In the cryptocurrency market, the first lesson is not 'how to make money,' but 'how not to lose money.' Only by staying alive can you accumulate experience, deeply understand the market, and establish a trading strategy that suits you. When the bull market comes, you can leverage your previous accumulation to realize your capabilities and returns.
Therefore, do not rush to pursue short-term doubling returns; first learn to survive in the cryptocurrency market—avoid over-leveraging, getting liquidated, or exiting the market, and you have already won at the starting line. Remember, in the cryptocurrency market, 'staying alive' is the premise of everything and the most precious ability.
Ten years of ups and downs in the cryptocurrency market: In 2015, I entered the market with 300,000, coinciding with a bull market, and my assets soared to over 3 million at one point. At that moment, I was blinded by victory, thinking I was exceptionally talented in trading, and I resolutely resigned from my job to fully immerse myself in cryptocurrency trading, even borrowing to increase my position.
However, the market is ruthless and changes can be sudden. Subsequently, a series of issues followed, leading me to not only lose all previously accumulated profits but also to be burdened with substantial debt. Ultimately, I had to painfully sell my property, and my family was at one point in crisis, with my wife and children nearly leaving me. The year 2017 became the darkest moment of my life, as I fell from peak to valley in just a few months.
After much reflection, I began to deeply reconsider my approach. By chance, I had the opportunity to have tea and discuss the market with a senior figure in the cryptocurrency space. His words were enlightening and had a profound impact on me.
After that, I embarked on a self-redemption journey, constantly summarizing methods and reviewing trades, striving to change erroneous trading mindsets and methods. Under the careful guidance of experts, I gradually gained insight. Today, although I have not achieved great wealth, I have achieved stable profits, at least surpassing 80% of participants in the cryptocurrency market.
Looking back on my journey in the cryptocurrency market, it has been tumultuous. From initially entering the market with 300,000 to having assets exceed 10 million during the bull market, only to then experience a significant drawdown, falling from over 20 million to the current 110 million. Today, I await the arrival of the next bull market, aiming to increase my assets to 300 million.
Next, I will share some experiences that I hope can provide some useful references for friends in the cryptocurrency space.
Bull market coin accumulation strategies and bear market trading techniques
Compared to traditional financial trades like stocks and futures, the cryptocurrency market seems to allow for explosive wealth growth more easily. We often see ordinary people, even those who were once not as capable as us, achieving wealth in the cryptocurrency space. This immense temptation for wealth leads many to lose their rationality, blindly searching for potential coins, hoping to achieve overnight wealth through large capital investments. However, the reality is harsh; very few can achieve sustained profits in the cryptocurrency market. Even if someone makes a fortune in a short time, if they do not take profits in time, they often end up losing everything. I know of such an example; a classmate had excellent luck, turning 20,000 into 5 million in six months. At that time, we were both envious and jealous, urging him to take profits, buy real estate, gold, or other fixed assets, or to hand over most of his funds to family for safekeeping. However, he did not heed the advice, and ultimately lost all his profits and was heavily in debt.
So, how can one establish an undefeated position in the cryptocurrency market?
Bull market coin accumulation strategy.
Select potential coins: Use half of the capital to buy promising coins, and then hold firmly for at least half a year or more.
Swing trading: Use the remaining half of the capital for swing trading, continuously earning profits through buying low and selling high.
How to buy low and sell high specifically? I've summarized a simple and easy-to-learn trading system - "Simple Immediate Trading System". This system is easy to understand, and an average person can learn it in half an hour and master it in about a week. It primarily utilizes turning points and trend lines as tools, making the opening and closing points clear.
Trading techniques in a bear market:
In a bear market, if one still adheres to the old idea of buying low and selling high, it often leads to significant losses. At this time, shorting becomes a more feasible strategy.
Leverage shorting: Leverage trading can be used for shorting, but it is recommended to control the position at 1 time. Specific operations can be consulted with customer service.
Low-leverage contract shorting: Set the contract multiple to 1 and operate with the full position when shorting.
Shorting points can be determined based on the 'Simple Immediate Trading System.'
This trading system not only has a simple operation but also the following advantages:
Avoid human weaknesses: Clearly defined buy and sell points can effectively avoid the influences of greed and fear, ensuring that one buys when it is time to buy and sells when it is time to sell.
Wide applicability: Applicable to all cryptocurrencies, including mainstream coins and altcoins.
Flexibility in applicable cycles: Can be used for cycles above 15-minute intervals.
Avoid indicator fatigue: Effectively avoid the misleading effects caused by indicator fatigue.
Finally, I want to emphasize that during a bull market, one should focus on spot trading and avoid entering contracts. This "Simple Immediate Trading System" may seem simple, but it actually contains the rules of financial trading, so I hope everyone does not underestimate it.
Bottom line that must be adhered to in contract trading.
Contract trading carries extremely high risks. To achieve profits in a high-risk market, the key lies in effective risk management, which means earning more when profits are made and losing less when losses occur. Next, I will elaborate on the importance of risk management in contract trading and some key risk management points.
In contract trading, making money once or twice may not be difficult, but achieving long-term stable profits is by no means easy. The market is unpredictable; we are like a grain of sand in the vast ocean. One should not overly pursue win rates, minimum or maximum points, nor should they fantasize about becoming rich overnight. Each trade, regardless of its correctness, should maintain a calm mindset and set stop-losses in a timely manner. If a profit is small, accumulate a few more trades; one should never be impatient for quick success. Greed and fear are human weaknesses in the trading market, and to achieve profits, one must strive to overcome them.
