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Next, let's discuss the essence of trading. What is the essence of trading??
The essence of trading is value exchange, fundamentally it is the exchange of goods and currency, and it extends to the multidimensional flow of values such as information, services, assets, etc. For example, when you buy BTC with USDT, you are exchanging the value of a stablecoin for the value of Bitcoin.
The essence of trading is the game of risk and return, predicting prices, supply and demand, etc. If you bet right (for instance, predicting that BTC will rise and going long when it does), you earn the price difference; if wrong, you bear the loss. In leveraged trading, if the direction is wrong, it could lead to liquidation, magnifying both risk and return simultaneously.
The essence of trading is the struggle of information and psychology. You need to filter and interpret macro data, market sentiment, and other information while also combating human weaknesses (chasing gains and panic selling, greed and fear). For instance, during a market crash, panic selling and calmly holding positions are reflections of psychological games.
The essence of trading is the logic of buying low and selling high. Whether it's stocks or cryptocurrencies, the core often lies in “buying low, selling high” to earn the price difference. However, in cryptocurrency, due to leverage and 24-hour trading, fluctuations and operations are more frequent and extreme.
The essence of trading integrates value exchange, risk-return assessment, information-psychological games, and the pursuit of price differences through buying low and selling high. In the cryptocurrency market, these characteristics are magnified due to high volatility and leverage, further testing the understanding and practical response to its essence.
