As there are many stories of people getting rich overnight in the cryptocurrency circle, many newbies who have never been involved in this industry also want to get a piece of the pie in this market. Will such a huge fortune come to the newbies who have just entered the circle? How can a newbie who has just entered the circle earn the first pot of gold in this circle? This is purely my personal thoughts and operational experience, and I hope everyone will comment and give advice.
The key to getting the first pot of gold is to make full use of opportunities with high certainty and maximize returns through reasonable use of leverage. The difference between simple interest and compound interest in investing is significant. When choosing simple interest investment, you can maintain a fixed leverage ratio. But in compound interest investing, as the money
As the scale grows, the leverage ratio must be gradually reduced to increase the fault tolerance rate and prevent a major mistake from causing the funds to return to zero.
In addition, when encountering a big market situation, you should decisively take heavy position operations. Big market trends don't appear frequently. Once you catch them, your assets may be worth more than 0. Taking my real trading experience as an example, my initial income started from 5000u and was gradually accumulated through compound interest.
In the first transaction, I used 20 times leverage to go long BTC, and within half a month, I increased my funds to 4 or 5 wu through rolling positions. As my capital grew, I gradually lowered my leverage. When the capital reaches 10wu, the leverage I usually use does not exceed 10 times; and when the capital reaches 30wu, the leverage multiple generally does not exceed 5 times. Currently, for regular market conditions, I will probably only use about 3 times leverage. These experiences are for your reference.
How many times the leverage is generally opened, let’s talk about it below.
The leverage ratio depends on the following conditions:
1. Your risk appetite
2. The contract currency used
3. Fund size of the contract
4. Determine the size of the market.
So it makes no sense for you to directly ask me how many times the leverage should be opened. If you have a high risk appetite, can earn high returns with a small amount of money, and can make big profits if you make the right decisions, then you must have more leverage, the better, roll up the floating profits, and then draw a stop-loss point for yourself. This is what happens once When the market climax comes, you will make a lot of money at once.
When the market is over, you can still make a good figure while ensuring backtesting. The worst thing is that the market goes against you and you lose all your principal. Just wait for the opportunity to fight again. This way of thinking, I suggest you divide your principal into many parts, ranging from 5 to 10 points. The main thing is to wait. When the market situation comes, directly ALLIN. At worst, if you lose this time, you still have four or five chances.
In trading, I usually first observe the overall market trend and look for opportunities that may cause fluctuations of more than 30%. When an opportunity like this arises, I wait patiently and take a position where a turn is likely to occur. If the market moves in line with my expectations, I will continue to hold the position and add to it at the appropriate time.
Adding a position is a technical step that needs to be handled with caution. I will choose not to add a position if I am not sure to avoid affecting my trading mentality. If the market trend is not in line with expectations, I will stop the loss, hedge or take the profit in time and wait for the next opportunity.
One disadvantage of this trading method is that sometimes orders with a profit of 5 points or even 10 points may be eliminated at the cost price, resulting in continuous roller coaster rides and stop losses within a month. However, as long as you catch a big trend, it is possible to make huge profits.
For small funds, I think the best trading method is to use funds that can withstand losses and wait patiently for the opportunity with the largest profit-loss ratio, which should be at least 1:10. Major currencies can have 50-100 times leverage. If you make a mistake, stop the loss in time and wait for the next opportunity; if you make a mistake, add a profit, and if you seize a wave of market trends, you may double your principal or even more.
In trading, it is necessary to reduce the influence of subjective market predictions and trust the market trends seen by the eyes rather than the predictions of the brain. When the market fluctuates sideways, if you are not good at dealing with this kind of market, you can choose to wait and see and not participate. Only enter the market when there is a clear trend.
Trading is a gambling game and there is no so-called technology at all. Find a good position to enter in a volatile market and wait for the results. If you are wrong, close the position immediately and accept the loss; if you are right, set a range and keep adding more and more until the opening price is used as the closing price.
Although you may not gain anything most of the time, as long as you get two big waves of extreme market conditions right in one year, it is enough to prevent you from opening orders for three years. All you need to do is wait patiently, put yourself on the right side before the big market starts, and then continue to increase your investment and hold it patiently.
The reason why most people can't make money is because they have been constantly in and out of the market to gain short-term differences and are unwilling to wait and hold patiently. They don't dare to win and they are not greedy enough to risk their own lives. The goal of trading is to seize a big wave of extreme market conditions that are being tested at other times.
When the big market is not coming, just ensure that your funds do not suffer too much loss. It doesn't matter whether you make money or not. All short-term, all shocks, all small trends should be given up to make big profits.
In the currency circle, the market trend over the past year shows that three or four waves of extreme consecutive rises and falls are common. This big market situation contains huge opportunities to make money. As long as investors are greedy enough, it is possible to achieve a leap in class. However, frequent entry and exit of the market to hunt for bottoms and tops often only increases transaction costs and fails to obtain long-term stable returns.
The currency circle is used to capture big market trends and make large profits, rather than making small profits every day. Stable small profits can be achieved through arbitrage. Exchanges can earn more than 20% in a year simply by arbitrage. However, contracts and coins have higher risks and require investors to bear greater market risks. Therefore, investors need to be bolder and seize the super market in order to achieve rapid accumulation of wealth.
