From the first liquidation, I deeply realized the impossible triangle problem of trading.
What is the impossible triangle?
① High Yield: Short-term windfall (such as hundredfold coins) or long-term appreciation (such as Bitcoin)
Contradiction: High-yield assets (such as Meme coins, new chain tokens) are often accompanied by extremely high risks (zeroing out, scams) and low liquidity (insufficient trading depth)
② Low Risk: Relatively safe principal, controllable price fluctuations, resistant to systemic risks
Contradiction: Low-risk assets (such as stablecoins, mainstream coins) have limited returns and may carry hidden non-market risks (such as credit risk of centralized stablecoins)
③ High Liquidity: Fast buying and selling with low slippage, supports large transactions
Contradiction: High liquidity assets (such as BTC/ETH) may be exposed to macro risks due to market interconnectivity (such as Federal Reserve policies, collective crashes triggered by exchange failures)
These three cannot be achieved simultaneously; do not embrace the idea that I am destined for greatness. The final outcome will definitely be an email for forced liquidation.
Different cryptocurrencies explanation:
Bitcoin: best liquidity, regarded as 'digital gold', but its yield is weaker than altcoins and is significantly influenced by macro policies;
Meme coins: short-term potential to surge dozens of times, but liquidity is concentrated in a few exchanges and lacks fundamental support.
New chain tokens: high yield expectations attract funds, but liquidity relies on project ecosystem development, and failure may lead to zero.
How to deal with the impossible triangle problem in the crypto world?
① Layered allocation:
Core position (low risk + high liquidity): BTC/ETH + some stablecoins, used to withstand extreme risks;
Satellite position (high risk + high return): small positions in speculative targets like Meme coins, new chains;
Opportunity position (medium risk + medium return): DeFi mining, cross-chain arbitrage, and other strategies.
② Avoid fatal risks:
Avoid all-in on a single asset or strategy, especially beware of 'trinity' scams (projects claiming to have high yield, low risk, and high liquidity simultaneously);
Prefer to choose well-audited smart contracts and diversify asset storage (cold wallets + multiple exchanges).
③ Use tools to hedge:
Purchase 'downside insurance' through options, or earn benchmark returns by staking stablecoins;
In a bear market cycle, focus on liquidity management, keeping sufficient stablecoins to cope with black swans.
Of course, I know that most newcomers come to the crypto world for the chance of a quick rise through high-leverage contracts. However, it takes millions of traders to find one lucky person. Never impose low-probability events on yourself; for retail investors, the only issue is capital, and we cannot have infinite bullets. Therefore, there is another way to combat the impossible triangle problem, which many may have heard about.
Only use 1% of margin to open a single position in a hundredfold contract, only open long positions, and consider increasing the position by 1% after each profit reaches 50% of the margin, while taking profits from the first position. Repeat this operation.
When encountering a one-sided downward trend, open a 1% short position and keep adding 1% margin for long positions as the actual price fluctuates by 5%. If there is a pullback in between, close the newly opened 1% position while keeping the newly opened position profitable, and continue to observe the trend. If there is still a downward trend, repeat the previous operation while also increasing the short position by 1%, closing the previous 1% for profit. During continuous declines, your long position will only increase, while the average price will continue to decline, and the short price will continue to lower. In the short term, your apparent floating profits may show losses, but when the upward trend arrives, there will be opportunities for dozens of times returns.
In this process, remember that the empty position must not exceed 20% of the long position; otherwise, it will only create a double lock. The most challenging part of this method is strict execution, but the risk factor is the lowest, and the trading frequency is also the lowest. It is the most suitable contract method for ordinary retail investors. If one can persist, I believe that even starting with just 10U, under the condition of compound interest growth, as long as there is no liquidation, there will be at least a hundredfold return on capital within two years.
