Must-read article for the crypto world! Newcomers often lose money first.
No matter what opportunity led you to enter the crypto world, you must have heard about someone making a lot of money from a certain cryptocurrency, multiplying their investments dozens or hundreds of times, suddenly turning from a loser to a winner.
There are many such stories in the crypto world, and these stories make us fantasize that one day we too will make a fortune trading cryptocurrencies. Of course, you also hear stories of people getting liquidated and losing everything, even contemplating suicide. Losing money in the crypto world is the norm; making money is luck.
In fact, trading cryptocurrencies does not require much brainpower.
There is a saying in the crypto world: 'When you buy, it drops; when you sell, it rises.'
This shows that trading cryptocurrencies does not require much brainpower. Some people refuse to accept this and will think in reverse, ending up losing even more, as if the market is specifically targeting them. It's just that magical. Practical results show that those who trade cryptocurrencies relying on their intelligence ultimately lose money.
Do you know why this happens???
- A frog at the bottom of a well, unable to see the vast sky.
The information and knowledge resources you receive only show the surface, just as we stand on the Earth but find it hard to perceive that we are actually on a sphere and not a flat surface. Your serious analysis is superficial, incorrect, and meaningless.
When trading cryptocurrencies, you must abandon your intelligence. Abandoning intelligence is also a form of wisdom, especially when you have insufficient understanding of the crypto world.
Chu Ge often encounters newcomers wanting to enter the crypto world without much understanding or practical experience, only seeing many legends of instant wealth in the crypto world and hearing that it is quite profitable, thinking about trying with tens of thousands of dollars.
If you really want to enter the crypto world, trying with tens of thousands is not out of the question, as long as you are prepared for potential losses!
Why?
- Today's situation is different from the past.
Now the crypto ecosystem is maturing, having passed the wild growth stage; there are no longer low-priced Bitcoins. If you think about buying cryptocurrencies with tens of thousands, the chance of a hundredfold or thousandfold increase is almost nonexistent.
You see, the increase in Bitcoin over the years has never exceeded tenfold; even during the bull market two years ago, it only rose a few times.
Currently, the price of a Bitcoin is already an unusual unit.
. More traps than opportunities.
Since buying Bitcoin does not offer the chance for instant wealth, you might think of just buying some cheap new coins, as those previously considered worthless coins have skyrocketed hundreds or thousands of times.
But the crypto world will always have more traps than opportunities.
The new concept coins and model coins you believe in are 99.9% traps designed to harvest retail investors. Some coins peak immediately upon listing; you see it skyrocketing a thousandfold today, and as soon as you buy, it drops by 50%. Unable to bear the loss, you cling to the fantasy that it will rise again, leading to another 50% drop. After several rounds of decline, your account balance is nearly wiped out, and you think there is nothing left to do but hold on. But after a while, TMD, it turns out it has been delisted.
Buying expensive items is unlikely to lead to being scammed. Conversely, buying cheap items significantly increases the likelihood of being scammed. Abandoning your intelligence means the market has already helped you filter.
In reality, the chance of finding a potential coin with explosive growth is like winning the lottery; you might only find one in your lifetime, and if you can hold onto it, your ancestors must be smiling.
Three. Low self-awareness.
In the crypto world, there are various concepts and cryptocurrencies, and you know nothing about the attributes and values of each currency.
Relying solely on the K-lines drawn by the market makers, if this coin rises today, hurry to follow; if this coin falls, hurry to sell. If they win, they think they are stock gods; if they lose, they curse the market makers. Without their own objective judgment, it leads to frequent trading and ultimately makes it difficult to earn money.
There are various bearish and bullish news in the crypto world, overwhelming you; what you see is only what the big players want you to see.
4. Immature trading.
Trading immediately leads to being trapped, being trapped leads to cutting losses, resulting in actual losses. Or they cannot hold onto profits, yet stubbornly cling to losses, lacking financial planning and averaging down strategies.
