Calculation of cost averaging: If you buy $10,000 worth of a coin when it is at $10, and then buy another $10,000 when it drops to $5, your average cost will be $6.67, not the imagined $7.5. *(Formula: Total investment / Total quantity = $20,000 / 3000 = $6.67)*

The astonishing power of compound interest: If you have $100,000 in capital and make a stable profit of 1% daily, exiting after each day, with 250 trading days a year, your assets could reach $1,323,200 at the end of the year, and after two years, you would have over $17 million. *(Calculation: 100000 * (1.01)^250 ≈ 1.32 million; 1.32 million * (1.01)^250 ≈ 17.5 million+)*

Probability and expected return: If the probability of a single investment being successful is 60%, and you invest 100 times, setting both the profit-taking and stop-loss points at 10%, then theoretically, the final expected return could reach 300%. *(Calculation logic: Expected return = (0.6 * 0.1) - (0.4 * 0.1) = 0.02, 100 times * 0.02 = 2, which is 200%, but considering compound interest, the final expected return is higher, 300% is the theoretical model result)*

The limit speed of compound growth: If you enter the market with $10,000, making a profit of 10% each time and reinvesting the entire amount, by day 49, your assets will reach around $1 million, by day 73, close to $10 million, and by day 97, it will exceed $100 million. *(Calculations: 10000 * (1.1)^49 ≈ 1,067,000; (1.1)^73 ≈ 9,849,000; (1.1)^97 ≈ 103,397,000)*

The gap between theory and reality:

The above calculation holds mathematically, but in real trading, it’s hard to find even one person out of ten thousand who can achieve it. The root cause lies in the difficulty of overcoming human weaknesses—greed and fear. Continuous stable small profits, strict profit-taking and stop-loss measures, as well as near-perfect compound interest execution, are all enormous challenges.

The core of contract trading: management and discipline

For contract trading, strict position management and capital management are the foundations for survival, and must be combined with your own risk tolerance.

What are position management and capital management?

In simple terms, it means controlling the size of each bet and the proportion of total capital that it occupies.

Common misconceptions:

Many beginners, and even experienced traders, are accustomed to using 20%-30% of their principal as a base position. This can create a huge psychological impact regardless of profit or loss, often leading to irrational decisions.

Personal advice (for reference only):

I tend to use 3%-10% of my principal as the base position (dynamically adjusted based on the risk level of the trading instrument), and use 20x leverage.

Those practices that frequently use 100x or even 125x leverage are extremely risky and are no different from gambling.

The essence of trading:

Whether in futures, stocks, or the cryptocurrency market’s contracts or spot trading, it ultimately boils down to a 'human nature game.' The effect of leverage is to amplify profits, but it also amplifies greed and fear. If one cannot effectively manage their desires, they will eventually be harmed by them.

Conclusion:
Establishing and adhering to your own capital management and position management rules is the cornerstone of pursuing long-term, stable profits, rather than a shortcut to getting rich quickly.#香港稳定币新规 #币安HODLer空投PROVE #币安HODLer空投TOWNS #Solana期货交易量创新高 #币安Alpha上新