Live Review: From Coding to Trading, let's talk about how a trading bull is cultivated.

On August 14th, we invited a trader with the username void* to participate in a discussion. He was once a programmer at a leading tech company and fully dedicated himself to cryptocurrency trading in 2019. After experiencing the pain of being "halved" due to several high-leverage contract trades, he gradually gave up the pursuit of short-term profits and instead built a trading system centered around "long-term survival." Options are the cornerstone of this system. By providing stable cash flow, they help him "stay alive" in the market and also allow him to "hold onto" core assets he is optimistic about, thereby capturing the full cycle profits. The following is a summary of the text from this live broadcast: How can programmers step into the trading world? Kunka: Please briefly introduce yourself, such as your education and upbringing. void*: I graduated with a full-time bachelor's degree. I might be slightly older than the new classmates in this round. After graduating with my bachelor's degree, I worked at one of the three major BAT companies. I got involved in the crypto space in 2016 and started officially investing in the crypto space in 2017. Since 2019, I have been trading in the cryptocurrency and US stock markets full-time. Kunka: I started getting involved in crypto in 2016, invested heavily in 2017, and went all in full-time in 2019. Can you tell me how you first got into the crypto industry? void*: I actually learned about it earlier in 2013, and my OKX account registration date is in 2013. At that time, Bitcoin was trading at a few hundred yuan, and there was a small market surge. I registered an account and bought a little bit of Bitcoin with a few hundred yuan, and then I left it there without much attention. It wasn't until the bull market in 2016 and 2017, when the price of Bitcoin skyrocketed and made the news, that I started to pay attention again. Since I write code, I took a closer look at Bitcoin's code and learned about some of the accounting features and token economics design. I have always been interested in investing, and cryptocurrency happens to be the intersection of computer technology and secondary market trading, so I find it quite intriguing. I started investing in some cryptocurrencies in 2017, mainly focusing on Bitcoin at that time. A glimpse into the crazy era of ICOs Kunka: As I remember, you entered the circle around 2016 or 2017, which is considered the "early days" of the cryptocurrency world. At that time, besides spot trading, did you pay attention to or participate in other areas, such as the very popular ICO crowdfunding? void*: ICO is "spending money to buy coins." I also participated in the EOS crowdfunding, and at that time, everyone rushed in, but in the end, we all lost money. I remember how high the price of EOS rose during the third wave? I forgot, but in short, I lost quite a bit. EOS was a project that came out at the tail end of the bull market in 2017. Ethereum had also surged at that time, and after EOS was introduced, it was particularly hyped up in the Chinese community. I remember there was a person called Di Shi who was promoting EOS everywhere. Kunka: Looking back now, that crazy era of ICOs was truly filled with all kinds of people and stories, quite surreal. Did you witness any bizarre phenomena during that wave in 2016-17? void*: The worst cut I took was with EOS. I'm a person with a relatively conservative risk preference, and general stories can't easily fool me, but EOS managed to fool me quite a bit. When the bull market soared before, I missed out and felt like I missed many opportunities, having to wait another three to four years, which is frustrating. This thing comes out at the end of the market phase, gets hyped up so much, and the technology is touted so well, claiming to take down Ethereum, making it easy for people to rush in. The Crazy Years of Leverage Trading Kunka: Apart from such a large project like EOS, do you have experiences of losing a lot of money in other projects? void*: There is also a secondary level. After all, I am not from a professional background, so it's impossible for me to jump straight into high-level things like options. I initially started with spot trading and gradually transitioned to contracts (futures). In 2017, when the market was good, I mainly focused on spot trading; by the small bull market in 2019, I started to trade contracts more. During the peak of the big bull market from 2019 to 2021, I was almost trading contracts all day long, and I preferred short to medium-term operations, holding positions for a few days or intraday trades. The leverage ratio I used was also relatively high—however, compared to many aggressive players who often use leverage of more than 10 times, my use of four to five times leverage was quite restrained. At that time, I was using