If you want to get rich overnight, don't come to the crypto world: because the mindset of 'getting rich overnight' is destined not to yield results in the crypto world. Nowadays, making money in the crypto world is not about betting 100,000 to win 1 million, but about using 1 million to bet on 1 million or 500,000.
Newcomers who invest tens of thousands in the crypto world are likely to lose money, while those who invest millions have a chance to profit.
In fact, the amount of money has little to do with whether one can profit from trading cryptocurrencies, but it reveals some factual logic. These two statements may seem contradictory, but they are not.
Chu Ge will analyze in depth:
Newcomers who invest tens of thousands are mostly testing the waters. Newcomers' characteristics in trading cryptocurrencies include being blind and following what others say; if Zhang San says this cryptocurrency is good, they buy it; if Li Si says that cryptocurrency has potential, they buy it too, going along with the crowd. Due to insufficient awareness and lack of market experience, they trade immaturely and do not understand value investment, lacking personal subjective judgment.
Even if newcomers know that buying Bitcoin is a safe bet, they do not understand why it is safe. Even if newcomers make profits from Bitcoin, they cannot resist the temptation of high returns and will buy other coins, leading to losses. Newcomers also tend to want to earn quick money; clearly, the returns on investing in Bitcoin are not as high as those of other cryptocurrencies.
The above are the questions from newcomers!
However, newcomers who trade with millions have a greater opportunity to make a profit.
Think about it, a newcomer trading with millions must have done some research on the crypto world before entering; most importantly, they must be someone who has made a lot of money before and must have more funds. People who have made a lot of money certainly have a better understanding of the logic of making money, are more adept at fund allocation, better at self-control, and will not make wrong judgments due to short-term losses.
Rich people understand how to make money better than poor people! This statement carries no discrimination; the high level of thinking, resource background, successful cases, execution ability, perspective on issues, and understanding of social realities of wealthy individuals are far beyond that of an ordinary person earning 5,000 a month.
Moreover, the most important point is that newcomers trading with millions, even if they incur losses, still have more money to average down and ultimately achieve profitability. For seasoned investors, the amount of money has little to do with whether they can profit from trading cryptocurrencies.
Therefore, seasoned retail investors find it easier to profit than newcomers, and wealthy individuals find it easier to profit than those with limited funds.
After reading all this, if you still want to enter the crypto world, Chu Ge suggests you find an experienced person to guide you.
Is trading cryptocurrencies legal?
Document 924 clearly prohibits trading virtual currencies, but as long as you are simply trading on the exchange, it is not illegal and does not constitute a crime. Trading virtual currencies goes against public order and morals, and is a situation where the risk is borne by the trader; put simply, if you lose trading cryptocurrencies, it's your own fault, and don't blame the relevant authorities for saying there is no regulation: if you made money and your withdrawal account is later frozen due to suspected funds, you will need to refund the involved funds to unlock your card.
Regarding this issue, Chu Ge once confronted the uncle directly. In 2020, during an actual operation to unlock a card, Chu Ge's card was frozen due to involvement in suspected funds. At that time, Chu Ge fearlessly said in the criminal investigation team office: 'Trading cryptocurrencies is legal; I am doing legitimate business...' Initially, the uncle was quite polite, but upon hearing this, he immediately refuted, saying, 'Who told you that trading cryptocurrencies is legal and compliant?'
Yes, to date, policies towards virtual currency speculation are still repressive, including the People's Bank of China, which has a strong crackdown on virtual currency settlements. As long as the bank knows you are trading cryptocurrencies, it is likely they will ask you to close your account.
However, to date, there has been no law or regulation stating that trading cryptocurrencies is illegal!
Why suppress speculation on virtual currencies?
There are two reasons: 1. Difficult to regulate, becoming a tool for criminals to illegally transfer funds. 2. Foreign exchange outflow.
