After ten years in the crypto world, in 2015, I entered the market with 300,000, reaching over 3 million at the highest point. At that moment, I thought I was a trading god, decisively resigning from my job to focus on trading crypto, even borrowing money to trade.
However, reality gave me a harsh slap; I encountered many problems that made me not only lose all my profits but also accumulate a mountain of debt, ultimately having to sell my house, and my wife and child almost left me. In 2017, it was my darkest moment; in just a few months, I went from the peak to the bottom.
Later, I reflected and summarized a lot. I had the privilege of sharing tea with a big shot in the crypto world, discussing the market dynamics.
His words left a deep impression on me.
Later, I began to summarize methods, reflect, change my erroneous trading methods and approaches, start altering my thinking and understanding, learn + learn + learn, and it was only under the guidance of experts that I had an epiphany! Currently, while I cannot claim to be very wealthy, I have achieved stable profits, at least able to consistently outperform over 80% of people.
Reflecting on my own journey in the crypto world has been full of ups and downs. From initially entering the market with 300,000, to making tens of millions during the bull market; and then from tens of millions down to just over 2 million; now, I am waiting for the next bull market with a goal of reaching three small targets.
Next, I will summarize my experience in hopes of helping fellow traders:
In a bull market, how should we correctly accumulate coins? In a bear market, how to trade?
Compared to traditional financial trading like stocks and futures, there are many more people making big money in the crypto space! Many ordinary people, or even those worse off than us, have made fortunes; how can we not be tempted?!
The temptation of wealth can lead people to lose their rationality. Many people hold onto the hope of finding a few potential coins, making large investments and waiting to get rich or change their fate! So-called potential coins are those that can increase by a thousand or even ten thousand times!
Here, I must tell everyone a fact. Those who make money are, after all, a minority, and a pitiful few at that. It cannot be denied that many people have made money, but wealth is temporary, or rather, it exists only in the account; if not withdrawn, exiting the crypto market will eventually lead to losses. There are too many such examples. For instance, one of my classmates, who learned trading techniques with me, was lucky enough to start with 20,000, earning 5 million in just six months. At that time, we were very envious, even jealous. We advised him to quickly withdraw the money to buy real estate, gold, or other fixed assets, or to give most of the money to his family. As you might guess, all the money he earned was lost, and he ended up in debt. So, how can we stay undefeated in the crypto market?
In a bull market, how should we correctly accumulate coins to make money?
First, find coins with potential and use half of your capital to buy in and don’t sell; hold for at least six months or a year. Second, trade in waves; use the remaining half of your money to continuously buy low and sell high, thereby constantly profiting.
Specifically, how to buy low and sell high? In my entire trading system, I have summarized a simple trading system, which is simple immediate use of the trading system. Simple means that anyone with normal intelligence can learn it in half an hour and master it in about a week. This is because it uses only two tools: one is the turning point, and the other is the trend line. Immediate use means that the entry and exit points are clear at a glance.
For those interested in a simple trading system, feel free to contact me separately.
Where there is a bull market, there is a bear market. If in a bear market, you still stick to old thoughts of buying low and selling high, you will often suffer severe losses. So, is there a good solution?
The solution is to short. First, you can use leveraged trading to short, with a position size of 1x. For specific operations, you can ask customer service. Second, make low-multiple contracts, setting the contract multiple to 1, fully shorting when shorting.
Specific shorting points should still be based on the simple immediate use of the trading system.
Simple and immediate use of the trading system is what I summarized after two months. Besides the above advantages, there are also these advantages:
1. Avoid human weaknesses, namely greed and fear. The entry and exit points are clear; buy when you should and sell when you should!
2. Applicable to all coins (including mainstream coins and altcoins)
3. Applicable to a wide range of cycles (15-minute line and above can be used).
4. Avoid the dullness of indicators.
Lastly, let me emphasize again that in a bull market, focus on spot trading, and do not touch contracts! The simple immediate use of the trading system can be summarized in four words: the great way is extremely simple. I hope everyone does not underestimate it because it reveals the laws of financial trading.
The bottom line that must be adhered to in contract trading.
