Dynamic: Things Newbies Must Understand

I often see people say that a certain coin has “large fluctuations”, but what exactly is volatility? Simply put, it refers to how wild the price changes are.

Take BTC for example, it rises by 10% today and falls by 15% tomorrow, this is called high fluctuation. In contrast, traditional stocks may only move 10% in a year, which is called low fluctuation. High volatility = exciting but dangerous, low volatility = stable but dull.

Why is the crypto market so “shaky”?

The market is still too young — The cryptocurrency has only been developed for a little over a decade, lacking the mature pricing mechanisms of traditional stock markets, causing immediate fluctuations as soon as news breaks.

Small Plate — Traditional stock markets can easily reach several trillion USD, but many coins have a liquidity of only a few billion, and a single trade by a large holder can move the entire market.

Human Weakness — When prices soar, FOMO takes over the brain; when they plummet, panic selling emerges. Logic? What is that?

Too many short-term speculators — There are few true long-term holders, most are trading on short-term movements, and they cut positions at the slightest market fluctuation.

What does volatility mean to you?

Can make big money — The greater the market fluctuation, the larger the short-term profit potential. There is indeed a chance for a 50% increase in one day.

You can also lose a lot of money — Conversely, you can lose 50%. Without a stop-loss, a significant pullback can lead to liquidation.

Emotional Test — Watching the fluctuations soar in front of you, what is being tested is not your IQ, but your mindset. Those who can endure will win in the end.

How to survive in fluctuation?

The most important sentence: Managing risk is 100 times more important than pursuing profit.

Don't put all your assets all-in; set stop-losses and let the machine help you make decisions. Don't be tempted by price increases or scared by price drops into making foolish decisions. Fluctuation is a double-edged sword; if used well, you can make a fortune, but if not, it could be the end.