Successful investors, such as Livermore, Lin Guangmao, Fu Haitang, etc., all changed their destiny by seizing the big market trends. They dare to take risks, have courage and vision, and can find favorable positions in market fluctuations.
For small capital investors, this is the only way to achieve wealth reversal. In the futures market, investors need to have the mentality and courage of the rich, rather than just relying on skills.
No one can predict market trends 100%, but successful investors can act decisively when market opportunities arise and stop losses in time when they make mistakes. They need to bear the psychological pressure brought by market fluctuations, dare to take risks and pursue higher returns. They can be wrong countless times, but as long as they are right once, they can change their strategy and make more stable and low-leverage investments.
Finally, let me talk about some logic why I am optimistic about the market next year. This is also the reason why I think there will be a big market this year.
There are three main engines for the next round of bull market:
(1) Approval of Bitcoin ETF
(2) Bitcoin halving market
(3) Expectations of the Federal Reserve to cut interest rates in 2024/2025
Passage of Bitcoin ETF
In the early morning of January 11, Beijing time, the U.S. Securities and Exchange Commission (SEC) announced that it had approved the listing and trading of spot Bitcoin ETFs through expedited mode and authorized 11 ETFs to begin trading on Thursday, local time. The SEC’s approval is actually a rare compromise. After the news was announced, the price of Bitcoin soared by more than $2,000, once again standing above the $47,000 mark. In fact, the price of Bitcoin has been ups and downs in the past three years. In 2021, the price was as high as $69,000 and in 2022, it was as low as $15,450. This approval is a milestone for the currency circle. The 69,000 times in the past 15 years has become history, and the future of Bitcoin is destined to be a sea of stars.
Analysts at Standard Chartered Bank pointed out that the incident is expected to attract US$50 billion to US$100 billion in capital inflows this year. And the bank predicts that BTC will rise to US$100,000 by the end of this year and further rise to US$200,000 by the end of next year. We don’t care whether these news are true or false, at least it shows that BTC has been recognized by more and more people, and this consensus is irreversible. Bitcoin has become Gold 2.0. No matter in terms of liquidity, confidentiality, non-tamperability, scarcity and other aspects, it completely crushes gold.
(2) Bitcoin halving market
There are many introductions on the Internet about the impact of the Bitcoin halving market on the price. Today I will briefly analyze it.
Will there be a big bull market after the halving in 2024?
There are less than 100 days left before the fourth Bitcoin halving. Looking back at the history of halving, each halving is accompanied by an increase in the price of Bitcoin:
Let's look back at history and see how past halving events have affected the price of Bitcoin: 1. When the first halving occurred on November 28, 2012, the price of Bitcoin was only about $12. Subsequently, the price began to climb, and by April 2013, the price soared to about $260, an increase of more than 2,000%.
2. On July 9, 2016, when the second halving occurred, the price of Bitcoin was approximately $650. Although the price did not surge immediately after the halving, in late 2017, the Bitcoin price reached an all-time high of nearly $20,000, a growth of more than 3000%. This volatility demonstrates Bitcoin’s huge potential as an asset.
3. On May 11, 2020, when the third halving occurred, the price of Bitcoin was approximately $8,787, and reached a record high of approximately $64,000 in April 2021. Now, as the fourth halving approaches, the market is once again in a state of nervousness and anticipation. According to analysis, mining costs may soar to US$40,000 per coin, which provides strong support for the future price of Bitcoin!
I believe that as long as these benefits are realized, Bitcoin will be guaranteed to break through 60,000 US dollars in 2024.
(3) Expectations of the Federal Reserve to cut interest rates in 2024/2025
The expectation that the Federal Reserve will cut interest rates in 2024/2025 has attracted much attention, but the expectation needs to be emphasized. Although the Fed's interest rate cuts will proactively inject liquidity into the market, risk assets will not necessarily rise. Domestic interest rate cuts and reserve requirement ratio policies have been releasing water, but A-shares still fell below 3,000 points.
In addition, looking back at the Fed's interest rate cuts in 2008 and 2020, we can draw a simple logic: interest rate cuts are monetary policy and serve economic fundamentals. The interest rate cut is because the economy has risks of downward pressure and recession. The expectation of an interest rate cut can temporarily stimulate the market, but it cannot change the downward trend of the market.
Therefore, in the process of interest rate cuts, the market will gradually reverse and liquidity will increase, but the market will not continue to rise, but will fall. However, expectations are different. Currently, the Fed's interest rate is 5.5%, and it is expected to maintain this level for a long time to control inflation.
If the Fed announces that it will start cutting interest rates now, risk markets such as U.S. stocks and cryptocurrencies will definitely rise sharply. This is because expectations have a huge impact on the market. Looking back at November 2021, Bitcoin had just hit a new high and then began to dive, the reason was the expectation of interest rate hikes.
Therefore, the market may rise when interest rate cuts are expected, but may fall due to factors such as an economic recession. However, in the long run, interest rate cuts will definitely cause risk assets to rise. Therefore, expectations are crucial to market movements.
Follow me and let’s get rich together in the feast! I am Blue Whale Beichen, and I welcome your comments and suggestions.