Contract trading is highly risky. The essence of making money in high-risk situations is to manage risks well. This is often said as 'earn more when making money, lose less when losing'; this principle applies even more to contract trading. Therefore, I will first talk about the importance of risk management in contract trading and then discuss several important aspects of risk management.
It can be said that making money in contracts is neither difficult nor easy. Earning is easy a couple of times, but the challenge is to earn steadily over the long term. In the face of the market, we are all small players; we should lower our expectations for ourselves, just focus on making money. Do not pursue win rates, do not chase the lowest and highest points, and do not expect to get rich quickly. Opening a position is normal, whether right or wrong; you should not let it affect your mindset. Just stop losses in time. Earning small amounts once, then earn a few more times, take some time to accumulate slowly, and never be in a hurry. These thoughts are like the Sword of Damocles, potentially bringing you disastrous consequences in some market trends.
Ultimately, human nature in the trading market revolves around greed and panic. To make money, one must find ways to overcome human weaknesses; do not be greedy when you shouldn't be, and do not be fearful when you shouldn't be.
It is important to stick to your own thinking. The crypto market is still quite small; there aren’t many trading opponents. The essential reason people can make money is that they persist in their own thinking. If you follow the crowd, it’s good enough not to lose; making money is as difficult as climbing to the sky.
Therefore, in contract trading, you must strictly adhere to the trading discipline you set; do not be greedy, do not take chances. You cannot be complacent because of a profit from a single act of non-compliance, nor should you be frustrated for missing an opportunity due to adhering to discipline. Discipline is ironclad; it is the bottom line, and you must strictly adhere to it at all times.
All of this is to manage risks well and reduce the probability of fatal errors. By adhering to the following points, making money will be a high probability event:
1. Reduce leverage
You must control the actual leverage of your position to not exceed 2-3 times; of course, it's best to stay around 1x. If it's a full position mode, you must set profit-taking and stop-loss orders to prevent a catastrophic loss like on 9.25.
2. Learn to stop losses.
This point is very important. Let me repeat it: the money that retail investors lose is not due to taking stop losses but due to margin calls. Market fluctuations are inherently unpredictable; those who can make money usually earn more when they are right and lose less when they are wrong. Stop losses help you minimize losses when you are wrong. Therefore, retail investors should also recognize their mistakes promptly, enforce stop losses, and never hold onto losing positions. Set a loss ratio you can tolerate, such as 15%, 30%, depending on your situation. Once you reach the maximum loss ratio, do not hope for a recovery, nor should you think that since you have already lost so much, you might as well hold on. In short, no matter what, you must stop losses. It may not feel significant once or twice, and sometimes you might regret it after stopping a loss, but over time, you’ll reap the benefits. For example, during the period before 9.25, you might continuously go long, easily hitting stop losses. Every time you stop loss, you might feel very frustrated, but looking back at how many people were liquidated with 2-3 times leverage that night, you ought to be grateful for your wise stop loss. In short, stopping losses is just cutting a bit of flesh; not stopping losses is equivalent to suicide.
3. Reduce frequency.
This doesn’t need much explanation; everyone should understand that the more you trade, the more mistakes you make. If you happen to make mistakes and incur significant losses, that would be even worse. So, in trading, strive to do the right thing, reduce trading frequency, and seize high-probability opportunities. Making fewer mistakes and losses is beneficial for both profit generation and mental adjustment.
4. Capital Management
Capital management is what I consider the most important aspect of trading. Mastering good capital management strategies can effectively protect the principal, significantly reduce drawdowns, secure profits, and ultimately increase your risk tolerance several times over. Capital management determines whether you can make money and is the lifeline for surviving long-term in the trading market.
