.
These mindsets are common in the cryptocurrency space; they act as an invisible barrier, causing panic to pervade the market. After thorough analysis, I found that the first four reasons mainly stem from a lack of understanding of contract investments. Only when you have a deep understanding of the market and sufficient awareness can you overcome these obstacles and have enough courage and determination to cope with market fluctuations.
Two main reasons for the recent market slump in the cryptocurrency space after a big drop: first is the innate fear instinct of humans, and second is the lack of understanding of speculative contracts. Beyond these psychological factors, I believe the key is to establish a practical contract system of your own.
3. From self-awareness to strategic improvement, achieving a long-term steady path.
The famous investment philosopher Van Tharp once said: 'You are not trading the market itself, but your understanding and belief about the market.' What this refers to is your investment operating system - having a unique interpretation and action guide for the market. But constructing such a practical system is not easy.
Before building the recent strategy system, you need to clarify your investment philosophy and deeply understand yourself. This includes your interests, goals, knowledge accumulation, skill mastery, and the boundaries of your abilities. Only by truly understanding yourself can you find a path that suits you. Additionally, you need to clarify when to enter and exit the market, which targets to choose, and how to allocate your positions. Not only that, but you also need to be prepared to handle mistakes. When the market trend does not align with your expectations, how should you respond? This does not mean choosing extreme methods but learning to draw lessons from failures and continuously improve your system.
This journey may feel difficult. However, trading cryptocurrencies is not something that can be accomplished overnight; it requires constant learning, practice, reflection, and adjustment. Establishing and validating a complete investment operating system often requires the experience of two bull-bear cycles. In the stock market, this may take 6 to 10 years; while in the cryptocurrency space, although the recognized bull-bear cycle is shorter, around 4 years, it also means you need at least 8 years to continuously perfect and validate your system.
This may sound daunting, but you need to know that this is a marathon, not a sprint. However, I must also admit that not everyone realizes the importance of establishing an investment operating system. Some retail investors may spend their entire lives blindly following trends, chasing highs and lows, without ever establishing their own strategic system.
4. How to avoid liquidation in contract operations?
In fact, I have attempted to build multiple operating systems. I once carefully designed valuation models for cryptocurrencies, criteria for buying and selling, strategies for selecting cryptocurrencies, and planning for holding periods, etc. Whether in the stock market or foreign exchange, I have invested effort in operations. Now I bring these experiences to the cryptocurrency space, hoping to find my path to success here.
In recent years, I have encountered five liquidations in contract operations. This was undoubtedly a heavy blow to me and a miraculous experience in my cryptocurrency career. After each liquidation, I tried to find various reasons and explanations, even like many investors, complained about the market's volatility.
But one day, I suddenly realized as if enlightened. I began to understand that perhaps an overly complicated operating system is not what I truly need. I started to think about whether there is a single move that could free me from the troubles of liquidation and allow me to be more calm on the path of cryptocurrencies.
Thus, I found my answer - strict position management. This move, though simple, contains profound investment wisdom. It allows me to remain calm in the face of market fluctuations and avoid getting trapped by excessive leverage or heavy positions. I believe that as long as I can strictly implement this strategy, I will be able to go further and more steadily on the path of investment.
5. Extreme position management: The ultimate defense against liquidations in the cryptocurrency contract market!
The root cause of contract liquidations often stems from two points: excessively high leverage and full position operations. These two factors are like a double-edged sword in position management, requiring careful consideration. Leverage and position complement each other. When you choose high leverage, you must correspondingly lower your position, and vice versa.
We do not need to criticize the extreme fluctuations of the market, nor should we be overly emotional about the rise and fall of prices. How the outside world changes has nothing to do with our inner decisions. What we need to do is to safeguard our position safety. The market will always stir up waves at certain moments, but the safest strategy is to place yourself within a solid fortress. You can occasionally stick your head out to feel the pulse of the market, but you must never expose yourself to the front lines of risk.
Thus, extremely strict position management has become the core of contract trading. It is not just a strategy but an attitude, a respect and reverence for investment. For example, if EOS is currently priced at 3U, if we can control our liquidation price at 1.5U, then regardless of how the market fluctuates, we can remain safe and sound. This is the charm of position management; it allows us to be more composed and adept in our investments.
There is an old saying: 'As long as the green mountains remain, one need not worry about firewood.' This is the essence of position management. Only by ensuring the safety of your funds can you maintain an invulnerable position in future markets. In the cryptocurrency space, I consistently adhere to a half-position philosophy, or even a dynamic half-position philosophy. Whether in spot trading or contract trading, I can navigate with ease. After experiencing multiple trials in the contract market, I have deeply realized that the only secret to trading contracts lies in position management.
Even stock guru Warren Buffett maintains a large cash reserve; why can't we learn strict position management from them?
Meeting is fate, knowing each other is destiny. V believes that fate will ultimately lead to encounters across thousands of miles, while the lack of fate is simply destiny. The journey of investment is long, and temporary gains and losses are just the tip of the iceberg. It is important to know that even the wisest can make mistakes, and those who think deeply can gain insights. Regardless of emotions, time will not stand still for you. Lift the heaviness in your heart and stand up again, ready to move forward.
I am V, having experienced multiple bull and bear markets, with rich market experience in various financial fields. Here, I penetrate the fog of information to discover the real market. Seize more wealth opportunities and find truly valuable opportunities; don't miss out and regret later!
Teaching someone to fish is better than giving them fish, and for investors, whether beginners or experts, what they gain from V is not just financial returns, but also growth in investment knowledge and experience. In the investment process with V, not only will V provide investors with analytical thoughts on market conditions, basic knowledge of watching the market, and methods for using various investment tools, but will also bring exciting interpretations of fundamentals, sorting through the chaotic international situation, and identifying various investment forces, allowing you to become both a winner and an expert in investment!
Walking in the cryptocurrency market, mastering the seven trading principles, you must understand investment's offensive and defensive strategies to remain steady amid gusts and find safety in traps. V has navigated the market for many years, deeply understanding its opportunities and pitfalls. If your investments are not going well and you feel unhappy about your losses, you can contact V to correct your past mistakes; if you are currently profitable, I will teach you how to protect your profits; if you are still lost in the market, I am willing to guide you forward. The true tragedy of trading lies not in how much you suffer, but in how many opportunities you miss! Seize the present and move forward together. I am V, someone who will leave a name in the future.
V has navigated the market for many years, deeply understanding its opportunities and pitfalls. If your investments are not going well and you feel unhappy about your losses, you can contact V and leave a message in the comments.
