I know a veteran who entered the cryptocurrency circle with 100,000 yuan and currently has a market value of 42 million. He once told me a phrase that enlightened me. He said, 'The cryptocurrency market is just a crowd of misfits; if you can control your emotions, this market is a cash machine!'
In the cryptocurrency circle, your trading strategy is your 'secret weapon'. The following tips are crystallizations of practical experience; save them quickly!
Entry method: test the waters first; enter steadily, refuse to rush in.
Sideways method: low-level sideways creates new lows; it is a good time to heavily buy the dip; high-level sideways and then spike, decisively sell without hesitation.
Volatility: sell during spikes, buy rapidly during crashes; observe the market, reduce trading, as sideways means using horizontal to replace declines, hold onto your assets, and a rise may be imminent.
Next second; be cautious of a sharp drop during a rapid rise and be ready to secure profits; a gentle decline is a good time to gradually increase your position.
Timing for trading: do not sell at peaks; do not buy during crashes; do not trade in a sideways market. Buy on down days and sell on up days, operating in reverse can help you stand out. Buy when there is a big drop in the morning, sell when there is a big rise in the morning; do not chase highs in the afternoon when there is a big rise, buy after a big drop in the afternoon the next day; do not cut losses when there is a big drop in the morning, if it neither rises nor falls, take a break; add positions when trapped to seek to break even, excessive greed is not advisable.
Risk awareness: calm lakes can rise high waves; there may be big tides later; after significant rises, there must be retracements; K-lines may present a triangle over several days. In an upward trend, look for support; in a downward trend, look for resistance. Full positions are a major taboo; going against the flow is not feasible; know when to stop in the face of unpredictability and grasp the timing of entry and exit.
Trading cryptocurrencies is essentially about trading mindset; greed and fear are major enemies; be cautious when chasing highs and cutting losses, a calm mind is essential.
In addition to the tips, I have also organized several super practical trading methods that can benefit both beginners and seasoned players.
Oscillation trading method: most markets are in oscillation patterns. Utilizing high sell and low buy within ranges is the foundation for stable profits. Use the BOLL indicator and range theory, combined with technical indicators and patterns to identify resistance and support, following short-term trading principles, and avoid greed.
Breakout trading method: after long periods of consolidation, the market will choose a direction. Entering after a breakout can lead to quick profits. However, one must have a precise breakout timing.
Unilateral trend trading method: after the market breaks through the trading range, a unilateral trend will form. Trading with the trend is key to profit; enter during retracements or rebounds, referring to K-lines, moving averages, Bollinger Bands, trend lines, etc. Mastery of these indicators will allow you to navigate smoothly.
Resistance and support trading method: when the market encounters key resistance or support levels, it often gets blocked or supported. Entering trades at this time is a common strategy.
Utilize trend lines, moving averages, Bollinger Bands, and parabolic indicators to accurately judge resistance and support levels.
Retracement and rebound trading method: after significant rises or falls, there will be short-term retracements or rebounds, seize the opportunity to profit easily. The main basis is K-line patterns, and good market sense can help you accurately grasp highs and lows.
Time-based trading method: morning and afternoon sessions have small volatility, suitable for conservative investors. Although the time to profit takes longer, it is easier to grasp the market; evening and late night sessions have large volatility, suitable for aggressive investors who can profit quickly but face higher difficulty, requiring strict technical and judgment skills.
After ten years of trading cryptocurrencies, from losing a lot to becoming wealthy, I have derived twenty-one trading principles. The content is not extensive, but the value is high. Today, I share them with everyone. If you understand just a few, things will become smoother.
1. For every market entry, the loss should not exceed one-tenth of your capital.
Even if you make mistakes each time, you still have 10 chances to play. For example, some friends suggest using only 1/10 leverage for contracts, as long as there is one chance to multiply by 10, you can break even. Of course, the old bull still hopes that newcomers do not engage in contracts.
2. Always set stop loss levels to reduce potential losses when trading goes wrong.
Stop loss is very important. Newcomers may not feel it deeply, but stop loss can prevent unnecessary massive losses caused by black swan events, for example.
Events like USDT crashing are completely unpredictable. Almost everyone who shorted at that time got wiped out. Moreover, the cryptocurrency market operates 24 hours; without stopping profit and loss, running naked in the market is very dangerous. If you can’t sleep, set a stop loss, and know what your maximum loss is; it will be much safer.
