In any investment market, basic investment strategies are consistent. However, for complex and ever-changing markets, mastering general investment strategies is necessary, but on this basis, investors must also learn and master certain practical skills because some investment techniques that have been validated through extensive practice are not only filled with philosophical implications but also have strong guidance in practice. Here are 20 investment techniques that can help you in your investment journey.
1. Invest with 'spare money'.
Remember, the money used for investment must be 'spare money', that is, funds that do not have urgent or specific uses for the moment. Because if investors use essential household expenses for investment, any losses will directly impact the family's livelihood. Alternatively, using funds that should not be invested to generate wealth puts the investor at a psychological disadvantage, making it difficult to maintain an objective and calm attitude during decision-making, thus increasing the chances of failure in the investment market.
2. Know yourself is the best.
Know yourself and know the enemy, and you will never be defeated. However, in the cryptocurrency market, knowing oneself is paramount. Investors need to understand their personalities because those who are prone to impulsiveness or strong emotional tendencies are not suitable for this type of investment. Most successful investors can control their emotions and have rigorous discipline, effectively restraining themselves. Therefore, knowing oneself is the key to ultimately succeeding in the cryptocurrency market.
3. Face the market and discard fantasies.
The market is real; do not let emotions interfere, overly yearning for the future or reminiscing about the past. A seasoned trader once said: A person full of fantasies, rich in emotions, and very expressive is a beautiful and happy person, but not suited to be an investor. A successful investor can separate their emotions, fantasies, and trading.
4. Small investors should not blindly invest.
Successful investors do not blindly follow others' opinions. When everyone is in the same investment position, especially when small investors are also following suit, successful investors feel danger and change direction. Blind obedience is a fatal psychological weakness of 'small investors'. Once economic data is released or a piece of news suddenly emerges, traders rush into the market as soon as the price chart 'breaks' within five minutes. They are not afraid of everyone losing money but are afraid of everyone making money. In a sense, sometimes misjudging market trends or suddenly reversing after entering a position, leading to being stuck in a position, is a normal phenomenon, and even experts cannot avoid it. However, the most foolish behaviors in decision-making and post-processing stem from the psychology of small investors.
5. Do not overtrade.
To become a successful investor, one principle is to always maintain 2-3 times the funds needed to cope with price fluctuations. If your funds are insufficient, you should reduce the number of contracts held; otherwise, you may be forced to 'cut losses' to free up funds, even if later proven correct.
6. Once a decision is made, do not change it rashly.
If, after careful consideration and analysis, a price point and plan for entering the market that day have been set, do not easily change the decision due to the fluctuations in prices. Decisions made temporarily based on daily price changes or market news are generally very risky unless one is an investment genius with a sudden insight.
7. Make decisions quickly.
When investing in the Bitcoin market, there are many psychological factors that lead to failure. A common scenario is that investors face increasing losses and, even when they know they cannot hold onto false hopes, often hesitate and fail to make decisive moves, thus getting deeper into trouble and increasing losses. Sometimes one must make a decisive cut.
8. Do not act on others' opinions.
This is not to advocate for unilateral decision-making. It should be understood that only you will be responsible for the outcomes of your investments. When you have grasped the direction of the market and made a basic decision, do not easily change it due to others' influences. Sometimes others' opinions may seem very reasonable, leading you to change your mind, but later you will find that your decision was the most correct. Therefore, others' opinions are always just a reference; your own opinion is the decision for buying and selling.
9. When uncertain, wait and see.
Investors do not need to enter the market every day. Beginners are often eager to trade, but successful investors wait for opportunities. When they enter the market and feel confused or uncertain, they will also leave the market first and adopt a wait-and-see attitude.
10. Stop buying and selling appropriately.
Day after day of trading may dull your judgment. A successful investor once said: Whenever I feel that my mental state and judgment efficiency is below 90%, I start losing money, and when my state drops below 90%, I begin to incur losses. At this point, I put everything down and go on vacation. Taking a short break from the market can help you re-evaluate the market, re-evaluate yourself, and clarify your future investment directions. Remember, staying too long in the forest, you do not see the trees.
11. In adversity, leave the market to 'rest'.
Investors, due to personal interests, often find their minds in a state of extreme tension. If they make a profit, there is a slight sense of satisfaction; however, if they are in adversity, with continuous losses or even making unnecessary mistakes, they must be extremely cautious not to lose their clarity and calmness. At this time, the best choice is to set everything aside and take a break from the market. Once the rest is over, the temporary gains and losses will become the past, the inflated mind will have calmed down, and the mental burden will have been lifted. It is believed that investment efficiency will improve. There is a saying, 'A general who does not rest is not a good general.' Not knowing how to recuperate makes it impossible to talk about breaking the enemy and conquering the city.
