Entering the cryptocurrency circle requires many fundamental skills to be learned, just like four people playing mahjong – everyone else has seen their cards, and if you don’t look at others' cards the same way, your chances of losing will be particularly high.
In trading technology, the most basic thing is watching the market. Watching the market means observing trends, seeing its past performance; different people can interpret different information during the market.
Therefore, you must first learn and build a solid foundation; do not blindly enter the market to trade. This is a principle that newcomers should understand. Do not trade blindly, or you will ultimately reach zero.
Generally, when an ordinary person first encounters the cryptocurrency market, it’s in the secondary market, and the two major ways to play in the secondary market require deep understanding: spot trading and contracts. If you have small capital or an amount that doesn’t matter to you if you lose it, like 10,000, converting to U is about 1,500U. It is recommended to take out 100U from this, place it in the contract account, and then only open positions with 10%, using 50-100x leverage, and do so gradually. If you have no understanding of trading, you can first use this 100U based on your intuition, whether you earn or lose depends on luck; this 100U is just to let you feel how worthless money can be.
After losing this 100U, you need to start learning technical analysis. Any type of technical analysis is fine, or any indicator, even naked candlesticks are acceptable. While learning, observe the historical candlestick charts of the assets you are trading to assess the success rate of the techniques you learn.
When you feel you have a deeper understanding of candlesticks and indicators, then transition to 100U, guiding your trades based on what you've learned.
At this time, you still have both losses and gains; in most cases, you may still not be able to strictly follow what you've learned in your trades. Regardless, you'll soon lose that 100U.
Next, you need to start learning trading psychology. You need to improve your execution based on trading psychology, even using indicators and technical analysis to judge market sentiment. If your learning ability is sufficient and your execution is strong, you can now strictly execute the technical analysis methods you've learned. Transition to 100U, and at this point, your chances of winning will greatly increase, but after some time, you still successfully lose this 100U.
Next, you should learn some mathematical knowledge. The biggest difference between trading and gambling lies in the fact that the winning percentage and profit-loss ratio can be changed through subjective initiative. Learning technical skills, psychological analysis, and enhancing execution can improve winning rates, but the profit-loss ratio is the secret to making big money in contracts. For instance, if the minimum price for Ethereum on the hourly chart is 1976 within three days, and the price repeatedly retreats to this point before rebounding, then you seize the opportunity and reduce your position at the price of 2020, with a stop-loss at 1940. If the historical rebound's highest price is 2103, and the trend is favorable, it could even break through the resistance level and spike to 2200. At this point, your potential profit-loss ratio has exceeded 1:10, which is definitely a risk worth taking.
The premise of seizing the profit-loss ratio is to strictly execute the stop-loss strategy. Contracts test human nature and endurance, while spot trading, if the capital is too small, what can you buy? Put in 10,000, and when a bull market comes, it can multiply tenfold. If time is limited, then you can randomly buy Bitcoin or Ethereum near the market bottom.
Newcomers in the cryptocurrency market often make common mistakes; this is pure practical advice, take your time!
One, contract leverage.
1: Some newcomers may not understand what contract leverage is, thinking that 100x is definitely riskier than 1x, but in fact, they are the same. Take my trading platform as an example; opening one contract at 1x and one at 100x has the same floating profit and loss. The level of risk depends on your judgment of the trend, the entry point, and very importantly, position management.
2: So how should leverage be chosen? Personally, I prefer 100x leverage. Taking my trading platform as an example, 100x allows for more positions than 1x, meaning the margin requirement is also much lower. If the trend is correct, and my entry point is not good, I can use leverage to average down, turning losses into profits. Averaging down is intended for better profits, not to increase risks.
Two, averaging down and position management. As mentioned above, averaging down is for better profits, not to increase your risks. Many novice partners may be unsure about how to average down and how much to average down.
