Compound effect, it feels like the cryptocurrency market fluctuates by dozens of points every day, 1% is very easy. In fact, it is not. One point a day, annualized 300%+, even Grayscale can't do it, it's difficult for Bezos too. So, the medicine cannot stop.

In the cryptocurrency world, there are some little-known facts or tricks that are often overlooked but are very important. Today, I’d like to share a few:
1. Cost dilution is not as simple as it seems
For example, if you invest 10,000 U when the price of a coin is 10 U, and then add another 10,000 U when the price drops to 5 U, your average cost is actually 6.67 U, not the 7.5 U that many people think. This situation is very common in market fluctuations, and understanding this cost calculation method can help with position management.
2. The power of compound interest is astonishing
Assuming you have 100,000 U and earn 1% daily, exiting the market each day. If you can maintain 250 trading days in a year, your assets will grow to 1,323,200 U after one year. Continuing for two years, your assets could even reach tens of millions. Of course, this result is based on stable returns, but the hidden challenge is how to continuously maintain this compounding effect.
3. The relationship between probability and profit-taking/stop-loss
If your investment success rate is 60%, and you set a 10% profit-taking and stop-loss for each trade, after 100 trades, your total return could reach 300%. But this premise is that you strictly adhere to your trading plan, not letting market fluctuations affect your emotions, especially maintaining calm in a highly volatile market.
4. Greed is the biggest enemy
If you start with 10,000 U and earn 10% each time, on the 49th day, your assets could reach 1 million U, on the 73rd day, it could surpass 10 million U, and by the 97th day, you might even exceed 100 million. However, in reality, very few can achieve this because most people cannot control their greed during this process, leading to failure along the way. This is why many traders find it difficult to maintain profits over the long term, even when they are profitable.
Contract trading and position management
In contract trading, position management and capital management are key to success or failure. Many people use 20%-30% of their principal as a base position, but I personally prefer to use only 2%-5%, employing 20x leverage. This can effectively control risk and avoid emotional decisions caused by excessive fluctuations.