1. The longer the sideways movement, the higher the rise; the longer it is sideways, the higher it will rise.
Horizontal fluctuations indicate accumulation at the bottom, with more chips indicating greater ambition.
Two, suddenly dropping while being horizontal means it is definitely a small drop; after a drop, there must be a rise.
Suddenly rising after being horizontal is usually a small rise; after a rise, there must be a drop. The horizontal phase is a strong accumulation phase, where fluctuations represent washing out; washing out means back and forth rises and falls, simple and brutal, but it never fails.
Three, if new lows are not made, it will rise quickly; if new highs are not made, it is not good.
Not making new lows indicates that there are major players entering the market for continuous acquisition, and it is about to bottom out. Not making new highs indicates that the speculators are secretly offloading, which is very bad.
Four, when the volume reaches a minimal point, it will definitely rise significantly; at the peak, it will definitely fall significantly.
The volume at a minimal point is on the sidelines, no one is trading, either they are all holding chips waiting for an increase, or the speculators have run out of chips waiting for a decrease.
Five, after a shallow drop at the peak, it will explore again; after a rebound at the bottom, it will touch the bottom again.
Re-exploring the peak is the speculators selling off the remaining stock; re-tapping the bottom is to gather the chips shaken out at the bottom again.
Today, Autumn will explain asset allocation in the cryptocurrency circle to preserve the fruits of victory.
Regarding asset allocation, while most investors in the circle have concepts, they lack specific practices. Many people trade coins, imitating the PiXiu, with funds only going in but not out, only seeing continuous funds invested in the market, with only paper profits but not actually withdrawing profits, leading to the conclusion that they have not made money. Despite experiencing many rebounds, they ultimately end up being trapped.
The cryptocurrency market is volatile; trends created by concepts and speculation cannot last. Bull markets are short, and bear markets are long. If you cannot take profits and exit at a high point, you will basically face the situation of losing the money earned by luck based on skill.
Although there are some big shots who achieve financial freedom by holding digital currencies long-term, that is just an exception. Behind those exceptions is a silent majority retreating in silence. For ordinary people, holding onto losses is not advisable, but rather, there should be a more detailed and clear asset allocation, guided by goals.
Personal asset allocation in the cryptocurrency circle can be simply summarized into two focal points, one trading strategy, and one method of rebirth through nirvana.
Two focal points: position management + capital allocation;
Trading strategy: short, medium, and long-term strategies;
Method of rebirth through nirvana: start from zero.
1. Capital allocation
Let's first talk about capital allocation. For personal investment, funds should only be available funds or idle funds that do not affect your survival; therefore, borrowing or mortgaging funds for trading is unacceptable. We are investing, not gambling with our lives.
In terms of capital allocation, the standard is the balance of risk and return. A sound capital allocation that can withstand market risks must be a diversified combination of low-risk, medium-risk, and high-risk products.
Regarding the investment targets in the current financial market, classified according to risk preferences as follows.
Low risk: cash, bank deposits, money market funds, bonds.
Medium risk: gold, funds, real estate.
High risk: stock market, foreign exchange, digital currency.
In terms of capital allocation ratio, there is a significant difference among various risk preference investors.
Risk-averse: low risk: 60%, medium risk: 30%, high risk: 10%
Conservative investors: low risk: 40%, medium risk: 30%, high risk: 30%
Risk preference: low risk: 20%, medium risk: 30%, high risk: 50%
The essence of the cryptocurrency market is high risk, and the high returns expected from that high risk. Therefore, for ordinary people, investing all available funds into the cryptocurrency market without recognizing the risks and returns of the market is inherently an irrational behavior.
The financial market cannot be a one-sided market; very few can make money in the market. We need to rationally allocate the flow of funds, especially in the current market, and be cautious rather than blindly going all in.
2. Position Management
Once the allocation ratios of various risk assets are clarified, we can look at the position management in the cryptocurrency market (taking 50% available funds in the cryptocurrency market as an example).
Position management in the cryptocurrency market involves two aspects: one is the level of cash utilization, and the other is the specific management of digital currency positions.
In terms of cash utilization, in a non-obvious bull market, the position level of conservative investors is as follows.
Cash: 30%
Digital assets: 50%
Liquid funds: 20%
Cash is used to wait for trend markets; when a trend arises, gradually increase the position: digital asset position accounts for 50%, and this is not a one-time purchase but achieved through regular investment and gradual accumulation based on market predictions. 20% of liquid funds are to respond to short-term markets, seizing potential buying opportunities; when opportunities pass or misjudgment occurs, timely selling and releasing the liquid fund ratio is essential.
Specifically for the positions of digital currencies, the following position ratios can be referenced:
BTC, ETH: 60%.
Platform tokens: 20%, platform tokens from mainstream exchanges, such as HT, BNB, OKB.
Mainstream coins: 10%, must meet two conditions: daily trading volume ratio and market capitalization ranking ratio both in the top 50.
Altcoins: 10%, for short-term opportunities.
Bitcoin and ETH, as market leaders, hold absolute advantages in market capitalization, liquidity, and audience, making them essential tokens to hold.
In addition, mainstream exchange platform tokens with stable profit models and user bases are also essential tokens to hold. Whether for mainstream coin trends or specific altcoin trends, platform tokens will perform well as long as trading exists, liquidity is not a concern.
