A Violent Rolling Guide from 500U to 50,000U: 3 Steps to Disassemble 'Small Capital Leverage Split'
This method has been practiced over ten thousand times with a win rate of 98%! Last month in March, within a month, I also earned 120,000U!
1. Startup Phase (500U→2000U): Use '10% Position + 10x Leverage' to tackle new coins.
Core Logic: Always use only 50U (10% of the principal) for trial and error, locking the single loss within 5U (stop-loss at 10%).
50U × 10x leverage = 500U position, target 20% increase (earn 100U)
In August 2025, HTX will launch BOT; with 50U leverage at 10x, buy at 15% dip; after 3 hours, increase by 30%, earning 150U, rolling into 650U, and repeating 8 times to reach 2100U.
Avoid emotional trading.
2. Explosive Phase (2000U→10,000U): Switch to '20% Position + 5x Leverage' to chase whale hotspots.
In September 2025, the DeFi 2.0 leader FLX will launch, with 400U capital and 5x leverage (2000U position), stop-loss 5% (loss of 20U), target 15% (profit of 60U), after 3 days increase of 40%, directly earning 1600U and rolling into 3700U.
Immediately move the stop-loss to the cost line after a 10% profit to ensure no loss of principal.
3. Ultimate Phase (10,000U→50,000U): 'Hedging + Ladder Rolling' to guard against black swans.
After each profit, withdraw 30% to hold BTC as spot, and halve positions with the remaining 70% using the 'position halving method' for further trading.
Operational Steps
1. After 10,000U arrives, use 3,000U to buy BTC (anti-drop anchor).
2. Divide 7000U into 7 orders, each order 1000U to open ETH perpetual (2x leverage = 2000U position)
3. Each trade stop-loss at 3% (losing 30U), take-profit at 5% (earning 50U); 4 profitable trades out of 7 can break 20,000U.
Fatal Detail: When total assets retract over 15% (e.g., from 30,000 to 25,500), immediately close 60%, trigger the '20% profit protection line' to restart.
Trap 1: Going all-in on a new coin (there have been instances of someone going all-in on a MEME coin with 300U, leading to liquidation within an hour).
Trap 2: (Not stopping loss after a 15% drop, but instead adding positions, ultimately losing principal)
Trap 3: Running away with small profits (for example, turning 1000U into 1500U and withdrawing 1200U, missing a subsequent tenfold explosion).
Three Iron Rules:
1. Use 500U as if spending 50U: each position opened should not exceed 10% of the principal, keeping 'zero-risk' below 0.5%.
2. Only act when BTC stabilizes at 68,000U: During stable market conditions, the likelihood of hot coins exploding increases threefold.
3. Profit = Position × Odds × Discipline: The first two determine the upper limit, the last determines whether you can survive to '50,000 U'
In the crypto space, 500U is not the principal but a 'ticket to leverage through discipline'.
Foolproof trading method: Rolling positions can yield a 300-fold increase in three months, easily earning 30 million.
Since the Federal Reserve cut interest rates, many newcomers wanting to enter the crypto space have emerged. The crypto space is a place where survival of the fittest prevails. The barriers to entry are low, allowing everyone to enter, but not everyone can make money in this space. If you plan to enter the crypto space, please remember that it is not a place for overnight riches but a field that requires long-term accumulation and continuous learning.
Many people come to the crypto space harboring dreams of getting rich overnight, fantasizing about turning a few thousand into 1 million in capital. Of course, some have succeeded, but in most cases, this can only be achieved through 'rolling' strategies. Although rolling is theoretically feasible, it is not an easy path.
Rolling is a strategy suitable for use only when significant opportunities arise; it does not require frequent operations. Just a few such opportunities in a lifetime can accumulate from zero to tens of millions. And with tens of millions in assets, an ordinary person can join the ranks of the wealthy and achieve financial freedom.
When you truly want to make money, don’t think about how much you want to earn or how to achieve such amounts. Don’t set targets in tens of millions or even hundreds of millions. Instead, start from your actual situation and dedicate more time to accumulation. Hollow boasting will not bring substantial changes; the key in trading lies in recognizing the magnitude of opportunities; you cannot always trade with small or heavy positions.
