1. What is coin speculation?
In this article, we will first talk about coin speculation. In fact, coin speculation is similar to stock speculation, real estate speculation, and foreign exchange speculation, which all involve buying low and selling high.
to profit from the price difference.
For example, if you believe that housing prices will rise, you buy a house immediately, and when prices rise significantly, you sell it for a profit. The difference is that.
Speculating on coins involves digital currencies, a more free trading mechanism (trading continuously 24 hours a day), and a larger profit potential (without limits on price fluctuations).
It allows digital currencies to become investment targets with returns far exceeding those of traditional stock markets, futures markets, funds, and real estate.
2. What is an exchange?
An exchange is a platform for trading digital currencies. The most commonly used exchanges today are Binance, OKX, and Huobi.
There are many other small exchanges, just like there are four major banks and various other banks.
Using top-ranked exchanges is very safe, and you can trade with peace of mind. Some coins can only be purchased from specific exchanges.
3. What is USDT?
An exchange is a place for trading Bitcoin and other digital currencies. Trading digital currencies requires a type of intermediary currency, also known as stablecoin, namely USDT.
This is also the most commonly used fiat currency.
USDT, known as Tether, is a virtual currency that links cryptocurrency to the fiat currency US dollar, and is a type of virtual currency backed by foreign exchange reserves.
You can simply understand it as equivalent to US dollars.
Tether (USDT) is a token based on the stable value currency US dollar (USD) launched by Tether.
1 USDT = 1 US dollar.
The exchange itself cannot directly sell or buy virtual currencies, nor can it sell you USDT, and you cannot buy it from the exchange.
If you want to buy coins, you need to first use RMB to buy USDT, and then exchange USDT for the digital currency you want to buy, if you want to sell coins.
You need to exchange your digital currency for USDT before selling it, and then convert it to RMB. Once you have USDT, you can exchange it for
any digital currency, which is called coin-to-coin trading.
4. Basic terms for trading coins
Position: Refers to the ratio of an investor's actual investment to their total investment capital.
Full position: Buying virtual currency with all available capital.
Reducing positions: Selling part of the virtual currency but not all.
Heavy position: A situation where the share of virtual currency is high compared to capital.
Light position: The share of capital is higher compared to virtual currency.
Empty position: Selling all the virtual currency held and converting it entirely into cash.
Take profit: Selling the virtual currency held after gaining a certain profit to secure earnings.
Stop-loss: Selling the virtual currency held after losses reach a certain level to prevent further losses.
Bull market: Prices continue to rise, and the outlook is optimistic.
Bear market: Prices continue to fall, and the outlook is bleak.
Bullish (going long): The buyer believes that the price of the coin will rise in the future, buys coins, and sells at a high price after the price rises to take profit.
Bearish (going short): The seller believes that the price of the coin will drop in the future and sells part of the coins they hold (or borrows coins from the trading platform).
Locking in profits when the price drops to a certain level, while also avoiding risks.
Establishing a position: Buying virtual currency.
Averaging down: Buying virtual currency in batches, for example: first purchasing 1 BTC, then buying another 1 BTC.
Rebound: When the price drops, it rebounds due to the excessive speed of the decline.
Consolidation (sideways): The price fluctuates within a small range, and the coin price remains stable.
Gradual decline: The price of the coin slowly decreases.
Plunge (waterfall): The price of the coin drops rapidly and significantly.
Cutting losses: After buying virtual currency, the price drops, and to avoid further losses, you sell the virtual currency at a loss.
Or after borrowing coins to short, if the price rises, you lose money buying back the virtual currency.
Stuck: Expecting the price of a coin to rise, but after buying, the price drops, or expecting the price to drop, but after selling, the price rises.
Unwinding: After buying virtual currency, the price drops causing temporary paper losses, but then the price rebounds, turning losses into gains.
Missing out: Selling virtual currency after being bearish about the future market, but the price rises continuously, resulting in missed profits.
Overbought: The price of the coin has risen to a certain height, buying power is basically exhausted, and the price is about to fall.
Baiting bulls: The price of the coin has been consolidating for a long time, with a high possibility of decline. Most bears have sold their virtual currency, suddenly the bulls push the price up.
This misleads the bulls into thinking that the price will rise, leading them to buy, while the bears suppress the price, causing the bulls to get stuck.
Baiting shorts: After a bullish buys virtual currency, deliberately suppressing the price to make bears think the price will drop, leading to a sell-off, resulting in bulls falling into a trap.
5. What are mainstream digital currencies?
Mainstream coins refer to valuable coins; Bitcoin is the leader, Ethereum is the second, and some people believe these are the only mainstream digital currencies.
Some people believe only the top ten market cap coins count as mainstream digital currencies, while others think that any coin listed on mainstream exchanges counts as mainstream digital currencies.
Taking Non-Small Numbers as an example, we can see the market cap rankings of related coins. Mainstream coins rank high, for example, Bitcoin's market cap firmly occupies the top position.
Generally, coins with higher market caps are more recognized in the market, have good liquidity, and possess higher investment value.
Conversely, coins with lower market caps are less recognized, have poor liquidity, and correspondingly higher investment risks, so users are advised to buy cautiously.
6. Risks of coin speculation
A very reasonable suggestion in cryptocurrency investment may come from Vitalik Buterin, the founder of Ethereum.
That is, do not invest any money you cannot afford to lose. Again, I remind all novices to act accordingly.
It is advisable not to borrow money, take loans, mortgage, or use credit cards to participate in such investments, especially when dealing with contracts.
7. The gameplay of contracts
Coin-to-coin trading belongs to spot trading. To make money in rising or falling markets, you need to engage in contract trading.
Contract trading, in contrast to coin trading, belongs to futures trading, meaning that the underlying assets of these trades are standardized contracts.
You can pay a certain percentage of margin to borrow part of the digital currency, choosing to go long if you expect the market to rise.
If you expect the market to decline or go short, you can also trade both ways, opening both long and short positions to hedge risks.
Therefore, through contract trading, you can make money in both rising and falling markets, greatly enhancing the utilization of capital.
The margin payment ratio corresponds to different leverage levels. For example, if you predict BTC will decline, you want to open a short position of 100 BTC.
The minimum margin requirement is only 1%, meaning you can borrow 100 BTC with just 1 BTC, which is a 100x leverage.
This means you used 1 BTC of capital to control 100 BTC in returns. After borrowing, you immediately sell and wait for the price to drop. If BTC falls from $35,000 to
$34,000, you immediately buy back 100 BTC and return it to the platform, you will gain (35,000 - 34,000) * 100 = $100,000 profit.
If you do not engage in contract trading, you cannot profit from this drop. If you do not use 100x leverage, you also cannot earn 100 times the profit.
This is a contract.
Beginners should not engage in contracts! Beginners should not engage in contracts! Beginners should not engage in contracts! This is important, so I will say it three times!
Contracts may seem like the fastest way to get rich, but it is definitely not the safest path. The 'fast' mentioned here
more often refers to being close to liquidation or bankruptcy, rather than being close to financial freedom.