the CTA strategy. Since I can program, I used technical means to conduct historical data backtesting for several years, measuring the approximate win rate and profit-loss ratio of the strategy. Then I traded according to the model like a machine. This model strategy performed really well during specific phases (within a few months), and the profit curve looked very nice. However, when the market structure and rhythm change, such as transitioning from a one-sided upward main rising trend to a weekly level of sideways fluctuation—like the current situation—the original pure chasing highs and cutting losses strategy becomes blunt, gradually losing effectiveness, and starts to incur losses. I have experienced relatively large drawdowns, like halving the net value of my account by 50% within two days, and I've done this more than once. I remember around three or four times where I lost half in two days, then worked hard to earn it back; then it would halve again, and I'd pull it back up... this cycle continued, and in the end, I couldn't bear it anymore. At that time, I thought to myself: "It's too exhausting, life is more important." So I withdrew a portion of the funds from my account to save myself. Kunka: Those contract trades you were doing at that time were mainly run automatically by a program, without manual operation, right? void*: Not entirely. I still manually confirm before placing every order. I'm quite cautious and haven't dared to let the machine place orders automatically. After all, the trading program I've written isn't mature enough to be left entirely to its own devices, so I always intervene manually to check. Kunka: Would you stay up all night watching the market at that time? void*: Linear products will definitely involve this issue. Because using leverage requires setting a stop loss, right? You can't just ignore everything and go to sleep—what if you don't set a stop loss, and when you wake up, your position might be gone. So after setting the stop loss, if the price hits the stop loss line in the middle of the night, and the phone alarm goes off, you have to get up and check. Because often you are reluctant to give up just like that and want to re-enter the market. Let's take an example: suppose the trend is really strong, rising from $5,000 all the way to $20,000, but I got stopped out at around $6,000 to $7,000 midway, I would definitely feel unwilling about it. So after the stop loss is triggered, I often watch the market closely: if the price stays near the stop loss level and consolidates back and forth, I start to think about whether to get my position back. Thus, the work begins: constantly watching the market. In the months of January and February before the "312" crash in 2020, I spent several nights in front of my computer. Every time the price fell below my stop loss and I got liquidated, I would stare at it intensely; when I saw the price rise back to a level I thought it might break through, I would jump back in. But then, half an hour later, the market would crash again... it was a repetitive cycle.

Staying up late to watch the market is largely due to the unwillingness to accept losses after setting a stop-loss, always thinking about taking another chance; or after taking profits, wanting to earn a little more, so they keep waiting for an opportunity to re-enter. For me, watching the market basically stems from this mentality. Kunka: Were you in good physical condition during such high-intensity continuous overnight monitoring? void*: Being young, I can manage short-term sleepless nights, as long as I don't do it for years on end, it's fine. But to be honest, during that time I was in a heightened state of excitement every day, feeling a bit manic. Because when the trades go well, it's particularly exhilarating, earning a lot in an instant; but when they go wrong, it feels like a slap in the face, creating a huge emotional contrast. When I calm down, I will also reflect: if I hadn't acted so crazy at that time, if I had been more rational, or if I had spent that time playing soccer or running, would my condition have been better? Options: A trading instrument with higher fault tolerance Kunka: After experiencing extreme fluctuations where the net value halved by 50% in just a few days several times, how have these experiences influenced your current trading style? void*: It's not about completely dismissing short-term high-leverage strategies; there are indeed some players who excel in contract trading. However, for me, if one only engages in this type of linear leverage trading over the long term and hopes to earn substantial profits, significant drawdowns are almost inevitable—walking by the river, how can one avoid getting their shoes wet? Using four to five times or even higher leverage for swing trading, if you look at it over an extended period, you will eventually encounter times when you step on air or hit a landmine.

