More and more people are now paying attention to speculating on coins in the currency circle, but very few people really understand it. Xiaobai does not know where to start. Today, I will share with newbies in the currency circle some basic knowledge about the currency circle.
1. Basic Knowledge
The novice Xiaobai bought Bitcoin before, during, and after all the need to know has been listed for everyone
The directory is as follows:
Things to know before buying Bitcoin:
1. What is digital currency?
2. What is Bitcoin?
3. Bitcoin's gains and risks;
4. Position management.
Things to know when buying Bitcoin:
1. Where to buy?
2. Specific steps to buy:
2.1 Fiat Currency Trading
2.2 Coin-to-Coin Trading
2.3 Contract Trading
Things to know after buying Bitcoin:
1. When to sell?
2. Coin circle information website
To prevent the article from getting lost, you can like + collect it before reading it
Things to know before buying Bitcoin:
1. What is digital currency?
Digital currency is a currency developed and operated by netizens themselves based on public blockchains and computer encryption calculations and other technologies, relying on the Internet.
Bitcoin, Ethereum, etc. are cryptocurrencies in digital currencies. They are all based on decentralized currencies, which are different from the electronic currencies we use daily, such as WeChat, Alipay, and bank cards.
2. What is Bitcoin?
The concept of Bitcoin was first proposed by Satoshi Nakamoto on November 1, 2008, and was officially born on January 3, 2009.
Unlike other currencies, Bitcoin does not rely on a specific monetary institution to issue it. It is generated by a specific algorithm through a large amount of calculation. Bitcoin uses a distributed database composed of many nodes to confirm and record all transaction behaviors and uses cryptographic design to ensure the security of all aspects of currency circulation. At the same time, the total amount of Bitcoin is only 21 million, which is extremely scarce.
3. Bitcoin's gains and risks;
In early 2011, the price of Bitcoin was around $1. After three consecutive months of skyrocketing, the price fell from $29.6 to $2.05, a drop of 93%;
In April 2013, Bitcoin rose to a maximum of $230, and then continued to fall, falling to a minimum of $66.34, a drop of 71.6%;
In the same year, the price of Bitcoin hit a maximum of $1,147, and then fell back. In the next two or three years, the lowest price of Bitcoin fell to $177, a drop of 84.5%;
In December 2017, the price of Bitcoin reached a maximum of $19,798.68. It fell back when it was about to break through $20,000. In early 2018, it fell to a minimum of $3,155, a drop of 84%;
In 2018, the lowest price of Bitcoin was $3155, and the highest price was $17157;
In 2019, the lowest price of Bitcoin was $3353, and the highest price was $13968.
In 2020, the lowest price of Bitcoin was $3,728, and the highest price was $29,340.
In 2021, the lowest price of Bitcoin was $27,850, and the highest price was $69,158.
In 2022, the lowest price of Bitcoin was $15443, and the highest price was $48200
In 2023, the lowest price of Bitcoin was $16495, and the highest price was $44779.
The lowest price of Bitcoin this year is $38,545, and the current highest price is $73,881;
From the historical prices, we can see the great volatility of Bitcoin. Although it has risen from $1 to a maximum of $73,881, a ten-thousand-fold increase, most people would find it difficult to accept the difference when your house fluctuates back and forth between a villa and a room.
Although the Bitcoin market is steadily rising as a whole, no one can say for sure when it will crash again. Therefore, before buying, investors should not only look at Bitcoin's gains but also pay attention to Bitcoin's risks and arrange according to their risk tolerance.
4. Position Management.
The so-called position management is the use of money in our investment process, which is the reasonable allocation of your invested funds, including position management and risk control.
For example, your current savings are 100,000;
(1) 10% is reserved for daily expenses, which is short-term consumption; (2) 20% is used as daily emergency money for some unexpected events, such as illness and hospitalization; (3) 40% can be used for some capital-protected and value-added investments, to resist inflation in addition to guaranteeing the principal, such as bonds, trusts, etc., products with stable returns; (4) 30% of high-risk investments, use funds that do not affect normal life, even if the investment fails, it does not affect life.
