I have been trading cryptocurrencies for 10 years, and it was only 6 years ago that I developed a trading system suitable for myself, and it was under the guidance of a mentor that I became enlightened! While I can't say I'm extremely wealthy, I have achieved stable profits, and I can consistently outperform over 80% of people.
I realized long ago that an excellent trading system can effectively help investors with their investments. I also understood that without a trading system, investing aimlessly will lead to more losses than gains. However, summarizing a trading system is quite difficult.
An excellent trading system is also counterintuitive; it requires you to overcome greed and fear, make decisive choices, avoid subjective assumptions, and strictly execute.
1. Timing: Enter the market only when the conditions for rolling positions are met.
2. Open position: Follow the signals from technical analysis and find the right timing to enter the market.
3. Increase position: If the market is moving in your direction, gradually increase your position.
4. Reduce position: Once you have made the predetermined profit or if the market seems a bit off, sell gradually.
5. Close position: Sell everything when you reach your target price or when the market is clearly about to change.
Increase your investment after making money: If your investment has increased, consider adding more, but only if your cost has decreased and the risk is smaller. Don't add every time you make a profit; instead, do so at the right time, like at breakthrough points in trends. If it breaks through, reduce quickly, or add during pullbacks.
Base position + trading: Divide your assets into two parts, one part remains untouched as a base position, and the other part trades during market price fluctuations, which can reduce costs and increase returns. There are several ways to divide this:
1. Half position rolling: Hold half of your funds long-term, and trade the other half as prices fluctuate.
2. 30% base position: Hold 30% of your funds long-term, and trade the remaining 70% as prices fluctuate.
3. 70% base position: Hold 70% of your funds long-term, and trade the remaining 30% as prices fluctuate.
The purpose of this approach is to maintain a certain level of holding while using short-term market fluctuations to adjust costs, optimizing your holdings.
In position management, first, you need to diversify risks; don’t put all your funds into one trade. You can divide your funds into three to four parts, investing only one part at a time. For example, if you have 40,000, divide it into four parts and use only 10,000 for each trade.
Six survival rules for short-term cryptocurrency trading:
1. Wait until the trend is clear before taking action.
- High-level horizontal consolidation is likely to create new highs, while low-level horizontal consolidation is likely to create new lows.
- Don’t rush to trade blindly during consolidation; wait for prices to break through key levels before taking action.
2. Don’t force trades in a fluctuating market.
The reason most people lose money is that they always want to find opportunities during sideways markets. Remember: sideways means the market is 'holding back for a big move'; rather than being a victim, it’s better to wait for the trend to clarify.
3. Look at candlestick patterns in reverse.
- See a large bearish close (bearish candlestick)? This may be a buying signal.
- See a large bullish close (bullish candlestick)? Consider taking some profits first.
(In simple terms: Don't panic when a bearish candlestick closes, and don't be greedy when a bullish candlestick closes.)
4. Don’t touch rebounds in a downtrend.
When the market is in a downtrend, rebounds are often just 'a flash in the pan' and can accelerate the decline. At this point, rather than buying at high positions, it’s better to wait until the trend is completely broken before taking action.
5. Build positions in batches, pyramid strategy.
Don’t buy all at once; you can buy more when prices are low and less when prices rise. For example:
- Buy 10% on the first purchase, buy 20% if it drops 5%, and keep adding if it drops further...
This approach lowers the average cost and avoids making a wrong bet all at once.
6. Liquidate in time when the trend reaches its peak.
Whether the price is rising or falling, when it reaches an extreme, it will inevitably enter a consolidation phase. At this point:
- Don’t fall in love with high positions: sell when it has risen significantly, don’t wait for a pullback and then regret it.
- Don’t rush to buy at low levels: Wait for a confirmed trend reversal before buying; don’t be deceived by short-term fluctuations.
If the price starts to decline from a high point, quickly liquidate your position— the trend may be about to change!
Here are some iron rules from the cryptocurrency world:
1. Only participate in irreversible upward trends in the market.
"Only participate in irreversible upward trends in the market"; the market is a fact, it cannot be doubted or challenged, and the trend is irreversible. As an investor, you must dare to admit mistakes, correct them at any time, refuse uncertain trends, and engage in those trends that the big players must also follow. Understand the importance of following the trend.
2. Refuse frequent trading.
The casino is open 24 hours; there’s no need to frequently place trades. There are many logics such as timing, trial and error, and position control. We advocate waiting patiently like a hunter for the perfect moment rather than recklessly investing when seeing prey.
3. Don’t blindly trust technical indicators.
First, we must acknowledge that any technical indicator has its lag.
For example, when the MACD indicator gives a golden cross buying signal, the coin has already increased. At the moment of the golden cross, you may very well be the one taking the position!
4. Forget about the cost price once you buy.
Once you start shorting or going long, your cost price is irrelevant to any subsequent actions, as whether to sell depends on market trends, which has nothing to do with whether you are currently profitable. If the pattern is good, continue to hold; if the pattern weakens, reduce your position or even liquidate.
5. Participate with money you can afford to lose.
Use spare money to trade cryptocurrencies; investing carries risks. Investors can increase their investment after mastering the game’s profit tricks. Before that, ensure you participate with money you can afford to lose; borrowing money often leads to significant losses!
6. When profitable, withdraw funds on time.
Without withdrawing, everything is just numbers; cryptocurrency investors are like gamblers who have not left the casino. Even if you temporarily make a lot of money, you cannot be considered a winner until you extract cash from the market. Only when you withdraw cash from the market can you say that you have laughed to the end. In the cryptocurrency world, withdrawing funds on time is a good habit.