I have been in the cryptocurrency space for several years now; I quit my job to trade cryptocurrencies six years ago, going from having nothing to being wealthy. In the beginning, I was also often a candidate for liquidation.
What truly changed me was a night five years ago. Words from a senior greatly resonated with me, helping me understand the eight stages every cryptocurrency enthusiast must go through, constantly reflecting and using this as a mirror, finally reclaiming what I had lost!
Perhaps in the eyes of some, retail investors are always lambs waiting to be slaughtered!
If you are preparing to enter the cryptocurrency space, I sincerely hope this article can help you. As someone with decent summarization skills and expression, I believe my thoughts might be of some assistance to you. Alright, without further ado, let’s get straight to the point~
Now that Bitcoin has broken 110,000, many newcomers eager to enter the cryptocurrency space have flooded in. The cryptocurrency world is a place of survival of the fittest. The barrier to entry is low; everyone can enter the cryptocurrency space, but not everyone can make money in it. If you plan to enter the cryptocurrency space, please remember that it is not a place for overnight wealth, but a field that requires long-term accumulation and continuous learning.
Many people come to the cryptocurrency space with dreams of overnight wealth, fantasizing about turning a few thousand into 1 million in capital. Of course, some have succeeded, but in most cases, it can only be achieved through 'rolling positions'. Although rolling positions are theoretically feasible, they are certainly not an easy path.
Rolling positions are a strategy that should only be used when significant opportunities arise; it does not require frequent operations. If you seize a few such opportunities in your lifetime, you can accumulate wealth from nothing to tens of millions. And having tens of millions in assets is enough for an ordinary person to join the ranks of the wealthy and achieve financial freedom.
When you truly want to make money, do not think about how much you want to earn or how to earn so much. Don’t even think about those goals of tens of millions or even hundreds of millions, but start from your actual situation and dedicate more time to solidifying your understanding. Simply boasting will not bring about substantial change; the key to trading is recognizing the size of opportunities; you cannot always trade lightly or heavily. In normal times, you can practice with small amounts; when a real big opportunity arises, then go all in. When you truly grow your capital from tens of thousands to 1 million, you will have unknowingly learned some profitable thoughts and logic. At that point, your mindset will become steadier, and future operations will resemble past successes.
If you want to learn about rolling positions, or if you want to learn how to turn a few thousand into tens of thousands, then you need to pay close attention to the following content.
1. Judging the timing for rolling positions
Rolling positions are not something you can just decide to do; certain background and conditions are required for a higher probability of success. The following four situations are most suitable for rolling positions:
(1) Breakthrough after long-term consolidation: When the market has been in a consolidation phase for a long time and the volatility reaches a new low, once the market chooses a breakthrough direction, you can consider using rolling positions.
(2) Buying the dip during a bull market: In a bull market, if the market experiences a significant drop after a substantial rise, consider using rolling positions to buy the dip.
(3) Weekly level breakthroughs: When the market breaks through significant resistance or support at the weekly level, consider using rolling positions to seize the breakthrough opportunity.
(4) Market sentiment and news events: When market sentiment is generally optimistic or pessimistic, and there are significant news events or policy changes that could impact the market, consider using rolling positions.
Rolling positions can only be successful under the aforementioned four conditions; at other times, one should operate cautiously or give up the opportunity. However, if the market appears suitable for rolling positions, you also need to strictly control risks, set stop-loss points, and prevent potential losses.
2. Technical analysis; since you all don’t understand this, I won’t elaborate on it.
3. Position Management.
Reasonable position management includes three key steps: determining initial positions, setting rules for increasing positions, and formulating reduction strategies. Let me give you an example to help everyone understand the specific operations of these three steps:
Initial position: If my total funds are 1 million, then the initial position should not exceed 10%, which is 100,000.
Position increase rule: Always wait for the price to break through key resistance levels before increasing positions, with each increase not exceeding 50% of the original position, that is, at most an additional 50,000.
Position reduction strategy: Gradually reduce positions when the price reaches the expected profit target; when it’s time to let go, don’t hesitate. Each reduction should not exceed 30% of the current position, in order to gradually lock in profits.
