A market crash? A disaster? Actually, none of these are scary; we have already experienced too much. The scariest thing is just one thing, and we have no experience with that.
Brother Sheng remembers that in 2013, during the first round of the Bitcoin bull market, everyone entering the market to trade memes or leading tokens is not much different from today's newcomers. The 'risk of going to zero' and 'extraordinarily great' continuously compete, filled with passion.
Even in a bear market, people still feel it is just a great retreat; every pullback is for a better entry.
In 2017, during the ICO issuance, whether in terms of assets or methods, everyone was telling the same great story: 'Let blockchain reconstruct a new world' and make a better future. Even when the bubble burst, we still believed that being afraid of bubbles means you have no right to taste the delicious beer.
The bear market left Binance, stablecoins, and laid the foundation for DeFi, and during the bear market, we still firmly believe that the future will be better.
In 2021, when the bull market arrived, people's faith was further solidified after being tested; even in the face of major negative news like May 12th, it quickly rebounded because during this round we experienced: 'DeFi needs to separate traditional finance's life', 'NFTs grant individual rights', and other revolutionary moments that stirred our blood, as well as the shining moment of 'teaching Tencent how to make games through GameFi's GMX'.
In this round of the bull market, we experienced
"Altcoins are all scams."
"The project parties and VC coins are all here to cut leeks."
"A market maker that doesn't cut leeks is not a good market maker."
"A president who cannot trade is not a good president."
"Those who play VC coins are fools."
"PVP is the future."
"Those who play memes have also become fools."
In this round, we experienced the transition from 'the crypto world only has PVP' to 'PVP is the classic use case', then to 'P has stopped moving', 'whoever P loses'.
In this round of the crypto world, most people no longer expect any revolution or future; they are all discussing which direction to go, whether to go at all? Instead, we are looking forward to Trump holding a meeting, expecting the U.S. to introduce policies to pump the market, expecting institutions to buy in, but we just don’t dare to expect new innovations, especially with the explosive development of AI agents outside. Looking back, the level of the crypto world is no longer that of doctoral students versus kindergarteners; it is purely a level from artificial intelligence to artificial stupidity.
Of course, one can still vaguely see some people on Twitter weakly waving their fists, calling for a revolution, while others are talking about 'this is probably the bottom', and there are sporadic weak voices saying incomprehensible terms like payfi, rwa, etc., but what they receive is ridicule from others, 'Did you buy the bottom again today?'.
The scariest thing in the crypto world is not the endless decline, nor is it the real arrival of a bear market, but that more and more people realize the overall high bubble in the crypto world—this was originally a good thing and not a big problem, just like the overvaluation of growth stocks is not a big problem.
But if the high bubble starts to be accompanied by a 'wake-up' realization, problems will arise. We all recognize Bitcoin's high value, but if there is no prosperity across the entire chain, would Bitcoin also be greatly affected?
Confidence is more important than gold. Is your information about the overall development of the crypto world as firm as it was a few years ago? Is your confidence in Bitcoin as strong as it was a few years ago?
I am still looking forward to new good things emerging after the bubble is squeezed. This is called the law of large numbers; in the end, the ratio of right to wrong must be 1:1, which means half wrong and half right.
Since everyone's judgment of the market's right or wrong is the same, how do some people make money? This involves the issue of profit-loss ratio; you must make small losses and large profits. Suppose you have traded 10 times, with 5 times being stop-losses, losing 100 dollars each time, that’s 500 dollars lost. The other 5 times you take profits, making at least 200 dollars each time; isn’t that a total profit of 500 dollars in the end?
And how do most people operate? They judge correctly and quickly take profits, fearing that their profits will be lost in a pullback, then when they judge incorrectly, they hold on stubbornly until they blow up. This is making small profits and incurring large losses; how can one make money?
Since everyone's win rate is like throwing dice, then why not throw dice to open positions? Because throwing dice can only determine the direction, whether long or short; the dice cannot tell you where to enter and where to set stop-loss.
At any time, there is no good entry and stop-loss point. A good entry point must have a small stop-loss and a larger expected profit point; this is called a large profit-loss ratio.
By now, you should understand that no one is against the idea that judgments are not important. We cannot improve the win rate; we must rely on large profit-loss ratios and time perspectives to guide our methodology. We should walk the most correct and easiest path to success. That's it for today; take your time to reflect on it.