Here are a few disciplines to mention separately: (1) Always keep your principal not fully invested. Even leaving 10% in cash, you will be grateful for the discipline you adhered to in extreme risk situations. I generally keep 10-20% of my funds in cash, occasionally trading short-term altcoins, typically holding positions for less than 24 hours, then making a quick profit. (2) Clearly separate contracts and spot trading; this is considered risk isolation. The spot part should not have any leverage. Crypto leverage is also not acceptable; just enjoy the profits from spot price increases. The contract part can occupy 20-30% of the total capital, no more than 50% in highly certain trend markets. The contract part should involve low-leverage operations, anchoring to coin-based returns. Once stable profits are achieved in the contract market, the coin-based returns are also quite considerable. (3) Avoid overly dispersed capital. Concentrate funds on several relatively strong coins; do not diversify too much. Reduce the number of trading targets; for instance, don’t think about simultaneously opening contracts for Bitcoin, Ethereum, EOS, and Litecoin. That is what the pros do to maximize returns. As retail investors, our goal is primarily to pursue returns, not maximization. Moreover, trading too many targets will only increase risk and will not magnify profits. Therefore, it is best to concentrate firepower based on improving win rates, which will make it easier to generate profits, significantly faster than spreading out funds across several targets.
5. Reflect often and summarize.
The entire trading process has only a few steps: judging the direction of the trend ---- finding entry points ---- determining the size of the position ---- adding to the position based on the market ---- taking profits and stopping losses. These are basically the key points. After completing a trade, reflect diligently. Throughout the entire trading process, identify which step you were weak in and focus your efforts there. Ensure that you have good discipline in different trading stages, summarize successful experiences and lessons learned in trading, and persist long-term to reap rewards.
What I want to express about contract trading is that I did not talk about order opening skills and strategies, but chose these seemingly common thoughts and philosophies because I believe these fundamental considerations are more important, more practical, and must be mastered. They are like the foundation of a tall building; only when the foundation is solid can the upper floors be beautiful. Therefore, after understanding these basic principles, one should also possess certain technical analysis capabilities, mastering some order opening skills and strategies. In the crypto market, contracts become your cash machine.
In the crypto space, if you want to turn 10,000 into 12 million, there is only one way. If you want to be quick, that is to roll positions +.
The most adventurous methods should also be divided into three times. This means you should at least give yourself three chances.
For example, if the total account funds are 200,000, the client allows you to lose up to 20%, which is 40,000. Then, the most daring loss plan I suggest is: first time 10,000, second time 10,000, third time 20,000. I believe there is a certain rationality in such a loss plan. Because if you get it right once out of three tries, you can profit or say you can continue to survive in the market. Not being kicked out of the market itself is a form of success, and you have a chance to win.
2. Grasp the overall market trend. Trends are much harder to trade than consolidations because trends involve chasing highs and cutting losses; you need to have the determination to hold positions, while buying high and selling low aligns more with human nature. The more trading aligns with human nature, the less money you make, precisely because it is difficult to trade, that is where the profit lies. In a rising trend, every violent pullback should be taken as an opportunity to go long. Do you remember what I said about probabilities? Therefore, if you're not in the market or have exited, patiently wait for a drop of 10-20% to go long boldly.
3. Set profit-taking and stop-loss targets. Profit-taking and stop-loss can be said to be key to whether one can profit. In several trades, we must ensure that total profits exceed total losses. Achieving this is not difficult; just accomplish the following: ① Each stop loss ≤ 5% of total capital; ② Each profit > 5% of total capital; ③ Total trading win rate > 50%. Meeting these requirements (with a profit-loss ratio greater than 1 and a win rate greater than 50%) will lead to profitability. Of course, you can also have a high profit-loss ratio with a low win rate or a low profit-loss ratio with a high win rate. Anyway, as long as total profits remain positive, you can achieve profitability: Total profits = initial principal × (average profit × win rate - average loss × loss rate).
4. Remember not to trade too frequently. Since BTC perpetual contracts trade 24/7, many beginners will operate daily, almost trading every day during the 22 trading days of a month. As the saying goes: 'Those who frequently walk along the river will inevitably get their shoes wet.' The more you operate, the more likely you are to make mistakes. Once mistakes happen, your mentality will deteriorate, and a bad mindset may lead to impulsive actions: possibly counter-trading or heavy positions. This could lead to a series of mistakes, easily resulting in huge losses on paper, which may take years to recover.