Regarding the current market, it belongs to a one-sided market, where mainstream coins follow the BTC overall market without having too many independent trading opportunities, only exhibiting greater volatility during simultaneous rises and falls. Therefore, from the perspective of stability and profitability, a small allocation is sufficient.
For most altcoins, there are only short-term markets, with no value or necessity for medium to long-term holding. After years of development, the era of altcoins telling stories is over. Without practical application scenarios or technological uniqueness, blockchain projects have little hope.
3. Trading strategy
Next is the trading strategy; unless trained professionals have relatively complete trading strategies, ordinary people lack strategic thinking. They confuse short-term, medium-term, and long-term concepts, along with position management for buying and selling, blindly searching for various methods, constantly trying and failing, but failing to summarize and practice strategies suitable for themselves.
Regarding trading strategies, simply put, one is a short, medium, and long-term trading strategy.
One is taking profits and losses, and the other is the buying strategy. Mastering these three points and applying them flexibly is sufficient.
Short, medium, and long-term trading strategies; you need to distinguish between each trade whether it is a short-term, medium-term, or long-term trade.
Short-term: combat ends within 3 days to 2 weeks, with a maximum of about 1 month;
Medium-term: 2 weeks to 3 months, up to 6 months.
Long-term: over 6 months.
Based on trading at different times,
Strict execution is needed; short-term trading generally chases short-term market hotspots. When market changes occur, one must exit at any time; medium-term corresponds to trend markets, where positions can be gradually built up and increased. Long-term markets correspond to large cycles and regular investment strategies.
Whether it is short, medium, or long-term trading, the key to making profits in the market is still buying low and selling high. Therefore, regardless of market conditions, we need to take profits and stop losses promptly to seize profits at each phase of the market.
Taking profits is actually hard to calculate; respond flexibly according to your expectations and the specific overall market conditions. Don't worry about selling early and losing a little; compared to losses, being able to profit has already surpassed the majority of investors in the market. After experiencing so many market conditions, everyone can actually discover that making profits on paper is not difficult, but the challenge lies in taking timely profits.
Stop-loss plans are relatively easy to formulate but difficult to execute, especially when being stubborn or acting against the trend. Countless situations arise where emotions lead to missing stop-losses, resulting in being trapped.
Those who do not know how to set stop-losses can execute according to the following methods:
Short-term: losses within 20%; if there are no results after buying, stop-loss immediately. Short-term is for seizing short-term opportunities; if judgments fail, one should cut losses immediately without delaying in hopes of a market reversal.
Medium-term: losses within 30%, with a lump-sum stop-loss at the time. Because the medium-term position is not purchased all at once, but in several batches, relatively speaking, the average cost is similar to the short-term 20% loss exit.
Long-term: around 30% loss; note that this is not a liquidation operation but a batch stop-loss, where the stop-loss each time is on the profitable positions built at low levels.
The buying strategy is not a one-time all-in operation, nor does it require light positions every time, but rather distinguishes based on whether the trade is short, medium, or long-term.
Short-term: full position; since it's short-term, just buy all at once without waiting, as opportunities are fleeting.
Medium-term: buy in 1-3 batches; the first is to enter with a light position and wait for market developments. After clear signals appear, positions can be gradually increased.
Long-term: buy in batches, similar to a regular investment strategy.
Achieve the goal of lowering the purchase cost through long-term continuous investment. When buying in batches, both space and time should be kept at a distance; you cannot add positions after a 5% drop or just a week after you have added several times. At least there should be more than 10% space and a time frame of two weeks to over a month. It is recommended to gradually lower sensitivity to short-term fluctuations and slowly learn to operate in larger cycles.
4. The method of rebirth through nirvana.
Finally, let's talk about the method of rebirth through nirvana, which is actually very simple. Regardless of the reasons that led to the current positions, and regardless of whether the account is profitable or not, since the current result has been caused, it indicates that your previous methods and strategies are problematic. The only way to escape reality is to zero out and start again.
Simply put, sell all digital currencies in your account, exchange them for stablecoins or cash, and then restart according to the various methods above. Each operation must be a rational investment, with methods and strategies, so that there are no burdens from previous actions.
However, this is actually the most difficult, equivalent to starting over, telling yourself that past operations were all wrong, admitting your failures.
There is also a second layer of meaning in the method of rebirth through nirvana; the market cannot have long-term thinking but must continuously adjust according to the bullish and bearish market changes, repeatedly clearing positions at high points or suitable prices to start over.
Otherwise, it is inevitable to be limited by historical positions and operations; unwilling to stop losses when they should, overly greedy when taking profits, resulting in giving back the money earned to the market. Only seeing continuous inputs of real money while having no funds to take out, this is completely a paradoxical market.
Of course, this does not mean you should cut losses and restart at a low point right now, but to have a zeroing awareness. When you feel it is appropriate, urgent, or when the overall market rebounds to a suitable time, attempt this operation. After all, starting light is much simpler than carrying a heavy load.
In the past few days, I am preparing for the layout of a divine order that is about to start!!!
Comment 168, get on board!!!
Impermanence brings impermanence, brings impermanence!!!
Important things are said three times!!!
