The most common thing in the cryptocurrency world is getting rich overnight, and the most common thing is miracles. You may have heard that someone found Bitcoins from many years ago and found true love instantly.

I've also heard that someone's friend's friend bought altcoins, which increased a hundred or a thousand times, and used them to buy a car and a house in the city where you worked hard.

A remarkable wealth story has been widely circulated among people. This story tells how a man started with 500 yuan and eventually earned 1 million yuan, which is a textbook miracle.

However, he was only three seconds away from 1 million to 10 million. The miss of these three seconds made him miss the 10 million, which was really regrettable.

There is a saying that goes: "You will never make money beyond your understanding unless you rely on luck."

Money earned by luck will often be lost in the end due to lack of strength.

If a person's wealth exceeds his cognition, then the world will have many ways to harvest him until his cognition matches his wealth.

On the evening of May 21, 2019, when the U.S. Copyright Office prepared to grant proof that Satoshi Nakamoto was the author of the Bitcoin white paper and code, the news triggered a chain reaction in the market.

The BSV on the exchange began to fluctuate, rising by 50%, attracting many followers to buy in quickly. At this time, the protagonist of our story also took quick action.

Not only did he buy it, but he also used 100 times leverage to trade perpetual contracts.

He used 528 yuan to buy 75 USDT. When the price of BSV was $120, he chose to go long with a leverage of up to 100 times.

When the price rose to $158, he had successfully earned 70,000 yuan.

Most people would probably choose to stop in this situation, after all, they have already made a lot of profit.

However, the protagonist had a very keen sense of the market. He quickly turned to short selling, shorting BSV when the price was $150, and the direction was right, so he made another 300,000 RMB.

A trading expert may choose to stop at this time, after all, he has already made 300,000 yuan from 500 yuan.

However, the protagonist's choice was different again. He did not choose to stop, but quickly went long, and this time he was right again. At this time, he had made a profit of 1 million. Compared with the initial investment of 525 yuan, he has now made a net profit of 1 million. This is undoubtedly a classic case of making money out of nothing.

However, his goal is not just to stop there. He wants to earn a little more, because 10 million is just around the corner.

The direction he chose seemed to be very correct, but the final result was a tragedy.

What is heartbreaking is that three seconds later, the 1 million yuan quickly returned to zero. It took only more than ten minutes from getting rich to going bankrupt, from 1 million yuan to zero.

While we can sometimes earn great fortunes through a combination of luck and good judgment, without adequate knowledge and strategy to protect those fortunes, they can be fleeting.

Although the protagonist of this story made a lot of profits in a short period of time, his failure also proved this point.

Therefore, we should always remain cautious and rational, and not be blinded by short-term success.

So, should we use leverage when trading cryptocurrencies? In fact, leverage is not about how much you can earn, but how long you can survive.

Many people lost a lot of money using leverage, most of them lost more than 500,000 yuan, and the highest was 120 million yuan.

120 million is probably considered financial freedom in the eyes of ordinary people. Even in the eyes of the national husband Wang Sicong's father, 120 million is a small goal, let alone ordinary people.

Some people say that poverty limits my imagination. With 120 million yuan, why not diversify my investments?

But others say that 120 million may just be a fraction of what they earn.

The earliest Bitcoin futures exchange in China is the 796 Exchange. If you have not played in 796, it is difficult to say that you are a veteran investor.

The biggest differences between futures and spot trading are that one is a two-way operation and the other can be leveraged.

Friends who have played it know that it has advantages and disadvantages. The advantage is that you can make money by short selling even in a bear market.

The most famous example is Soros making a fortune by shorting the Thai baht.

Soros is an internationally renowned financial speculator who has made huge profits by shorting the British pound and the Japanese yen.

In the 1997 Asian financial crisis, the Thai baht was shorted, and the wealth of the Thai government and ordinary people was looted. But I believe that everything has its cause and effect. In addition to Soros's taking advantage of the situation, the tragedy of the Thai baht also has subjective factors such as the overvaluation of the Thai baht and the imbalance of the competitiveness of Thailand's real economy.

In 1997, Soros rushed into Thailand with the Quantum Fund and a large amount of international hot money.

The first step was to frantically borrow Thai baht from various banks in Thailand, borrowing billions and billions.

Subsequently, Soros quickly sold these Thai baht to the market through various channels and then exchanged them for US dollars. At that time, there was a fixed exchange rate between the Thai baht and the US dollar, with 1 US dollar exchanging for 25 Thai baht.

Assuming that the exchange rate of Thai baht to US dollar is 1:25, Soros first borrows 25 billion baht from the Bank of Thailand as collateral, and then sells them. According to the exchange rate, he can convert 25 billion baht into 1 billion US dollars and keep it in his hands.

Then, Soros kept borrowing Thai baht from Thai banks, then selling them and finally exchanging them for US dollars. After repeating this many times, there were soon so many Thai baht in the Thai market that they were depleted. Panic in the market began to spread, and many people began to sell Thai baht. By May 1997, 1 US dollar could be exchanged for 26.7 Thai baht in the market.

To put it simply, it is like I came with 10 US dollars, and here I assume that 1 US dollar can be exchanged for 10 Thai baht.