It was precisely because of this that, during the end of the last bear market around 2019, I started to shift towards options trading. Options can be used to hedge risks, essentially reducing the burden on oneself. Now, I use options to lower the overall risk level of my trading. Kunka: What are the main differences between spot trading from the very beginning, leveraged contract trading later on, and the use of options during the bear market? void*: The distinction as I understand it is as follows: spot trading means directly holding the underlying asset, and price fluctuations won't kick you out of the market; leveraged contracts magnify gains and losses proportionally, but if you encounter extreme volatility, you may be forced to close your position due to insufficient margin along the way—this is inevitable as long as leverage is used; options, on the other hand, are a nonlinear tool that can provide more angles and time dimensions to express your views on the market. In terms of tolerance, options can give you more room, allowing you to trade more comfortably. Of course, it's important to keep an eye on the market when needed, but there's no need to watch the screen nervously every five minutes like with high-leverage contracts. Kunka: It seems that options are the area you have been focusing on trading. Could you share why options are worth your long-term commitment? void*: Options themselves did not let me make more money, but they allowed me to hold onto my favored assets more firmly. Through options strategies, I have cash flow coming in every day, which allows me to comfortably hold onto spot positions. The cash flow I accumulate daily can be used to take on some low-cost leverage, which discounts the stop-loss cost of the leverage, thereby allowing me to gain significant profits in the larger trends on a weekly chart.

If we talk about short-term speculation on price fluctuations using options, it definitely can't be as exciting as directly trading contracts. However, looking at it over a longer period, options help me maintain a more stable position, control my mindset, and manage risk effectively, thus allowing me to smoothly navigate through prolonged periods of stagnation—like the current consolidation phase that lasts for several months or even a year or two. Kunka: In bull markets, bear markets, and volatile markets, what role do you think options can play? void*: In the early stage of a bull market, I prefer to use the cash flow accumulated during a bear market to directly buy long-term calls. If the call price is too high, I will directly go for contracts and then buy puts as a safety net. When the market is in a sideways trend, start doing covered calls/straddles to lower costs, and appropriately sell some goods, then buy back when the price drops. In a bear market, I personally don't like to short. If you are going to do this, it's like we shouldn't short our own country in this circle, we shouldn't short our own industry. Whether going long or short, a long-term trend requires a strong belief in holding. Going long is relatively easier to achieve, but it can be very difficult to hold onto amidst various negative news; shorting is even more so. The shorting market comes quickly, and so do the rebounds, making it very difficult to take profits. The difficulty of shorting is higher than that of going long. The way of trading: The most important thing is to choose the right target. Kunka: As an experienced trader, you surely have your own trading system. How is your trading system constructed? void*: Before discussing the trading system, I think the most important thing is to choose the right trading target. No matter how good the system is, if you choose the wrong object, it is useless. Therefore, the first step is to select assets that you have thoroughly researched and believe in from the bottom of your heart, especially whether you still have confidence to hold it during its worst times. For example, Bitcoin once dropped to over $3,000 during the "312" crash in 2020. In that dark moment, could you still hold on? If your faith target does not have such fundamentals, then everything that follows cannot be discussed. This is the premise of establishing a trading system. As for my trading system itself, I generally divide it into several aspects: the first is market analysis (primarily technical analysis, supplemented by macro and fundamental analysis); the second is capital management and risk control; the third is trading mentality; the fourth is the selection of trading tools.

Market Analysis: There are various schools of technical analysis in the market, including various candlestick patterns, wave theory, moving average systems, and so on. They seem diverse, but essentially they all describe the commonality of market trends; they just have different appearances. Ultimately, technical analysis is like a "rearview mirror"; it cannot guarantee that you will accurately catch the bottom or top every time. However, finding a method that works well for you and can roughly determine the trend direction and stage highs and lows is enough for me. My approach is to use fundamentals as a verification and supplement to technical analysis conclusions. This is because fundamental information that is widely known tends to be delayed, and there are always people in the market who know the news earlier than you. They trade based on the information they have ahead of time, and the changes are already reflected in the technical trends of the market. Therefore, I usually make a preliminary judgment based on technical analysis, and then use subsequent changes in fundamentals to verify whether my technical judgment is correct. For example, during October to November 2022, Bitcoin began to bottom out and rebound after a continuous decline. At