Today someone asked me, after five years of trading, do you have any views on short-term versus long-term trends?

I actually have some opinions, based on personal experience.

Let’s talk about short-term trading first. I vaguely remember when I first started trading contracts; I was betting on short-term trades, and every new trader entering the crypto space probably does the same. The benefit of short-term trading is that if you make a profit, you can run away and secure your gains, which gives a sense of satisfaction. Because new traders, knowing nothing, have no mentality to speak of, they fear floating losses, especially the floating losses that occur after making profits—those can be truly devastating. Of course, there are advantages and disadvantages; the downside is that you can’t possibly make money. In frequent short-term trading, the transaction fees can drain all your capital. It’s like a casino in Macau; the longer and more frequently you bet, the higher the casino’s probability of winning. Ultimately, your capital will turn into transaction fees, benefiting the exchange. In short, in my five years in the crypto space, I’ve never seen anyone get rich by trading short-term.

However, short-term trading is a common problem for new traders and a process that most new traders must go through. Only after enduring setbacks can they learn their lessons. New traders are eager for success, wanting to get rich quickly. Even a second of delay feels like a waste; they hope to enter a position and make money right away, then immediately close the position to secure profits, enjoying that quick money-making and feeling of safety. They have no interest in the slow growth of wealth because new traders lack patience.

Speaking of this, I have to complain about those analysts in the market who provide trading signals. For example, there is a type of signal provider who draws lines for you, talks about 15-minute charts, gives a bunch of jargon about wave theory, golden crosses, death crosses, MACD divergences, and then provides entry points. ETH at $1900 for entry, $1930 for first take profit, second take profit at $1950, third take profit at $1970. Stop loss at $1880, second stop loss at $1870. Their operations are as fierce as a tiger, and it’s obvious they are just clueless. There are many such line-drawing teachers in the market, and I checked, they have tens of thousands of followers, which is quite popular. They frequently share group chat records and boast about how many people they’ve led to wealth. What a joke, can such idiots really make money? Yet, many new traders fall for this, why? Because they don’t need to think for themselves; they just need to follow the teacher's operations to make money effortlessly! But can they really make money?

Here, I sincerely advise many naive traders to stay away from signal providers; they won’t make you rich, only lead you into a pit. However, the teachers themselves can get rich by leading you to wealth... If you want to assess whether someone is impressive, please use the results as a criterion. Look at whether they are making money; as long as their results are successful and they are making money, then whatever they say, think carefully about their words and see if there’s any wisdom within. Such people, even if they fart, will surely smell sweet. In contrast, some teachers may analyze a lot but have no real achievements, and their accounts might only have a few thousand dollars, possibly even less than yours. Would you trust such people? There are indeed too many fools, and there aren’t enough scammers to take advantage of them. Therefore, distinguishing between good and bad based on results is a very simple method. Of course, teachers who achieve results are genuine teachers; usually, they don’t have time to fool around with a new trader and won’t bother with you. So, everything must be self-reliant, and self-learning is essential. If you want to rely on others to win effortlessly, you might as well work hard at Meituan.

To digress. In summary, my conclusion is that short-term trading cannot make you rich and will lead to losses.

Now let’s talk about long-term trading. I remember in 2019, I attended an OK gathering in Wuhan and listened to a very impressive trader named Hai Zhong Lao Bitcoin. He said to get rich, you must follow trends and focus on major trends, capturing opportunities through constant trial and error. Although most of the time may be wasted on test orders, and often profits turn into losses, as long as you catch one good trade, the feeling is truly amazing. At that time, I understood nothing and couldn’t comprehend it. Now, I’m starting to get a taste of it. Most of the impressive traders I know have risen through trends. They usually test with small positions, but once they catch a trend, they go all in. So in the crypto space and the contract market, if you want to make money from trends, you need a few things. First, at least two years of contract experience to adapt to this market and develop a stable mindset; otherwise, frequent shifts from profit to stop loss will break your mentality. Second, you need to be bold, ready to go all in when you catch a trend, willing to hold on, and not run away after just tasting the soup.

In short, the contract market is not easy to navigate. The two points I mentioned require time and money to develop. Which great trader doesn’t have some bitter experiences? I know several contract traders with net worths over a hundred million, who solely made their fortune through contracts. They all have their own difficult histories and have experienced bankruptcy; some went bankrupt directly, while others experienced glory before going bankrupt and then bouncing back. They have all at least gone through a complete bull-bear cycle.

Conclusion: Trends can lead to wealth, but it takes money and time to develop oneself.

Suggestion: The contract market is not easy to navigate; you need to have a safety net. Either have a physical industry for continuous cash flow, or prepare two strategies: divide your funds into two parts, with 80% in spot assets buying Bitcoin and Ethereum, and 20% in trading and practicing. If you are truly outstanding, 20% of the funds will be enough; if you are a newbie, even Warren Buffett's assets won’t be enough for you to squander.