There are several key points you must understand when speculating in cryptocurrencies:
1. Returns and risks: If you invest 1 million yuan and earn 100% return, your funds will double; but if you subsequently lose 50%, you will return to your initial funds. Therefore, setting stop-profit and stop-loss is very important, because losses are easier to make than profits.
2. Rise and fall: Suppose you hold 1 million yuan, and it rises by 10% on the first day, your funds become 1.1 million yuan; it falls by 10% on the second day, and your funds fall to 990,000 yuan. Whether it rises or falls, the impact is symmetrical, but for capital-profit cryptocurrencies, reducing losses is particularly important.
3. Market volatility: For example, if you use 1 million yuan for trading, you earn 40% in the first year and lose 20% in the second year. If you repeat this for six years, your final profit is only 5.83%, which is not even as much as keeping money in the bank. 4. Compound interest effect: If your funds grow by 1% every day, you will have 12.032 million yuan after 250 days, and 145 million yuan after 500 days. This shows that the benefits of compound interest are very high.
5. Annual doubling: If you invest in two projects within a year and double your funds every year, you may have 243 million in five years. This is why some people insist on holding a single cryptocurrency.
6. Covering strategy: For example, if you buy a coin at 10 yuan, if it drops to 5 yuan, and you buy the same amount again, the average cost will become 6.67 yuan, instead of the intuitive 7.5 yuan. Therefore, shorting and covering positions are important means to reduce costs.
7. Investment portfolio: In the field of cryptocurrency, combining venture capital and risk-free investment is a basic strategy. Stablecoins are generally regarded as risk-free investments, and the rate of return is generally about 3%. Therefore, establishing a 4:1 ratio combination of venture capital and stable investment is a more conservative investment method. These points help you understand how to effectively manage risks and seek returns in the cryptocurrency market
