After eight years of trading cryptocurrencies, starting with just 5,000 dollars and now having assets over 25 million, I can say that this path has never depended on luck — but rather on the determination to execute simple logic to the extreme. Today, I will share with you my practical insights, especially regarding the nuances of moving averages, understanding which can save you at least three years of losses.

1. Money management: Surviving gives you a chance.

Many people want to go all in for quick profits when they first enter the market, but the cryptocurrency world is full of black swan events. I realized the 'capital slicing technique' in my second year: divide the principal into five parts and only move one part each time.


The brilliance of this strategy is that even if a single asset loses 10%, it only represents a 2% fluctuation of the total capital. After five consecutive misjudgments, the total loss is only 50%, leaving the other half of the principal to recover. But if the direction is correct, the profit grows exponentially—just like that market surge in 2020, I used this method to roll over and turned my principal into eight times in three months.


The more critical rule is the stop-loss ironclad law: cut loss immediately when a single asset loses 10%, never fantasize about a rebound. I’ve seen too many people go from shallow losses to deep losses because they thought, 'just wait a bit longer', and eventually their mentality broke down and they made chaotic trades. Remember, there are plenty of opportunities in the cryptocurrency world, preserving your principal is more important than anything else.

2. Trend is king: Don’t be a contrarian in the market.

The most common mistake beginners make is bottom fishing and chasing highs. I've seen people shout 'buy the dip' when Bitcoin dropped from 60,000 to 30,000 dollars, only to see it fall to 15,000 dollars and give up.


True trend following means taking action only after the trend is clear: in an uptrend, wait for a pullback to key support levels to buy low, which is much safer than guessing the bottom; in a downtrend, no matter how tempting a rebound may be, do not touch it, as rebounds in bear markets are often traps. Those coins that surge more than 50% in the short term are 90% speculative trading, with retail investors always left holding the bag.

3. Moving averages are not omnipotent, but not understanding moving averages is absolutely unacceptable.

Moving averages have been my 'old buddy' for eight years, but in the first two years, I almost entirely lost money because, like most beginners, I thought 'buy on golden crosses and sell on death crosses' was the truth.


In fact, the essence of moving averages is the 'market average cost line'. SMA (Simple Moving Average) reacts slowly but is stable, suitable for viewing large trends; EMA (Exponential Moving Average) is more sensitive to recent prices and is suitable for seizing short-term opportunities. A common mistake for beginners is to stubbornly stick to parameters; some say 5-day + 20-day is best, others advocate 12-day + 26-day, but in reality, there are no universally applicable parameters.


My current method is 'multi-timeframe resonance': I look at the daily chart using EMA60 to determine the major direction, and the 4-hour chart with EMA20 to find entry points. For example, if Bitcoin stabilizes above EMA60 on the daily chart and the 4-hour chart pulls back to EMA20 without breaking it, the probability of success at this moment is at least increased by 40%. This method helped me accurately capture three main upward trends in ETH when it rose from 1,500 to 4,000 dollars last year.


Remember, the purpose of moving averages is not to give you orders, but to help you filter out noise. When the price is above the moving average and the moving average is rising, it indicates that bulls are in control; conversely, it indicates strong bears. Those markets that are too far from the moving average, whether rising or falling, often revert back to the vicinity of the moving average — this is what I often refer to as 'moving average gravity'.


Eight years of practical experience tells me that the logic of making money in the cryptocurrency world has never been complicated: use money management to survive, rely on trends to make big profits, and find opportunities with moving averages. But 90% of people lose because they 'know but can't do'.#Chainbase上线币安 #加密立法新纪元