The above is just a simple example. Everyone can allocate according to their own risk tolerance.
Borrowing or taking all of your funds to invest is an irrational behavior and is very undesirable. Especially for novice Xiaobai, you must know how to act according to your ability. If you put all your funds into the market, it will not only increase the risk of loss but also affect the investor's mentality to a certain extent. Once the market goes down, it is easy to have trouble sleeping and eating or feel anxious and panicked.
Things to know when buying Bitcoin:
1. Where to buy?
Currently, there are three well-known top exchanges: Binance, OKX, Bybit
I have previously compiled some information about the advantages and disadvantages and differences of the three major exchanges. If you are interested, you can share it for free.
I emphasize again and again, never go to unknown small exchanges!!!!
Small exchanges are at risk of running away and freezing your funds at any time.
Large exchanges have guarantees in terms of establishment time, number of users, and trading depth!!
Anyone who tells you that going to a certain platform will bring high returns, please block them all
If a friend asks you to trade on a small exchange, this person is not your friend.
2. Specific steps to buy:
2.1 Spot Trading
Spot trading simply means buying coins with money. It is divided into fiat currency trading and coin-to-coin trading.
2.1.1 Fiat Currency Trading
Fiat currency is legal currency, such as RMB, US dollar, British pound, etc. Fiat currency trading is the transaction between legal currency and digital currency, such as directly buying Bitcoin with RMB.
We can directly buy digital currency with RMB in the quick coin purchase area of the exchange.
The advantage of quick coin purchase is that it is convenient and fast; the disadvantage is that there are not many types of digital currencies that can be directly traded with fiat currency, only some mainstream currencies, such as Bitcoin (BTC), Ethereum (ETH), or Tether (USDT).
2.1.2 Coin-to-Coin Trading
Coin-to-coin trading refers to the purchase of one digital currency with another digital currency, without the involvement of legal currency transfer or settlement. For example, using USDT to purchase ETH will form the ETH/USDT trading pair. USDT is called the pricing currency, and ETH is called the trading currency. USDT is used as the pricing currency to define the price of ETH.
The types of digital currencies in the quick transaction area are limited. If we want to buy digital currencies that are not in the quick area, we need to buy stable coins first, and then use stable coins to buy other digital currencies.
The most widely used stablecoin currently is USDT.
Stable coins, as the name suggests, are cryptocurrencies that maintain a stable exchange ratio with a certain target. Stable coins can be regarded as a digital currency with a "stable value", which is an intermediary connecting the digital currency world and the fiat currency world. The most widely used stable coin is USDT (Tether). Tether (USDT) is a token Tether USD (hereinafter referred to as USDT) based on the stable value currency US dollar (USD) launched by Tether, 1USDT=1 US dollar, users can use USDT to exchange with USD 1:1 at any time.
2.2 Contract Trading
Spot trading is the transaction between fiat currency and digital currency. Contract trading is different; it is also called futures contracts. It refers to your view of the price changes of currencies in the market, such as whether you think Bitcoin will rise or fall in price in the future.
In contract trading, if you think the price of a currency will rise, buy a contract, which is called going long; if you think the price of a currency will fall, buy a contract, which is called going short.
Contract trading can profit by going long or short whether the currency rises or falls, but in the spot market, we can only profit by buying the currency and expecting its price to rise. There is also a concept called leverage in the contract. When placing an order for a contract, the trader only needs to pay a small amount of funds as a financial guarantee to fulfill the contract according to the contract price at a certain ratio, and then can participate in the buying and selling of the contract. For example, if you want to buy a BTC contract of $6,000, you only need to pay $600 of BTC if you use 10x leverage. Margin trading is basically leveraged trading. In digital currency futures trading, the trading currency is used as the margin.
Things to know after buying Bitcoin:
1. When to sell?
Those who know how to buy are apprentices; those who know how to sell are masters.
