In the world of financial speculation, the market is like a cruel battlefield. Investors who do not understand its operating rules, lack position management, risk control, and trading discipline often become the 'selfless donors' of profits. Take those who blindly follow trends, for example; during the so-called 'smart money nets in sells the news' moments, they are easily deceived by stories, buying assets at the peak, fantasizing about unrealistic futures. For instance, some naively believe that Musk will turn Dogecoin into a currency for Mars, or think that expensive NFTs like punk AYC will be endlessly collected by the wealthy and never sold. Those with only superficial experience in trading other markets may know to stop-loss around -10% when facing losses, but these investors, blinded by stories, can endure massive losses of -80% or even -90%. The reason is that they are completely ignorant of the basic laws of market operation, such as liquidity and other factors.
Leverage, the double-edged sword of the financial market, has become a nightmare for many investors. In traditional finance, leverage is usually only available to qualified investors. However, in this unregulated market, leverage of up to 100 times or even 1000 times is easily offered to inexperienced investors, who are blinded by greed and struggle in fear while also bearing high fees. Once off-exchange borrowed money is added, it forms a wealth-devouring meat grinder. From the perspective of gambling psychology, situations like 'almost made a profit,' 'could have made a profit but didn’t,' or 'made a profit but lost it all' trigger the same dopamine response in the brain as making a big profit, leading individuals into the abyss of gambling, ultimately resulting in a tragic fate similar to those who gamble elsewhere.
Regarding leverage, we must remain highly vigilant. If a person cannot achieve long-term stable profits in spot trading, they are not qualified to touch any leveraged derivatives. Investors should find a trading cycle that suits them and respect every bit of their capital. Even if there is only $100 in the account, it should be cherished as if it were $1 million. Only in this way can one truly learn from trading experiences. Because if this $100 is treated as a lottery and gambled recklessly, feeling indifferent once losses occur, it is impossible to learn anything of value.
In trading, gains and losses stem from the same source, and position management is crucial. The size of the position directly affects the investor's psychological state. When facing a trade, one can first try investing half of the position; if it feels okay, gradually increase it, but the premise is to remain within 20% of the principal. Through continuous practice, find a position size that one can handle. This method of small-position trial and error is actually a positive cycle. Once there is a profit, the mindset becomes more stable, and fear of losses from stop-losses diminishes.
It has been proven that in trading, the judgment of entry points and directions accounts for only 30% of the factors, while mindset, position management, and profit-loss ratio management account for 70% of the critical weight. Finding a suitable position requires investors to explore through continuous attempts while being clear about their positioning in the market. Today's market has long departed from the 'pve stage' of everyone inflating bubbles together and entered the fierce competition of the 'pvp stage.' Looking back at the bull market of 2021, those who made profits actually gained from the capital of those who held on during the bear market, at that time the market had a high tolerance for errors. But in a bear market, while the market repays the 'debts' of the bull market, it also plunges investors into brutal competition; every penny of profit means taking it from someone else's pocket. Therefore, investors need to clarify their ranking and only participate in market trades that match their abilities. If you are just at the silver rank, you should accumulate experience in bronze and silver ranks. Recklessly entering the king's diamond rank will only result in becoming cannon fodder, losing your principal for nothing. Before reaching a market level that matches your strength, learn to wait patiently, and do not blindly enter at inappropriate times, thereby depleting precious funds. In this challenging market, learning to calculate profit-loss ratios and odds has become an essential skill for survival; the once easy and carefree profit-making situation is long gone.
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