Today I learnt two very valuable lessons

Hello everyone,
I’m a big fan of this subreddit, I’m also very new to it.
I learnt 2 important lessons about investing and trading in crypto after getting a big loss.
1. Never use margin/leverage. It amplifies both profits and LOSSES. I knew this in my head, but have now felt the sting of it in my gut.
2. Never go against the trend. This is less strong a rule as rule 1. But still a lesson learnt for me.

Of course, there are some times these are fine, but leave it to the experts.

This post is partly a reminder to my future self to not use leverage. Even if it seems so promising.

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23 thoughts on “Today I learnt two very valuable lessons”

  1. I honestly will never understand why people use Leverage in Crypto.

    It’s like betting on the 3 legged blind horse in a horse race.

  2. Feel you bro, it was hard for me too the first time I traded leveraged, but I think you shouldn’t just close that door, if you prepare enough you can take some good leveraged positions and make good profit from them. It’s the final “test” for your trading strategy and research

  3. Well, at least you learned what “increased exposure from leverage” means now.

    Knowing when and how much to leverage your positions is key if you want to trade futures.

    I wouldn’t outright scratch it off, as there are a lot of ways to leverage your positions outside of margin trading and it allows you to get deeper into the ecosystem without actual cash on hand.

    For example, you could spend all of your cash on bluechips, put those on money markets, borrow stablecoins and use that to yield farm for example. As long as the % your farm gives you outphases the lending APY you’ll be able to pay your loans off without a price change. It’s basically printing money.

  4. I wouldn’t say “never use margin” rather, educate yourself on margin before you use it. Plenty of experienced traders use margin. I used it pretty often when I dabbled in stocks. Greatly amplified my gains. As long you don’t over leverage you should do fine. Also always have some extra cash to cover margin calls.

  5. Never use leverage as a small scale invested fullstop. Only corporations and hedge funds can absorb it if it goes tits up

  6. >2. Never go against the trend. This is less strong a rule as rule 1. But still a lesson learnt for me.

    **Always go against the trend**. The *trend* is buy high sell low around this place.

    When people get greedy here and start predicting outrageous prices using *dates* recognise you’re with a dangerous crowd. Same goes whenever the /r/buttcoin*ers* start larping in here (they feed off of sorrow) telling everyone *told you so* is the best signal to buy. And if you’re using margin and the meme is 100k EOY and it’s 60k in December maybe think about closing some of your positions even though everyone else is yoloing in using max leverage.

    If everyone is saying XYZ *listen* but don’t blindly follow or you’ll never get ahead of them.

  7. New crypto investors trading the market is like giving them the keys to a Ferrari without passing a drivers test and hoping they don’t wrap it around a tree

    Then they use leverage…so they have just bolted a F1 engine onto the car just to make it even more fun/dangerous.

  8. Without going to deep the rabbit hole, what is leverage trading in crypto? I don’t know what it is and hear nothing but bad things out of it.

    What are some examples?

  9. Going against the trend can actually be a good thing.

    Leverage in crypto doesn’t work out too well most of the time though.

  10. Your rule 2 is so important.

    I was planning to sell most of my crypto today but trend is up so I wait. No point going against all.

  11. If your gonna use margin, make sure you know what to do and your smart with it. Go long if it doesn’t look good enough for shorting. You never loose if you can do it proper lol.

  12. Next time: today i learned that the concept of trend is derived from past and i should not imply anything to do or not to do


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