These words are all typed out by me, not copied from elsewhere, and you should be able to see my tone in the lines.
The meaning of these things, let me give you an example: many people spend their whole lives searching for all kinds of information, learning various indicators, studying various technical analysis methods, and looking for the holy grail of trading everywhere!
Ask yourself how many technical analysis books you have read and how many indicators you have studied. If you understand that trading is just about probabilities, not about judgments, but about making small losses and big profits, then you will know that technical analysis and indicators are basically meaningless, and you will not waste time going further down the wrong path.
Whether paid or free, I believe no one has told you these things. The trading market is filled with a lot of people selling placebos—those who talk about indicators, purely engage in technical analysis, sell rumors, and analyze the market from a macro perspective are all this type of people. They are merely targeting your anxious mindset, doing things that benefit them but are meaningless to you. Don't go down the wrong path; even if you work hard on the wrong path, you will only go further away.
Sometimes I fear that you may not understand or grasp it, thinking that I am just talking nonsense. I have also gone through such times; I have also come from that state.
The most important book in the trading field, 'Reminiscences of a Stock Operator', is regarded as the trading bible. Just ask any trader, and they will tell you that 'Reminiscences of a Stock Operator' is the book that has influenced them the most. The status of this book is like the Christian Bible and the Marxist ideology of the Communist Party.
The entire book has no substantial content, let alone discussing candlesticks; during Livermore's era, there were no candlesticks.
The entire book is filled with similar ideas: trends are waited out, profits are sat out; I make big money because I am as steady as Mount Tai, sitting still, etc. If you truly want to continue on the path of trading
Trading principles
There is a very important principle in trading: do not make small profits and do not incur large losses.
In simple eight words, it is actually very difficult to achieve. Let me give you an example:
When you opened a position at 20,000 and it rose to 21,000, you were very happy, took profits, and earned 5%. But then the market kept rising to 25,000... You made 5% but missed out on 50%; then you tell yourself you want to make big money and absolutely won't take profits this time. Then the market falls back to 20,000 again, and you opened another position, which rose to 21,000 again. You tell yourself to learn from the last lesson and hold on for big profits, but the market falls back to 20,000 and even drops below to 19,500, and you stop loss.
I find it so hard!
Many people spend their entire lives constantly switching between such dilemmas, never being able to escape. Is there a way to earn from both big and small markets?
No, it must be one or the other; I generally choose not to make small profits.
What I said, I cannot achieve 100%, and no one can achieve it 100%, but I can tell you the correct philosophy. How much can be achieved depends on personal cultivation; each of us can only achieve a certain proportion of these philosophies, and we should try our best to improve this proportion.
Trading mindset
Whether you are trading short or long, making 200% in a wave of big market, as long as you can maintain most of the profits, earn another 200% in the next big opportunity, that's 4 times... As long as you can keep the profits, you can compound. If you make 200% this time and then lose it back, what’s the use? There is no such thing as missing out in the trading market, only two results: losing and making.
Some people may feel that they have found the right path, feeling that they are about to get rich.
Touching the road only represents that your probability of making money has increased.
Trading misconceptions
Many people have many misconceptions about trading, for example, thinking that small funds should trade short-term to increase their capital. This is a complete misconception; this kind of thinking is merely trying to exchange time for space, attempting to get rich overnight. Small funds should do medium to long-term trades to grow.
Is one sheet of paper thin enough? Folding a sheet of paper 27 times results in a thickness of 13 kilometers; if folded 10 more times to a total of 37 times,
The Earth is not as thick as him... If you fold it 105 times, the entire universe cannot contain it.
If you have 30,000 in capital, you should be thinking about how to triple it in one wave, and then triple it again in the next wave... This way you can have 400,000 or 500,000. Instead of thinking about making 10% today, 20% tomorrow... Doing so will eventually lead to your downfall. Always remember, the smaller the capital, the more you should focus on long-term trades and grow through doubling your capital; do not trade short-term for trivial profits.
I often see a saying:
My liquidation price is XXX; I’m not afraid, I’m using 2x leverage. The liquidation price is XX; I'm not worried.
When encountering markets like 312 and 519, are they gone?
Why mention the liquidation price? Is the bottom line of trading to aim for liquidation? The bottom line of trading should be not to lose money, not to avoid liquidation. The future is unpredictable; it is all a matter of probability. What if you get liquidated?
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