I usually choose to average down at pressure and support levels. I do not average down at the original amount; instead, I average down by two or three times the position, which can achieve quick profits and reduce risks. As for position management, I will share my experience: I generally enter with 25% of my position or even less, regardless of the size of the trend, I never go in with 50% or 100% of my position. As for why, I believe everyone knows that entering with more increases the risk, bringing you closer to liquidation price, and it’s inevitable to encounter bad points or sudden market spikes. This way, you can better control the risk.
Three, profit-taking and stop-loss: It's not the old hands who can make money, but those who know how to stop losses who are the experienced ones.
This is something everyone understands, but very few can do it.
Newcomers engaging in this should definitely cultivate the good habit of setting stop-loss and take-profit orders. Do not be too greedy when profiting, lest a profitable trade turns into a loss. Taking my personal example, if I see a bullish trend this hour, I will go long near the support level. After making a profit, I will evaluate and take out part of it while leaving some to continue rolling. If I find the trend is wrong, and it fails to break through near the resistance level, then I will exit completely. Personally, I believe that stop-loss is even more important than taking profits. If the trend is wrong, whether chasing near the peak or bottom, you must switch from long to short or from short to long. Always remember to stop-loss when necessary; otherwise, if the market moves in one direction, the losses will only accumulate until liquidation. The best stop-loss point is near support or resistance levels, depending on market conditions and your risk tolerance, to determine which cycle's support or resistance levels are appropriate.
In this circle, nothing is impossible; you should know this when you enter this circle. So still, remember, be cautious; money earned by luck will slowly be lost by skill.
Four, support and resistance levels. Support and resistance levels have been mentioned multiple times before, and many friends may not understand them. A support level is where the price has fallen multiple times without breaking through this level, starting a rebound. A resistance level is where the price has risen multiple times and cannot go higher, initiating a decline.
So how should support and resistance levels be viewed? In fact, the support and resistance levels for each cycle are different. By connecting the highest and lowest points, you can see them. The larger the cycle, the higher the reference value.
Five, frequent operations. Many new partners may encounter this situation, frequently trading, sometimes going long, sometimes going short, often leading to losses whether going long or short, or ending up with nothing after deducting fees. This bad habit must be changed. Remember, trading is never short of opportunities; there are chances every day, at all times. There is no need to rush for a moment; not every opportunity can be seized, nor can every opportunity be acted upon.
The number of trades is not what matters, but the quality. Control your hands well, so that you won't easily let the money you've earned flow away.
Six, the buy-the-dip rule: When a strong cryptocurrency continuously falls for nine days at a high point, this may very well be an excellent buy-the-dip signal. At this point, do not hesitate, act decisively. Such continuous declines often reveal true investment opportunities, known as golden pits.
In the cryptocurrency market, significant corrections often present a great opportunity for acquiring low-priced assets. Seizing such opportunities lays the foundation for subsequent wealth growth.
Seven, profit-taking rules: If the cryptocurrency you hold rises for two consecutive days, you must consider reducing your position to lock in profits. The cryptocurrency market is unpredictable, and there is no myth of perpetual rise without fall. Timely cashing in on profits is the most practical approach. Avoid missing the best profit-taking opportunity due to greed, leading to profit loss.
Eight, high signal: When a cryptocurrency shows a 7% increase, this is merely the beginning of the trend. Usually, the next day, the cryptocurrency will continue to rise due to inertia. Therefore, investors should closely monitor the market and must not rush to exit. Patiently wait for the price to rise further to obtain greater profits.
Nine, trend secrets: For cryptocurrencies with long-term upward potential, the end of a correction is the best entry point. In cryptocurrency investment, you must refuse to blindly chase highs and sell lows. Patiently wait for the market to correct itself and enter the market in line with the trend, just like waiting for the wind to come, to easily catch the ride of wealth growth.
Ten, trend change warning: If the price of a cryptocurrency has been sideways for three days, further observation is needed. If the sideways movement continues for six days without a breakthrough, then investors should decisively choose to switch positions and not cling to the current ones. If the sideways period is too long and cannot break through, it often means that the market may be about to change, so timely adjustment of investment direction can effectively avoid risks.
