Ten years ago, my teacher entered the cryptocurrency market with fifty thousand yuan; today, his account balance has surpassed twenty-five million. He once said, 'The cryptocurrency market is filled with crowds wrapped in emotions; those who can control their emotions can turn the market into a cash machine.'
In recent years, I have deeply realized that strategies based on practical experience in trading are the key to navigating bull and bear markets. The following sayings are infused with hard-earned lessons in real money and are worth keeping.
Entry Section: Start cautiously, build a solid foundation.
Testing the waters in the cryptocurrency market requires preparation. Before entering, make three preparations: funds should be 'idle money', where losses do not affect living; knowledge should encompass K-line, moving averages, and other indicators, and an understanding of blockchain logic; psychologically, preset the worst-case scenario to avoid being thrown off by volatility.
Steady entry tests patience. Newbies should avoid going all in; the prudent approach is to build positions in batches: the initial investment should not exceed 30% of total funds, observe the trend over 3-5 trading days before adding another 20%-30%, and keep the remaining funds for extreme situations. Refusing to rush in is a survival principle.
Sideways Section: Capture opportunities in silence.
Sideways markets hide the secrets to making money. If the price remains low and fluctuates for over 15 days, with a single-day drop exceeding 5% and increased trading volume, this often indicates that the main force is 'digging a pit' to accumulate; at this point, one can buy heavily, as 'breaking down' is often a trap, and a rebound is very likely to follow.
Be wary when experiencing a high-level sideways market followed by a spike. If the price has been in a historical high-level sideways market for over 10 days and then suddenly increases by more than 2% without breaking the previous high, it often indicates that the main force is 'pumping up to sell off', and one must decisively sell off; greed will only get you trapped at the peak.
In a sideways market, sideways often replaces a drop. Hold onto your chips tightly; a breakout at a key level can happen anytime. However, the longer the sideways movement lasts, the greater the potential drop after a support level is breached, so ensure that stop-loss lines are set for your positions.
Volatility Section: Grasp the rhythm amidst fluctuations.
There are strategies to cope with cryptocurrency market volatility. Sell when it rises: if a cryptocurrency rises more than 8% in 1 hour and the trading volume reaches three times the average of the past 5 days, decisively sell at least half of your position, as ‘impulsive rises’ are often driven by speculative money, and it is likely to fall back afterward.
Quick entry during a dive: If the price drops more than 6% within 1 hour and the trading volume does not show significant increase, a small position can be entered. The initial purchase should not exceed 10% of the total funds; if it continues to drop, add positions in batches to avoid ‘catching the bottom halfway up the mountain.’
During sideways movements, one should observe and reduce trading. If the price fluctuates within a range of less than 3% for more than 3 trading days, it’s best to remain still; frequent trading will only increase costs and lead to confusion.
Timing in buying and selling: contrarian thinking is the key.
'Do not sell when prices don't spike; do not buy when prices plunge; do not trade in sideways markets' is the essence, with the core being to refuse to chase prices up or sell down. Buy on bearish candles and sell on bullish candles: when the market is in panic and K-lines show large bearish candles, it is a good buying opportunity; when the market is optimistic and K-lines show large bullish candles, consider selling.
Time patterns are also key: buying during a major drop in the morning can often lead to a rebound in the afternoon; selling during a major rise in the morning can often lead to a drop in the afternoon. Do not chase high during a significant rise in the afternoon; the next day is likely to open lower; after a significant drop in the afternoon, buying the next day often presents a better entry point. Avoid excessive greed when trying to break even; setting and executing profit-taking points is the way to long-term success.
Risk awareness and mindset section.
Risk awareness must be ingrained. After a significant rise, a correction is inevitable; if there is a cumulative rise of over 20% for more than 3 days, one should reduce positions to lock in profits. Full position trading is a major taboo, as it loses buffering space. Set stop-loss and take-profit levels: short-term stop-loss of 3%-5%, take-profit of 8%-10%; long-term stop-loss of 10%-15%, take-profit based on fundamentals.
Trading cryptocurrency is essentially about managing one's mindset; greed and fear are the arch-enemies. Be cautious with chasing prices and selling in panic; experts know to find opportunities on the opposite side of public sentiment. Stay calm, don’t be overly joyful with profits, and don’t be discouraged by losses; treat trading as a long-term practice. Remember, only those who can control their emotions can master profits.