Several points to note about rolling positions:
1. Enough patience; the profits from rolling positions can be enormous. As long as you can roll successfully a few times, you can earn at least over a million. Therefore, you cannot roll lightly; look for opportunities with high certainty.
2. High-certainty opportunities refer to those that consolidate after a sharp drop and then break upward. The probability of trending in this case is quite high, so you need to get in early when the trend reversal point is identified.
3. Only roll long, not short.
But no matter what, contracts are a high-risk gambling market; safety first. I wish everyone can make a fortune in the crypto world.
Framework
Life is full of randomness and opportunities; often, your efforts do not coincide with opportunities, which renders everything meaningless. It’s impossible to soar to the heavens. I don’t mean to say don’t work hard but rather, do not be too tough on yourself.
The future is full of uncertainties; there are too many unpredictable things. Trading and life are not linear, filled with surges and declines. What is needed is to be well-prepared and wait for the wind to come. When opportunities arise, you can hoist the sails; during adversities, stay humble, and do not think about unrealistic things.
1. Short-term Trader
We lack faith in trends. Our minds are filled with the sound of coins clinking, cautiously accumulating small amounts. However, what does it matter? Short-term profits depend on time accumulation; daily losses must be controlled within a certain range because you can spend a few days earning it back.
2. Faith
Long-term trading requires faith; many day traders also have strong convictions. These understandings of the market and self-awareness forge our confidence. Long-term trend trading relies on market conditions; if experiencing a significant market event, you must seize the opportunity; otherwise, you will spend a lot of time waiting for the next big market move. Or when the next grand market event comes, you may find yourself exhausted by the market during the waiting period, losing sufficient capital, which would be troublesome. Thus, luck is also crucial.
3. Execution Ability
With the same technical analysis, some people earn a lot while others lose everything. Why is that? Since everyone understands that technical analysis is just a game of probabilities, why is there such a big gap? This is due to the difference in execution ability.
For many traders, whether they earn or lose, they are often rigidly looking at technical analysis, with the computer screen filled with various lines. However, when it comes to actually entering the market, they often hesitate and drag their feet when exiting. Ultimately, the only weapon of technical analysis becomes practically useless.
A principle of trading solves two problems.
The principle is: buy strong, sell weak!
Why buy strong and sell weak? Are you also following this principle in your operations? If you don't understand the reasons, think more about it; I won't elaborate here. Adhering to the principle of buying strong and selling weak will greatly increase your returns and reduce risks!
The first question is: trend judgment!
We all know that we need to trade with the trend, and the probability of doing so correctly should be greater than 50%. So which trend should we follow?
How to judge trends and trend reversals? The question of which trend to follow has already been solved in the trading method because you have determined your operating cycle. After determining the trading cycle, discussing trends with others becomes meaningless because the directions of trends may differ based on the different operating cycles. Therefore, what others say about rises and falls has no relevance to you; just use your own trend judgment standards to make clear judgments in your own cycle.
Once you understand the judgment, only trade in the direction of the trend, which solves the problem of following the trend! Of course, there are also standards for judging trend reversals, which are also for following the trend! As for what method you use to make judgments, anything is fine!
Trend lines and moving averages are good; they are simple and clear, without much subjective judgment involved!
The second question: the structure of the trend!
Once you clearly understand the basic structure of the trend, the trend becomes clear and obvious to you, no longer a tangled mess! So, what is the basic structure of the trend?
Is it Shen? Jia? You? Yue? In the end, it's Yue! When you understand that the ups and downs of the sun are excellent positions for attack and defense, will you still trade blindly?
As I mentioned, this isn't a secret; there is no issue of it not working once said. Because this is an unchangeable essence!
The Dao is the bones that support the framework of trading! The Fa is the tendons that connect the inside and outside; the Shu is the muscles that cover the outside. Thus, trading reaches a complete state!
Patiently stay out of the market, waiting for trends and opportunities.
Patiently wait for the market to show a truly perfect trend; do not make predictive interventions; 'Timing is everything'. Buy at the right time and sell at the right time. Trading does not have to happen every day; those who think they should trade at all times overlook a condition: trading needs reasons, and those reasons must be objective and appropriate.