As ordinary people, we can just increase our stakes when the opportunities are abundant and reduce them when opportunities are scarce. If luck is on our side, we might make a few million; if not, we can only accept our losses. But I still want to remind you that when you make money, you should extract your invested principal and use the profits to play. It's okay not to make money, but you cannot lose money.
4. Adjusting positions
After completing position management, the most crucial step is how to achieve rolling operations through position adjustments.
The steps to operate are undoubtedly those few steps:
1. Choosing the right timing: Enter the market when conditions for rolling positions are met.
2. Opening positions: Open positions based on technical analysis signals, selecting suitable entry points.
3. Increasing positions: Gradually increase positions as the market continues to move in a favorable direction.
4. Reducing positions: Gradually reduce positions when the predetermined profit target is reached or when a reversal signal appears in the market.
5. Closing positions: Completely close positions when the profit target is reached or when there are obvious reversal signals in the market.
5. Risk Management
Risk management is mainly divided into two parts: control of total position and allocation of funds. It is essential to ensure that the overall position does not exceed the acceptable risk range, and funds should be allocated reasonably without investing all funds in a single operation. Of course, you must also monitor market dynamics and technical indicators in real-time, adjusting flexibly according to market changes, and stop loss or adjust positions promptly when necessary.
Many people hear about rolling positions and feel both fearful and eager, wanting to try but afraid of the risks. Actually, the risk of the rolling position strategy itself is not high; the risk lies in leverage, but if used reasonably, the risk will not be significant.
For example, if I have 10,000 in capital and open a position when a coin is at 1,000, I use 10x leverage and only use 10% of my total funds (1,000) as margin, which actually equals 1x leverage. Set a stop loss at 2%; if the stop loss is triggered, I will only lose 2% of that 1,000, which is 200. Even if the liquidation condition is ultimately triggered, you will only lose that 1,000, not all your funds. Those who get liquidated often do so because they used higher leverage or larger positions, causing them to get liquidated with slight market fluctuations. But according to this method, even if the market is adverse, your losses are limited. So 20x can roll, 30x can roll, and 3x can also roll; even using 0.5x is possible. Any leverage can be used; the key is to use it reasonably and manage your position wisely.
This is the basic process for using rolling positions. Friends who want to learn can watch it several times, think it over carefully, and of course, there will be differing opinions, but I only share experiences, not persuade others.
So how can small funds grow large?
Here I must mention the power of compounding. Imagine if you have a coin and its value doubles every day, after a month its value will become astonishingly high. The first day it doubles, the second day it doubles again, and so on; the final result will be astronomical. This is the power of compounding. Even with a small initial amount, after a long period of continuous doubling, it can grow to tens of millions.
For friends who want to enter the market with small funds, I suggest focusing on big goals. Many people think small funds should frequently engage in short-term trading to achieve rapid appreciation, but it is actually more suitable for medium to long-term trading. Instead of making small profits daily, you should focus on achieving multiples of growth in each trade, using multiples as units for exponential growth.
When it comes to positions, you must first understand how to diversify risks; do not concentrate all your funds on a single trade. You can split your funds into three to four parts, using only one part for each trade. If you have 40,000, divide it into four parts and use 10,000 for trading. Secondly, use leverage moderately; personally, I recommend not using more than 10 times for major coins and not more than 4 times for altcoins. Furthermore, you should adjust dynamically: if you incur losses, supplement with an equivalent amount of funds from external sources; if you earn, withdraw an appropriate amount. Whatever you do, don’t let yourself incur losses. Lastly, you need to increase your position, but this is only under the condition that you have already made profits. When your funds grow to a certain level, you can gradually increase the amount for each trade, but do not add too much at once; transition slowly.
I believe that with reasonable position management and stable trading strategies, small funds can gradually achieve significant appreciation. The key is to patiently wait for the right timing and focus on the big goal of each trade, rather than daily small profits. Of course, I have experienced liquidation before, but at that time I still had spot gains to cover my losses. I also don't believe you haven't made a penny on your spot positions.
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