Eleven, the iron rule of stop-loss: If you haven't recovered your cost by the next day after buying a cryptocurrency, you should immediately liquidate your position. In cryptocurrency investment, stop-loss must be decisive; once you realize the investment direction is wrong, you must quickly cut losses. Hesitation often leads to greater losses; strictly executing a stop-loss strategy is essential for preserving strength in the market.
Twelve, the law of consecutive rises: When a cryptocurrency rises for three consecutive days, it often indicates that there may be a five-day upward trend following that. On the fifth day, investors should take profits. In the cryptocurrency market, knowing when to sell is the key to investment success. Accurately grasping the timing for selling can maximize profits.
Thirteen, the volume-price bible: When a cryptocurrency shows a breakout with increasing volume at a low point, this is a clear entry signal. The increase in trading volume indicates active market participation, and prices are expected to continue rising. Conversely, if there is an increase in volume at a high point with stagnation, this is a strong alert to exit. At this time, investors should act decisively and avoid falling into the trap of declining prices.
Fourteen, moving average strategy: In technical analysis, the 3-day moving average can be used to judge short-term trends, the 30-day moving average helps observe medium-term trends, the 80-day moving average is often related to the main upward wave, and the 120-day moving average can serve as a reference for long-term investments. Investors should choose cryptocurrencies where the moving averages are trending upward for investment. Following the trend allows for stable profits while avoiding the fatigue and risks that come from frequent trading.
Fifteen, the mindset for a comeback: Even with a small amount of capital, considerable profits can be achieved in the cryptocurrency market. The key is to refuse the interference of FOMO (fear of missing out) emotions and strictly adhere to trading discipline. Persistently learn and practice every day, allowing yourself to improve your investment knowledge and skills by 1%. Through the power of compound interest, create miracles of wealth growth.
In the early years of trading, like many others, I stayed up all night watching the market, chasing highs and cutting losses, losing sleep over it. Later, I gritted my teeth and stuck to a clumsy method, and surprisingly, I survived and gradually began to stabilize my profits.
Looking back now, this method may seem clumsy, but it works: 'If I haven't seen a signal I'm familiar with, I won't act decisively!'
It’s better to miss out on a trend than to place orders recklessly. By following this iron rule, I can now maintain an annual return rate of over 50%, and I no longer have to rely on luck to survive.
If you plan to stay in the cryptocurrency market for a long time and want to be a qualified trader, then you might consider learning this rolling position strategy, which can offer you skills to start doubling your investments.
Rolling positions is a strategy that should only be used when significant opportunities arise, and it does not require frequent operations. If you seize a few such opportunities in your lifetime, you can accumulate from zero to tens of millions. And with tens of millions in assets, an ordinary person can join the ranks of the wealthy, achieving financial freedom.
When you truly want to make money, do not think about how much money you want to earn or how to earn that much, and definitely do not think about those targets of tens of millions or even hundreds of millions. Instead, start from your actual situation and take out more time to settle down. Simply boasting cannot bring us substantial changes; the key to trading lies in recognizing the size of opportunities. You cannot always be lightly positioned nor always heavily positioned. In normal times, you can practice with small amounts of capital, and when a real big opportunity comes, then you can give your all. When you truly grow your capital from tens of thousands to one million, you will unknowingly have learned some ways and logic to make big money. At this point, your mindset will become more stable, and future operations will resemble past successes.
If you want to learn rolling positions or how to grow from a few thousand to millions, then you need to pay close attention to the following content.
One, judging the timing for rolling positions.
Rolling positions is not something you can just do whenever; it requires a certain background and conditions for a better chance of success. The following four situations are most suitable for rolling positions:
(1) Breakout after a long period of sideways movement: When the market has been in a sideways state for a long time and volatility drops to a new low, once the market chooses a breakout direction, it may be time to consider using rolling positions.
