Let's put it this way: In the cryptocurrency world, playing spot trading doesn't guarantee how much you earn, but at least you won't lose money; losing a lot of money is almost impossible, of course, this also depends on the person. For example, a newbie just entering the market will find it very difficult to achieve this. I believe that experienced traders who have gone through two cycles of bull and bear can generally easily make stable profits in spot trading.
As long as your understanding of the cryptocurrency world is in place, it's almost impossible to lose money in the spot market. Those who understand will naturally know whether what I say is correct or not. Recently, I've been pondering this question: Why are there far more people making money through spot trading in the cryptocurrency world than through futures? I summarize the following reasons:
1. The cognitive level of investors: Spot trading often lacks leverage, and the capital accumulation speed is slow. Therefore, those who generally hold spot positions usually have large capital, and this group of people may have completed some kind of 'certification' in other industries outside the cryptocurrency world, so they are not in a rush for quick success; on the contrary, the contract trading crowd generally has less than 100,000 USD. Such people can go up or down; going up is like soaring to the sky, while going down is starting from zero again. Therefore, most people cannot resist the temptation of instant success.
2. Seasonality: Spot trading tends to have a longer cycle and a higher margin for error; contract trading tends to have a shorter cycle and a lower margin for error. The high transaction fees and capital rates of contracts force you to make judgments in a relatively short period of time. We know that market trends, especially short-term trends, are largely random; once you make the wrong judgment, you face real monetary losses, while in spot trading, it's just unrealized losses.
3. Psychological pressure: Those who have experienced it know that when trading contracts, you can't expect to sleep well. The first thing you do when you wake up in the middle of the night is check your phone to see if your position has been liquidated. You dream of liquidation scenes, and before sleeping, you keep staring at the market that won't fluctuate, until you can't stand it anymore and quietly add a bit of margin to dare to continue sleeping. Spot trading, on the other hand, is completely opposite; I can sleep anytime I want without worrying about liquidation, and I have plenty of time to do what I want.
The above are a few reasons I summarize that making money in spot trading is simpler. Complexity does not mean correctness. If we want to achieve stable profits in spot trading, we must meet the preconditions: 1. Don't invest if you don't understand: I believe this point carries the highest weight among all reasons. I see many people cursing Ethereum for not rising, which indicates that many hold a large position in Ethereum, but I can guarantee that at least 80% of them have not done in-depth research on Ethereum. They just think it’s good because others say so. If you truly understood what you are buying, you definitely wouldn't curse it for not rising. Many losing people invest all their money impulsively into something they haven't researched deeply, and once the market goes wrong, they fall into endless doubt and panic, ultimately cutting their own losses.
2. Timing of entry: Just because you've researched and found something good doesn't mean you should mindlessly jump in immediately. Even if something is skyrocketing, don't FOMO chase it due to emotions; wait until it’s on sale before buying. Like NVIDIA now, we must admit that this is a very good company. A good company doesn't necessarily equate to making money. If you can't wait for the opportunity, then look for the next one. In investing, you must not have thoughts like 'I must do it this way.' Appropriate waiting is necessary; excellent hunters do not easily shoot without aim.
Summary: The core of making stable profits in spot trading: 1. Don't invest if you don't understand; don't invest if you haven't done in-depth research. 2. Secondly, find a suitable entry point. This point doesn't necessarily have to be absolute low; a relatively low position is sufficient. What does relatively low mean? It means when everyone is throwing it away like a hot potato, we pick it up, rather than chasing after it when everyone is scrambling to buy. That can easily lead to losses. I've said my piece, and I hope you can continue to make money, Brother Feng.
