Cryptocurrency Exchange - How to Avoid Market Risks

First, it is essential to understand what market risk is. Regarding risks, the previous sections can include different qualitative descriptions such as policy risk, systemic risk, trading risk, liquidity risk, operational risk, and so on. However, from a purely technical perspective, all risks inevitably manifest in the price movement. Ultimately, all risks are reflected as price volatility. For example, some tokens have a very high win rate in the market, but their prices keep rising without stopping. From a purely technical standpoint, risk can only be measured technically, without considering factors like win rate or similar metrics.

The most important premise for the validity of this ID theory is that the traded assets analyzed by the theory must be able to continue trading within a foreseeable timeframe. For instance, a token traded on a daily chart that stops trading after one week is meaningless because it lacks the most basic premise. Of course, if you trade on a 1-minute chart, even if the token stops trading after a week, the risk is technically controllable.

The only uncontrollable factor is not knowing when trading might be suddenly halted. This is the biggest technical Achilles’ heel. Therefore, this ID theory is not万能; the only limitation is the sudden stoppage of trading, which invalidates the premise of the theory. Of course, a more extreme scenario is when trading is simply abandoned, which is effectively the same as stopping trading. This is not a fantasy; in immature markets, it is not unusual at all.

When applying this ID theory, the only risk to watch out for is whether trading can continue and whether it remains valid. For assets that are about to stop trading, it’s better not to use any theory at all—just treat it like gambling. As for suspensions or halts, they do not affect the risk control of the theory.

All other risks will inevitably be reflected in the price movement. As long as the trend continues and is not suddenly halted forever, all risks are within the control of this ID theory. This is a crucial conclusion and must be clarified before applying this theory. More importantly, trading halts are not caused by market reasons but by internal reasons. Any trade must have money, meaning the premise of trading is having funds first. If funds are limited in time, it automatically sets a deadline for trading to stop. Such trades are among the most common failures—many people have previously lost money due to overdrawing. Essentially, the money involved in any trade should be unlimited; if there is a time limit, it should be sufficiently long. This is a critical point in investment. Money with a finite time limit can only be managed by lowering the operational level enough to control the risk within that period, but this is just a last resort and best avoided.

Some may ask, what if performance suddenly deteriorates or bad news occurs? In fact, such questions are meaningless. Even in mature markets, such impacts are usually reflected in the trend beforehand. In Chinese society, who can guarantee that no one knows any news in advance? Not knowing does not mean others do not know; not reacting does not mean others do not react. All of this, whether you know or not, will inevitably be reflected in the trend. Once the news becomes clear, it’s often too late. How does the trend emerge? It is built with money! In this capital society, what is more credible than money? Besides the trend, what else is more trustworthy? And all trustworthy things are built on money. The capital market is a game of money—nothing else. Only money is trustworthy, and the trajectory of money in the market is the trend. This is the only thing in the market that can be observed and is worth observing. All fundamental and news-based analyses ultimately need to be reflected in the trend; they must be made to speak through real money, or they are just self-deception. As long as there is movement of money, it will inevitably leave a trail and be reflected in the trend.

In the market, the only activity is the exchange movement of money and tokens. Tokens are just worthless paper; all fundamental analysis and valuation are ultimately nonsense. Tokens are just worthless paper; their only function is to serve as a certificate that allows you to legally exchange one sum of money for another after some time. The essence of trading is investing a sum of money and exchanging it for another sum after some time, with the certificate being the traded asset. Essentially, anything can be a traded asset. The so-called value of tokens is just a lure to entice you to invest your money. Anyone applying this ID theory must first recognize this point. For your invested money, the certificates that can turn it into more money at a later time are valuable. If there were a machine that, by investing 1 yuan, could produce 1 trillion yuan after 1 second, only a fool would trade tokens. Unfortunately, such a machine does not exist, so we can only play in the capital markets. In the market, no token is worth forming emotional attachment; no token can generate returns for you. The returns come from your wisdom and ability—the wisdom and ability to turn money into more money at a later time. Tokens are always subordinate; those who are manipulated by tokens are even worse than subordinates.

Similarly, the only risk in the market is that the money you invested cannot be exchanged for more money at a later time with the corresponding certificate. Beyond that, all risks are nonsense. But any certificate, in essence, is worthless paper. Any transaction conducted at a price above zero necessarily involves risk—that is, it may result in the invested money not being able to be exchanged for more money at some later point. Therefore, trading risks always exist. So, what possibility exists for a risk-free trade? The only possibility is that you hold a certificate with a negative price. What is a truly skilled, undefeated trader? It is someone capable of turning any certificate into a negative price within the relevant period. For real experts, what they trade is actually unimportant; as long as the market fluctuates, they can turn any certificate into a negative price over a sufficiently long period. The core of this ID theory is to explore how to ultimately turn any certificate’s price into a negative number over time.

Any market fluctuation can support this activity of eventually turning certificates into negative prices. Whether buying first and selling later or selling first and buying later, the effect is the same. However, many people only move unilaterally and do not make round-trip moves—that is a bad habit. Whether the market rises or falls, it is always an opportunity for you. You can always buy or sell as long as there is a selling point or a buying point. The only thing to control is the volume. Even with the capital size of this ID, it will participate in 1-minute sell points, perhaps only selling 50,000 tokens, then buying back at the 1-minute buy point after a fall, with a spread of only a dime. The entire operation might only generate 4,000 yuan in profit after fees, but isn’t 4,000 yuan enough for an average family’s monthly expenses? More importantly, such operations can reduce the overall cost of this ID. Even at 0.000000001 cents, this ID must do it. Therefore, for this ID, every sell point is a sell point, every buy point is a buy point. The only thing to control is the volume of buying and selling. The significance of levels is actually only related to trading volume. Daily chart levels naturally involve much larger volumes than 1-minute levels. This ID can use larger amounts, such as 1 million tokens, 10 million tokens, or even more. For tokens with positive costs, this ID never trusts them; the only idea is to turn them into negative as quickly as possible. The same applies to warrants, for example, a call warrant that has been suspended. When this ID finally sold out at over 1 yuan in the last few days, its cost was negative 2.8 yuan. Note that this ID’s position has remained unchanged; it started with a certain amount, and it fluctuates up and down. When selling, the amount decreases; when buying, it returns to the original amount. But it never adds positions; it bought enough at the start.

Therefore, from this perspective, tokens do not need to be chosen. The only thing worth choosing is tokens with high volatility, but this cannot be fully predicted—just like whether face-to-face meetings will succeed or not. Who knows what will happen next? For this ID, the market never truly has risk—unless the market is a straight line forever. Of course, for small-cap investors, it is entirely possible to go all-in and out, moving between different certificates. This approach is the most efficient, but it is not suitable for large funds. Large funds cannot always buy enough volume at any time. Generally, this ID only enters at buy points on the monthly or weekly charts, as chasing high is impossible. Doing so would make the process of turning negative too long, usually entering when the market is almost absorbed by the big players, typically at second or third-tier buy points. This can deceive the big players into pushing down to buy more, making it too tiring to buy from retail investors. Usually, it does not enter at the first buy point on the monthly chart, as that could turn it into a big player itself. For big players, this ID is the most formidable enemy. It’s like a vampire machine—no matter whether the big players go up or down, it only creates opportunities for this ID to turn costs into negatives. Whatever they do is useless; this ID no longer works for big players. It only regards big players as ancestors—big players, whoever they are, as long as this ID targets them, they must pay tribute.

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