Trading cryptocurrencies is a game that foolish people cannot play, lazy thinkers cannot play, those with unhealthy minds cannot play, and adventurers who hope to get rich overnight cannot play. In the world of financial markets, successful trading depends not only on knowledge and skills but also on how to face uncertainty, manage risks, and accumulate experience and opportunities through long-term trial and error.
In the book (Antifragile)+, Taleb presents a profound viewpoint: the world is full of uncertainty, and those who can benefit from uncertainty are often the winners in the market. For any trader, these principles are not only guidelines for investment but also important rules for how to respond to market fluctuations and protect account safety.
Here, I will discuss the five core principles of trading based on the ideas in (Antifragile). These principles apply not only to traditional investment markets but also to today’s risk-prone crypto world. Below is my understanding and practical experience summary of these core principles:
1. Uncertainty: Face risks and learn to accept uncertainty.
In any financial market, especially in a highly volatile market like the crypto world, uncertainty is always the main theme. As Taleb said: 'If you can predict the market a minute in advance, you can be as rich as a king.' But in fact, no one can predict the future market trends, including so-called market experts and various analytical methods. The market is a complex system, and all analytical methods and tools predict the future based on past data, while no model or formula can cover all possibilities.
Thus, as a trader, the most important ability is recognizing the uncertainty of the market. Many investors are influenced by various market analysts and news, blindly trusting predictions and technical indicators while ignoring the randomness and volatility of the market.
Real smart traders know that in the face of uncertainty, their strategy is not to try to predict the future, but to adjust their positions and risk management continuously in response to market changes.
Taleb's (Antifragile) emphasizes the value of uncertainty itself—antifragility. Simply put, when the market fluctuates, some people can benefit from it because their strategies become stronger in volatility. This is not only the basic principle of investment but also the key to profiting in the crypto world.
2. Convexity+ Trading Rules: Let profits run and cut losses. To make long-term profits in the market, the most basic requirement is to establish reasonable entry and exit rules, which is referred to as 'trading rules.'
However, excellent trading rules are not just about finding the right entry and exit points; they are also about how to maintain flexibility during market fluctuations and make adjustments in different situations.
The concept of 'convexity' is a very important trading thought proposed by Taleb, whose core is to let profits have no upper limit while controlling risks within an acceptable range.
Simply put, we need to 'cut losses and let profits run.' For example, a common trading rule is: buy when the price breaks through a key level, and sell when the price falls below a support level.
The key to this rule is that 'profits are unlimited,' as the market can sometimes give you an unexpected explosive opportunity. And 'losses are limited,' regardless of how the market fluctuates, stop-loss orders must be set to avoid significant losses. Simple and effective trading rules are based on maintaining antifragility while maximizing returns and avoiding large losses.
3. Capital Management: Ensure survival and avoid full-position gambling.
In the market, the most important thing is not how much you earn, but how to ensure the long-term survival of your account. Especially in high-risk markets like the crypto world, traders often face rapid market fluctuations and extreme market events. At this time, an excellent capital management plan is particularly important.
One of the core strategies is the barbell principle+. The core idea of the barbell principle is to divide funds into two parts: one part remains highly safe and stable, while the other part takes on higher risks. In the crypto world, this means that 90% of the funds can remain in cash or low-risk investments, while 10% is used for high-risk speculation.
The advantage of this approach is that it limits the maximum loss, especially during severe market fluctuations or black swan events; traders will not lose all their assets due to a single failure. Regardless of how the market changes, ensuring the safety of funds is always the most important.
4. Repeated trial and error: Accumulate experience in failure and welcome opportunities.
Trading is a long-term game, and successful traders do not profit every time; often, their winning rate is even very low. In fact, many excellent trading systems have a winning rate typically between 30%-40%. This means that out of every 10 trades, there may be 6 to 7 losses.
However, as Taleb emphasizes, successful trading does not rely on every success but accumulates experience through repeated trial and error. Every failure can help you understand the market more clearly and comprehend how your trading system works under uncertainty.
Through extensive repeated operations, you will find that real profits do not depend on perfect predictions but on making appropriate decisions at the right time.
Therefore, successful traders are often those who can patiently wait, are willing to experience failure and learn from it, rather than those who attempt to get rich overnight.
5. Good luck: Success requires timing, location, and harmony.
Finally, even if you master all the above skills, achieving ultimate success in the market still requires a bit of luck. Market fluctuations cannot be completely predicted, and many times, successful traders do not always profit solely from their judgment and analytical skills; luck is also an important factor.
For instance, during significant market events or black swan occurrences, lucky traders can take the correct action in time, while unlucky traders may suffer losses due to missed opportunities. Therefore, while we can reduce risks by improving our trading skills, in some cases, sudden market changes can become the key to determining the success or failure of a trade.
Through the book (Antifragile), Taleb shows us how to build a trading system that can survive long-term and achieve continuous profits in a market filled with uncertainty.
Understanding uncertainty, establishing effective trading rules, managing funds well, accepting the trial-and-error process, and maintaining humility in the face of luck are five core principles that any trader wishing to profit in financial markets must master.
Therefore, in the crypto world, we need to build a trading system, continuously do the right things, and ultimately wait for the luck that belongs to us. That is to say, after doing our part: do your best and let fate take its course.
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