12. Patience is also an investment.
There is a saying in the investment market: 'Patience is an investment.' However, few investors can truly achieve this or understand its meaning. For those engaged in investment work, it is essential to cultivate good patience and endurance. Patience is often a 'multiplier' of investment success, affecting whether the final result is positive or negative. Many investors do not have low analytical abilities or lack investment experience; rather, they simply lack patience, leading to premature buying or selling, resulting in unnecessary losses. Therefore, every investor involved in the cryptocurrency market should recognize that patience is also a form of investment.
13. Let the past prices go.
'Past prices' are often a considerable psychological barrier to overcome. Many investors make erroneous investment judgments due to the influence of past prices. Generally speaking, after seeing high prices, when the market falls back, there will be considerable discomfort with the new low prices; even when various analyses show that the market will fall further and the investment climate is terrible, investors will not only hold onto their goods but feel that the new low is very 'cheap' and have an impulse to buy, resulting in being firmly stuck after buying. Therefore, investors should remember, 'past prices', let them completely pass.
14. Set a stop-loss position and cut losses.
Set a stop-loss position (that is, at this point, it has reached the maximum loss you can bear). Once the market reverses and the cryptocurrency price hits the stop-loss point, be brave enough to cut losses. This is a very important investment skill. Due to the high risks of Bitcoin, to avoid losses caused by investment mistakes, every time we enter the market to trade, we should set a stop-loss order so that when the exchange rate drops to a certain predetermined price and may continue to fall, we can immediately close the trade. In this way, the losses incurred will only be limited and manageable, rather than expanding further, leading to complete loss. Even if one has to cut losses temporarily, the investment capital remains; as long as the green mountain is there, one need not fear the lack of firewood.
15. Do not go all in.
When engaging in contract trading, one must act according to their capabilities and must not go all in, putting all savings or family assets at stake like a big gamble. Because in such cases, if the market trend is misjudged, there is a possibility of incurring significant losses, even to the point of being unable to extricate oneself. In such situations, the wiser approach is to implement a 'pyramid scaling' method: first make a partial investment, and if the market trend is clear and favorable, increase the investment. Furthermore, one must be cautious not to allow the mindset of going all in to take root during adverse market conditions.
16. Do not let a few points cause trouble.
In Bitcoin trading, do not blindly pursue round numbers when making profits. In practice, some people set a profit target for themselves after establishing a position, for example, wanting to earn enough $200 before leaving, always waiting for that moment. After making a profit, sometimes the price approaches the target, and there is a good chance of taking profit, but it is just a few points away from the target. One could have closed the position and taken the money but missed the best price due to the original target, losing the opportunity. Remember, it is not worth it to cause trouble over a few points.
17. When the situation is unfavorable, strike back.
Sometimes trading along with the market, but when entering the market is already near the end, one must pay attention. Once a reversal occurs and the situation is unfavorable, one should strike back. For example: after buying in a bullish market, if the market price fails to develop, and then the price rapidly drops, do not panic; it is best to reflect. If it can be determined that the current trend is reversing, one should immediately cut losses and strike back.
18. Establish positions when breaking through tight markets.
A tight market refers to a situation where the price fluctuations are narrow, and buying and selling forces are evenly matched, temporarily in a tug-of-war state. Whether in a rising market or a falling market, once the tight market ends, breaking through resistance or support, the price will leap forward. For experienced investors, this is a good time to enter the market and establish a position. If the tight market is a long-term threshold, the positions established when breaking through will yield abundant profits.
19. Be cautious of rebounds after a big drop and adjustments after a sharp rise.
In the Bitcoin market, prices do not rise or fall in a straight line; rapid increases will always be adjusted, and sharp declines will rebound. The extent of adjustments or rebounds is quite complex and not easy to grasp. Therefore, after the exchange rate rises two to three hundred points or five to six hundred points, one must be especially careful, preferring to watch from the sidelines rather than rashly follow in.
20. Learn to control risk.
The Bitcoin market is highly risky, mainly because there are too many variables determining Bitcoin prices. Although there are various theories and doctrines regarding Bitcoin volatility, the fluctuations in the cryptocurrency market often surprise investors. For Bitcoin market investors and operators, it is especially important to learn about risk probabilities. In other words, it is necessary to fully understand the risks and benefits, the probabilities of winning and losing money, and several major issues of prevention in Bitcoin investment. If there is no accurate understanding of risk control and one trades Bitcoin indiscriminately, losing money is inevitable.
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