Every newcomer entering the cryptocurrency world must be filled with a passionate yearning for wealth, just like I was when I first plunged into this mysterious and volatile field. To this day, I still clearly remember my first operation as a novice, the feeling of 'getting rich overnight,' as if I had been heavily struck by the luck god, remains etched in my memory. I woke up to find my account balance increased by 50,000; at that moment, the joy in my heart surged like a tidal wave, instantly overwhelming me, as I thought I had found the golden key to unlock the door to wealth, as if I had become the 'chosen one' of the market. Overcome by this sudden victory, that night, driven by impulse, I opened a 75x leverage position, fantasizing that my funds would double like a rocket the next day, and financial freedom was within reach. However, reality hit me like a sharp slap, waking me up. The market trend quickly turned downward, and not only did I not get the massive profits I expected, but my account funds also rapidly drained like a floodgate opened. I watched helplessly as my hard-earned savings were consumed bit by bit, anxiety, regret, and self-blame gnawed at my heart like a venomous snake. At night, what should have been a peaceful time for rest turned into restless tossing in bed, unable to sleep. At one or two o'clock, my eyes were glued to the screen, not letting go of any market fluctuation; finally managing to doze off for a while, I suddenly woke up at four or five o'clock, frantically grabbing my phone to check, with my heart always in my throat, painfully struggling between the dilemma of 'cutting losses immediately and closing positions' and 'waiting a bit longer, maybe it will rebound soon,' every minute and second was torment. In just a few days, the account margin of 300,000 nearly returned to zero; even if I added funds later, I could not escape the misfortune of liquidation. The financial loss was severe, my sleep was severely lacking, and my mindset was completely shattered; it was an incredibly dark time. But deep down, I had an unwillingness to give up, gritting my teeth and persisting, determined to calm my mind and explore a way forward in this chaotic market. After three years of struggle, with the remaining 120,000 principal, I miraculously earned over 27.5 million! Looking back on this arduous journey, the feelings within can only be deeply understood by myself. Today, I share this not to boast about personal achievements, but sincerely hope to illuminate a light for newcomers entering the cryptocurrency world, helping you find direction in confusion and avoid some of the detours I once took.
1. Risks and hedging tips in the cryptocurrency world
1. Hedging guide for major market fluctuations: The cryptocurrency market is like crashing waves, with significant shocks occurring frequently. At this time, both bulls and bears are engaged in intense games, with black swan events such as exchanges ‘pulling the plug’ and sudden massive fluctuations emerging, causing risks to rise exponentially. The wise choice is to actively avoid and observe from the sidelines, preserving strength. If you absolutely cannot resist participating, ensure to trade with light positions and minimal amounts, keeping risks to a minimum, and never let greed blind your eyes to take reckless positions.
2. Risk warnings for altcoins: At the end of a rising market, especially near the peak area of BTC, altcoin bulls are prone to concentrated selling, triggering a phenomenon of low-volume needle spikes. These types of coins have low transaction volumes and poor liquidity, and once the market direction changes, there is essentially no buying support, leading to a snowball effect in price declines. I set an iron rule for myself: only focus on BTC or mainstream large-volume varieties, staying away from these high-risk niche altcoins, and do not joke with the principal.
3. Red line of drawdown control: In the closed loop of trading logic, maximum drawdown is the lifeline. I set my drawdown limit at 50%, which is a line that must not be crossed. No matter how crazy the market is, one must always be vigilant to avoid the misfortune of liquidation. In summary, be cautious and do small trades when risks are high, and be steady and do large trades when risks are low. However, finely tuning this balance indeed requires repeated practice in real situations.