In normal times, practice with small amounts, and when the real big opportunity comes, go all in. When you successfully grow from tens of thousands to a million, you will unknowingly learn some strategies and logic for making significant profits. At that point, your mindset will stabilize, and future operations will resemble previous successful repetitions.
If you want to learn rolling, or if you want to learn how to grow from thousands to millions, then you need to pay close attention to the following content.
1. Determine the timing for rolling.
Rolling is not something you can just do; it requires certain backgrounds and conditions for higher chances of success. The following four situations are most suitable for rolling:
(1) Breakthrough after long-term consolidation: When the market has been in a consolidated state for a long time, and volatility drops to new lows, once the market chooses a breakout direction, rolling operations can be considered.
(2) Bottom Fishing During a Bull Market: In a bull market, if the market suddenly drops significantly after a considerable rise, consider using rolling operations for bottom fishing.
(3) Breakthrough at the Weekly Level: When the market breaks through significant resistance or support at the weekly level, consider using rolling to seize the opportunity.
(4) Market Sentiment and News Events: When market sentiment is generally optimistic or pessimistic, and there are recent significant news events or policy changes that may affect the market, consider using rolling operations.
Only in the above four scenarios does the rolling operation have a relatively high chance of success; at other times, one should operate cautiously or forgo the opportunity. However, if the market seems suitable for rolling, strict risk control is still necessary, setting stop-loss points to prevent potential losses.
2. Technical Analysis
Once you confirm that the market meets the conditions for rolling, the next step is to conduct technical analysis. First, confirm the trend using technical indicators to determine the direction, such as moving averages, MACD, RSI, etc. If possible, combine multiple technical indicators to confirm the trend direction, as making more preparations is always advisable. Next, identify critical support and resistance levels to judge the effectiveness of breakouts. Finally, use divergence signals to capture reversal opportunities.
(Divergence signal: When a coin's price hits a new high, but MACD does not reach a new high, it forms a top divergence indicating a price rebound; positions can be reduced or shorted. Similarly, when the price hits a new low, but MACD does not, forming a bottom divergence, it indicates a price rebound, and positions can be added or bought.)
3. Position Management
After this step, proceed to position management. Reasonable position management includes three key steps: determining the initial position, setting rules for adding positions, and formulating a reduction strategy. Let me provide an example to help everyone understand the specific operations of these three steps:
Initial position: If my total funds are 1 million, the initial position should not exceed 10%, which is 100,000.
Adding positions rule: Always wait for the price to break through key resistance levels before adding positions; each addition should not exceed 50% of the original position, i.e., a maximum of an additional 50,000.
Reducing positions strategy: Gradually reduce positions when prices reach expected profit targets; do not hesitate to let go when it's time. Each reduction should not exceed 30% of the current position to gradually lock in profits.
As ordinary people, we should invest more when opportunities are abundant and less when they are few. With luck, you might earn a few million; if luck runs out, you may have to accept your losses. However, I still remind you that when you earn money, you should withdraw your initial principal, and then use the profits to play. It’s okay not to make money, but you must avoid losing.
4. Adjusting Positions
After completing position management, the most critical step is how to adjust holdings to achieve rolling operations.
The operation steps are undoubtedly those few steps:
1. Choose the timing: Enter when the market meets the conditions for rolling.
2. Opening Positions: Open a position based on technical analysis signals, choosing the right entry point.
3. Adding Positions: Gradually add to positions as the market continues to develop favorably.
4. Reducing Positions: Gradually reduce positions when reaching preset profit targets or when the market shows reverse signals.
5. Closing Positions: Fully close when reaching the profit target or when the market shows obvious reversal signals.
Here I want to share my specific operation for rolling:
(1) Adding to Positions: When the invested assets appreciate, consider adding to the position, provided that the holding cost has reduced to minimize the risk of losses. This does not mean you should add to the position every time you make a profit; rather, do it at the right moment, such as during a convergence breakout in a trend, and quickly reduce after the breakout, or add to the position during a trend pullback.
(2) Base Position + Trading: Split the assets into two parts, one part remains unchanged as the base position, while the other part is used for buying and selling during price fluctuations to reduce costs and increase profits. The proportions can refer to the following three types:
1. Half-position rolling: Half of the funds用于长期持有，另一半用于价格波动时买卖。
2. Base Position of 30%: Hold 30% of funds long-term, with the remaining 70% used for trading during price fluctuations.
3. Seventy percent base position: Seventy percent of funds held long-term, with the remaining thirty percent used for trading during price fluctuations.
