1. Misunderstanding of Cost Averaging

Many novice investors often misunderstand the concept of cost averaging when investing in cryptocurrencies. For example, if you invest 10,000U when a coin is priced at 10U, and then invest another 10,000U when the price drops to 5U, many people would think their average cost is 7.5U, but in fact, the correct calculation is:

  • First Investment: 10,000U / 10U = 1000 coins

  • Second Investment: 10,000U / 5U = 2000 coins

  • Total Investment: 10,000U + 10,000U = 20,000U

  • Total Coins: 1000 + 2000 = 3000 coins

  • Average Cost: 20,000U / 3000 coins = 6.67U

Therefore, it is very important to understand how to correctly calculate cost averaging.

2. The Existence of Privacy Coins

Apart from mainstream cryptocurrencies like Bitcoin and Ethereum, there are some cryptocurrencies known as privacy coins, such as Monero and Zcash. These coins aim to provide a higher level of anonymity and privacy protection, suitable for investors with a high demand for privacy.

3. Understanding Market Sentiment

Market sentiment plays an important role in the crypto space. Investors should pay attention to social media, forums, and news to understand the overall market sentiment. For example, certain news may trigger panic selling or overly optimistic buying, understanding these emotional shifts can help you better seize trading opportunities.

4. Compounding Effect

In the crypto space, the compounding effect also applies. By investing and holding regularly, you can achieve wealth growth over the long term. Even small investments can significantly increase your assets over time due to the effects of compounding.

5. Risk Management

Risk management is an indispensable part of investing in cryptocurrencies. Setting stop-loss points and reasonable investment ratios can help protect your funds during market fluctuations. Many successful investors emphasize the importance of risk management to avoid significant losses caused by severe market volatility.

6. Trading Psychology

In the crypto space, trading psychology is an important factor influencing investment decisions. Many investors can easily be influenced by emotions when faced with market fluctuations, leading to irrational decisions. Staying calm, following a trading plan, and avoiding impulsive trades due to greed or fear are key to success. This is especially important in highly volatile markets.

7. Contract Trading and Position Management

In contract trading, position management and capital management are key to success or failure. Many investors tend to use 20%-30% of their principal as the base position, but a more prudent approach is to only use 2%-5% of the principal and employ high leverage (e.g., 20x leverage). This method can effectively control risks and avoid emotional decisions caused by excessive market fluctuations. Proper position management can help investors maintain stable returns during market volatility.