Persist in independent thinking, which is crucial in the cryptocurrency market. The market is relatively small, and trading counterparts are limited. The essence of making money lies in sticking to one's trading strategy. If one blindly follows the crowd, not only is it difficult to make profits, but one could also incur losses. Therefore, one must strictly adhere to the trading discipline they set, not being greedy or relying on luck. One should not feel complacent for making a profit after violating discipline, nor should one be upset for missing an opportunity by adhering to discipline. Discipline is the bottom line of trading and must be adhered to at all times.
To effectively manage risks and reduce the probability of fatal errors, the following points should be noted:
Reduce leverage: Control the actual leverage of the position to no more than 2-3 times, preferably around 1 time. If using a full position model, be sure to set stop-profit and stop-loss to prevent large fluctuations from causing liquidation.
Learn to set stop-losses: Stop-losses are a crucial part of trading. Many retail investors lose not because of stop-losses, but because of position sizes. Market fluctuations are unpredictable, and the key to making money lies in maximizing gains when right and minimizing losses when wrong. Therefore, when wrong, one must set stop-losses in a timely manner, establishing a tolerable loss ratio, such as 15% or 30%. Upon reaching that ratio, stop-loss must be firmly executed regardless of the situation.
Reduce frequency: The more trades there are, the greater the chance of mistakes. If there is a large loss during a wrong trade, the consequences will be even more severe. Therefore, one should reduce trading frequency, seizing high-probability opportunities to minimize errors and losses, which benefits profit generation and helps adjust mindset.
Capital management: Capital management is the most important aspect of trading, as it effectively protects the principal, reduces drawdown, preserves profits, and enhances risk tolerance. Here are some rules for capital management discipline:
Keep some funds in reserve: Never operate with a full position, even if only leaving 10% of the capital as reserve. In extreme risk situations, this reserved capital can play a crucial role. I usually keep 10-20% of the capital in reserve, occasionally used for short-term trading in altcoins, with holding periods generally not exceeding 24 hours.
Risk Isolation: Contracts and spot trading must be operated separately. The spot portion should not be leveraged and only profits from the increase in spot prices should be earned. The contract portion can occupy 20-30% of the total capital, and in very certain trending markets, it should not exceed 50%. The contract portion should operate with low leverage, anchoring to coin-based returns. If stable profits can be achieved in the contract market, the coin-based returns will be considerable.
Avoid capital dispersion: Concentrate funds on a few relatively strong coins, avoiding trading too many targets at the same time. Trading too many targets not only fails to amplify profits but also increases risks. It is best to concentrate efforts on operations based on improving win rates.
Easily generate profits.
Reflect often and summarize: The trading process mainly involves judging the direction of the market, finding entry points, determining position sizes, increasing positions based on market conditions, and setting stop-profits and stop-losses. After each trade, one should reflect seriously, identify weak areas, and improve them. At the same time, summarize successful experiences and lessons learned from trades, and persistence will bring rewards in the long term.
The above are my thoughts on contract trading. Although specific opening techniques and strategies are not covered, I believe these foundational thoughts and concepts are more important, as they are the cornerstone of trading. Only by solidifying the foundation and mastering certain technical analysis skills can one achieve stable profits in cryptocurrency contracts.
Rolling position strategies and precautions
In the cryptocurrency market, if one wants to turn 10,000 into 12 million, rolling positions might be a relatively quick way, but it is also highly risky. The most risky rolling method should be done in three stages, giving oneself at least three chances.
For example, if the total account capital is 200,000, the maximum allowable loss for the client is 20%, which is 40,000. Therefore, the suggested loss scheme is: the first time 10,000, the second time 10,000, and the third time 20,000. This scheme is somewhat reasonable because as long as one of the three attempts is correct, there is a chance of profit or continuing to survive in the market. Not being eliminated by the market itself is a kind of success, thus providing an opportunity for profit.
During the rolling process, the following points must also be noted:
Grasp the overall market trend: Trend trading is more challenging than range trading, as trend trading requires buying high and selling low, testing one's resolve in holding positions, while buying low and selling high aligns more with human nature. However, the essence of trading is anti-human nature, and precisely because trend trading is difficult, it holds greater profit potential. In an upward trend, any violent pullback is an opportunity to go long. Therefore, if one misses an entry opportunity or has exited, they should patiently wait. When a 10-20% drop occurs, they should boldly go long.
Set profit and stop-loss targets: Setting profit and stop-loss targets is crucial in determining whether one can profit. In multiple trades, ensure that total profits exceed total losses. To achieve this goal, the following points must be met:
Each stop-loss should not exceed 5% of total capital.
Every profit greater than 5% of total capital.
Overall trading win rate greater than 50%.
As long as the above conditions are met (profit-loss ratio greater than 1 and win rate greater than 50%), profits can be realized. Of course, high profit-loss ratio with low win rate or low profit-loss ratio with high win rate strategies can also be adopted, as long as the total profit remains positive. Total profit = initial capital x (average profit x win rate - average loss x loss rate).
Avoid over-frequent trading: Due to the 24-hour continuous trading of BTC perpetual contracts, many newcomers will trade frequently, often wanting to trade every day during the 22 trading days a month. However, frequent trading inevitably leads to mistakes, and once a mistake occurs, the mindset is impacted, potentially leading to impulsive decisions, such as counter-trend trading or heavy trading, resulting in huge losses and possibly years of inability to recover.