(2) Buying the dip during a bull market: In a bull market, if the market experiences a sudden drop after a significant rise, consider using rolling positions to buy the dip.
(3) Breakthrough at the weekly level: When the market breaks through significant resistance or support at the weekly level, consider using rolling positions to capture the breakout opportunity.
(4) Market sentiment and news events: When market sentiment is generally optimistic or pessimistic, and there are significant news events or policy changes that may affect the market, consider using rolling position operations.
Rolling position operations only have a higher chance of success under the four situations mentioned above; otherwise, you should operate cautiously or give up the opportunity. However, if the market seems suitable for rolling positions, you also need to strictly control risks, set stop-loss points, and prevent potential losses.
Two, technical analysis.
Once you confirm that the market meets the conditions for rolling positions, you should proceed with technical analysis. First, confirm the trend using technical indicators to determine the direction, such as moving averages, MACD, RSI, etc. If possible, combine various technical indicators to jointly confirm the trend direction; after all, it is never wrong to prepare more.
Secondly, identify key support and resistance levels to assess the effectiveness of breakouts. Finally, use divergence signals to capture reversal opportunities. (Divergence signals: When a cryptocurrency price reaches a new high but MACD does not, forming a top divergence, indicating a price reversal may occur, consider reducing position or shorting; similarly, when the price reaches a new low but MACD does not, forming a bottom divergence, indicating a price reversal may occur, consider increasing position or going long.)
Three, position management.
Once this step is completed, the next step is position management. Reasonable position management includes three key steps: determine the initial position, set the rules for increasing positions, and formulate a reduction strategy. Let me give you an example to help everyone understand the specific operations of these three steps:
Initial position: If my total capital is 1 million, then the initial position should not exceed 10%, which is 100,000.
Increased position rules: You must wait for the price to break through key resistance levels before increasing your position. Each increase should not exceed 50% of the original position, meaning at most an additional 50,000.
Reducing position strategy: Gradually reduce your position when the price reaches the expected profit target. When it's time to let go, don't get tangled up. Each reduction should not exceed 30% of the current position to gradually lock in profits.
In reality, as an ordinary person, when there are many opportunities, just invest more, and when there are fewer opportunities, invest less. If you're lucky, you might earn a few million; if you're not, you can only accept the loss. But I still want to remind you that when you earn money, you should extract your invested principal, and then use the profits for trading. You can accept not making money, but you must not lose money.
Four, adjusting positions.
After completing position management, the most critical step is how to achieve rolling position operations through position adjustments.
The operational steps are undoubtedly those few steps:
1. Timing: Enter the market when it meets the conditions for rolling positions.
2. Opening positions: Open positions based on technical analysis signals and select appropriate entry points.
3. Increasing position: Gradually increase your position as the market continues to move in a favorable direction.
4. Reducing position: Gradually reduce your position when you reach your predetermined profit target or when the market shows a contrary signal.
5. Closing positions: When reaching the profit target or when the market shows clear reversal signals, completely close the positions.
Here I share with you my specific operation of rolling positions:
(1) Floating profit to increase position: When the invested asset appreciates, consider increasing the position, but the prerequisite is to ensure that the holding cost has been reduced, thereby minimizing the risk of loss.
This does not mean that you should increase your position every time you make a profit, but rather at the right moment, such as increasing your position during a converging breakout in a trend, and quickly reducing it again after the breakout. You can also increase your position during a trend correction.
(2) Base position + T trading: Divide your assets into two parts, one part remains unchanged as the base position, while the other part is used for buying and selling during market price fluctuations to lower costs and increase returns.
You can refer to the following three ratios:
1. Half-position rolling: Use half of the funds to hold long-term and the other half to trade during price fluctuations.
2. Thirty percent base position: Long-term hold of thirty percent of the funds, with the remaining seventy percent used for buying and selling during price fluctuations.
