Why was Liangxi able to double his investment with a small amount of capital?
In 2021, Liangxi turned a principal of 1000 yuan into 10 million yuan in a short period through cryptocurrency contract trading. This case of 'small bets yielding big returns' is primarily based on the following key factors:
1. High leverage and rolling position strategy
Leverage trading: Cryptocurrency contract trading allows for high leverage (such as 10x, 20x, or even higher). Liangxi amplified the effect of his principal through leverage. For example, with a principal of 1000 yuan using 20x leverage, the actual trading scale can reach 20,000 yuan, and the profits or losses from price fluctuations will also be magnified by the leverage.
Rolling position operation: He frequently adjusted his positions in the short term, continuously increasing his investment using profits (i.e., 'rolling positions'), especially profiting repeatedly through shorting or going long during periods of extreme market volatility. This strategy can achieve exponential growth in a one-sided market.
2. Market volatility and timing
Emotion-driven market: The cryptocurrency market is significantly influenced by news, hype, and other factors. Liangxi may have utilized market panic or FOMO (fear of missing out) sentiment to operate in the opposite direction during extreme market conditions.
3. High-risk trading style
Aggressive strategy: Liangxi's trading style is characterized by high frequency and high positions, even borrowing multiple times after losses to attempt a 'comeback.' Although this gambling mentality may succeed in the short term, it carries immense long-term risks.
Lack of risk control: From subsequent liquidation experiences, it is evident that he did not set strict stop-loss mechanisms, leading to unsustainable profits, ultimately resulting in rapid losses due to market reversals or operational errors.
4. Social media and traffic effects
Personal hype: Liangxi live-streamed his trading process on platforms like Weibo, attracting a large audience. The influence brought by traffic may indirectly affect market sentiment, even leading other investors to follow his trades, further amplifying his trading effects.
5. Short-term unreplicable luck factor
Liangxi's success has a strong element of chance. For example, he claimed during a live stream to 'turn a thousand times in one day,' but the actual trading details were not disclosed, which may involve survivor bias during several extreme market conditions. Similar cases are rare in the cryptocurrency circle, as most high-leverage traders eventually exit the market due to liquidation.
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