that time, the Federal Reserve was still raising interest rates, but I noticed that the rate hike in November was reduced from the previous 50 basis points to 25 basis points. I judged through technical analysis that this might be a stage bottom, and then I saw this fundamental signal matching my judgment, which strengthened my confidence in capturing that wave of increase. My philosophy can be summarized as "technical analysis first identifies the trend, and fundamentals come to confirm it." Funds Management and Risk Control: This aspect must be combined with one's own risk preference. Personally, my risk preference is not high; I am well aware that I am just an ordinary person and cannot be right every time. The acknowledgment of this fact manifests in that when I feel we are close to a bottom or a top, I actively control my position. For example, assuming I divide my position into 10 parts, when I judge that a certain peak has been reached, I will gradually sell a few parts to lock in profits; conversely, when I believe we are close to a bottom, I will also gradually buy back my position in batches. I no longer operate with a full position and go all in and out as before. Betting with a full position can indeed feel great when it's right, but if I make a mistake, the losses can be extremely severe, leading to fatigue and constant anxiety that affects my life. Nowadays, I focus more on diversifying my positions and reducing the psychological pressure caused by volatility. Additionally, there are many details in risk control, such as setting stop-loss levels and position leverage ratios, which I won't elaborate on. Mindset Management: This varies from person to person. I know some traders in the circle who are always convinced that their judgments are correct, eager to proclaim to anyone, "This wave will definitely rise," and later enjoy flaunting their results, savoring the satisfaction of being "proven right." But for me, deep down, I acknowledge that I cannot predict the market. When my judgment is correct, there is an element of luck involved, and perhaps a bit of technical skill, but I am more concerned about whether I can bear the consequences if I am wrong. Therefore, I try to maintain a calm mindset, understanding that being right or wrong is completely normal. Before placing an order, I always ask myself: "If I'm wrong about the direction, can I accept this loss?" rather than fantasizing about "how much I can earn if I bet correctly." Don't start by thinking about earning enough to buy a house or a car; instead, think about what to do if you're wrong. Additionally, don't deliberately go against the market. For example, if the whole market believes that something will happen, betting against it by assuming it won't happen is likely to be a painful operation that goes against the trend. Tool Selection: Not every trading tool is suitable in any market condition. In a strong upward trend, most people can make money regardless of the method used: whether it's moving averages or Bollinger Bands, as long as the direction is right, anyone can profit. However, in a long-term sideways market, using linear tools like futures can be quite challenging - after opening a position, the market neither rises nor falls, causing you to get whipsawed by stop losses and take profits, gradually eroding the profits made in previous trending markets during the prolonged consolidation. As everyone knows, the extreme volatility of sharp rises and falls only occupies a small part of the total time; most of the time, the market is sideways. Therefore, we need to consider how to cope with prolonged sideways conditions to generate some income while waiting. For example, selling options to collect premiums can somewhat compensate for the lack of trending profits during the consolidation period. Of course, if the sideways period lasts too long and volatility continues to decline, the seller's profits will also become increasingly limited. In this case, it may be better to simply choose to wait and watch for the next major trend to arrive. Kunkka: You just said that position sizing is very important in trading, how do you size positions? void*: When building a position in a single asset, it should be done in batches, for example in 5 portions, or by buying 5 options with different strike prices and expiration dates, rather than buying all at once. Spread out the entry price and entry date to give yourself margin for error. Bottoms are rarely V-shaped, so allow for some margin for error. If you are making a bottom on a weekly chart, take your time by spreading it over a few hours or a couple of days, and don’t go all in at once. I like to allocate a portion of my capital across spot, contracts, and options when the risk is controllable, which gives me better control over the overall account. Keep the account margin utilization rate (MM) at ≤5%. Kunka: Can you talk about the option strategies you usually use? What strategies do you use in what scenarios? void*: My strategy is to follow my own views. For example, if I believe this is a weekly level bottom, I will start to sell out-of-the-money put options in batches. When the market enters a daily or 4-hour level adjustment, I will further operate based on the situation, such as taking delivery, closing positions, or using other methods to hedge. Kunka: If you encounter an extreme situation like 312, will you have any additional ways to respond? For example, off-site charging? void*: In that kind of situation, if your position is not heavy, it's still okay; at most, you've just acquired some relatively expensive chips. I believe that measures to prevent extreme risks need to be prepared before the risks occur. Usually, you should leave your bottom line and manage risk well. Try not to corner yourself. When something