3. Always just buy and sell.
Keep trading frequency low, ideally reducing it to 1-2 times a week. Newcomers can train using simulated funds or very small amounts to accumulate experience, but for normal accounts, one must wait for the right opportunity. Trading opportunities are actually very rare.
4. Never let held positions turn from profit to loss.
Many people feel regret when their profitable trades turn into losses. How to handle profitable trades to prevent them from becoming losses? It’s simple: set a stop loss to protect your capital when you reach a certain profit percentage. For example, if you buy at 10 and it rises to 13, you can set the stop loss at 10 or 11, so even if the market reverses, your capital can be protected from loss.
5. Never trade against the market. When market trends are unclear, it is better to observe from the sidelines.
Do not trade against the trend; follow the trend instead. This trend varies in definition for everyone based on their trading cycles and reference indicators. Some may refer to the 20-day moving average on the daily chart, while others may reference the 60 moving average on the hourly chart. It varies from person to person. Only when the direction is clear should you enter the market; trading errors will be significantly reduced.
6. If there are doubts, close the position and leave. Be decisive when entering the market, and do not enter when indecisive.
This requires personal insight. Whether a position can be held depends crucially on confidence and trading psychology. If you can't sleep while holding a position, it’s better not to trade.
7. Only trade in active markets. Do not trade in thinly traded times.
This is a special reminder that it is best to trade mainstream coins and not to buy altcoins lightly. The depth and liquidity of altcoins have significant issues, and trading is very light; do not amplify your funds into them, as it is easy to get stuck.
8. Never set target prices for entering or exiting the market to avoid limit orders, and only follow market trends.
Avoid subjective assumptions about the market; this is akin to guessing tops and bottoms. Trading is not analysis, much less prediction. One can predict Bitcoin will rise to $100,000, but when Bitcoin falls from $20,000 down to $3,000, it is best to avoid it. The future is elusive; reality is what must be faced.
9. If there is no proper reason and you are not closing your positions, you can use stop profit levels to safeguard your profits.
Same as 8, do not guess tops. Take profits in batches, and try a reverse pyramid method for exiting.
10. After consecutive market victories, you can withdraw some profits for emergency needs.
This is something that deeply pains the old bull. Because everyone has moments of making money, everyone has moments of great profits, and it is at this time that it is easiest to become proud. Fantasizing, a moment of relaxation in thought, the market will immediately teach you a lesson. Securing profits or prospect theory is crucial. Money only counts when it is in hand; otherwise, it is just a pile of numbers.
11. When incurring losses in trading, avoid gambler's mentality to lower costs.
Do not add positions when you are losing; remember, most importantly, do not heavily leverage against the trend. This is a dead end! Many have died because of it. The premise of the theory of buying more as prices drop is that you have enough money. No one has infinite funds; do not believe such talk.
12. Do not enter the market out of impatience, and do not close positions out of impatience.
Avoid emotional trading.
13. Willing to lose but unwilling to win, avoid this. Do not engage in trades that lose more than they gain.
Many friends remain calm when facing losses but become eager to take profits at the slightest gain. This is something to watch out for; the risk-reward ratio should be reasonable, ideally with rewards at least twice the risk.
14. Never randomly cancel the stop loss set when entering the market.
Not much understanding yet.
15. The more you do, the more mistakes you make; wait for opportunities before entering the market; do not trade too frequently.
The more you do, the more mistakes you make; same as 3, lower trading frequency.
16. The more you do, the more mistakes you make; wait for opportunities before entering the market; do not trade too frequently.
The more you do, the more mistakes you make; same as 3, lower trading frequency.
17. Be flexible in both long and short trades; do not just trade in one direction.
The old bull often fails to do this, as he is a persistent bull. Therefore, he suffers losses during pullbacks. One must not have obsessions; respect the market.
Reality is the most important.
18. Do not buy just because the price is too low, and do not short just because the price is too high.
Do not guess tops; especially during wild rises and falls, do not casually think you can short or go long; you must have your own principles for entering and exiting the market.
19. Never hedge.
If you incur a loss on a single trade, cut losses! Do not lock positions; that’s a big taboo.
20. Try to avoid pyramid adding during inappropriate times.
Not much understanding. Pyramid adding is best done when the trend is clearer; do not add positions during market oscillations.
21. If there is no proper reason, avoid randomly changing trading strategies.
What is a proper reason? I don't know! Trading strategies must be formulated in advance, such as entry signals, stop loss, position size, exit signals, etc. Once established, they should not be easily changed due to drastic market fluctuations.
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