Difficult to regulate! Virtual currencies provide convenience for black and gray industries, as their anonymity makes them hard to trace. Decentralization and global payments have attracted many criminals to the crypto world. Previously, scammers targeted RMB and used bank cards for reception. Once a victim reports to the police, the police can freeze the bank card quickly, thereby easily locking onto the scammer's identity and intercepting the funds.
Now, scammers are targeting USDT; how does the uncle track it? Even if they track it down, the scammers may be overseas. Cross-border trading of USDT is hard to regulate. The legal issues caused by "decentralization": unclear regulation of cross-border transactions and difficulty in determining jurisdiction. User anonymity makes accountability challenging.
Foreign exchange outflow! Since the birth of Bitcoin, after years of development, virtual currencies have been widely recognized. Some "illegal individuals" use virtual currencies to transfer domestic funds abroad to evade foreign exchange regulation, leading to outflow of foreign exchange and seriously harming national interests.
Don't forget who invented Bitcoin and where the USDT issuer is. The crackdown has never been on blockchain itself, but on the illegal activities behind it.
Why doesn't China take the initiative to build compliant virtual currency exchanges?
It is already being established, in Hong Kong.
Prohibited from using virtual currencies for illegal activities!
Every exchange will cooperate with the authorities, as will the issuing companies, like Tether... They all cooperate with the authorities in handling cases. As long as your virtual currency assets are involved in any case, both the exchange and the authorities can restrict your account. Exchanges have your detailed information; as long as you are in the country, finding you is quite simple, and the crypto world is not a lawless land!
Will banks investigate if you make millions trading cryptocurrencies?
It depends on what kind of money you are receiving; is it a transfer payment or cash deposit?
If you sell cryptocurrencies through an exchange and receive clean funds, the transaction will not be investigated. However, if you receive illicit funds, it could lead to direct judicial freezing, even if the funds are not involved in any crime. If the account sending you the funds is flagged for fraud risk, the bank will also monitor your account, requiring you to explain the transaction history. If it gets more serious, you may be asked to sign at the anti-fraud center.
Thus, the counterparties and funds in cryptocurrency trading are crucial; there have been too many cases where selling cryptocurrencies on exchanges has led to issues, ranging from account freezes to arrests, with the hard-earned money being deducted.
If you receive large amounts of cash from off-exchange transactions, the bank will definitely investigate.
Currently, fund handling is largely digitalized. Except for official accounts for compensation or lottery winnings, huge sums transferred to you will be investigated; banks will require you to clarify the source of funds or provide tax proof, especially since your account has been frozen multiple times before.
If you previously had little money in your account and belong to the working class, the amount you save will not match your identity, making it more likely for the bank to investigate you.
If you previously had ten million in your account and now have a few million in cash, the bank will ask you to fill out a form explaining the source. Even if you successfully deposit money at that time, the bank will report this transaction to the People's Bank of China's anti-money laundering system, which will connect with departments like the Ministry of Public Security and the Discipline Inspection Commission, meaning these departments will also see your deposit. All of these operations are conducted internally by bank clerks, and the depositor will not be aware.
I advise everyone to stay away from all illegal activities, use cards properly, and avoid unaccounted funds.
Now, Chu Ge will share his understanding and experience of trading cryptocurrencies over the years:
(It is recommended to bookmark and read repeatedly.)
1. Trading cryptocurrencies is not a 'zero-sum game.' Many people believe that their losses must be profits for others. In a bull market, most people make money, while the small amount lost does not come close to the total profit of so many people.
In the crypto market, most people lose money, while a small number earn countless times more.
Thus, no one is cutting leeks.
2. When trading cryptocurrencies, it is essential to understand "repairing the pen after the sheep are lost"; do not invest all your money at once. Allocate funds reasonably so that even if you enter at the wrong position, you can still gradually make up for it and turn the loss into a profit.
3. In the crypto world, you can see many people discussing 'value investment,' claiming they buy value coins and do not care about current floating losses because they are already trapped.
The order of learning is very important; smart learners deeply understand before investing. Foolish investors learn and research only after being trapped.
