Trader Eugene: There is a difference between CEX trading and on-chain speculation, the latter has to accept the greatest downside risk

Trader Eugene Ng Ah Sio wrote on X about the difference between CEX trading and on-chain speculation: “Given that most crypto players have been deep in the on-chain trenches lately due to the AI ​​Meme season, I wanted to post something that helps clarify the fundamental differences in the approaches of these two types of trading. (Hint: they are very different) CEX trading: The goal is to find well-defined setups to minimize downside risk. Every setup a trader will see will have a lower downside risk than the upside reward. This is why a good setup will have strict invalidity but allow for ample TP levels where gains are multiples of losses. But it also means you may be stopped out more often. This is an integral part of being a good CEX trader, and if you can identify downside risk mitigation, you have completed 80% of the preparation to become a consistent winning player. This is also why I do not advocate the use of leverage, as leverage increases volatility, both to the upside and the downside. On-chain speculation: In contrast, speculating on-chain is about accepting maximum downside risk. Your goal is to make 10-100x profit on-chain, while the goal of CEX perpetual contracts is 10-30%. On-chain liquidity is also very poor, often involving liquidity pools in the low 7 figures (or less), to the point where traditional technical analysis simply doesn’t work. Understanding the nuances between these two types of trading can help you make better investment decisions, and this is where I see many traders struggle the most. Of course, being a good CEX trader doesn’t necessarily mean you can be a good on-chain trader, and vice versa. ”