Memoirs of an Ethereum hacker

Editor's note: This article is from a contribution, the author Paprika, Odaily is authorized to publish, and has verified the authenticity of the content

I am not a master trader, nor am I a professional institutional trader. But because of this, I think my sharing is more universal for more ordinary people who want to participate in Crypto investment.

I love trading Crypto assets, mainly futures contract trading. Before that, I was doing small things, making money and losing money. At the end of 2019, when bitcoin was close to $10,000, I bought 28 bitcoins for 2 million yuan (the exchange rate at that time was close to 7.2). Originally, these 28 bitcoins were intended to be kept in my pocket for 10 years, but then the bear market came , the price has been falling all the way. When it fell to more than 6,000 US dollars in March 2020, I was very itchy and used most of it to go long. Naturally, I was liquidated in the epic slump of 3.12.

With only more than 200,000 yuan left in my hand, I spent time researching, formulating and adjusting strategies, and there were many ups and downs in the middle. It took me a year to achieve more than 50 million yuan in early 2021. I then withdrew most of it and used it to buy real-life assets and diversify. About 3 million yuan remained in the market and continued to trade relatively conservatively, and today it has reached about 20 million yuan.

After 19 years, I have never made a deposit, but I have been insisting on withdrawing cash almost every month. I never hesitate to withdraw coins when I want to buy something. Therefore, I have repeatedly jumped between getting rich and returning to zero on many contract platforms. The reality Unlike the penny-pinching Big V, I have the confidence to say that I am not a gambler, but a serious trader. All the money I made was used to improve my life, not to further my pursuit of mental stimulation.

Of course, my rate of return may not be worth mentioning compared to the stories in this industry of betting on thousands of times or even ten thousand times of coins and getting rich overnight. However, I have gone through this process several times through concentrating on research, making accurate judgments, self-validating, resolutely implementing my own ideas, and obtaining considerable benefits. So I can say that I don't make money by luck, at least not all by luck.

For a long time, I have not felt proud of making some money from secondary trading, and it is still the case today. I seldom share my strategies, ideas, and judgments with others, and I will not help my friends trade. I think that would cloud my judgement. I think what I've been doing right all along is very simple, just firmly believe in and participate in the trend. Of course it is nice to make money, but it is not worthy of glory.

Under the background of flooding and the mainstreaming of encrypted assets, the bull market has been going on for quite some time, and I am more and more comfortable in the familiar environment and methods. But it is easy to make mistakes if you are too comfortable. Recently, I re-read "Memoirs of a Stock Operator", which made me reflect that the simplest is the most difficult to do. Truth is actually very helpful. So I decided to write this review, to share, and to introspect, how can an ordinary person make relatively stable money in Crypto transactions.

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lock trend

First of all, ordinary people must know that big money can only be made in the general trend. No matter what is the reason for the initial rise of the market, the fact is that the continuous rise of the market is neither hype by insiders nor tricks of financiers. Determined by the basic situation of the market, the market will inevitably move forward according to the extent, speed and time determined by the driving force, and no one can stop it.

The first quarter of 2020 was full of drama. The DeFi pattern was emerging, and the locked ETH and U.S. dollars hit new highs. Just as people were discussing DeFi’s exit, the "Black Thursday" crash on 3.12 came, and Bitcoin plummeted to $3,800. Ethereum to $87. At that time, my bitcoin contract was liquidated, and I only had U worth two to three hundred thousand yuan in my account, and my mind was full of confusion. I was not particularly anxious to buy the bottom, but thought about waiting and watching for 3 months, basically holding the spot in the middle, and playing with a small amount.

In June, when the spot price in my account rose to about 400,000 yuan, I made up my mind to take a heavy position in Ether. One was based on technical analysis, and the other was based on fundamental beliefs. I remember very clearly that at that time, Ethereum was $200. I told my best friend in the industry that within three months, Ethereum would rise to $500. He couldn’t believe it. At that time, the performance of Ethereum was relatively sluggish. I remember There is an article called "Why is ETH silent in the DeFi carnival?" 》, at that time, from Kyber to Compound, the market value of DeFi rose rapidly, but the performance of ETH itself as the underlying layer was mediocre, and there were many debates in the community about the arrival of 2.0.

But in my opinion, this means that the answer has already been revealed. DeFi will definitely lead Ethereum to reach new peaks. Sometimes the relationship between technology and fundamentals is very mysterious. When the rise starts, all the benefits will naturally be in every resistance bit cashed. Here I want to say that it is a necessary process to study by yourself and believe in your own judgment, otherwise it is impossible to hold it. It takes a lot of time for a person to buy a computer and research configurations, and many people bet half of their wealth just because others say it is good.

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correct operation

But my psychological expectation at the time was to close the position at $500, and then I would get it back after a pullback, so I made a mistake again. When Ethereum rose to $488 on September 1, I was obsessed with waiting for $500 to close the position. Instead of taking profit as expected, I continued to increase my position during the decline, pulling the liquidation price from a safe 200-odd dollars to 320 dollars. During the decline, it just fell below my liquidation line, so I once again The warehouse was liquidated until there were only 400,000 to 500,000 yuan left.

