Every newcomer stepping into the crypto circle surely harbors a passionate desire for wealth, just like I did when I first plunged into this mysterious and ever-changing field. To this day, I still clearly remember my first operation as a novice, that feeling of 'getting rich overnight,' as if I had been struck hard by the goddess of luck, a memory that is etched in my mind. After waking up, I found that my account balance had unexpectedly increased by 50,000; at that moment, the joy inside me surged like a raging tide, instantly overwhelming me. I thought I had found the golden key to unlock the door to wealth, feeling as if I had become the 'chosen one' who dominates the market. However, this sudden victory clouded my judgment, and that night, driven by impulse, I opened a 75x leverage position, fantasizing that my funds would double like a rocket the next day, with financial freedom just around the corner. However, reality hit me like a sharp slap in the face, waking me up harshly. The market took a sharp downturn; not only did I not see the huge profits I had hoped for, but my account funds began to flow away like a burst dam. Watching my hard-earned savings being devoured little by little, anxiety, regret, and self-blame gnawed at my heart like poisonous snakes. At night, the supposed tranquil resting time turned into a sleepless struggle; I tossed and turned in bed, unable to fall asleep. At one or two o'clock, my eyes were glued to the screen, not missing any market fluctuations; finally, after a moment of drowsiness, I suddenly woke up at four or five o'clock, frantically grabbing my phone to check, my heart always in my throat, caught in the painful struggle between 'painfully cutting losses and closing positions immediately' and 'wait a bit longer; maybe it will rebound soon.' Every minute and second was torture. In just a few days, the 300,000 account margin was nearly zeroed out; even if I added more funds later, I could hardly escape the fate of liquidation. The financial loss was severe, sleep was greatly insufficient, and my mindset completely collapsed; it was an incredibly dark time. However, deep down, I had an unyielding spirit, gritting my teeth and persisting, determined to calm down and find my way in this chaotic market. After three years of hard work and perseverance, with the remaining 120,000 capital, I miraculously earned over 27.5 million! Looking back on this arduous journey, the experiences and feelings can only be deeply understood by oneself. Today, I share these experiences not to flaunt personal achievements, but sincerely hope to light a lamp for newcomers in the crypto circle, helping you find direction in confusion and avoid some of the detours I once took.
1. Risk reefs and hedging tips in the crypto circle
1. Hedging guide for volatile markets: The crypto market is like turbulent waves, with huge shocks often hitting. At this time, both bulls and bears engage in fierce battles, with black swan events such as exchanges 'pulling the plug' and sudden massive fluctuations occurring frequently, causing risks to rise exponentially. A wise move is to actively avoid and temporarily watch from the sidelines, preserving strength. If you are truly unable to resist the urge to participate, be sure to trade with light positions and small amounts, keeping risks to a minimum and not allowing greed to blind your eyes into entering heavy positions recklessly.
2. Risk warning for altcoins: At the end of a wave of rising markets, especially near the peak area of BTC, altcoin bulls are prone to concentrated selling, triggering a phenomenon of thin needles with no volume. These coins have low trading volume and poor liquidity; once the market direction changes, there is essentially no support, leading to a price collapse. I have set a strict rule for myself: only focus on BTC or mainstream large-volume varieties, staying away from these high-risk niche altcoins, and never taking capital lightly.
3. The red line of drawdown control: In a closed-loop trading logic, the maximum drawdown is a matter of life and death. I set my drawdown limit at 50%, which is a bottom line that cannot be crossed. No matter how crazy the market gets, one must remain vigilant at all times to avoid the disaster of liquidation. In summary, be cautious and make small trades when risks are high, and trade steadily and significantly when risks are low, but mastering this timing indeed requires repeated refinement in practice.
4. Key points of asset allocation: Capital management is the key to survival in the crypto circle. Always use less than 10% of your liquid capital to trade contracts; this is your lifeline. When profits reach a certain multiple, do not hesitate to take profits decisively. In the early stages, it is challenging to distinguish whether profits come from luck or skill; locking in profits is the wisest strategy, then using small amounts to cycle through trades steadily. It is known that most of the top contract traders started with hundreds or thousands; the amount of capital is not the key to success or failure; the rational use of funds is the true principle.