The purpose is to maintain a certain position while utilizing short-term market fluctuations to optimize position costs.
5. Risk Management
Risk management is mainly divided into two parts: controlling total positions and distributing funds. Always ensure the overall position does not exceed the bearable risk range, and allocate funds reasonably; do not invest all your capital in one trade. Additionally, monitor in real time, closely observe market dynamics and changes in technical indicators, and adjust flexibly according to market changes. If necessary, implement timely stop-loss or adjust positions.
Many people hear about rolling positions and feel both fearful and eager, wanting to try but also fearing the risks. In fact, the risk of rolling strategy itself is not high; the risk comes from leverage, but using leverage reasonably also minimizes risks.
For instance, if I have 10,000 as the principal, when opening a position at a currency price of 1,000, I use 10x leverage, and only 10% of the total funds (i.e., 1,000) as margin, this is equivalent to 1x leverage. Setting a 2% stop-loss means if the stop-loss triggers, I will only lose 2% of that 1,000, which is 200.
Even if liquidation conditions are ultimately triggered, you will only lose that 1,000, not all your funds. Those who get liquidated often use higher leverage or larger positions, leading to market fluctuations triggering liquidation. But following this method, even in adverse market conditions, your losses are limited. Thus, whether it's 20x or 30x leverage, or even 3x, it can be rolled; at worst, using 0.5x is also feasible. Any level of leverage can work as long as it is used and controlled reasonably.
This is the basic process of using rolling. Friends who want to learn can watch this several times, ponder it carefully, and there will certainly be differing opinions, but I only share experiences, not to persuade others.
So how should small capital operate?
This brings us to the compounding effect. Imagine if you have a coin, and its value doubles every day. After a month, its value becomes astonishing. Day one doubles, day two doubles again, and so on, leading to an astronomical final result. This is the power of compounding. Even starting with a small amount, after a long period of continuous doubling, it can reach millions.
Currently, for those wanting to enter with small capital, I recommend focusing on big targets. Many believe that small capital should engage in frequent short-term trading for quick appreciation, but actually, it’s more suitable for mid to long-term trades. Instead of earning small profits daily, focus on achieving several times growth in each trade, using multiples as the unit.
In terms of positions, it’s essential to understand how to diversify risks and not concentrate all capital on a single trade. Funds can be divided into three or four parts, using only one part for each trade. For example, if you have 40,000, divide it into four parts and use 10,000 for trading. Furthermore, use leverage moderately; my personal suggestion is not to exceed 10x for major coins and 4x for altcoins. Lastly, dynamically adjust; if you incur losses, compensate with an equivalent amount, and if you gain, withdraw appropriately. Above all, ensure you don’t let yourself incur losses. Finally, consider adding to your positions, but only if you are already in profit. As your capital grows to a certain level, gradually increase the amount for each trade, but do so slowly.
Table of Contents
What is a moving average?
Types and formulas of moving averages
How to add moving averages to the chart
Trading Applications of Moving Averages
Combining multiple moving averages
How to choose parameters for moving averages
Advantages and disadvantages of moving averages
Summary
As a technical indicator essential for beginners in trading, moving averages are one of the most widely used indicators in the market. In this chapter, we will explore what makes moving averages special, how they assist investors in making trading decisions, and delve into their meanings, types, calculation methods, and practical applications in trading. Finally, we will provide advice on how to adjust your moving average parameters. What is a Moving Average? A Moving Average (MA) is one of the most commonly used indicators in technical analysis, helping traders smooth price fluctuations to observe price trends more clearly. It eliminates short-term price fluctuations by calculating the average closing price over a period, assisting investors in determining whether the market is in a bullish or bearish trend.
In the chart, you can see moving averages smooth the fluctuations of K-line prices. Why does a moving average with a larger parameter smooth the price more? This relates to its formula, which we will understand next.
Types and formulas of moving averages
The calculation method for moving averages is based on the closing prices of K-lines over a certain period, calculated as weighted or unweighted averages. Common moving averages include:
Simple Moving Average (SMA)
Exponential Moving Average (EMA)
Weighted Moving Average (WMA).
