I myself have grown my initial capital of 100,000 to several million now, mainly relying on spot trading, but today I want to say something different from others, heartfelt words from an old hand who has crossed through bull and bear markets.
If you want to change your life, please make sure to read this thoroughly.
I wonder if you often see the phrase 'stay away from futures, cherish life'?
Everyone enters the market hoping to find a hundredfold or thousandfold coin, thinking of that saying 'one day in the crypto world equals ten years in the human world,' but now it’s no longer that era.
If you are an ordinary person without much initial capital and want to invest in Bitcoin or Ethereum to make big money that can change your destiny, in the past, I would have told you to buy BTC or ETH; spot trading can also make big money. However, now if you don’t have much capital, and BTC rises to hundreds of thousands, it won’t completely change your life.
Don’t misunderstand me; some higher-risk options may be more suitable for you. Profits and losses come from the same source. The more risk you can bear, the more returns you will have.
Can hoarding coins in a bear market and selling in a bull market achieve a hundredfold increase and change your life? I can tell you from personal experience that it’s a delusion. Nowadays, the number of coins in the crypto world is even close to exceeding the number of retail investors. Financing projects come one after another, and the speed of new coin listings is even faster than the growth rate of retail investors. Look at the average increase of new coins on Binance and Huobi; they list with inflated market values and absurd valuations. Institutions continuously invest in projects, obtaining almost cost-free chips, and immediately sell off, letting retail investors take the fall. The funds in the crypto world are drained by them, with daily trading volumes in the hundreds of billions. Once a project is listed, its valuation can reach 10 billion, while the entire market’s liquidity is less than 1%. Currently, there is severe anemia; perhaps this is the essence of a speculative market.
If you say many people rely on meme coins for wealth freedom, that’s a very small number. I don’t want to touch meme coins; it’s better to carefully study futures. Even if you leave this circle, there are still many trading assets to choose from.
In this market, you need to master a skill. There are many things that can be done in this industry. Unless you have experts around you, it’s difficult to keep up with the pace of the industry. If you want to improve your understanding, the only fastest and most effective way is to consult experienced people or read books. Always remember to master one thing; don’t try to grasp everything, or you may end up with nothing. Of course, please set aside your biases and laziness, invest your effort, gather information, and research deeply. This is far more important than money.
First, we must recognize the situation and know ourselves. The purpose of coming to this circle is to change our lives. Please build a complete plan for yourself: when to buy? When to sell? What assets to buy? What strategies to adopt? How to manage risks?
In my communication with fans in the group, I repeatedly emphasize that most people can only earn money from trends. In many industries, as long as you persist and put in effort, you can reach the top. However, in the investment market, losing money is the norm. There are still many who are smarter and more diligent than you, and they still lose money. Why do you think you will definitely make money? Investment is making money with money, and with too little capital, it’s easy to breed gambling tendencies. Gambling tendencies are not scary; we should have principles when gambling. Since we are gambling, we should bet on the highest risk-reward ratio.
What is a trend? It is a bull market that lasts for one to two years. During the transition from bull to bear, make plans, follow objective laws and data, and accumulate your original assets in coin-based terms.
Pay more attention to new projects. People now like fresh things and also enjoy new stories. New coins just listed on Binance during a bear market can be circled. Don’t buy them right after they are listed; spend some time and energy to analyze and research them from multiple angles. If the research is good, continuously buying in batches at this time is correct.
The crypto market is developing very rapidly now; in such an environment, learning must be strengthened. Risks and returns coexist. The market has already passed the stage of barbaric growth, and potential profits are quickly decreasing. If you want to get rich quickly but don’t want to pay much attention, then only futures are left. Futures may have more potential than meme coins.
I used to be like most people who came in; many seniors told me to stay away from futures and cherish life, but I always felt that the futures market in crypto is a very great product. The crypto world itself is a game of gambling, a game of human nature, a zero-sum game. Since it’s a game, we must first understand the rules of the game. The maturity of a person's investment logic is to constantly recognize the rules of this market.
The speculative nature of the crypto world has become stronger now; don’t look at things with bias, and don’t think you are always right while others are fools. Broaden your mind a bit, think from multiple perspectives. Everyone has their own suitable path. Buffett's value investing can make money, and Soros's speculation can also make money. No one is necessarily correct; what suits you and yields results is the best. Please don’t be lazy; spend time and energy to strengthen your trading system, so that you won’t miss this opportunity to change your destiny in the future.
Of course, first build a long-term plan. Understand the wave of spot trading thoroughly, and then start your journey in futures trading. I think futures are a very good investment tool, not only can you make money when the market rises, but you can also make money when it falls, and it can be used to hedge against spots. If you lose money in futures and face liquidation, it’s your fault; it’s a problem with your trading system and trading plan. The existence of futures itself is like a tool; what’s wrong with the tool? It’s the user’s mistake. Why should the tool bear the blame for your mistakes? Losing money is because you haven’t established a trading system, you lack discipline, your mentality is poor, and you don’t use stop-loss.
