One, Basic understanding and risk warnings
1. Market characteristics
- High volatility: 24-hour trading, price fluctuations often exceed 10%, leverage contracts can amplify risk by hundreds of times.
- Information asymmetry: Frequent black swan events such as market manipulation, fake news, and project failures.
- Regulatory uncertainty: Significant policy differences across countries may lead to risks such as exchange closures and asset freezes at any time.
2. Participation principles
- Invest only with spare cash: Recommended not to exceed 10% of personal liquid assets.
- Reject FOMO: Do not blindly chase rising prices or panic sell.
- Diversified investment: Avoid investing all in a single cryptocurrency.
Two, Classification of mainstream profit strategies
1. Spot trading (low risk)
- Long-term holding
- Applicable cryptocurrencies: Mainstream coins like BTC, ETH.
- Strategy: Regular investment (e.g., buying a fixed amount weekly/monthly), ignoring short-term fluctuations, target period 3-5 years.
- Tools: Regular investment features from exchanges (such as Binance's 'Investment Plan').
- Swing trading
- Strategy: Use technical analysis (MACD, RSI, Bollinger Bands) to capture weekly/monthly trends.
- Key point: Set stop-loss (e.g., exit if falling below support by 5%-10%).
2. Contract leverage
- Long and short: Can both go long on price increases and short on price decreases.
- Strategy examples:
- Grid trading: Set price ranges for automatic low buying and high selling (e.g., Binance's 'Grid Bot').
- Breakout trading: Enter positions after key resistance/support levels are breached.
- Risk control:
- Leverage should be ≤5 times to avoid liquidation.
- Prefer perpetual contracts in U-based margin to reduce liquidation risk.
3. Arbitrage strategies
- Exchange price difference arbitrage: Buy low and sell high when there is a price difference for the same cryptocurrency on different exchanges (requires quick execution).
- Futures-spot arbitrage: When futures prices are significantly higher than spot prices, short the futures and buy spot to lock in profits.
- Cross-chain arbitrage: Profit from liquidity differences between different public chain ecosystems (requires familiarity with DeFi protocols).
Three, Sentiment indicators
- Fear and greed index: Assess whether the market is overheated or oversold.
- Social media sentiment: Discussions on Twitter and Telegram regarding popular projects.
Four, Risk control and capital management
1. Position allocation
- Mainstream coins (BTC/ETH): 50%-70%.
- Potential altcoins: 20%-30%.
- High-risk contracts/U-based margin: ≤10%.
2. Stop-loss rules
- Spot: Mandatory stop-loss when a single cryptocurrency loses over 15%.
- Contracts: Set 'trigger price' + 'execution price' as dual insurance to avoid liquidation.
3. Black swan responses
- Retain 10%-20% in stablecoins to respond to extreme price drops for bottom fishing.
- Reduce leverage or liquidate positions before significant policy announcements (such as Federal Reserve interest rate hikes).
Five, Pitfall avoidance guide
1. Reject 'shitcoins': Altcoins ranked outside the top 100 by market cap with no real application are 99% likely to go to zero.
2. Beware of pig-butchering scams: Communities claiming to be 'signal teachers' or offering 'guaranteed returns' are mostly scams.
3. Cold wallet storage: Store large assets in hardware wallets to avoid exchange failure risks.
4. Tax compliance: Retain transaction records; some countries require reporting cryptocurrency capital gains tax.