4. Essentials of asset allocation: Capital management is key to survival in the cryptocurrency world. Always use less than 10% of your liquid funds to trade contracts; this is your life-saving money. When profits reach a certain multiple, do not hesitate; decisively withdraw funds. In the early stages, it is difficult to distinguish whether profits come from luck or skill, so locking in profits is the wisest strategy, then using small amounts to cycle operations steadily. It is important to know that the top players in the contract rankings often started with hundreds or thousands; the amount of capital is not the key to success or failure, but the reasonable use of funds is the true path.
2. The maze of contract trading and strategies to break free
1. Analysis of liquidation chaos: The cryptocurrency contract market is known as a wealth meat grinder. In the past month, liquidations reached as high as $20 billion, which is alarming. Behind this is not just a simple funding issue but a lack of market synergy. Whether small retail investors or large capital players, they all harbor dreams of overnight riches, entering the market under the temptation of high leverage. The reality is harsh; recently, the proportion of long positions liquidated exceeded 90%, warning us that leverage is a double-edged sword, with liquidation risks lurking regardless of the amount of funds.
2. Building a practical system: Why do many investors hesitate in the face of market fluctuations? A deeper investigation reveals that the attitude problem is the main reason. Some are out of funds, exhausted their 'ammunition'; some fear the bottomless pit of decline, buying only to be trapped; some are anxious about gains and losses, caught in the whirlpool of chasing highs and selling lows; some hesitate and miss good opportunities; and others fear the market and lack the courage to act. In fact, the first four mindsets stem from insufficient understanding of contract investments. Only by deeply understanding the market and filling in cognitive gaps can we dispel fear and establish our own practical contract system, moving steadily through the storms.
3. From self-awareness to strategic elevation:
Investment master Van Tharp once said: 'You are not trading merely the market but your understanding and belief about the market.' This profoundly points out the core of the investment operating system—a set of exclusive market interpretation and action guidelines. But how easy is it to build such a system? First, a deep analysis of oneself is needed, clarifying interests, goals, knowledge reserves, and skill boundaries. On this basis, accurately grasping entry and exit timing, selecting investment targets, and reasonably allocating positions. At the same time, there should be a buffer space reserved for mistakes, calmly responding when market trends deviate from expectations, drawing nutrients from failures, and continuously optimizing the system. This is a long marathon; it takes 6-10 years in the stock market, and although the cryptocurrency bull and bear cycles last about 4 years, it still requires at least 8 years of honing. Unfortunately, many retail investors blindly follow trends throughout their lives and never build their own strategic fortress.
4. Breaking the curse of liquidation:
Looking back, I encountered numerous obstacles on the contract road, experiencing five liquidations in recent years, each one a deeply painful lesson. At first, I was like a headless fly, seeking various excuses and complaining about the market's unpredictability. Until one day, I had an epiphany: a complex operating system is not the antidote; ultimate position management is the true essence. Strict position control seems simple but contains profound investment wisdom, allowing us to remain calm during market turbulence and avoid the deadly traps of uncontrolled leverage and over-weighted positions.
5. The ultimate way of position management:
The root cause of contract liquidation lies in excessive leverage and full position operations. Leverage and position size are closely related; choosing high leverage requires reducing position size, and vice versa. The market is unpredictable, and we cannot control it. We can only strictly guard the safety bottom line of our positions. Imagine investing as guarding a city, placing yourself in a solid fortress, occasionally glimpsing the market's pulse, but never venturing out into danger.
For example, if the current price of EOS is $3, if we can control the contract liquidation price at $1.5, no matter how the market ravages, we can sit firmly on the fishing platform. 'As long as the green mountains remain, we need not worry about firewood,' adhering to a half-position strategy or even a dynamic half-position strategy in the cryptocurrency world 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 my experiences and insights can serve as a nautical chart for everyone navigating the cryptocurrency world, helping you avoid hidden reefs and sail towards the shores of wealth. Remember, in the cryptocurrency world, attitude and strategy are equally important; stability leads to long-term success.
If you are still underwater and cannot see the trend, going long leads to drops, and going short leads to rises. Click the icon to check daily layout and strategy.