I separated the 10 US dollars and exchanged 1 US dollar for 10 Thai baht, and then 1 US dollar for 10 Thai baht. I did this 10 times in a row. When I finished, I had 100 Thai baht in my hand.

At this time, I already had a considerable amount of Thai baht (chips) in my hand.

Then I will borrow some more money from your national bank, for example, I will borrow another 100 Thai baht, and at this time I will have 200 Thai baht in my hand.

When you were not paying attention, I suddenly launched an offensive, demanding that you exchange 200 Thai baht into US dollars, and then make a big fuss about it in public opinion.

At this time, a considerable amount of hot money (here refers to people who have Thai baht chips) in Thai society and internationally will follow suit and exchange their Thai baht for US dollars (herd effect).

At this time, it is equivalent to that everyone does not want Thai baht, but wants US dollars.

Therefore, the Thai baht will face the pressure of devaluation. To exchange Thai baht for US dollars, the way to go is to go through the Thai Foreign Exchange Administration and exchange it with Thailand's foreign exchange reserves (US dollars).

However, Thailand is a country with an underdeveloped economy, an imperfect financial system, and a low foreign exchange reserve ratio. Therefore, if you want to exchange money, the Thai State Administration of Foreign Exchange does not have much foreign exchange reserves to cope with large-scale currency exchanges.

Therefore, the Thai baht can only face a substantial depreciation. After the depreciation, assuming that the original 1 US dollar could be exchanged for 10 Thai baht, now 1 US dollar can be exchanged for 100 Thai baht.

Now I owe you 100 baht, right? If I exchange 1 US dollar for 100 baht and return it to you, I will still have 19 US dollars.

But remember! When I first came here, I only brought $10! ​​Excluding the operating costs, you will make a net profit of $9!

When Soros left, Thailand's currency had depreciated by more than half. He just exchanged some of the US dollars he had for the borrowed Thai baht and paid it back to the Thais. He left satisfied with the remaining approximately US$4 billion.

This example is not to tell you to do futures trading or leverage. It is just a kind of "survivor bias" in my opinion.

Futures have more advantages than disadvantages for smart people and expert traders.

Leverage can also enable some smart people to transfer risks, and it can also provide a kind of protection for lucky people.

But for those who are not good at trading and are unlucky, it is simply the beginning of a nightmare.

You have to admit that there are smart people and stupid people in the world, people who are extremely lucky, people who understand things quickly, and even some people who can learn without a teacher, while there are also some people who cannot be taught no matter how hard you try.

So what kind of person are you? You can quietly ask yourself this question in your heart, or you can quietly try to answer it.

However, when it comes to trading, sometimes you can transfer the risk to your counterparty, but sometimes there is no opportunity to transfer the risk to your counterparty.

Not only smart people can't do this, the lucky ones will eventually become unlucky, and even Nobel Prize winners will unfortunately fail.

Contracts are the main battlefield for hedge funds, and many people believe that they are hedging risks by speculating in contracts.

The name hedge fund may mislead people into thinking it is a safe investment, like a gamble without any risk, but the term is not used very accurately this time. Hedge funds are the playground of the rich who just want to get richer. Investing should not be about focusing on the highest or lowest returns.

Investment should be a long-term compound interest. The most interesting fact in the investment market is that trends such as sharp rises and falls are not located in the middle of the medium-sized curve, but at the tail, which is where the normal distribution will lead us astray.

Unexpected events, such as seeing a black swan and consecutive dry years, the volatility of the Dow Jones. From 2004 to 2006, there was only one day with a volatility greater than 2%, and then in 2007, it happened 14 times.

The super bull market that Bitcoin experienced in 2017 does not occur every year, and the pessimism in the second half of 2018 will not last long.

A bull market is often born in an atmosphere of pessimism and grows in the soil of doubt. Optimism makes it mature, while excitement leads to its death.

The market is not a fixed stage. In the derivatives market, the power of risk is extremely strong, and even the smallest risk may occur.

Even smart Nobel Prize winners can't predict it, let alone ordinary people.

Many people blame futures contract trading after losing money, which is unfair. It is like blaming the car manufacturer for a traffic accident.

Gamblers never understand that they are not betting against luck or the house.

Because the design of the exchange is like a casino, it concentrates mathematical experience such as probability series and limit equations.

If an ordinary gambler participates in gambling for a long time, he will eventually lose all his money, because the constantly generated handling fees will eat away at your principal bit by bit.

This cryptocurrency trader who stood out from the crowd, almost made 10 million, but ended up losing everything, is he lucky or unlucky?

When considering whether to use leverage for futures trading, in addition to market factors, you must think: Do I want to use leverage to make money from market fluctuations, do I want to make money from my counterparty, or do I want to make money from the exchange?

In the eyes of casino owners, there are only two kinds of people in the world: one is the poor person now, and the other is the poor person in the future.

If you really want to win in this game, the only rule is never to gamble. If you think you are a lucky person, you can try to use 10 times leverage to feel the cruelty of society; if you think you are extremely lucky, you can directly use 100 times leverage and let the world teach you a lesson.

Finally, are you a lucky person, a smart person, or a person who often gets liquidated?

Finally, you can forward this article to your friends who are still addicted to contract trading, so that they can say goodbye to the devil as soon as possible.