1. Misunderstandings of Cost Averaging

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

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

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

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

  • Total Coins: 1000 + 2000 = 3000 coins

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

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

2. The Existence of Privacy Coins

In addition to mainstream cryptocurrencies like Bitcoin and Ethereum, there are some cryptocurrencies known as privacy coins, such as Monero and Zcash. These coins are dedicated to providing higher levels of anonymity and privacy protection, suitable for investors with high privacy demands.

3. Understanding Market Sentiment

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

4. Compound Interest Effect

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

5. Risk Management

When investing in cryptocurrencies, risk management is an indispensable part. 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 drastic market volatility.

6. Trading Psychology

In the cryptocurrency world, trading psychology is an important factor that affects investment decisions. Many investors are easily 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 particularly important in high-volatility 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 their principal and use high leverage (such as 20x leverage). This method can effectively control risks and avoid emotional decisions caused by excessive market volatility. Reasonable position management can help investors maintain stable returns during market fluctuations.