In the cryptocurrency world, there are some little-known facts or tips that are often overlooked, but they are very important. Today, I will share a few:

1. Cost averaging is not as simple as it seems

For example, if you invest 10,000 U when a coin is priced at 10 U, and then add another 10,000 U when the coin price drops to 5 U, your average cost is actually 6.67 U, rather than the 7.5 U that many people think. This situation is very common in market fluctuations, and understanding this cost calculation method is helpful for managing positions.

2. The power of compound interest is astonishing

Assuming you have 100,000 U and earn 1% daily, if you can maintain 250 trading days in a year, your assets will grow to 1,323,200 U after one year. Continuing for another two years, your assets could even reach tens of millions. Of course, this result is based on a stable rate of return, but the hidden challenge is how to consistently maintain this compounding effect.

3. The relationship between probability and take-profit/stop-loss

If your investment success rate is 60%, and you set a 10% take-profit and stop-loss each time, after 100 trades, your total return could reach 300%. However, this premise is that you strictly follow your trading plan and are not influenced by market fluctuations, especially maintaining calm in a highly volatile market.

4. Greed is the greatest enemy

If you start with 10,000 U and earn 10% each time, by the 49th day, your assets could reach 1 million U, by the 73rd day, you could surpass 10 million U, and by the 97th day, there’s even a chance to exceed 100 million. However, in reality, almost no one can achieve this because most people cannot control their greed during this process, leading to failures along the way. This is why many traders, even when profitable, find it hard to maintain their success over the long term.

Contract trading and position management

In contract trading, position management and capital management are key to success or failure. Many people use 20%-30% of their capital as the base position, but I personally prefer to only use 2%-5% and employ 20x leverage. This effectively controls risk and avoids emotional decisions caused by excessive fluctuations.