Like other speculative markets, fools who do not understand market operating rules, do not have position management, risk control, and trading discipline are the main providers of profits. There will be fools who believe stories and buy at the peak when smart money is selling the news, like believing that Elon Musk will make Dogecoin the currency of Mars, or that wealthy people will buy and collect NFTs like punk AYC without selling. Only those with experience in other markets will cut losses when they are down, say, 10%, but these fools, because they listened to stories, might hold onto losses of 80% or 90%, not understanding market operating rules like liquidity.
Then the principal becomes confusing, and another market's main profit providers are leveraged gamblers. Traditional finance leverages are generally only open to qualified investors. In this market, due to the well-known lack of regulation, 100x or even 1000x leverage is easily offered to fools. Leverage amplifies greed and fear along with transaction fees, and they lack experience and understanding, making it easy to lose everything. The combination of the above factors and external borrowing leverage is a meat grinder for fools. Understanding gambling psychology shows that nearly earning, initially being able to earn but not getting it, earning but not pocketing it and then losing, these situations will be recognized by the brain as providing the same dopamine as when earning.
Then, just like social trash gambling with red eyes elsewhere, that's the outcome.
How to view leverage?
Price fluctuations reflect that those who cannot achieve stable long-term profits in spot trading should not touch any leveraged derivatives. Find a cycle that suits you, respect every bit of principal. When you have little money, treat your tuition like big money. Even if you only have 100 USDT, treat it as 100,000. This way, you can learn something. If you think of 100 USDT as just a lottery, betting small and losing it, thinking it's just 100 USDT, you won’t learn anything. When profits and losses come from the same source, how to overcome the issue of not being able to hold onto positions?
Position affects the change in mindset. Halve your position, and if that doesn't work, halve it again. The position you can control is also gradually built up, so it's a position problem. Find a position you can manage between 10 and 20% of your principal x10. Good, protect your principal. Small positions for trial and error actually create a positive cycle. If there is profit, the mindset becomes good, and you are not afraid of the drawdown of stop-loss.
The more you can hold onto and eat the market, the more you lose and the more you fear losing again, making it easier to miss out on the market.
The direction of the price level accounts for only 30%, while 70% is about mindset, position management, and profit-loss ratio management.
The position that suits you must be figured out through your own trials. The market has moved past the PVE stage where everyone was blowing bubbles together; it has become PVP. In 2021, everyone was blowing bubbles together.
In that phase, everyone who made money in the bull market borrowed from the principal of those who didn't escape the bear market. This cycle has a high margin for error. In the bear market, while repaying the debts of the bull market, every penny you earn comes from someone else's pocket. It is important to clearly understand what level you are positioned at and how you match with the market. If you are silver, you can only compete with bronze and silver; entering diamond matches means you're just giving away your rank. You can only play in the right tier, and if you're not at your matching level, be patient and wait. Don’t wait until your level arrives. If your bullets have already been wasted in diamond matches, think about whose pocket every penny you earn comes from. This point is crucial. If you don't understand and go to play at a level you can’t match, your money will be inexplicably earned by others. To play in this market with matching difficulty.
You must learn to calculate the profit-loss ratio and odds; it is no longer a market where you can make money just by playing around.