1. Simple Moving Average (SMA)
The Simple Moving Average (SMA) is the most basic moving average. The calculation formula for SMA is as follows:
SMA = Total closing prices over n days / n
By dividing the total closing prices in a specific range by the number of days n, the current day's SMA can be calculated. SMA gives equal weight to all data, making price fluctuations smoother.
Example:
Assuming a certain stock’s closing prices over the last 5 days are: 100, 102, 101, 104, 103.
Calculation result: 5-day SMA is 102.
This type of moving average is relatively simple to calculate, but it references average prices, thus reacting slowly to recent price fluctuations. As n increases, the correlation of the simple moving average with the current situation weakens, and sometimes it may not align with current conditions.
2. Exponential Moving Average (EMA)
The Exponential Moving Average (EMA) assigns different weights to closing prices over different periods, with more recent K-line closing prices receiving higher weights, making the EMA more responsive to price changes and reflecting market prices more closely than the SMA.
EMA is suitable for highly volatile markets or when traders want to capture short-term trends.
EMA = (Today's closing price × α) + [Yesterday's EMA × (1 - α)]
The smoothing coefficient α is an adjustment parameter determined by the number of days n:
α=2/(n+1)
Calculation Steps:
Step 1: Calculate α. Assuming n = 10, then α = 2/(10+1) = 0.182
Step 2: Use SMA as the value for the first day's EMA.
Step 3: From the next day onward, use the EMA calculation formula. Example:
Assuming a certain stock’s closing prices over the last 3 days are 100, 102, 104, calculate the 3-day EMA (simplified process):
Day One:
SMA = (100 + 102 + 104) / 3 = 102 (as the initial EMA). Second day EMA:
α = 2/(3+1) = 0.5
Today's price = 102, Yesterday's EMA = 102.
EMA = (102×0.5) + (102×0.5) = 102 for the third day EMA:
Today's price = 104, Yesterday's EMA = 102.
EMA = (104×0.5) + (102×0.5) = 103
3. Weighted Moving Average (WMA)
Weighted Moving Average (WMA) is similar to EMA, but it does not use exponential decay; instead, it assigns weights linearly in a descending manner. WMA is suitable for moderately volatile markets where traders want to smooth prices while quickly following trends.
For instance, in a 5-day WMA, the weight for Day 1 is 1, Day 2 is 2, and so on until Day 5, where the weight is 5.
Example:
Assuming a certain cryptocurrency's closing prices over the last 3 days are 100, 102, 104, calculate the 3-day WMA:
Weights are 1 (Day 1), 2 (Day 2), 3 (Day 3).
Calculation Formula: WMA = ((100*1)+(102*2)+(104*3))/(1+2+3) = 616/6 = 102.67
Calculation result: 3-day WMA is 102.67.
Trading Applications of Moving Averages.
As one of the most commonly used technical indicators in financial markets, moving averages have various trading applications. The roles of moving averages in trading are:
Used for trend judgment, as support and resistance references, and for identifying trend reversal points.
1. Used for trend judgment.
Trend is one of the core elements of trading, and moving averages can intuitively reflect the direction of price trends, helping traders confirm whether the current market is in an upward or downward trend.
When prices consistently stay above moving averages, it is likely an upward trend.
When prices consistently stay below moving averages, it is likely a downward trend.
Taking the Hong Kong Hang Seng Index HK50 as an example, we can see that when the price is below the 20-day moving average and the moving average shows a downward trend, the asset price forms a clear downward trend; when the price is above the 20-day moving average and the moving average shows an upward trend, the asset price forms an upward trend.
2. As Support and Resistance
Moving averages can serve as dynamic support or resistance levels under different market conditions, helping traders identify potential rebound or breakout points.
In the example of the S&P 500 shown above, we see that when asset prices drop near the moving average, they receive a certain degree of support; when prices drop below the moving average, that moving average becomes a resistance level.
3. Use Golden Cross and Death Cross to determine trend reversals
The crossover points of moving averages are often used as signals for buying or selling. Common crossover strategies include the Golden Cross (where a short-term moving average crosses above a long-term moving average) and the Death Cross (where a short-term moving average crosses below a long-term moving average).
