There is a lady in Zhejiang who has been in the cryptocurrency circle for less than three months and has lost more than 4 million yuan. She has been liquidated more than a dozen times, and her life savings have been halved.
This is one of Brother Wen’s students. I asked for her personal consent before writing this story here to share with you.
The story goes like this. This sister Juan's family is relatively well-off. She owns a restaurant by the sea and sells seafood wholesale. She has been investing in entities all her life and has made her fortune little by little through hard work. She also likes to invest and manage money, but she does not have a high level of education, so she does not understand a lot of things. She only learned from a few sisters.
At first, I tried trading funds and futures, and later I switched to stocks. In total, I have been in this business for five or six years. When I was doing it before, the market was good, and I made more or less 200,000 or 300,000 yuan. I was so happy. After all, the money earned without physical labor was extremely relaxing and comfortable, and it was also very generous to spend. I remember she said that the money at home was usually only a few hundred or a thousand yuan to buy a set of clothes, and she was completely reluctant to spend it. But after making this much money, she bought herself a bag worth tens of thousands of yuan, and was also very willing to spend on cosmetics
However, due to the sluggish market, it became increasingly difficult to do business in the physical and wholesale sectors. Fortunately, the restaurant was built on its own land, so it only lost some money on labor costs. The wholesale competition was also fierce, and the business usually made 400,000 to 500,000 yuan a year, but it became only 100,000 yuan.
So at this time, she learned about virtual currency+ through the platform. She heard from others that Bitcoin+ had increased several times, and how much money she had previously had turned into tens of thousands, so she was very tempted. At first, she tried it herself. Since she had some basic knowledge of stock trading, she had a general understanding of these transactions and could make a difference, but the way of playing was different.
She told me that she invested 50,000 yuan at the beginning, and also traded spot +, just like the way she traded stocks before, buying at low prices and selling at high prices. How could a person with very high expectations for the cryptocurrency circle be satisfied with the income brought by trading tens of thousands of spot? She had no feeling at all
So she started to study contract+. Although she was a little scared, she couldn't resist her greed. She lost 50,000 yuan in almost a week. During this process, she said that she had made a maximum of 250,000 yuan, but because she was too greedy, she lost more than 100,000 yuan in a short time. After tasting the sweetness of cantaloupe, you may no longer want to eat raw sweet potatoes. With this experience, she also felt the pleasure of profit and loss. It can't be said that she was sad about losing money, but more of a pleasure of doubling her money to hundreds of thousands.
Just like that, she fell into a state of extreme confusion. Why do I say that? Because people can experience many different emotions in one day, just like riding a roller coaster. One moment you reach the top of the mountain and experience the farther view, and the next second you plummet down to the feeling of weightlessness, the tension that makes your heart want to jump out, the disappointment and sadness, and then a little hope burns again, until...
Do many pen pals have this feeling after reading this? When you really enter the game, you are no longer yourself. Brother Wen had such an experience before, and it was even more outrageous, because people cannot control themselves in the face of desire and greed. In this way, more than 4 million yuan was spent, and a lot of money was wholesale payment.
Buddha once said that the easiest mistakes for people are greed, anger, and ignorance.
1. "Greed" means the attachment to favorable circumstances that trigger our strong desires and cravings. We will do whatever it takes to get them. If we cannot get them, we will feel an inner struggle, like the pain of being unable to breathe.
2. "Anger" means the resentment we feel towards those adverse circumstances that make us feel frustrated and uneasy. We may become irrational and act on impulse because we cannot control our anger, leading to situations that should not happen.
3. "Stupidity" means that we lack a clear understanding and cognition of the nature and truth of things, and cannot make correct judgments and choices about things. We are often blinded by our own desires and thoughts, confusing right and wrong, good and evil, and even making some wrong decisions that lead to our actions violating justice and conscience.
This kind of thing is actually very common in the cryptocurrency circle. There are too many of them. Brother Wen often says that we should pay more attention to learning and constantly reviewing, accumulating experience, and leaving opportunities to those who are prepared. This is how the market is. Only 20% can really gain something, so we must constantly improve ourselves to become one of the 20%
Through this story, I would like to remind friends who are still trapped that they must be rational, learn to slow down, stop, learn to empty their positions, and adjust themselves.
Here are 15 rules to share with you. I always keep them in mind. I will read them carefully every day when I trade or when I feel uneasy.
1. Survival comes first, and the principal comes first: Only by keeping the principal can you survive in the market for a long time, and only by surviving can you have a chance. 2. Be indifferent to fame and fortune, and make profits easily: Don't be greedy, making money is actually not that difficult, relax your mentality, and profits will come naturally. 3. Focus on a few and follow the trend: Concentrate on a few varieties, don't operate with full positions, and follow the market trend. 4. Steady operation, don't take risks: Don't hold a heavy position, don't hold it, reduce frequent operations, and control risks are the key. 5. Think twice before buying, and be decisive when selling: Think more when buying, don't hesitate when selling, and leave the market decisively to lock in profits. 6. Unlimited wealth, prevent losses: Money can't be earned, but a loss may be lost, and preventing losses is more important than earning more. 7. Stop loss first, leave decisively: When the stop loss point is touched, leave immediately, stop loss is always right, don't be lucky 8. Take the bag and win steadily: Whether it is short-term or long-term, taking the bag and winning is the most reliable strategy.