I once bought LINK for 10,000 yuan, and the profit was doubled, but in the end, because I did not have a clear goal, I sold it after half of the profit was returned. If the selling target is not set well, it is very likely that the account will show a profit, but waiting and waiting, the account will actually lose money.
1. Set take-profit and stop-loss target points
Before buying digital currency, novices can set three points: a buying point, a take-profit point, and a stop-loss point.
However, the minimum requirement for this is to be able to understand resistance and support.
II. News
Of course, we can do more research on knowledge-based things and do basic accumulation. However, the experience or pitfalls of people who have been there can make growth faster. It is said that reading history makes people wise! This is also the case in the currency circle. Usually, when we judge the trend of the market, we combine the news and technical aspects.
Taking the market in the past two years as an example, regulators have frequently taken action, and global crypto assets have suffered heavy losses, and prices have plummeted. Under this extremely negative situation, the future market of the crypto market is not optimistic. This is a more intuitive impact of news.
In addition, the currency's price, circulation, total amount, current market value, trading volume in the past 24 hours, and other basic things need to be known. Secondly, there is the currency's computing power, the number of active addresses, the block size, the Google search index, and the fear and greed index. In addition, there is the currency's net capital inflow, net outflow situation, and the long and short order holding ratio of the trading platform. These data can be used as a reference for short-term price fluctuation prediction.
Many information platforms can check these data. The ones that everyone is more familiar with may be Bishijie, Feixiaohao, Lianwen, etc.
In addition, I have also compiled some materials that can be shared with everyone for free!
1. Coin Circle Forum
2. Foreign Information
3. Must-see websites in the coin circle
4. Chinese Information Website
5. Trading-related websites
How to see newly issued digital currencies for the first time?
III. Technical Aspects
All things cannot be considered in isolation. News is just one method of evaluation, and indicators are also a method of evaluation. That is to say, the news and technical aspects must be combined to evaluate the current market trend. The vision cannot be too single!
Of course, there are many technical indicators, and I definitely can't finish talking about them in one article.
Below, I will give an example of one of the indicators for accurate buying and selling in the currency circle - KDJ.
1. What is KDJ?
The KDJ indicator, also known as the random indicator, calculates the fluctuation between the highest, lowest, and closing prices within a certain period of time by introducing the concepts of fast and slow moving averages, reflecting the strength and overbought overbought dynamics of the price trend.
II. How to understand KDJ indicator?
On general market software charts, the yellow K line represents the fast indicator, the white D line represents the slow indicator, and the red one is the J line. Generally speaking, in terms of sensitivity, the J value is the strongest, followed by the K value, and the D value is the slowest. In terms of security, the J value is the worst, followed by the K value, and the D value is the most stable.
Specifically, the calculation principle of KDJ is to calculate the immature random value RSV of the last calculation cycle through a specific cycle (usually 9 days, 9 weeks, etc.) of the highest price, the lowest price, and the closing price of the last calculation cycle, and the ratio between the three, and then calculate the K value, D value and J value according to the smoothing moving average method, and draw a curve chart to judge the price trend.
Calculation formula of KDJ indicator
The cycle for calculating the KDJ indicator in China is 9 days, and the K value D value is 3 days. RSV(9) = (Today's closing price - Lowest price in 9 days) ÷ (Highest price in 9 days - Lowest price in 9 days) × 100 K(n) = (Daily RSV value + Previous day's K value) ÷ N D(n) = (Daily K value + Previous day's D value) ÷ N J = 3K - 2D
III. Application of KDJ Indicator
According to the value of KDJ, it can be divided into several areas: overbought area, oversold area, and hovering area. According to general division standards, K, D, and J values below 20 are in the oversold area, which is a buy signal; K, D, and J values above 80 are in the overbought area, which is a sell signal; K, D, and J values between 20-80 are in the hovering area, and it is advisable to wait and see.
