In the crypto world, stories of sudden wealth are like dazzling fireworks, constantly stimulating people's nerves. Zhao Changpeng, at 44 years old, built Binance in just four years and became one of the top ten richest people in the world with a net worth of $90 billion. The daily trading volume of Binance reaches $76 billion, with a valuation of $300 billion. Just 30% of his shares have made him wealthier than Zhong Shanshan of Nongfu Spring.
Li Xiaolai, a former New Oriental English teacher, cashed out 135 billion yuan with 100,000 bitcoins and was crowned 'China's Bitcoin Billionaire'.
Guo Hongcai, known as 'Master Bao', transitioned from a beef vendor to a Bitcoin angel investor, overturning traditional impressions of the financial world with his unique image; 17-year-old Erik Finman dropped out of school, invested $1,000 in Bitcoin, and now has a net worth in the nine-digit range; there’s also Liang Xi, who started with 1,000 yuan and made nearly 40 million yuan through high-leverage strategies. These myths attract countless young people with dreams of multiplying their wealth by thousands flooding into the crypto world.
However, in the seemingly golden realm of crypto, what truly determines success or failure is not trust in technology, whales, or candlestick charts, but rather the understanding and management of 'risk'. In contract trading, the seemingly enticing high returns actually stem from the losses and liquidations of others. To obtain these returns, the primary prerequisite is to avoid being consumed by risk.
From a risk perspective, the crypto market is fundamentally different from the ordinary pursuit of wealth. Buyers can resist declines with patience, but if the same strategy is applied in contract trading, it is often difficult to survive long-term. Operations based on risk management differ fundamentally from those based on dreams of sudden wealth. In the trading market, blindly dreaming will only lead to rapid loss of wealth, while those skilled in managing risks can pocket the wealth lost by others due to uncontrolled risk. Therefore, the choice to become a 'dreamer' or a 'risk manager' directly determines one's fate in the crypto world. Especially in contract trading, the dreams of 'dreamers' often shatter in a short time, and risk management is the foundation for survival.
In the crypto trading world, the norm for successful speculators is to wait in a large cash position, cautiously test the waters, retreat in time, and try again. For example, on February 14, 2022, the strategy of 'shorting most cryptocurrencies and timing long positions in BTC as a hedge' seems simple but contains many details. Why not directly short based on BTC? Why is shorting more conservative and typically shorter in duration? How should stop-losses be handled? These questions require in-depth study and practice. Contract stop-loss plans need theoretical support, valued at no less than half of the invested contract funds. Even if it is difficult to find ready-made theories, one must deduce and strictly implement them to seize profit opportunities. Trading may seem like simple buying and selling, but behind it lies an accumulation of knowledge and experience.
The long and short operations in contract trading are fundamentally different from forex trading. Due to the ratio characteristics of cryptocurrencies to fiat currencies, long and short positions operate and think differently. Short positions usually only capture partial gains and are time-limited, while long positions involve considerations of quantity limits, increased positions, and long-term holding. This difference requires traders to have specialized speculative knowledge and skills, just as piloting an aircraft requires mastering basic operational techniques to ensure safety. Trading in the crypto world also requires proficiency in risk management and stop-loss management to avoid liquidation risks.
The crypto world is by no means an easy paradise for wealth, but a professional field full of risks and challenges. Even newcomers can enter, but the prerequisite is serious study and strict training to establish a comprehensive risk management system. Only in this way can one remain clear-headed amidst the temptation of getting rich overnight and steadily advance in a complex and ever-changing market, truly preserving and increasing their wealth.