Today let's talk about the take-profit and stop-loss of the trading system used by the big players in the crypto circle. It's practical advice that you can save. Take-profit and stop-loss can be said to be the key to whether one can make a profit; in several trades, we need to ensure that total profits exceed total losses.
To achieve this is actually not difficult, just follow these points:
① Each stop-loss ≤ 5% of total funds;
② Each profit > 5% of total funds;
③ Total trading win rate > 50%. If the above requirements are met (profit-loss ratio greater than 1 and win rate greater than 50%), profit can be achieved, of course, a high profit-loss ratio with a low win rate, or a low profit-loss ratio with a high win rate is also possible.
Anyway, as long as you ensure that total profit is positive, it is enough. Total profit = initial capital × (average profit × win rate - average loss × loss rate). In the trading system, it is expected that a 30% volatility will trigger action, and the profit-loss ratio will be very high, which is one of the fundamental reasons for extraordinary returns.
However, many people find it easy to take profits in practice but hold on stubbornly during losses, and even though they know this is wrong, they just can't control it. This is the weakness of human nature; greed and fear need to be controlled through capital management.
Summary of trading insights:
1. Trade with money you can afford to lose; don't be afraid of losing money to make a profit;
2. Combine 'fundamentals + technical analysis' to determine direction; with the support of fundamentals, the trend can be steadier;
3. Only trade daily trend markets (volatility > 30%); do not engage in intraday short-term trading, do not trade in sideways markets, and do not hoard coins foolishly;
4. Stick to trend strategies during sideways markets and adhere to strict stop-losses, patiently waiting for the trend to arrive;
5. If you are on the wrong side, never hold the position; being wrong is not scary, but going to zero is the most terrifying;
6. Compared to shorting, Bit King prefers to go long;
7. In a trending market, Bit King will patiently wait and choose to enter at a price position with an advantage.
Here are reflections on issues in trading: With such a perfect trading record, what problems could there be? After thinking for a long time, there's only one: the leverage is relatively high, which ordinary retail investors psychologically cannot bear. In the first and third trades, 20x and over 5x leverage were used respectively. Although the certainty of both bullish trends was extremely high, if the outcome was inconsistent with expectations, or if the entry position was inappropriate, a big correction could wipe one out. Fortunately, both times the bets were correct. However, for ordinary retail investors, it is still advisable to use low leverage for slow compounding; high leverage all-in operations are random and not replicable. The reasons are as follows: first, ordinary retail investors do not possess the judgment ability of Bit King regarding trends and the ability to patiently wait for entry positions, making mistakes easily; second, high leverage all-in can be addictive, and ordinary retail investors lack self-control, leading to a zero-sum game eventually, even if it’s only two times with high leverage, then switching to low leverage with strong control. If Bit King had gone all in with high leverage every time, he would have probably gone to zero long ago.
1. Win rate and prediction are not important; position management, stop-losses, and profit-loss ratios are more important. Why can trading strategies with a win rate exceeding 90% lead to bankruptcy? And why have traders like Fatty, V, Tony, and Ouyang, who have win rates hovering around 50% or even lower, made big money? Because position size, stop-losses, and profit-loss ratios can determine your final profit more than win rates: a trade with a 30% win rate and a profit-loss ratio of 10 versus a trade with a 90% win rate and a profit-loss ratio of 1; it is evident that the former is easier to make money. A high win rate with heavy positions that do not stop-loss can lead to significant losses, which are evidently larger than the losses from a low win rate with position management plus stop-loss strategies.
Those who can continuously make big money in the secondary crypto market can ensure that when the trend comes, they can heavily invest and swiftly recognize mistakes to avoid serious losses. The difficulty in trading is not in analysis and prediction; these are low-threshold things. A middle school student can learn to say 'fifth wave up', 'Bear Flag' after reading a few days of (Elliott Wave Theory) and (Technical Analysis of Futures Markets). The threshold lies in capital management and stop-loss; for the former, you must at least understand the Kelly Criterion and Bayesian conditional probability; for the latter, you need to overcome human nature. Overcoming human nature is where subjective trading truly has a threshold.

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