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On my journey in crypto trading, I started as a small investor with 5,000 yuan and eventually turned into a middle-class individual with 25 million!
Today, I will share with you all the insights I’ve gained along my journey.
The most important point in crypto trading is capital management; don’t invest all your money at once. I habitually divide my funds into five parts, only taking one part to operate each time, so even if I lose, I won’t be too heavily burdened. Moreover, I have set a rule for myself that if I lose 10%, I will withdraw immediately, regardless of the market. If I lose 10% five times in a row, I have only lost 50%, but if I make profits, the return will be much more. Even in case of being trapped, I can maintain my mindset.
Following the market trend is always the most reliable strategy. When the market is falling, don’t think about bottom fishing; that’s simply unrealistic. When the market is rising, corrections are golden opportunities, and buying the dip is much safer than trying to catch the absolute bottom.
Choosing coins requires sharp insight. Those coins that skyrocket, whether mainstream or altcoins, should be avoided as much as possible. Coins that rise too quickly will also see significant corrections afterward, making them easy to get trapped in.
In terms of technical indicators, I use MACD the most. When the DIF line and DEA line cross and break through the 0 axis below, it is a buy signal. Conversely, if they cross above the 0 axis and move downwards, it is time to reduce positions.
When it comes to averaging down, never try it easily! If you lose, do not average down; the more you average down, the more you lose, and you may end up with nothing. Remember, stop-loss when losing, and only add positions when making profits.
Trading volume is also very critical. When the coin price breaks through at a low level with high trading volume, it usually indicates a big opportunity.
The most crucial point is to go with the trend and seize the opportunity! Combining daily lines, 30-day lines, 84-day lines, and 120-day lines, when any line begins to turn upwards, you will know how to act.
There are risks in crypto trading, but there are also considerable opportunities.
Learning capital management, trend analysis, and coin selection allows you to turn from a small retail investor into a middle-class individual like me.
8 Golden Rules Summarized from 10 Years of Crypto Trading | Investment Discipline That Even Newbies Can Understand:
Having been through the ups and downs of the crypto world for 10 years, from liquidation to stable profits, I have summarized these practical experiences to help newcomers avoid pitfalls. The content is devoid of fluff; it is purely practical! (Appendix: operation checklist)
[1] [Idle money investment principle | Use funds that do not affect your life to enter the market]
Always use only 10%-20% of disposable funds for operations. For example, if you have 100,000 in savings, you should only invest 20,000 at most. I have seen too many people risk their entire net worth or even take loans, ultimately leading to a collapse in mentality. Real winners are in a 'can afford to lose' state. For example, in Bitcoin dollar-cost averaging: investing 10% of your monthly salary in batches, even if the market drops by 50%, it won’t affect your quality of life.
[2] [Stop-loss is more important than profit | 5% forced stop-loss line]
When the direction is wrong, a 5% loss must be immediately stopped. I once held positions during the LUNA crash, watching 100,000 turn into 1,000. Now my discipline is: exit short if the 5-day moving average is broken, and clear positions if the 20-day moving average is broken. Remember: as long as you are alive, there is a chance to turn things around.
3] [Position management pyramid | Never be fully invested]
Divide the funds into three parts:
130% mainstream coins (BTC/ETH) for long-term holding
250% swing trading (based on 15-minute KDJ indicators for entry and exit) 1
3. Reserve 20% as a supplementary margin
When encountering a crash, average down in three stages at -15%, -30%, -50% 2
4] [Technical indicator combination | Three charts determine the situation]
115-minute K-line to observe short-term trends 1
2. Daily MACD to determine long or short direction
Weekly Bollinger Bands + identify resistance and support levels
When the three conditions of 'golden cross + mid-line support + volume expansion' resonate, it is the best entry signal 5.
5 [News-based operation guide | Positive news leads to negative outcomes]
On the day of a major positive news release, if you haven’t sold, you must sell on a high opening the next day. When the Bitcoin ETF passes in 2024, many people will chase the price and get trapped at the 69,000 high. Remember: when the media starts to celebrate, it is often the selling point for the big players.) 6
Appendix: My personal tool list
· Market Data: TradingView (most comprehensive drawing tool)
· Information: Jin10 Data + (real-time monitoring of macro policies)
On-chain data: Glassnode (tracking whale addresses)
Fraud prevention guide: TokenSniffer (identify scam coins)
Lastly, I want to say: there is no holy grail in this circle; all these experiences are earned with hard-earned money. It may seem restrictive at first, but once you form muscle memory, you will understand—discipline is the premise of freedom. Let's encourage each other!
What is the logic behind making money in the crypto world?
The logic of making money in the crypto world is essentially legal robbery.
In the crypto world, you can earn 50,000, 100,000, 200,000, or even 1 million in just one day. This is a reality and the probability is much higher than in other traditional markets.
For example, I mentioned: Doge in 2021, TRB in 2023, People in 2024.
No matter what you did before, what background you have, or how much capital you have, everyone has equal opportunities in front of Bitcoin! This has been true since its inception!
My experience is that if you want to make money in the crypto world, it boils down to a few points:
1. Cognitive gap
These three are fundamental, and they can build on each other, such as cognitive gaps combined with execution gaps, information gaps combined with execution gaps, etc.
This model also determines that his trading behavior yields high returns, low risk, and strong sustainability. This is also the most stable profit model I've seen publicly in the crypto space over the years.