2. The maze of contract trading and strategies to break through it
1. Analysis of liquidation phenomenon: The crypto contract market can be described as a wealth meat grinder. In the past month, liquidations have reached as high as 20 billion USD, which is shocking. Behind this is not merely a capital issue, but a lack of market synergy. Whether small retail investors or large capital players, everyone harbors dreams of getting rich overnight and enters the market under the temptation of high leverage. The reality is harsh; recently, over 90% of long positions have been liquidated, warning us: leverage is a double-edged sword, and regardless of the multiple, the risk of liquidation follows closely, regardless of the amount of capital.
2. Constructing a practical system: Why do many investors hesitate in the face of market fluctuations? Upon deeper investigation, mindset issues are the main reason. Some suffer from capital exhaustion, 'ammunition' running out; some fear a bottomless pit of decline, buying in only to be trapped; some suffer from gains and losses, falling into the whirlpool of chasing highs and selling lows; some hesitate and miss good opportunities; and others are fearful of the market, lacking the courage to act. In fact, the root of the first four mindsets lies in insufficient understanding of contract investment. Only by deeply understanding the market and filling in cognitive gaps can we dispel fear, build our contract practical system, and move steadily through the storms.
3. From self-awareness to strategic elevation:
Investment master Van Tharp once said: 'You are not trading a mere market; you are trading your understanding and beliefs about the market.' This profoundly points out the core of the investment operating system—an exclusive market interpretation and action guide. But how easy is it to build such a system? First, one must deeply analyze oneself, clarifying interests, goals, knowledge reserves, and skill boundaries. On this basis, accurately grasp the timing of entry and exit, select investment targets, and reasonably allocate positions. At the same time, reserve buffer space for mistakes. When the market trend deviates from expectations, respond calmly, draw nutrients from failures, and continuously optimize the system. This is a long marathon; it takes 6-10 years in the stock market, and although the crypto circle has a bull-bear cycle of about 4 years, it still requires at least 8 years of honing. Unfortunately, many retail investors blindly follow the trend throughout their lives and never build their strategy fortress.
4. Breaking the curse of liquidation:
Looking back, I have encountered many obstacles on the contract path, experiencing five liquidations in the past few years, each one a painful lesson. Initially, I floundered like a headless fly, making all sorts of excuses and complaining about the capricious market. Until one day, I had an epiphany: a complex operating system is not the cure; ultimate position management is the true essence. Strict position control may seem simple, but it embodies profound investment wisdom, allowing us to remain calm during market turmoil and avoiding the deadly traps of uncontrolled leverage and overweight positions.
5. The ultimate way of position management:
The root cause of contract liquidation is nothing more than excessive leverage and full position operations. Leverage and position size are interdependent; choosing high leverage requires reducing position size, and vice versa. The market is ever-changing, and we are powerless to influence it, so we must strictly adhere to a safe position threshold. Imagine investing as defending a city, placing yourself in a solid fortress, occasionally peeking at the market's pulse, but never venturing out into danger.
For example, if EOS is currently priced at 3U, if we can control the contract liquidation price at 1.5U, no matter how the market ravages, we can sit steadily on the fishing platform. 'As long as the green mountains remain, one need not worry about firewood,' adhering to a half-position philosophy or even a dynamic half-position strategy in the crypto circle allows for flexibility in both spot and contract trading. After experiencing storms, I deeply understand that the ultimate secret to playing contracts is: position management.
I hope that my experiences and insights can serve as a nautical chart for everyone navigating the crypto circle, helping you avoid reefs and sail towards the shores of wealth. Remember, in the crypto circle, mindset and strategy are equally important; stability leads to long-term success.
If you are still underwater, unable to see the trend, going long results in a drop, going short results in a rise. Tap the profile to see the layout and strategy.