You can cross-check to see which act you’ve played out.
Act 1, called Entry. A friend sends you a screenshot of profits. People in the group chat are discussing how much more it’s gone up. You hesitate for a week, and finally place your first order with a sum of money you’d be okay losing—even if it’s money that’s not making you feel any pain. Coincidentally, almost everything is profitable.
Act 2, called Confidence. You start to think you understand candlestick charts, understand the mastermind behind the scenes, and even understand this market. So you add to your position, go further on leverage, and your stop-loss gets moved farther and farther away. You call this “broad-minded strategy.”
Act 3, called Vomiting Returns. A single big bearish candle comes crashing down, your profit is gone, and your principal starts shrinking. You’re not willing to give up. You remember what others said about lowering the average cost, so the harder it drops, the more you buy.
Act Four: Liquidation. When the notification popped up, you were surprisingly calm. You looked back at your first trade—the direction was clearly right. What killed you was every later attempt to outsmart the market.
I spent two years backtesting perpetual futures and watched hundreds of strategies live and die. I came to a counterintuitive conclusion: the market has never been taking down the ignorant.
Beginners don’t know what they don’t know, so they keep their positions small and get out fast—and sometimes they even make money. What really costs people big is winning a few trades and then thinking they’ve got it figured out.
When you’re ignorant, you respect the market. When you’re confident, you fight it. But the market never debates anyone—it just executes orders.
So there’s a brutal rule in this market: beginners die from ignorance, veterans die from overconfidence. Tuition is never discounted, and there are no retakes. If you can’t pay, you’re out.
I have just one piece of advice for beginners: assume you’re wrong first, then size your position so you give yourself a chance to make it to the next episode.
Which act are you in right now? Tell us in the comments: what’s the most expensive lesson you’ve ever paid for?