Recently, many cryptocurrency enthusiasts have asked me how to trade contracts, reminding me that 'after all, no one wants to get rich slowly'. Today, I will discuss how someone who has been through this should approach contract trading. I'll try to use simple language.
Watch the big trend, earn big money:
Is there a main force in the cryptocurrency market? Of course, there is. Retail investors analyze trends, while the main forces study retail investors.
Retail investors' means of studying the main forces consist of news and so-called data graphics, while the main forces study retail investors by observing data at the bottom, washing them out. At the top, they lure retail investors in. In contract trading, several oligarchs collaborate to control the market, closing the doors to observe net positions.
This is an unfair information game, yet the myth of becoming rich overnight motivates every trader to forge ahead.
Trading in the cryptocurrency market is different from the stock market. In today's world, where blockchain applications have not yet materialized, cryptocurrencies do not possess substantial value. Everyone is speculating on concepts; if you believe in halving, splits, or similar ideas while trading contracts, you have already lost.
To utilize the least cost to complete the main forces' contract and currency harvesting, you will notice a very similar pattern: the rise and fall of all major currencies are very sudden. For example, during the sharp decline in mid-last month, all indicators suggested that BTC had reached the bottom, but the result was a loss of over four billion dollars in just two days, while the money merely shifted into someone else's wallet.
In such a situation, the only thing retail investors can do is to analyze the trends: identify rising trends, falling trends, and confused trends; distinguish between long-term, medium-term, and short-term trends.
Long-term trends are measured in years; medium-term trends in months; short-term trends in days. At the beginning of March's sharp decline, the market was in a confused short-term trend, and several attempts to enter resulted in stop-loss exits. When unusual events occur, there must be something behind them. Thus, when I sensed confusion, I chose to step back and avoided this major downturn.
Trading with the trend means going with the flow. When your actions are contrary to the main forces, you should be cautious of the potential for sharp declines. Wang Yangming's theory of 'investigating things to attain knowledge and sincerity to rectify the heart' is further deepened into a concept of unity of knowledge and action as the ultimate life goal, pursuing the purity of 'the emergence of good is good'. This idealistic mindset is an essential quality for every successful trader. When you can consistently achieve this, financial freedom is not far away.
This statement is very important; reading it several times may greatly help you at present.
Record of Retail Investors' Ups and Downs: How to Overcome Opening Anxiety
Trading anxiety is a problem faced by traders worldwide, whether experienced or newcomers. A successful contract trade must be based on the calm mindset of the actual trader. How can this anxiety be overcome? I have systematized overcoming anxiety into three steps; traders with steady mindsets can skip this chapter.
Establish your own trading system:
When it comes to trading systems, newcomers might be confused. Those with such thoughts are likely unable to understand indicators. You can look for some books that explain indicators in detail and create a buying and selling strategy by combining different indicators based on your needs. Next comes risk management (position management and leverage control); that is a simple system.
Operate according to the system's buying and selling indicators, conduct real trading tests yourself, and if the success rate is over seventy, you can start using it. Most anxiety stems from a lack of confidence in trading strategies. Thus, reviewing past trades and observing past trends is very necessary. But it’s worth noting that a well-constructed trading system is not something that can be used indefinitely.
When a trading system repeatedly fails, it indicates a change in market style, and the main forces might have changed. Thus, trading strategies also need to adapt over time.
Protect Principal:
In the cryptocurrency market, there are always opportunities to make money. As long as you have enough patience, turning a thousand dollars into a million is not impossible. What is lacking is a steady heart; losing 50% means you need to achieve a 100% return to break even, which can cause anxiety. Most people perish on the path of bottom fishing or chasing highs.
The reason I can survive in the cryptocurrency world is that technical analysis actually plays a very small role. More often, I focus on protecting my principal. Before every trade, my thoughts are never about how much I can earn, but rather at what point I need to stop loss or take profits.
No regrets for failures:
For some market situations, missing out is just missing out; it’s not a big deal. Perhaps you could have made huge profits by shorting on March 12, but that might not align with your position-building strategy. If you gamble ten times and lose once, it could lead to disaster, so there's nothing to regret. Similarly, a major wave doesn't require capturing every profit. But it is also a benchmark for measuring a trader's level: seventy percent is considered excellent, and twenty percent indicates that your trading system has issues and doesn't align with market rhythms, requiring timely adjustments.
A sniper, if unable to maintain calm while aiming, cannot hit the target.
A trader, if unable to trade calmly, will find it difficult to achieve results.
Most of the time, trading is like an assembly line job; what you need to do is merely validate strategies, repeating operations daily. The main forces treat every retail investor fairly.
I see many newcomers think trading contracts is fun and fantasize about getting rich. They listen to various analysts' suggestions, but after building positions, they only shout about price movements without forming core trading perspectives and skills. Who will pay for the actions of these inexperienced traders?
Record of Retail Investors' Ups and Downs: How to make big money, quick money, and how to earn?
When trading is done well, happiness is inevitable. Trading should inherently be joyful; otherwise, the investor named Xu wouldn’t have had a consistent trading strategy for ten years, where the waiting process is enjoyment, and the outcome is merely profit-taking or stop-loss.
At least for me, whether making or losing money excites me immensely.
However, for most people, futures are an absolutely high-risk market. For example, during the spike in prices a few days ago, if the timeframe extends, the liquidation rate of high-leverage trading is too high. Faced with huge risks and profits, if you are not completely confident, it is absolutely unwise to take action.
Everyone wants to make money, big money, and quick money; how to earn?
Two paths:
Become an expert yourself
Look at the stock market, those seasoned veterans with over ten years of experience are too many to count. They are well-versed in technical analysis and fundamental analysis, and although their performance may not be great, their average skill level is indeed much higher. The futures market, although a speculative space, doesn't mean you need to gamble like other speculators. With a mindset of losing tens of thousands, thinking that you won't play if you don't make money or lose, the final outcome will inevitably be endless losses until you can no longer add positions.
You might suddenly awaken midway, but due to coincidences, you may find yourself opening positions again after some time. If it were as simple as opening an account, investing some money, and listening to a few opinions to make money, everyone would be rich. The most practical approach is to cultivate yourself into an expert: read books, understand indicators, review trades, adjust trading systems, and conduct small real trades to test success rates.
Follow the experts to trade
If you say that you don't have enough talent and usually don't have time to watch the market and learn, but want to achieve stable profits, is it feasible to open positions together with some analysts? This is indeed a viable path, but the question is whether you can distinguish which analysts are truly experts? Brother Bao, a big player who achieved a thousandfold return with a single account, experienced multiple liquidations due to last month's market, becoming a veritable 'Brother Bao'
Even experts can make mistakes, so even if you have basic operational skills and discernment, following others still carries significant risks. If you are tracking a player, it’s best to ask for their judgment basis, but generally, no one shares this information, including myself. I only discuss market analysis and trading insights daily.
Some people may act out of selfishness, but I believe that teaching someone to fish is better than giving them fish. Instead of sharing a system that can achieve short-term profits with you all, it’s better to inform you how to build a trading system. It's best to walk the path yourself; the investment market is not a place where those who come after can enjoy the benefits laid out by their predecessors. Everything is built on bubbles, including the so-called 'path'.
Learning to succeed in trading, thinking and analyzing but ultimately failing, is common. I hope you all keep your eyes wide open, work hard to improve, and find success in this future sunrise industry.