⛔ Why is the Market going down? ⛔
What a simple and complex question to answer. But in the cryptocurrency market it is very simple. In a bull market year the only thing that brings down the price is the accumulation of LONGs and the liquidation engine.
- What is the settlement engine?
- The algorithm that moves the price towards liquidity zones.
- Liquidity zones?
- Yes. Where the stop losses and liquidation prices of open futures positions are located.
- ...and are there ways to avoid losing money with those falls?
- Yes. Buying in Spot at low prices and protecting the investment.
- So why does everyone invest in the future market?
- They get carried away by the magic words of leverage and make money when the price falls by opening positions in SHORTs.
- That's bad?
- Yes. Because they are not really investing. They are speculating, betting and no one takes into account the liquidation engine.
- How bad can it be?
- In reality, the settlement engine will always move the price in such a way that the fewest possible traders win and the losses go to the exchanges. The exchange houses.
- That's cheating! 🤨
- Yes. But no one seems to care until they lose everything and burn the account.
- Ohhh! And what can the trader do to avoid losing money in the futures market?
- Use it for what it was created for. To cover losses.
- And why do people continue to use it in the wrong way?
- Because the majority did not study finance or risk management. They just operate the market like a chimpanzee would!
- The chimpanzee thing is very offensive...
- Yes, but I do not care. Hehe 😅
- What do you recommend studying then?
- Corporate Finance! It is mandatory to understand the basics about the art of money management. Without that foundation it is difficult to understand the futures market and the options market. Forget it!
- Good! Thank you so much.
- You are welcome.
🔸Greetings and good luck with your Trading! 💰💰💰
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