1. Generally speaking, the D line turning from bottom to top is a buy signal, and turning from top to bottom is a sell signal. 2. KD fluctuates in the range of 0~100, and 50 is the long-short equilibrium line. If it is in a bullish market, 50 is the support line for the retracement; if it is in a bearish market, 50 is the pressure line for the rebound. 3. The K line crossing the D line upwards in the low position is a buy signal, and the K line crossing the D line downwards in the high position is a sell signal. 4. The K line entering above 90 is an overbought area, and below 10 is an oversold area; the D line entering above 80 is an overbought area, and below 20 is an oversold area. It is advisable to pay attention to grasping the buying and selling timing. ...
I have compiled some learning materials, which are the following. They can be shared free of charge with friends in need!
1. What are resistance and support? 2. What is a trend and how to judge it? 3. Dow Theory 4. Bollinger Bands 5. Elliott Wave Theory 6. Stochastic Index 7. Relative Index
IV. Classic Books
I will divide the book recommendations into three parts: first, the study of basic digital currency theory, second, the study of trading technology, and third, the study of investment psychology.
I. Basic Theory of Digital Currency
1. (How to Invest in Digital Currency) Author: Wang Bo / Zhou Chaohui
This book is divided into three sections:
First, Basic Knowledge: Lets readers fully understand the concept of digital currency and the status quo of development in the past six years;
II. Investment and Trading: Introduces to readers all types and technical points of digital currency investment currently involved, especially how ordinary investors choose a trading platform, open an account, recharge, buy, sell, and withdraw coins to successfully complete investment transactions;
Third, Investment Philosophy: Discusses from the source of human historical development and the digital currency ecosystem, regulation and development that long-term investment in digital currency is a wise choice.
Suitable for: It is mainly inclined to conceptualization and is suitable for novices who are new to digital currency and do not know much about it.
2. (Decoding Bitcoin) Author: Liu Ning / Shen Dahai
This book is written by domestic Bitcoin technology geeks and evangelists, and its professionalism and authority are beyond doubt.
From a professional perspective, it comprehensively introduces the development history, basic concepts, monetary significance, monetary characteristics, generation principles, operating mechanisms, acquisition methods, trading methods, circulation principles, the attitudes and policies of governments around the world towards Bitcoin, as well as Bitcoin investment common sense, principles, strategies, techniques, and risk avoidance, in simple language.
II. Trading Technology
1. (Technical Value Indicator Selling Point Analysis) Author: Yang Bo
This book introduces dozens of technical indicators in detail, and elaborates on the principles, usage, and actual combat skills of each technical indicator, striving to show the actual combat uses of each indicator from different sides and in all directions. It can be used as a manual for investors to consult various indicators, and it can also be used as a lecture to improve investors' actual combat skills.
In addition, the author also summarizes and summarizes the complex technical analysis knowledge, methods, and other content based on years of experience accumulation, following the principle of going from shallow to deep, in the hope that readers can master the way of technical analysis in the shortest time and open the door to profit in the stock market.
Suitable for: This book starts with basic principles and gradually transitions to actual combat, with illustrations. This kind of technical classic is suitable for Xiaobai who wants to get in touch with trading in a gradual and easy-to-understand way.
2. (Japanese Candlestick Charting Techniques) Author: Steve Nison
Introduction: Candlestick charts are the most popular and oldest form of technical analysis in Japan, originating earlier than Western point-and-line charts and bar charts. The first part of this book explains in detail the basic knowledge of candlestick charts, candlestick chart combination patterns, and the overall technical aspects of candlestick charts and the market. The second part explains differential indices and new price charts, including three-line direction breakthrough charts, brick charts, and key charts, to help readers better invest.
Suitable for: The author systematically explains the core candlestick charts in a simple, easy-to-understand, and thorough manner, while also integrating candlestick chart analysis with trading, market conditions, and actual combat. So detailed and meticulous, logically clear, suitable for beginners.
3. (Chan Zhongshuo Zen: Illustrated Technical Theory) Author: Baodike
This book is divided into 6 chapters, fully analyzing the essence of Chan Zhongshuo Zen technical theory and analyzing Chan theory technology, including specific operating steps and difficulty analysis, and assisting with actual combat charts to help readers quickly master Chan theory from shallow to deep.