Let’s understand what advantages and risks futures have. Can we really fight against human nature to avoid liquidation? I feel that the crypto world now belongs to a speculative market. No matter how Bitcoin rises, there will be a ceiling. At that time, will it still be an opportunity for ordinary people to buy spots? Some people have little capital; do you think there are ways in today’s market to accumulate capital faster?
Spot.
Assuming you only have $1,000 today, and Bitcoin is currently $30,000, if you think Bitcoin is about to rise and you use $1,000 to buy, when it rises to $36,000, you earn $200 because you only have $1,000. The coin price doubling means you only make $200.
Futures.
Assuming you also believe Bitcoin is about to rise +20%*5, your $1,000 will earn $1,000.
Before starting futures, you must learn how to manage positions and build your trading system.
If the price of the coin has risen for some time, assuming you think the price will correct in the future, you can go short, and your earnings will also be the same as above. If it’s spot trading, you can only buy long, so there’s only one direction.
What are the advantages of futures?
1: Theoretically, in the futures field, as long as you set a high multiplier, you can amplify small capital many times. Futures enhance the capital utilization rate.
Actually, veteran players will allocate a small portion of their positions to futures apart from spot trading, but you still shouldn't use particularly high leverage unless your trading system is extremely mature.
2: Profit faster.
If you are only trading spots, calculating with an average increase of 10% each time, it takes 7 times to double your capital of 10,000. However, if you open a 10x contract and catch one increase, your capital can double.
Profit = 10000 * 10 * 10% = 10000.
So focus on the right direction and apply reasonable leverage to amplify the gains, and your assets will achieve a sudden surge.
3: Hedge against the risk of decline.
In crypto futures trading, you can not only go long but also short.
If you hold Bitcoin with a long-term bullish view and absolutely do not want to clear your assets, but the bull market continues to decline, we can increase our coin-based assets through futures trading and also make money by going short. Many big players will short to hedge their positions. Simply put, when the market falls, the value of the chips in hand will shrink. However, by going short, we can reduce the shrinkage and increase the coin-based assets, even making money. When you think the coin price is about to end the bear market and rise, we can close our positions and just hold the spots while waiting for the rise.
4: You can go long and also short, convenient and flexible.
When the bull market in crypto is booming, it seems like anything you buy will rise. However, once it enters a bear market, you will find that even buying Bitcoin can lead to losses. Futures provide a flexible option; you can not only go long but also short, making money in both bull and bear markets.
About risks.
1: Risk of liquidation.
There is no single method that can definitely make money, especially not for quick and big profits. Futures trading can amplify profits, and many big players have succeeded, achieving a turnaround from being underdogs. Although many have faced liquidation, this is inherently a betting market. Just because you faced liquidation doesn’t mean others can’t succeed; instead, you should focus on honing your skills. Futures can make quick money, but you also have to bear the huge risk of liquidation, which is the biggest risk.
2: Exchange spike.
The so-called spike refers to technical K-lines, where a very thin line appears going up or down. This small line in one minute won’t affect spots, but futures are different because leverage amplifies the fluctuations. 100 times leverage will liquidate with just 1%.
3: Amplifies human nature.
Those who have experienced futures trading may understand what it is. Clearly seeing the correct direction, having a trading plan, discipline, stop-loss, taking profit, controlling positions, leverage, etc., but when in the market, all of this is forgotten. When it should stop-loss, they don’t execute, choosing to hold on instead, resulting in liquidation. Futures can also easily lead to over-excitement, constantly amplifying desires and leverage. Many people find it difficult to control their own human nature and cannot adhere to trading discipline, leading to a vicious cycle of continuous liquidation. In fact, the biggest enemy we face in trading is our own human nature.
Finally, let’s summarize the differences between the two.
Spot VS Futures.
The capital threshold for spot trading is high, while the capital threshold for futures trading is low.
Spot is more suitable for conservative people, while futures are suitable for aggressive people.
Spot has only one direction, while futures can go up, down, or sideways.
In spot trading, there is no scenario of capital going to zero, but in futures, the capital can go to zero.
Just expressing my views on futures; please don’t criticize.
Currently, liquidity is poor; major players are trading in waves, making futures more suitable for the current market situation. I am not a futures expert; trading for a living is my current state. Respecting market rules is my daily reminder to myself. I just want to share a different perspective on futures as a tool. I just want to turn trading into a business through my own efforts. I hope everyone can establish their own trading systems, using trading to find ways to make money and achieve their own success.
Friends who are currently confused and directionless in trading can follow me. Comment '1' for mutual improvement.
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