4. Retail investors lack patience; what they lack is strength.
There are two outcomes in trading cryptocurrencies: profit or loss, each accounting for half.
However, investors with a million in assets certainly have a better chance of winning than those with a hundred thousand. If both a hundred thousand and a million investors buy in at the same price, the hundred thousand investor might panic while the million investor remains calm.
In the crypto world, the outcome is determined not by luck, but by strength.
Must control the position size.
5. A common problem among retail investors: they refuse to admit defeat after losses, desperately holding on, and as soon as they have a slight profit, they rush to sell, cutting off their profits. If they can't hold on during an uptrend, they should never hold on during a downtrend.
6. The reason retail investors are retail investors is that they not only take risks without calculating costs but also love to learn; they just study how to "snoop around for insider information."
7. The higher the trading frequency, the closer it is to a zero-sum game. Non-experts mistakenly believe that they can outsmart trading fees with their intelligence, not realizing that the platform's fees can slowly eat away at their principal.
You can look at K-lines by minute, hour, day, week, or month... and you will draw different conclusions that affect your trading frequency. (Tianji often sees some non-experts like to post minute K-lines.)
The shorter the trading period, the closer it is to coin flipping, approaching gambling. The longer the forecast, the closer it is to real logic. Reduce trading frequency, reduce, and reduce again.
Or you can set a rule: do not consider it until it doubles.
8. All non-experts have delusions, thinking that if they buy here and sell there, it will be fine.
This delusion is inevitable for new retail investors, but seasoned non-experts often have it for a long time.
In fact, you can never buy at the lowest point or sell at the highest point.
9. Adjust stop-loss lines to reduce your risk exposure.
Reduce the amount of each trade in proportion to the total funds.
Choose higher quality cryptocurrencies.
Choose the best trading timing (for example, buying after several crashes).
Extend the holding period (for example, through a bull cycle).
Improve your ability to make money off the exchange (or fundraising ability).
10. If you don't know which cryptocurrency to buy, you must abandon your intelligence.
Only buy the two or three cryptocurrencies with the largest trading volume in the market.
Abandoning intelligence is also a form of wisdom; when you have insufficient understanding of the crypto world, trusting the market's intelligence is far more reliable than your own 'self-assessment.'
11. In the trading market, what rises sharply will rise even more sharply, and what falls hard will fall even harder.
Therefore, when all currencies are rising, you must choose the ones that rise the most; the market is telling you that it is more likely to increase.
When all currencies are falling, you must choose the one that falls the least; the market is telling you that it is the most resilient.
12. Retail investors have no sex lives; they frequently check the market, even keeping their phones within reach while having sex with their girlfriends.
While trading cryptocurrencies, you must also pay attention to real life. Moreover, you should learn to make money off the exchange; at all times, you should hold a certain proportion of cash because there are risks.
Never invest all your money in trading cryptocurrencies.
13. Recognize cycles and grasp them. Many people rush to buy as soon as they enter the market, easily getting caught at the peak of the bull market. Retail investors love to talk about trends but lack the concept of cycles.
If you ask him why he is buying cryptocurrencies now, he will say it is an upward trend, or a downward trend, or this is the big trend.
An upward and a downward movement constitute a cycle; a true trend can only be genuinely revealed after multiple cycles.
Many people think of trends that others do not consider trends at all. This is because the latter values the trends that emerge after multiple cycles.
This explains why those who chase trends inevitably suffer losses, as the trends they see are not real trends but merely their own illusions.
14. Many retail investors inherently believe that the cryptocurrencies they are trading are not capable of sustained long-term growth; even Bitcoin believers may think this when trading Bitcoin.
Thus, they trade quickly in and out, engaging in frequent transactions.
15. You are truly fortunate to have seen Mr. Zhuang's article. Even if you can integrate all the above content and apply it practically, I guess you will still make mistakes in trading.
Because controlling oneself is the hardest thing in the world.
Trading cryptocurrencies is about self-control.
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