3. Seventy percent base position: Seventy percent of funds are held long-term, while the remaining thirty percent is used for buying and selling during price fluctuations.
The purpose of doing this is to optimize the holding cost while maintaining a certain position.
Five, risk management.
Risk management is mainly divided into two parts: total position control and fund allocation. You must ensure that the overall position does not exceed the acceptable risk range, and the allocation of funds should be reasonable. Do not invest all funds in a single operation. Of course, you should also monitor the market dynamics and technical indicator changes in real-time, flexibly adjusting based on market changes, and promptly stop losses or adjust positions when necessary.
Many people feel both afraid and eager when they hear about rolling positions; they want to try but are afraid of the risks. In fact, the risk of the rolling position strategy itself is not high; the risk lies in leverage, but if used reasonably, the risk will not be significant.
For instance, if I have 10,000 as capital and open a position at a cryptocurrency price of 1,000, using 10x leverage and only 10% of my total funds (i.e., 1,000) as margin, this is equivalent to 1x leverage. Set a 2% stop-loss; if triggered, I will only lose 2% of that 1,000, which is 200. Even if the liquidation condition is eventually triggered, you will only lose that 1,000, not your entire capital. Those who are liquidated often do so because they used higher leverage or larger positions, causing the market to trigger liquidation with minimal fluctuations. But using this method, even if the market is unfavorable, your losses will still be limited. So 20x can be rolled, 30x can be rolled, and even 3x can be rolled; if necessary, 0.5x can also be rolled. Any leverage can be used, the key is to use it reasonably and manage positions appropriately.
This is the basic process of using rolling positions. Friends who want to learn can watch it a few more times, ponder it carefully. Of course, there may be different opinions, but I only share experiences and do not persuade others.
So how can small capital grow larger?
Here, I must mention the effect of compound interest. Imagine that if you have a coin, and its value doubles every day, after a month, its value will become incredibly astonishing. On the first day, it doubles, then doubles again on the second day, and so on, resulting in astronomical figures. This is the power of compound interest. Although starting with small capital, after a long period of continuous doubling, it can also reach millions.
For those currently wanting to enter the market with small capital, I suggest focusing on big goals. Many people believe that small capital should engage in frequent short-term trading for quick appreciation, but in reality, it is more suitable for medium to long-term trading. Instead of earning small profits daily, it is better to focus on achieving several times growth with each trade, using multiples and exponential growth.
Regarding position, you must first understand how to diversify risk; do not concentrate all funds on one trade. You can divide your funds into three or four parts, using only one part for trading each time. If you have 40,000, divide it into four parts and use 10,000 for trading. Secondly, use leverage moderately. My personal suggestion is not to use more than 10 times leverage for Bitcoin and Ethereum, and not more than 4 times for altcoins.
Moreover, you should dynamically adjust; if you incur losses, replenish equivalent funds from outside, and if you make profits, extract them appropriately. No matter how, do not let yourself incur losses. Finally, there should be increases in positions, but this is based on the condition that you are already in profit. When your capital grows to a certain extent, you can gradually increase the amount for each trade, but do not increase too much at once; transition gradually.
This is the trading experience that Xing Ge shared with everyone today. Often, because of your doubts, you lose many opportunities to make money. You do not dare to boldly try, interact, or understand. How can you know the pros and cons? You only know the next step after taking the first step. A warm cup of tea, a piece of advice; I am both a teacher and your friendly conversational partner.
Acquaintance is fate, and knowing each other is destiny. Wen Ge firmly believes that if it is destined, you will eventually meet, and if it is not destined, you will pass by. The journey of investment is long; momentary gains and losses are merely the tip of the iceberg. Remember that even the wisest person will have their blind spots, and the least wise will still have their gains. No matter how your emotions fluctuate, time will not stop for you. Pick up your worries, stand up again, and move forward with determination; if you lack wisdom, learn to follow!