If you can avoid the 'big washout', you can bring home substantial profits.
Only enter the market when a strong trend characteristic is shown, or your analysis indicates that the market is brewing a trend.
What I understand from the above theories is: there are two reasons for entering the market:
1. A clearly determined trend that can be judged by your own analysis method (a trend you can understand).
2. 'Affirmative' entry timing signals that have undergone thorough testing and verification.
Knowing when to stay out of the market is wise; this saying has a certain truth to it. Staying out of the market is not difficult; it just means not trading when the trend lacks certainty.
Patience in holding positions, waiting for the trend to end.
Trends are sustainable. My 'thoughts' have never made me big money; it is always my 'persistence' that makes me big money. Do you understand? It is my persistence!
It is rare to simultaneously judge correctly and remain steadfast. I have found this to be the most difficult thing to learn.
'Following the trend' positions can yield substantial profits; never easily 'abandon the ship'.
'Cut losses and let profits run'; the goal of patient holding is to maximize profits, and the key is how to exit. Solving how to exit can resolve the issue of patient holding. After more than a year of repeated exploration, I have found a method.
That is, do not think about buying and selling at the highest and lowest points. Use shorter time cycles and exit on the right side. Although you lose part of your profits, you can still hold until the trend concludes and achieve consistency in exiting.
Secrets to increasing profit success.
The market is a very enchanting one; it can bring immense wealth, but most of the time it brings joy and sorrow, leading to liquidation and exit. Today, let's talk about the tricks that successful veterans in the market possess.
Solve the following three problems, and you will be close to stable profit.
1. What can ultimately ensure that investors profit continuously?
2. How can one improve the profit-loss ratio in investments?
3. What are the secrets of quickly flipping small funds?
The only way to solve these problems is to establish your own mature trading system and increase the system's success rate to over 70%. Then, you can control consecutive losses to 5 times or less, set the system's profit-loss ratio to 3:1 or even larger, and achieve a winning goal in every 10 trades through specific capital management strategies.
To be profitable in trading, you must have a deep understanding of your trading system, firmly believe in your trading system, and possess the correct mindset and good trading attitude, which are prerequisites for investment success.
The investment market has repeatedly proven that 80% of people incur losses; no one can change the natural laws of the investment world because this is the eternal iron law of the investment world. This does not mean that the stock market is mysterious or difficult, but rather that most people have an irresistible nature: they doubt their trading systems. It is precisely this fatal nature that ultimately leads to investment failure, while trusting the system is the most crucial element in trading. Only by trusting your trading system can you find the key to open the door to wealth.
The entire secret to successful trading: is to persistently adhere to your trading system.
Investment success is not determined by how powerful and outstanding your tools are, but by whether you can effectively use your trading tools. On the road to wealth dreams, the most effective strategy is to focus and persist with a good trading system. Focus and persistence can generate incredible power. When you can truly do this, you can create miracles that even you would not believe.
Successful traders have a firm belief that they firmly believe that sticking to a successful trading system is the only choice for small people to achieve great ambitions. Doubting one's trading system is the beginning of investment destruction. Every successful investor possesses a unique quality: having the correct mindset, a rigorous trading attitude, strong confidence, decisiveness, and an indomitable spirit in the face of failure. Even in the most challenging times for the system, they can trade strictly according to the system because they understand that success requires a grand vision and the ability to overcome the short-sighted weaknesses of human nature, as well as the patience and confidence to adhere to a fixed profit model.
Original content is not easy. I am 阿鬼, and I share daily valuable content for retail investors! There is a way to the soul, and there is a technique to trading. The above content is based on my ten years of experience in the market, continuously summarizing and reflecting to achieve today's results. It may seem simple, but achieving knowledge and action unity is not easy. I hope to help many traders avoid detours!
If you are also a technical enthusiast and are diligently studying technical operations in the crypto space, feel free to follow my public account (crypto 阿鬼) for real-time learning and communication. You can also clarify market directions and strategies; regardless of market style, knowing in advance allows you to better grasp opportunities!
