After much trial and error, I have summarized 6 iron rules. The content is not lengthy, but it is very valuable. If after reading you still think it makes no sense, feel free to say whatever you want!

1. Each time you enter the market to buy or sell, the loss should not exceed one-tenth of your funds. This way, even if you are wrong every time, you still have 10 chances to play. For example, some friends trade contracts and it’s best to use only 1/10 leverage at a time. As long as there is one opportunity to multiply your investment by 10, you can recover your capital. Of course, I still hope that newcomers do not trade contracts.

2. Always set a stop-loss level to minimize potential losses from mistakes in trading. Stop-loss is very important; newcomers may not feel its significance deeply. Stop-loss can prevent unnecessary huge losses caused by unexpected events like black swan events. For instance, the USDT crash was completely unpredictable, and almost everyone who shorted at that time faced losses. Moreover, the cryptocurrency market operates 24 hours a day. Without taking profit or stop-loss measures, trading in the market is very dangerous and can lead to sleepless nights. Setting a stop-loss and knowing your maximum loss will make it much safer.

3. Never overtrade. The trading frequency must be low, ideally reduced to once or twice a week. Newcomers who want to practice can use simulated funds for training or accumulate experience with very small amounts. However, for a normal account, one must wait for the right opportunities. Trading opportunities are actually quite rare.

4. Never let a profitable position turn into a loss. Many people feel particularly regretful when a profitable position turns into a loss. How to prevent a profitable position from becoming a loss? It’s simple: when a certain profit percentage is reached, you must set a breakeven stop-loss. For example, if you buy at 10 and it rises to 13, you can set the stop-loss at 10 or 11. This way, even if the market reverses, you can protect your principal from losses.

5. Never go against the market trend. When the market trend is not clear, it is better to observe from the sidelines. Not going against the trend means going with the trend. This trend can be defined differently by everyone, depending on their trading cycle and reference indicators. Some may use the 20-day moving average on a daily chart, while others may use the 60 moving average on an hourly chart; it varies from person to person. Only enter the market when the direction is clear, which will greatly reduce mistakes.

6. If in doubt, close the position and exit the market. Be decisive when entering the market, and do not enter if you are hesitant. This is something you must realize for yourself. Because whether you can hold a position is crucially dependent on confidence and trading psychology. If you can’t sleep at night holding a position, it’s better not to trade.