Today I want to share my experience of making money in the cryptocurrency market over the past seven years.
In the cryptocurrency world, people say that trading can change lives, but I want to say that I can change trading.
You are troubled by not making money from investments, saddened by falling into pitfalls, and heartbroken by cutting orders. You hear rumors that the market is good, and even the vegetable vendor can make a profit, while you enter the market and are immediately labeled as a 'newbie'.
The difference between you and me is that apart from my years of hard study and practice, there’s nothing else. However, I can change the fate of a 'newbie' who fails in the investment market. Without further ado, today I will continue to share some practical insights, which are derived from my previous experiences in several markets.
In the cryptocurrency trading market, don't worry about which coin you are trading. I often hear people say that a certain coin has risen significantly. I just want to say that how much it has risen has nothing to do with you. The beauty of someone else's wife has nothing to do with you. If you want to make money through cryptocurrency trading, first and foremost, position management techniques are very important. Don't underestimate position management. You should have a clear idea of your losses. Position management is a double-edged sword; if handled well, it can allow us to navigate cryptocurrency trading with ease, both offensively and defensively. If handled poorly, it can lead to significant losses, either getting stuck or losing everything in a minute.
I advise all 'newbies' to trade cryptocurrencies according to their capabilities and to choose suitable operating methods based on different funds.
Here I want to share a position management method—'Pyramid Positioning Method.'
This method originally comes from a technique in futures speculation, mainly used for buying and selling operations. After improving this method, I can find a way out of desperate situations.
(1) For your first entry, use no more than 20% of your total funds. If the direction is correct and the trend is established, you can gradually increase your position, but the proportion of increases should gradually decrease. Generally, each time you increase your position, use 10% of your remaining funds. This is a type of pyramid position management method, which is also quite simple.
(2) For your first entry, use 20% of your position. If the direction is wrong, don’t rush; assess where the support is. If the support is far away, you can choose to add to your position at the support level. When adding to your position, use 30% of your remaining funds. Generally, you should only add to a position once in the opposite direction. Why is the position size for adding heavier than that for establishing the position?
In generally reversed market trends, the pullback strength is usually small. A heavier position can average down and thus allow you to catch the pullback to break even or make a small profit. If necessary, you can also exit with a small loss.
(3) For your initial entry, use 20% of your position. If the market moves against you and the fluctuations are rapid, and you don’t have time to set a stop-loss, or you can’t bear to set a stop-loss which leads to getting stuck, at this time, you should promptly open a position in the opposite direction using the same size as your original position to form a hedge, thus avoiding position risk. When a one-sided market ends and begins to oscillate, you can seize the opportunity to operate back and forth within the hedging range to offset losses and gradually exit positions, aiming for small profits or break-even, or even exit with a small loss if necessary.
Position Management Taboo
1: The account is overloaded; building a position over 30% is equivalent to self-destruction.
2: Do not set stop-loss orders. Every position you take must have a stop-loss set, and the risk-to-profit ratio should be at least 1:1.5.
3: When faced with failure, many people gamble in anger. Most people, after incurring losses, will make a desperate bet, which leads to an inability to recover. After a loss, quickly shift your focus to the next trade. Even investment experts cannot guarantee that every trade will be profitable, so when some of your trades incur losses, you should quickly forget about them and swiftly shift your attention to the next trade.
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