Taking the example of the USD/JPY chart above, when the 10-day SMA drops below the 20-day SMA, it accelerates downward, forming a clear downward trend; conversely, when the 10-day SMA breaks above the 20-day SMA, this trend reverses, changing from a downward trend to an upward trend.
Combining multiple moving averages
Moving averages can be used in conjunction with multiple lines, helping traders to better judge market trends.
1. Bullish Arrangement of Moving Averages
Short-term, mid-term, and long-term moving averages are arranged from bottom to top, all showing an upward slope, indicating a strong bullish trend.
Trading Application: Consider holding long positions and adding to the position during short-term moving average pullbacks.
2. Bearish Arrangement of Moving Averages
Short-term, mid-term, and long-term moving averages are arranged from top to bottom, all showing a downward slope, indicating a strong bearish trend.
Trading application: Consider holding short positions and adding to the position when short-term moving averages rebound.
3. Convergence of Moving Averages
When multiple moving averages tend to be parallel and interwoven, it indicates the market may be in a consolidation phase or about to break out.
Trading Application: Observe the direction of price breaking through the entangled moving averages, choosing entry points.
How to choose parameters for moving averages
Setting parameters for moving averages is very important in trading, as different parameters directly affect the generated trading signals. So how should we choose the parameters for moving averages?
1. Classification of moving averages by time period.
Based on time periods, moving averages can generally be divided into three categories:
Short-term moving averages (5-day, 10-day)
Characteristics: Reacts quickly and is sensitive to market changes. Suitable for day traders for intraday trading or short-term swing operations.
Application Scenario: Capture short-term price movements, such as breakouts, pullbacks, and rebounds.
Mid-term moving averages (20-day, 50-day)
Characteristics: Balancing sensitivity and stability, effectively identifying segment trends. Suitable for swing traders wanting to capture a complete trend.
Application Scenario: Judging the stability of market trends, filtering out short-term noise.
Long-term moving averages (100-day, 200-day)
Characteristics: Reacts slowly but better reflects long-term market trends. Suitable for long-term investors.
Application Scenario: Used to determine bull or bear markets and serve as primary support or resistance levels.
2. Choose parameters based on trading style
Day Traders
Recommended moving average parameters: 5-day EMA, 10-day EMA
Reason: Day trading requires quick responses, hence short-term EMA is more suitable for capturing immediate price fluctuations.
Application: When the 5-day EMA crosses above the 10-day EMA, it triggers a buy signal; conversely, it triggers a sell signal.
Short-term swing traders
Recommended moving average parameters: 10-day EMA, 20-day EMA
Reason: Short-term swing trading requires balancing sensitivity and stability; the 20-day EMA can reflect recent trends while filtering out short-term noise.
Application: Consider buying when the price stabilizes above the 20-day EMA; consider selling when it drops below the 20-day EMA.
Mid to long-term investors
Recommended moving average parameters: 50-day SMA, 100-day SMA, 200-day SMA
Reason: Long-term investment emphasizes major trend judgment; the 200-day SMA is an important bull-bear boundary.
Application: When the price crosses above the 200-day SMA, it indicates entering a long-term bullish market, suitable for positioning at lower prices; when the price crosses below the 200-day SMA, it indicates a weakening market, warranting cautious operations.
3. How to choose parameters based on market characteristics
High Volatility Market (such as cryptocurrency, tech stocks)
In markets with high volatility, using more sensitive moving averages, such as short-term EMA (5, 10 days), is appropriate.
Reason: EMA can quickly reflect market changes, allowing traders to adjust strategies in a timely manner.
Low volatility markets (such as large blue-chip stocks, stable assets)
The market is stable, suitable for using the smoother SMA (20, 50, 200 days).
Reason: SMA can filter out unnecessary short-term noise, allowing traders to focus on mid to long-term trends.
Fluctuating Market
During price consolidation or fluctuation periods, moving averages can be frequently crossed.
Recommendation: Combine multiple moving averages (like 5, 10, 20-day SMA), observe whether the moving averages are entangled, and the direction of price after breaking through the entanglement.
Advantages and disadvantages of moving averages
Although moving averages are one of the most widely used technical indicators in financial markets, they are not without flaws. Next, let's take a look at the advantages and disadvantages of moving averages.