9. The market has cycles, and everything will turn around when it reaches its extreme: the market will always reverse. Only by grasping the cycle can you stand on the winning side.
10. Be patient and wait for opportunities: Don’t rush to trade when there is no market. It is normal to miss opportunities. It is enough to seize what you can seize. 11. Plan first and discipline first: Have a plan before trading, strictly abide by discipline, and don’t change strategies at will. 12. Keep learning and make continuous progress: The market is changing, and you have to change with it. Keep learning to keep up with the pace.
13. Manage your emotions and respond calmly: Don’t let your emotions control your transactions. Stay calm and operate rationally to win. 14. Diversify your investments and reduce risks: Diversify your investments and don’t put all your eggs in one basket. Only by diversifying risks can you feel at ease.
15. Set clear goals and stick to your principles: Set clear trading goals and stick to your trading principles. Don't waver easily.
Most of the money lost in the cryptocurrency world is in contracts. Every time, I can't help but want to go all in and open a full position to carry the order, which is very irrational. Now I will share with you a contract playing skill
The most stable way to play cryptocurrency contracts
Choose the right coin and be a good person. As a leveraged trader, volatility can be amplified by leverage multiples. The primary consideration in the trading process is not volatility but certainty.
In an uptrend, go long on the strongest currencies; in a downtrend, go short on the weakest currencies.
For example, at the beginning of a new quarter, eos+ and eth+ had the strongest growth. These two currencies were the first choice for long positions when the market fell back, and bitcoin was the first choice for short positions when the market fell. Even if the final result was that the mainstream currencies fell more than bitcoin, only shorting or chasing short bitcoin can avoid the risk of violent pullbacks to a great extent.
Most of the traders in the cryptocurrency circle are short-term traders. When trading, it is difficult for them to have the opportunity to hold on to the ideal point to close the position. At the same time, they are not very proficient in position control, and they cannot rely on shocks to do T to pull the average price. Based on this situation, for most traders, a good opening price is more important than anything else.
Once there is a profit, sell part of it first and lock in the profit, and set a stop loss at the cost price for the rest. This is what I have always emphasized in my own community.
The essence of contract trading strategy
(1) Find out the main trend and enter the market following the main trend, otherwise do not enter the market.
(ii) If you are trading with the trend, the entry point is:
1. A new breakthrough point in the trend!
2. Breakout point of sideways trend towards a certain direction
A pullback point in an uptrend or a rebound point in a downtrend
(III) Positions that go with the trend will bring you huge profits, so never get out of the market early:
(IV) If the position building is in line with the general trend and the book profit has proved that you are right, you can use the pyramid technique to increase the position; (Refer to 2
5) Keep your position unchanged until the trend reverses and closes the position
(VI) If the market trend is opposite to the position you opened, stop loss and run
In addition to adhering to the above strategies, you must also remember three qualities: discipline, discipline, and discipline!
The way of trading is to accumulate small amounts into large amounts, and compound interest is king. If you get out of the cost, you must not turn it into a loss again. If you make a profit, you must pocket part of it to avoid wasting time. In a nutshell: if you make a profit, go boldly, and if you lose the original price,
Perpetual Contract + Money Making Tips
1. Avoid full warehouse operation
How should funds be allocated? Fund allocation should be understood from two levels:
First, to understand fund allocation from the perspective of risk, we must first clarify how much loss our account can or is prepared to bear. This is the basis for our thinking about fund allocation. After this total amount is determined, we can consider how many times we should lose to the market if we lose repeatedly in the market, so that we can willingly admit defeat.
I personally think that the riskiest method should be divided into three times. In other words, you should give yourself at least three chances. For example, if the total amount of your account capital is 200,000, and the client allows you to lose up to 20% or 40,000, then the riskiest loss plan is: 10,000 the first time, 10,000 the second time, and 20,000 the third time. I think this loss plan is reasonable. Because if you do it right once in three times, you can make a profit or continue to survive in the market. Not being kicked out of the market is a success in itself, and there is a chance to win.
2. Grasp the overall market trend
It is much more difficult to follow a trend than to follow a shock, because the trend is to chase highs and sell lows, and one must have the determination to hold positions, while buying high and selling low is in line with human nature.
The more trading conforms to human nature, the less money you make. It is precisely because it is difficult that you make money.
In an upward trend, you should choose to go long on any violent pullback. Remember the probability I mentioned? So, if you are not on the bus or have gotten off the bus, wait patiently, and if there is a drop of 10~20%, go long boldly.