For the vast majority of ordinary people, aside from the good luck of the chosen ones, achieving small profits in the short term through the market is reliant on oneself.
There are basically a few opportunities for 10x:
Less fantasizing and more effort. For most people, this is the optimal solution in life.
If you don’t have much money and want to get rich by just clicking a mouse, that’s unreliable for most people; for example, if you are a computer student and solidify your programming skills, finding a job that pays 300,000 after graduation is relatively not difficult and is much better than bouncing around with just a few thousand every day, right?
Work hard to learn, cultivate excellent skills, and find a good job. If you can achieve a sense of accomplishment in reality, you might give up gambling and making money may actually happen faster, leading to a more stable life path.
Can short-term crypto trading make money?
Many people say that short-term trading doesn’t make money, but in reality, it’s because short-term trading itself requires a certain amount of time to monitor and a lot of backtesting work. Additionally, in the crypto space, it involves double-sided trading fees, meaning both buying and selling incur certain fees charged by exchanges. In this scenario, when calculating returns, one must consider the already incurred fees and account for all these costs.
Moreover, in short-term trading, if you misjudge the market, it is easy to turn short-term trades into medium- to long-term positions, or even turn them into beliefs. The vast majority of people do not have systematic trading habits and find it difficult to strictly adhere to their own habits, causing them to withdraw immediately upon returns. Not so, in short-term trading, there are two ways to ensure that we can exit safely.
a. We should use trading bots for trading, executing automatically 24 hours a day.
b. This means setting strict buy and sell principles for yourself: if you make a 30% profit, sell immediately; if it drops by 30%, buy in. Manually operate and strictly execute. As long as you follow the trading rules, you will basically avoid getting trapped or stuck. The same applies to both spot and contract trading; whether you're swing trading or contract trading, strict execution and establishing your own trading system are essential.
Short-term trading techniques for digital currencies:
1. Before making a trade, do not carry any subjective or human directional bias. Each entry must have a stop-loss point or stop-loss conditions set 'beforehand'. Do not care about profits or losses or price levels when entering and exiting the market. In 'ultra-short' trading, only choose the 'hottest variety' with the largest transaction volume and continuously increasing open interest, leading in a rising trend or leading in a falling trend. Do not look at or trade any varieties with low transaction volume.
2. For 'ultra-short' trades, only look at real-time charts, 1 or 3-minute charts, buy and sell order prices, trading volume, and market orders (do not look at any other technical indicators, and do not care about price levels).
3. The moving average parameters for real-time charts are; the moving average parameters for 1 or 3-minute charts are 5 or 55, 113, and the volume line is 5, 34. You can adjust according to different varieties.
4. Look at the real-time chart to grasp the current trend of the day:
(1) When the average price line (yellow) is sloping upwards, and the price line (white) is above the average price line, and each wave is higher than the last, it indicates an upward trend, and we will focus on going long (only consider going short when the price line is far away from the average price line).
(2) When the average price line is sloping downwards, and the price line is below the average price line, and each wave is lower than the last, it indicates a downward trend, and we will focus on going short (only when the price line is far away from the average price line can we consider going long, or forgo long opportunities in a downward trend).
(3) When the average price line is horizontal, and the price line crosses above and below the average price line, it indicates that the current situation is either consolidating or oscillating. Do not enter the market, or trade both long and short.
(4) When you see the price line crossing above the average price line, go long (or close a short position to go long); when it crosses below the average price line, go short (or close a long position to go short).
At the moment of 'crossing over', it is best to have a coordination of the 1 or 3-minute chart, market orders, and volume.
5. Specific entry and exit points should be based on 1 or 3-minute charts and the situation of market orders:
(1) When the real-time chart shows an 'uptrend', be patient and wait for the 1 or 3-minute chart to show 'the previous candle is a negative candle, turning into the next candle which just became a positive candle' or 'when a negative candle turns positive simultaneously with the 3 moving averages turning upwards', decisively enter the market to go long. At this time, sell orders are continuously being consumed by buy orders, even if there are sell orders going down, they are not significant or cannot last.
(2) When the real-time chart shows a 'downtrend', (short positions are taken, opposite to long positions, which I won't elaborate on here).
(3) Close long positions. If you enter the market when the first 3-minute negative candle turns into a positive candle, prepare to close your position immediately. The timing to close your position is: close whenever there is profit, or if the increase of the positive candle is smaller than the previous one, or if there is a long upper shadow, or if there have already been two consecutive positive candles on the 3-minute chart, or if the sell orders above suddenly increase, or if there are large sell orders eating up the buy orders while the buy orders continuously decrease, or if the 3-minute candle just had its first negative turning positive, or if it turned positive but the 3 moving averages curve downwards. At this time, you should decisively close your long position.
(4) Closing a short position (which is exactly the opposite of closing a long position).
(5) When the real-time chart shows an 'oscillating trend', as long as you see a negative candle turning into a positive candle on the 3-minute chart, and the 3 moving averages curve upwards, you should go long; if you see a positive candle turning negative, and the 3 moving averages curve downwards, you should go short.
Even the most diligent fisherman, during stormy seasons, will choose to safeguard his boat and wait for the storm to pass; sunny days will eventually come. Follow me, and I will not only give you fish but also teach you how to fish; the door to the crypto world is always open for you. Embrace the trends to embrace a smooth life. Remember, this is your wealth guide!