1. Advantages of Moving Averages
Smooth price fluctuations, filter out noise
Moving averages can smooth price data over a period, filtering out short-term price volatility noise, helping traders focus on the main trend.
Highly flexible and suitable for different time periods
Moving averages can be set with parameters based on different trading cycles, from short-term (like 5-day, 10-day) to long-term (like 100-day, 200-day).
For example, short-term traders can choose 5-day or 10-day moving averages to capture short-term fluctuations, while long-term investors may choose the 200-day average to judge bull-bear boundaries.
Provides clear trading signals.
The crossovers of moving averages (such as Golden Cross and Death Cross) and price breakout strategies can provide clear buy and sell signals. These signals help traders formulate clear entry and exit plans, reducing indecision.
2. Disadvantages of Moving Averages
Strong lagging, reacts slowly
Moving averages are calculated based on past price data and cannot predict the future; they only reflect past trends. In rapid market reversals, moving averages lag, causing entry or exit signals to be delayed.
For example, when the market rapidly rises or falls, prices may have completed a round of fluctuations, while the moving average crossover signals may just appear, missing the best trading opportunities.
Cannot respond to fluctuating markets, easily generating false signals.
During sideways consolidation or fluctuating markets, prices frequently cross moving averages, leading to numerous false signals, easily causing traders to enter and exit frequently, increasing trading costs.
For example, in a fluctuating range, short-term MA (like 5-day or 10-day) frequently crosses the price, but the actual trend is unclear, leading to losses.
Difficult to capture extreme markets or sudden changes
Moving averages cannot respond to sudden market events or violent fluctuations, potentially missing significant trends or reversal signals.
For example, when major news leads to a sudden market surge or plummet, the trading signals from moving averages typically lag behind the price.
Summary
Moving averages are one of the most commonly used indicators in technical analysis, helping to judge market trends and provide trading signals through price fluctuations. It includes types such as Simple Moving Average (SMA), Exponential Moving Average (EMA), and Weighted Moving Average (WMA), which can be used for trend judgment, support and resistance analysis, and identifying trend reversal points. Short-term moving averages suit traders who need to react quickly, while medium to long-term moving averages help capture stable trend movements. Although moving averages are easy to understand and effectively filter out noise, one must be cautious of their lagging nature and false signals in fluctuating markets. To gain deeper insights and adjust moving averages, continuous experimentation and exploration are essential.
After over a decade of trading and thousands of transactions, I've summarized stable compounding in practical position management! (suitable for spot and contract trading)
Cryptocurrency investments yield high returns but come with significant risks, and risks are omnipresent. A wrong choice or operational mistake can lead to unnecessary losses. To ensure the achievement of the aforementioned profit goals, it is crucial to enhance risk awareness and implement robust risk control measures. Treat positions as a reservoir, with each coin being a faucet pouring water into the reservoir, and the control switch is in your hands.
Position Management
1. Control risk from the perspective of strategy and operation.
Don’t rush to buy; optimize with split purchases. Follow buying rules like 334, 433 for gradual entry, avoiding all-in strategies.
Setting necessary stop-loss and take-profit before placing an order. If the price breaks significantly, technical indicators form a top, or your position profit decreases significantly, even resulting in a loss, you need to adopt necessary protective strategies. Timely take profit to secure gains, and timely stop-loss to prevent further losses.
2. Adhere to the principle of risk diversification.
Diversifying sectors and coin types helps control risks, while for each capital account, avoid holding a single coin but also do not hold too many types, which can make it difficult to respond to market fluctuations.
Reasonably distribute long, mid, and short-term positions; this is akin to arranging troops in battle, where funds are your soldiers. Ensure long-term positions in Bitcoin or Ethereum are configured to guarantee profits.
Other cryptocurrencies should ideally be kept to 3-5 types. For mid-term positions, choose currently trending sectors, while for short-term, use flexible positions primarily for speculation and capturing spikes. The distribution of long, mid, and short-term positions should ideally follow a ratio of 5:3:2.
3. Position Risk Control.
Control the position progress well; keep it at 30% during the bottoming phase, increase to 50% at the end of a bear market or beginning of a bull market, and maintain over 70% once the bull market is confirmed. Always remember not to operate with full positions, as this won't be enough to cope with sudden market changes.