3. Specify the stop-profit and stop-loss targets
Stop-profit and stop-loss can be said to be the key to whether or not you can make a profit. In a number of transactions, we must make the total profit greater than the total loss. It is not difficult to achieve this. Just do the following:
① Each stop loss is ≤ 5% of the total funds:
② Each profit > 5% of total funds:
Total transaction winning rate>50%
If the above requirements are met (profit-loss ratio greater than 1 and winning rate greater than 50%), you can achieve profit. Of course, you can also have a high profit-loss ratio and a low winning rate, or a low profit-loss ratio and a high winning rate. Anyway, as long as the total profit is positive, the total profit = initial principal x (average profit x winning rate - average loss x losing rate).
4. Be careful not to trade too frequently
Since BTC perpetual contracts are traded 24 hours a day, many novices trade every day. They wish they could trade every day for the 22 trading days in a month. As the saying goes: If you walk by the river, you will get your shoes wet. If you trade too much, you will always make mistakes. After making mistakes, your mentality will become bad. If your mentality becomes bad, you may act impulsively and choose "retaliatory" operations: you may go against the trend or hold a large position. This will lead to one wrong step and another, which can easily cause huge losses on the books. These losses may not be recovered for several years.
5. Contract entry timing
Many users open orders 24 hours a day, which is just like sending money. The purpose of the contract is to make a relatively stable profit strategy with controllable risks and relatively stable indicators, rather than clicking 100 times to buy and then get rich! Therefore, the timing of entering the contract is particularly important!
(1): Do not open orders during periods of strong bullish or bearish news, because the market is very chaotic at this time, and the spot price can fluctuate between 1-3%. If you choose to gamble on the market at this time, you will easily be taken away by the heaven and earth needle.
(2): I usually choose to enter the market after the second bottoming out or the second rise after a large fluctuation, because after the second wave of the market, the fluctuation of the market will gradually stabilize. The risk factor in the subsequent range is the lowest. The purpose of the contract is to make the most appropriate strategy in the minimum risk range.
(3): Enter the market within the indicator range, and never open an order if the indicator parameters do not meet your expectations. This can be understood as entering the market within your own strategy range, and ignoring the market if it does not reach your psychological price. Because the risk factor is also magnified when the contract amplifies the leverage, self-discipline is very important.
To sum up simply, when the market stabilizes and indicators are in place, the risk rate will be reduced by 50% and then orders can be placed.
Perpetual Futures Cons and Risks
Risk of liquidation+
Liquidation means that when the loss of a position reaches a certain level and the margin is insufficient to support the position, the exchange will automatically force liquidation to protect the interests of the exchange and other traders.
We mentioned earlier that the underlying logic of contract trading is actually leveraged lending. For example, Xiaoyu has an investment capital of 100 USDT and uses 10x leverage to open a BTC long position worth 1,000 USDT. If the Bitcoin price is 100 USDT at this time, then the essence of this order is to borrow 900 USDT and purchase 10 BTC together with the principal, hoping to sell them for profit after the Bitcoin price rises.
But if the price of Bitcoin drops all the way to 90 USDT per coin, the 10 BTC in hand is only worth 900 USDT according to the market price, which is exactly equal to the amount borrowed by Xiaoyu. If the price continues to fall, the value of these 10 BTC will be lower than the loan. The exchange will liquidate Xiaoyu's position when the price of Bitcoin drops by 10%, that is, when it drops to 90 USDT per coin, which is what we call "explosion".
After a margin call, not only will the user not make any money, but the margin (principal) used to open the position will also be lost. And the higher the leverage used, the easier it is to get a margin call. In the above example, if a 10x leverage is used, a 10% price fluctuation in the opposite direction will cause a margin call: if a 100x leverage is used, a 1% price fluctuation in the opposite direction will cause a margin call.
The above example is based on the calculation of 100% loss before liquidation. However, in actual transactions, each exchange calculates the liquidation loss % differently, and some exchanges calculate it as 90%. Therefore, in specific transactions, it is more accurate to directly refer to the forced liquidation price given by the exchange.
Pin risk
A spike is when the market experiences a sharp fluctuation for a moment and then quickly returns to normal levels. This situation may trigger stop-loss orders or cause liquidation, resulting in losses for investors. A spike may be due to insufficient liquidity on the exchange or the result of malicious market manipulation.
Funding Rate Wear
As we mentioned earlier, exchanges now require users who hold perpetual contract positions to pay a funding rate every 8 hours. Although it is only 0.000x% each time, if the position held is large and the position is held for a long time, the cumulative amount of funding rate each time is also a considerable fee.
To put it bluntly, playing in the currency circle is a contest between retail investors and bankers. If you don't have cutting-edge news and first-hand information, you can only be harvested! If you want to make a layout together and harvest the banker together, you can follow me
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