really happens, besides recharging, there’s very little you can do, which tests your on-the-spot experience and mental state. Kunka: You entered the space in 2016. What are your thoughts on various sectors of the crypto industry, such as DeFi, GameFi, RWA, etc.? void*: Personally, I tend to be more conservative. For an industry to attract more funds and traffic, it must create hotspots, as hotspots bring wealth effects, which can draw new participants into the market. Regarding various sectors, one of my observations is that in the last market cycle, similar types of things that had already exploded in popularity may be difficult to replicate their wealth myths in the next cycle. What can be focused on are some relatively new things in each cycle that have never appeared in history, that have a higher level of popularity and more discussions. It’s best if many novices or individuals with less influence are discussing it, rather than those high-profile KOLs with a particularly large number of followers. Kunka: As a developer, having come across the Bitcoin whitepaper and Ethereum, over the years of observation, has your perspective on the value of the infrastructure of these two crypto worlds changed? void*: I have always been very confident in BTC, as it can meet a part of the demand for decentralized finance or say personal financial absolute ownership. BTC has basically become something akin to a religion; it doesn't need to go through various iterations, and there is a full consensus among people about it. However, Ethereum is quite different; it resembles a tech startup that constantly needs to make some impressive and forward-looking technological advancements to show people the future, so that its expectations can better support the price to rise. This is a point I think distinguishes it from BTC. Kunka: So you have a strong belief in holding Bitcoin? void*: If I don't do technical analysis and don't care about the macro aspects, I have it. But since I feel I can see a rough cycle, I will still make some timing judgments. Advice for beginners and intermediate traders Kunka: If someone wants to get started with options, where do you think is a good place to begin? What are some pitfalls that newcomers might easily fall into? void*: If you want to learn about options, I think searching for videos on SignalPlus on Bilibili is quite good. But a more important factor is that being able to make significant money is not because options magnify your profits, but because the underlying asset you choose is good enough, and you are fortunate enough to be on the right cycle, choosing the correct direction for that cycle, and then holding firmly, along with having good risk control with options or using appropriate leverage, can lead to a relatively good outcome. These factors complement each other and are all essential. Additionally, I think one point that other teachers may not have mentioned is that you must first have your own perspective on the market. If you don't have a viewpoint on the market, it's difficult to use options effectively. Unless you have a large amount of capital to engage in volatility arbitrage. For those with medium and small funds, it is essential to base your operations on your own set of market views, rather than being influenced by A's analysis today, B's tomorrow, and C's the day after. You must have your own sense of whether prices are high or low. Kunka: If you could give some advice to newcomers who want to trade options long-term, what would you say? void*: Take a small amount of money that you can afford to lose and dip your toes in. I have many friends who want to learn, but they just keep reading books, possibly for three or four months, and still haven't opened an account. Kunka: So what advice do you have for a mid-level trader who has been floundering in the market for some time? void*: This varies from person to person, as every trader has their own style. I'll share my experience: if someone has been immersed in the market for years and is still active (meaning they haven't been eliminated), then they should repeatedly examine and refine their trading perspective, figuring out what they are really good at and what they are not. In simple terms, one needs to know which market phases throughout the year they can confidently make money in. Conversely, it is also important to understand in what kind of market conditions they are likely to lose money, or at the very least, not make any profits. If after a few years you can recognize this, then during the market phases you excel in, you can boldly increase your position to enhance profits; while in the market ranges you are not good at, you should decisively take a break or reduce your position.

Many experienced traders actually do this—when the market is not favorable, they either take a step back or only use small positions to run strategies, ensuring they don't make big mistakes. Personally, I choose to use some quantitative programs or sell options during those "no-win" periods to generate a bit of cash flow for myself. Because after surviving in the market for many years, you probably have a vague judgment about the price range and market rhythm, which allows you to use these judgments to implement some low-risk selling strategies, ensuring that even in difficult earning phases, you can still have food to eat and soup to drink. In this way, even if the market currently has no trending opportunities, I won't lose my balance or deplete my resources; when a big trend that suits me appears, I can maintain a good state and sufficient ammunition to re-enter the market. In summary, intermediate traders need to know when to strike and when to hold back. By making small profits to maintain their position, they can wait for their own opportunities to win or lose.