Limit total position; a heavy position can lead to significant returns, but also carries high risks. Trading must be based on market changes; increase positions when the trend is favorable; during unstable markets, reduce positions appropriately, holding a small amount of coins for flexible operations.
4. Capital Management and Profit Management
Reasonable profit management is the best way to secure what you've earned. First, treat the crypto market as an ATM, not a savings machine; as long as you don't exit, all your money is just a number. Profits must be realized, not blindly reinvested. Only when you put that money in your pocket is it truly yours.
Instead of rolling the money earned, at least half of the profits should be kept in the capital account, establishing a reserve system. Of course, you can withdraw all the profits if you choose. Even if the funds in this trading account incur losses, you still have reserves to help you recover.
Never roll the money you earn with your principal together. After all, no one is infallible; mistakes happen. One day, you might face a liquidation, and then you won't have a penny left, and you won't even have a chance to recover.
How to control positions while following orders.
How to manage buying positions depends on the market conditions; for instance, if the market requires heavy positions, still leave some to manage risk. This chapter focuses on short-term position control.
First, let's talk about position control for Bitcoin trading:
Usually using 100X leverage, small positions at 2%-2.5%, normally controlled at 3-5%.
Contract liquidations are common; for those following, stop-loss must be included in the order, and holding positions is strictly prohibited.
Entry points that are not far apart can be directly entered, as there are price differences across exchanges.
Close positions near the first take profit level, either reducing positions or taking profits directly.
Let's first take spot trading with altcoins as an example:
For one cryptocurrency, the total of three positions should not exceed 30%; hold a maximum of 3-5 coins, with the combined total not exceeding 70% of total capital (normal position).
For one cryptocurrency, the total of three positions should not exceed 20%; hold a maximum of 3-5 coins, with the combined total not exceeding 50% of total capital (conservative position).
Then provide an example based on leverage:
10x leverage is optimal with 2-3 layers of positions; exceeding 30% begins to carry risks. Too much leverage cannot withstand a casual drop, leaving too little margin for error. This is a summary of Cold Wind's years of experience; please don’t take it lightly.
If increasing leverage, you can simultaneously reduce your position; reducing your position can simultaneously increase leverage. This ensures you remain in line with market trends.
For one cryptocurrency, the total of three positions should not exceed 30%; hold a maximum of 3-5 coins, with the combined total not exceeding 30% of total capital (normal position).
For one cryptocurrency, the total of three positions should not exceed 20%; hold a maximum of 3-5 coins, with the combined total not exceeding 20% of total capital (conservative position).
Averaging down operations
Averaging down is an important component of normal operations.
When buying one, you should first have an idea of how much you want to buy. For example, if I want to buy BTC, I plan to buy 1000U; for ETH, I plan to buy 2000U; for ORDI, I plan to buy 500U.
Next, have a rule for the pace of purchases, usually a three-position system, like 4.3.3 or 3.4.3 process.
If the price begins to rise during the buying process, do not add positions.
If all three positions are in play and the price drops, do not average down further.
1. Set stop-loss. This is essential, not optional.
2. Averaging down but still falling. This indicates a wrong judgment; proactively reduce positions and wait for a turnaround to add positions.
3. Turning to Averaging Down. Averaging down should not be done continuously as the price falls, as this can lead to increasingly heavy positions. Instead, wait for a turnaround before averaging down.
4. There are two types of averaging down:
One reason is to reduce costs; this kind of averaging down must exit once it reaches above the cost price. Of course, sometimes after averaging down, the price may still fall, in which case follow the second rule.
Another reason is to increase profits, also called flexible positions. This part can be reduced according to your profit space, exiting when reaching the profit target. You can also exit according to pressure levels, such as first, second, and third pressure levels, reducing positions in batches or all at once.
I generally consider the first position as the base position, viewing it as the foundation. This isn't rigid; if the market is good, the ratio can be increased slightly, while in a bad market, the base position should be smaller.
5. The issue of inserting needles to increase positions. It still boils down to overall position planning. If you find your position accidentally increased, actively reduce it; do not take chances!
6. Issues with transferring positions and switching positions.
If we have a set of 3-5 coins.
If you don't want to increase the position, you must exit one to enter another; do not enter without exiting.
If controlling positions during a downturn, always start reducing from the weakest one.