To be honest, I am more depressed and annoyed at this moment than at 312. I know that my judgment is correct. After the ether pulls back and fluctuates, it will rise stronger, but I lost my position. up.

In this process, there is one of the simplest truths repeatedly mentioned in "Stock Operator", which I always tell myself later, that speculators should hope to rise and fear to fall. This seems to be a nonsense, but in reality people often operate On the contrary, when it falls, everyone always holds on to it, hoping to rebound without stopping the loss, but when it rises, they always fear that the profit will disappear and they can't hold it. I did the latter and believed in the trend during the rise, but I didn't do the former and sold in time.

By extension, I often made similar mistakes in short-term operations in the past: I held two currencies, and if there was a loss, I continued to hold it, and if there was a profit, I sold it. This is what ordinary people often do , but it is also an extremely stupid operation. In speculative trading, it is the most stupid thing to try to raise the average price in order to reduce losses. It is wise to get rid of losing positions and keep profitable ones.

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A week later, thinking that the market was bottoming out, I divided my main positions into two, one was more aggressively long Bitcoin, and the other was long Ethereum with low leverage.

The so-called aggressive long Bitcoin was because I believed that $9,800 was a strong support level at the time, which meant that opening a position was very cost-effective. If it continues to dip, stop the loss immediately. If the judgment is correct, this will be a long-term safe position.

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(Left: The pictures generated by going to Huobi in the past few days, middle and right: the pictures with high daily returns for friends at that time)

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When I say this, you will think that it is easy to hold the contract for three months and see a 100-fold return, which is absolutely the case. In addition to the human weakness of overcoming the fear of rising as mentioned above, it is more important to stick to your core strategy, not to be dazzled by various news, and not to listen to the news casually.

For example, I have always firmly believed in the future of the Ethereum ecosystem, and the construction of Ethereum is indeed changing with each passing day, but for an ordinary investor, you often cannot distinguish which are good opportunities and which are traps or even scams, and it is difficult to get out at the right time. In the past 2 years, I have also dug a lot of DeFi mines, bought many NFTs, and tried many counterfeit assets. There are gains and losses, but when I look back, the gains are not even as high as the rise of Ethereum spot. Fortunately, I only used a small part of the funds.

In addition, when your trusted friends tell you that xx is good recently, you'd better listen and let it go. I'm not saying that people shouldn't try new things. Learning is very important, but you have to understand that subjective trading is often a matter of having both fish and bear's paws, and has nothing to do with the amount of funds. Because if you want to execute your own ideas well, you can't sometimes listen to others, sometimes believe in the news, and sometimes doubt yourself.

And, I want to make every kind of money, I want to seize every opportunity, and in the end it is easy to catch nothing.

At the same time, a very important thing I have learned is that "waiting" is the most important and difficult part of trading itself. In the world of Crypto, waiting is even more tormenting, because it develops too fast and the cycle is too intense. Every day you listen to the stories of others getting rich on the train to shake your own mind.

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For me personally, self-cultivation is by no means abstinent, but to enjoy life. The Yuan Universe has not yet arrived, so I should take good care of the physical body first.

I never watch the market anxiously all the time, because it takes time for a trend to come out. You can judge its position and possible moves through technology, but no one can pinpoint the specific time, so there is no need for trend traders to torture themselves. If you can manage to open an order in the "right" place, all you need to do is hold it without distraction, so I rarely toss and turn at night.

Another interesting thing is that people who do secondary transactions often have a wonderful habit of only making money and not spending it, because that would "lose leverage". But I'm different, I'm a consumerist people.

I think consumerism is a neutral word. For an ordinary person, I believe that I will live longer. I often withdraw cash and spend frequently. I want to buy a car, a watch, and a watch. I know that I am an ordinary person. , so if one day the transaction fails, it won't end up with his wife and children.

In the subsequent pullback on May 19, 2021, I also lost some money, but at this time I have withdrawn most of the money I earned in the past for family and life, and my contract position is very low. It sounds like I lose money every time there is a big pullback, but I know that I actually went from being unprepared for losing all my money to being able to bear normal losses reasonably.

Many people ask me if I only go long and not short. I would say that is not the case, but I am in the general trend of the bull market. Even if I judge that there will be a phased correction, I will not go short. I will only close long positions. Not necessarily out.

Because I know that I am not a very smart and professional trader, I can't execute several strategies at the same time without being interfered by myself, I just want to earn money within my knowledge, before the end of the big trend, I value more The most important thing is not to lose your position, which makes me more worried than a temporary paper loss.

The above are the trading insights I wrote to myself. There is a lot of nonsense, but I understand everything.

Now that 2021 is coming to an end, and 2022 is coming, I know that I will balance my desires, love life, and continue to make money within my knowledge firmly and resolutely.

(Odaily Note: The author of this article lives overseas for a long time, just to share investment ideas, and it is not recommended for users in mainland China to participate in digital currency contract transactions)