1. Be Cautious in Averaging Down: Make rational judgments, refuse panic buying.
In a downtrend, do not blindly average down due to price fluctuations. Confirm reversal signals based on technical indicators (such as moving average golden crosses, increased trading volume) and market sentiment. Blindly averaging down costs can easily fall into the vicious cycle of 'the more you average down, the more it falls.' It is recommended to set a tiered averaging down plan (such as increasing positions by a preset ratio for every 10% drop) to avoid excessive pressure on the capital chain.
2. Stick to Discipline: Plan ahead, use rules to counter human weaknesses.
- Before trading: Establish clear entry logic (such as favorable fundamentals/technical breakout), stop-loss levels (suggest setting a 5%-10% loss threshold), and profit-taking targets (consider breaking resistance levels for partial profit-taking).
- During trading: Eliminate emotional operations such as 'holding onto positions' and 'chasing prices,' strictly execute according to the plan, and use automated trading tools to reduce human intervention.
3. Trade Less: Reduce frequency to avoid 'trading loss traps.'
High-frequency trading not only incurs high fees (such as contract trading rates exceeding 0.2%), but also misjudges trends due to short-term fluctuations. It is recommended to focus on mid-to-long-term logic (such as industry cycles, policy trends) and develop trading strategies on a weekly/monthly basis, reducing emotional exhaustion from intraday monitoring.
4. Control Risk: Capital management is the foundation of survival.
- Nature of funds: Strictly prohibit the use of essential living funds such as mortgage or auto loans, with allocation not exceeding 20% of personal disposable assets.
- Leverage Principle: Refuse leveraged trading (such as contracts over 10 times), avoid triggering liquidation due to extreme market conditions, and even spot trading should diversify holdings (single cryptocurrency positions should not exceed 30% of total funds).
5. Reflect Often: Build cognitive barriers from losses.
- Review Mechanism: Pause trading after each losing trade, record core issues such as 'Did the entry reason become invalid?' and 'Why was the stop-loss not executed?' to create a trading log (reference tabular review: time + cryptocurrency + operation + profit/loss + reflection).
- System Iteration: Transform experiences into reusable strategies (such as 'only dollar-cost averaging in bear markets, partial profit-taking in bull markets'), gradually break away from 'random trading' patterns, and establish a stable risk control cognitive framework.
Core Logic: The essence of survival in the crypto world is to 'play against human weaknesses.' The five rules center around 'risk control' and, through disciplined and systematic operational logic, transform market fluctuations into opportunities for cognitive upgrades, rather than traps for wealth depreciation.
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