π A Story About Greed
π Hello finance enthusiasts and savvy investors!
I hope you're all doing great and finding your way through the crazy ups and downs of the crypto world. Today, I've got a story to share that really got me thinking, and I bet it'll do the same for you.
Story Time
So, a buddy of mine decided to try his luck with a quick long Bitcoin trade when he noticed todayβs dip in its price. For him it sounded like a smart move, especially since he was pretty new to playing with derivatives and decided to use 5x leverage.
But here's the thing: knowing how leverage works in theory is one thing, but feeling its punch is something else. Suddenly, every move in the market feels five times stronger.
He had just gone long when, bam, the market dropped by about 4.5%. With 5x leverage, that meant he was looking at a 22.5% loss in no time!
He came to me, shared his game plan and how things were looking pretty grim, asking for my two cents. Honestly, I wasn't thrilled about it.
It's not that I'm against using leverage. I mean, I'm currently in 4x leveraged positions on BTC and ETH myself. But those are positions I've scaled up carefully over weeks, making sure I've got enough unrealized profit to handle a 30% drop without sweating it.
Luckily, the market turned around, and my friend ended up selling without losing anything just moments ago.
What was supposed to be a bit of fun left him glued to the charts all day, worried sick about losing his investment.
Takeaways
So here's the takeaway: Don't jump into risky stuff without a plan, especially if you're new to leverage. Start slow, maybe with 2x or 3x leverage, to get a feel for how it all works and what it does to your stress levels. Diving headfirst into 5x crypto volatility with a big chunk of your money might not be the best idea.
Let's not let greed lead us into making decisions we might regret, especially when the market is as tempting as it is now.
And hey, if you want to get smarter about your crypto investments and really know what you're doing, why not check out my 14 Day Crypto Mastery Course? It's a quick way to level up your investing game in just two weeks.
That's all from me this week.
Stay safe, enjoy the ride, and have a fantastic weekend!
Cheers,
Stefan
Co-Founder of CryptoExplorer & InvestmentExplorer (coming soon)