If you don't want to increase the total position but want to buy strong coins, you can reduce the holding of weaker coins or sell the weakest coins to transfer positions to stronger coins.
Observe tops and bottoms to avoid risks.
Before placing an order, observe Bitcoin; see whether the recent market is favorable or unfavorable. If Bitcoin is set to fall, everything will likely plunge. If you believe today's market is dangerous and may fall, reduce or close your positions.
Possible peak market conditions; everyone should know how to operate. Most of our losses come from here. We must first observe Bitcoin's trend before placing orders.
In a potentially peaking or already declining trend, positions should be reduced, while regular trading positions should also be slightly reduced. As Bitcoin declines, gradually reduce long positions to ensure alignment with the overall trend, waiting for critical support or a reversal to increase positions again.
In potentially bottoming markets, bottom fishing should not be rushed; bottoms are gradually formed. Short-term rebounds should also control positions, maintaining good take-profit and stop-loss. Unless there is a very significant reversal signal.
Entering a rebound or upward trend, normal trading can be done in the early stages; the closer to the end, the more cautious one should be, especially during critical turning points, gradually decreasing position size and frequency of operations.
Judging the time period the market is in is a must-have market intuition for every investor. If you can't comprehend whether the overall market has risks or how significant those risks are, then it indicates a significant lack of foundational knowledge that cannot be explained in a few sentences. For such friends, please take the time to study the basics of market observation; Bitcoin's market is the most standard and straightforward among all currencies.
Relationship with Bitcoin
Bitcoin's market is clearly in an upward trend; if it hasn't reached key resistance, it's a market that Teacher Jin is most adept at; one can be slightly casual but not reckless.
Tip: Bitcoin is still in an upward trend today, relatively stable; everyone can hold and buy with confidence.
When Bitcoin encounters key resistance zones, first analyze the key resistance identified earlier, recognizing the key resistance agreed upon by many. After reaching this level, altcoin longs should be cautious, and positions should not be opened near Bitcoin's peak. For short-term, wait for a pullback or breakout for a more stable approach. For mid to long-term, reduce positions or consider exiting.
Tip: Bitcoin encounters key resistance, focus on the breakout situation; until the breakout, avoid going long, primarily short positions with smaller sizes.
Bitcoin encounters key resistance and pulls back; once Bitcoin stabilizes after hitting support, consider short-term long positions, lowering profit expectations while taking small positions, and it's best to reduce the number of trades and types of coins.
Tip: Bitcoin is under pressure to pull back; the overall trend is upward, consider buying for a rebound. If the overall trend is downward, take small positions for rebounds.
Bitcoin has dropped to key support; analyze whether it is likely to bottom.
In analyzing uncertain bottom conditions, do not make high-position long orders; if made, add stop-loss later and reduce the number of trades and types of coins.
Tip: If Bitcoin reaches key support and breaks below, it could lead to a sharp decline; everyone should prioritize shorts and minimize longs.
Analyze potential bottoming markets and accumulate positions gradually, ensuring that any prediction errors keep losses within manageable limits.
Tip: Bitcoin has dropped to key support, technical aspects may have rebound potential; one can bet on the rebound. For conservative traders, wait for bottom patterns to appear.
In a fluctuating market, pay attention to the size of the Bitcoin fluctuation range. Do not go long near the top of the box; consider going long after a breakout, or in the middle or end.
Tip: Bitcoin is in a box fluctuation, currently at (top/middle/bottom), risks range from high to low.
Bitcoin's fluctuating short-term repeatedly tests key support levels, indicating it may not hold, suggesting a short pause for short-term trades and considering exiting for mid to long-term.
If the daily chart repeatedly tests a key support level more than four times without a significant rebound, maintaining a fluctuating trend, or the rebound highs are progressively lower, it indicates a strong desire for Bitcoin to pull back.
Tip: Bitcoin is extremely weak; try to avoid going long; short positions can be taken in small batches.
Trading is not about getting rich from one trade, but rather achieving reasonable profits that allow for long-term, stable, sustainable, and high-probability wealth accumulation.
That's all for today. In a bull market phase, you really can't navigate the crypto space alone. Don't force yourself; come find me to learn, understand the latest information, plan, embrace the bull market, improve your win rate, and say goodbye to being trapped at high positions.
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