Let’s put it this way: playing spot trading in the cryptocurrency market doesn’t guarantee how much you will earn, but at least you won’t lose money. Losing big money is almost impossible, of course, this varies from person to person. For example, a newcomer will naturally find it difficult to do this. I believe that seasoned investors who have experienced two rounds of bull and bear markets can easily achieve steady profits in spot trading.
As long as you understand the cryptocurrency market well, it is almost impossible to lose money in the spot market. Those who understand will naturally know if what I say is correct. Recently, I have been pondering this question: Why are there far more people making money through spot trading in the cryptocurrency market than in futures? I have summarized a few reasons:
1. The cognitive level of investors: Spot trading often lacks leverage and accumulates capital slowly. Therefore, those who generally hold spot are usually large capital holders. This group may have already achieved some form of 'enlightenment' in other industries outside the cryptocurrency space, so they are not in a hurry to succeed. Even without the cryptocurrency market, they can live well. In contrast, the futures crowd generally has accounts under $100,000. These individuals can go up or down: up means soaring, down means going to zero and starting over. Thus, most people cannot resist the temptation of instant success.
2. Cyclicality: Spot trading tends to have a longer cycle and a higher margin of error, while futures have a shorter cycle and a lower margin of error. The high transaction fees and funding rates in futures force you to make judgments within a relatively short time. We know that market conditions, especially short-term ones, are largely random. If you make a wrong judgment, you face real monetary losses; whereas with spot trading, it's just unrealized losses.
3. Psychological pressure: Those who have experienced it know that you can't expect to sleep well while trading futures. The first thing you do when you wake up in the middle of the night is check your phone to see if you have been liquidated. You dream of liquidation scenarios, and before sleeping, you keep staring at the market that won’t fluctuate until you can’t take it anymore, then you quietly add a little margin before daring to continue sleeping. In contrast, with spot trading, it's completely the opposite; if I want to sleep, I can sleep anytime, and I don't have to worry about liquidation. There’s plenty of time to do what I want.
The above summarizes a few reasons why making money in the spot market is easier. Complexity does not mean correctness. If we want to make steady profits in the spot market, we must meet the following prerequisites: 1. Do not invest without understanding: I believe this point carries the most weight among all the reasons. I see many people complaining that Ethereum is not rising, indicating that many have heavily invested in Ethereum. However, I can guarantee that at least 80% of these people have not conducted in-depth research on Ethereum; they just think it's good because others say so. If you truly understand what you are buying, you definitely wouldn't lash out just because it isn't rising. Many people lose money because they throw all their money into something they haven't researched, and once the market moves against them, they fall into endless doubt and panic, ultimately cutting their own losses.
2. Timing of entry: Just because we have studied and confirmed something is good doesn’t mean we should blindly enter the market immediately. Even if something skyrockets, we shouldn't let emotions lead us to FOMO and chase the highs; we must wait to buy when it’s on sale. For example, with Nvidia right now, we must admit it's a very good company, but a good company doesn't necessarily equal making money. If we can't find an opportunity, we look for the next one. In investing, we should avoid thoughts like 'I must do it this way'; waiting appropriately is necessary. A good hunter won't easily shoot aimlessly.
Summary: The core of steady profit in spot trading is:
1. Do not invest without understanding, and do not invest without in-depth research.
2. Secondly, find a suitable entry point. This point doesn't necessarily have to be an absolute low; a relatively low position is sufficient. What is a relative low? It means we buy when everyone is throwing it away like a hot potato, rather than chasing it when everyone is scrambling to grab it, as that can easily lead to injury. I have said my piece, and I hope you can continuously prosper.
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