On the night of the FTX crash in 2022, I was staring at the K-line fluctuating on the screen, and my account balance suddenly soared by 1,200,000. This money came from a "contract master" calling for an ETH long position, while I placed a 10x reverse short position. But now, this "huge sum" is locked in my cold wallet, untouched for three years. It's not that I don't want to spend it, but every time I see it, it's like seeing countless retail investors getting liquidated with a red warning.
As a veteran who has been in the crypto market for 10 years, I have seen too many people make money through "shortcuts" and then lose their principal in an even shorter time. I once regarded reverse trading as a "cash machine" until I stepped into pitfalls and realized: all the money made by profiting from others' mistakes carries greater risks. Today, I will share three hard-earned lessons, so that beginners can at least avoid losing 500,000 after reading.
1. Don't be a 'follower'; first learn to dismantle 'copy trading'.
In the crypto space, 80% of the calls are 'scripts': big influencers build positions in advance at low points, then shout out loud in communities and plazas to create a buying frenzy. After retail investors follow the trend and drive up the price, they quietly close their positions and leave, leaving the latecomers to suffer from the market's backlash. I learned this lesson early on when I followed a certain 'war god' and got trapped right after entering the market, only to find out later that his position was nearly full when he shouted out.
Later I changed my strategy: delayed following by 15-30 minutes. A true trend will not disappear within half an hour, while those short-term market movements driven by shouting are often broken during this time window. After the adjustment, my win rate increased directly from 35% to 65%, avoiding countless 'trap for lure'.
2. The inverse list needs to 'filter out the dregs'; stop-loss is the final defense line.
Many people follow the trend inversely, always fixating on big influencers with large followings, but in reality, the 'losers' who make continuous mistakes are often more valuable than the 'gods' who are occasionally accurate. I will specifically create a 'mistake list' that includes KOLs who have made three consecutive incorrect judgments and had the market immediately reverse after their stop-loss—often, their stop-loss points are the 'reversal signals' of market sentiment.
But remember, no matter how reliable the list is, you must set a stop-loss. At the end of the bull market in 2021, I followed a KOL in the list to open a short position, but unexpectedly the market surged by another 20%. Luckily, I set a 5% stop-loss in advance, which saved me from the extreme market 'double kill.' There are no 100% rules in the crypto space; stop-loss is your 'lifesaver.'
3. Don't be superstitious about win rates; 'big wins and small losses' is key.
In 2023, I compiled data on inverse trading for the entire year: the win rate was only 46%, which means nearly half of the trades were losing. But why can one still make money? Because the profitable trades have an average profit margin three times that of the losing trades. Many newbies only look at the win rate, thinking that above 50% means profit, while ignoring the core concept of 'risk-reward ratio.'
The more heartbreaking thing is that there are still a large number of 'double explosion' markets in the market—both long and short positions are forcibly liquidated. At this time, following the trend is just a waste of effort, and you still have to pay handling fees. So don't think about making easy money by following trends; it is essentially a trading strategy that requires you to monitor the market and analyze it, not just throwing money in and calling it a day.
In the end: surviving in the crypto space is more important than anything.
Now I have long given up on following the trend inversely and instead focus on trend trades that I understand. It's not that I can't make money anymore, but I've seen too many tragedies: college students disappear after getting liquidated from following trends, and middle-aged people invest their retirement savings in hopes of making back their losses, only to end up with nothing. The crypto space is a zero-sum game; every penny you earn might be someone else's lifeline.
The truly top traders do not just harvest profits but know when to 'stop.' Newbies should not think about taking shortcuts. Following trends and copying others is just gambling on luck. Making money from others' mistakes will eventually backfire due to your own greed. You need to diligently study projects and manage risks well, using spare money to accumulate slowly in order to survive long in this market.