The biggest feature of this book is its illustrations. It also includes a large number of stock charts and diagrams, interpreting profound content in a graphic and textual way, making the book full of fun and readability.
Suitable for: This book first arouses readers' interest with rich pictures, and then conveys the essence of Chan theory to readers to help readers master Chan theory technology. This kind of content distribution from the surface to the inside is suitable for people who want to cross from novice to operating expert.
III. Investment Psychology
1. (Rich Dad Poor Dad) Author: Kiyosaki
I don't need to say how famous this book is!
Main Content:
Kiyosaki has two dads: "Poor Dad" is his biological father, a highly educated education official; "Rich Dad" is the father of his good friend, an entrepreneur who did not graduate from high school but is good at investment and financial management.
The "poor dad" who worked hard all his life lost his job, while the "rich dad" became one of the richest people in Hawaii.
Kiyosaki resolutely followed in the footsteps of "Rich Dad" and entered the business world, thus embarking on a wealth express train. Kiyosaki uses his personal wealth stories to show the completely different money views and wealth views of "Poor Dad" and "Rich Dad." Poor people work for money, and rich people let money work for themselves!
Recommendation reason: It is rare that it is not a bowl of chicken soup for the soul. The investment advice put forward is of great significance to practical operation; in addition to investment and financial management, there are also contents such as emotional sublimation and life meaning exploration.
2. (The Psychology of Investing) Author: John R. Nofsinger
After reading this book, you will realize the value of traditional financial instruments. Perhaps the most important thing is that investors' reasoning errors will affect their investments and ultimately affect their wealth.
Recommendation reason: By reading, you can learn many psychological biases that may affect investment decisions; understand how these psychological biases affect investment decisions; see how these wrong decisions erode your wealth, etc.
I have compiled some good books that can be shared with everyone for free.
1. Dow Theory and Actual Combat 2. He Zaozhong Interprets Gann Theory 3. Revealing the Distribution of Main Force Chips 4. Tonghuashun Formula from Beginner to Proficient 5. Investment Psychological Analysis 6. Detailed Explanation of Volume and Price Relationship 7. Decoding and Actual Combat of Market Prophecy ...
IV. Trading Psychology
I often have people come to me and say that they suspect the market maker is targeting the little money in my pocket as a retail investor. Otherwise, why does it always fall as soon as I buy and rise as soon as I sell? Why are my operations always the opposite of the market trend?
This question is actually very simple. The market maker uses the trading psychology of retail investors, such as chasing rises and killing falls, to complete the process of building positions, washing the market, pulling up, and shipping. Therefore, as a newbie in the coin circle, you must understand the following!
Gambler fallacy: The tendency to believe that the probability of future events will be changed by past events.
It is like in our trading, due to the effect of people's psychology, certain key prices will generate certain resistance and support, which will form similarities in graphics. However, we must know that history will repeat itself, but it will not simply repeat itself. Therefore, as investors, we cannot gamble!
Loss aversion: A strong preference for avoiding losses. In other words, not losing money is far more important than making money.
For a qualified trader, losing 100 yuan should be the same thing as earning 1 yuan. However, there are always some people who can accept not earning 100 yuan, but cannot accept losing 100 yuan. This is actually a manifestation of immature investment psychology!
Disposition effect: Taking profits early, but letting losses continue.
For example, you bought a currency at a cost of 100, and it started to rise continuously. But when the bull market turned into a bear market, it fell in response. At the beginning, you said you would sell when it returned to 100, but the situation did not improve. You said you would sell at 70, and then when it fell again, you said you would sell at 50. As a result, you finally sold it at 20!
Outcome bias: Only judging the quality of a decision based on its result, without considering the quality of the decision itself.
For example, when the currency circle came with a black swan on 519 last year, many people began to doubt themselves. However, Nassim Taleb once pointed out in his book (Black Swan) that the concept of "narrative fallacy" is introduced, that is, how flawed past events affect our worldview and our expectations for the future. Therefore, we often fabricate far-fetched explanations for past regrets and believe them to blind ourselves.
The above is the trading experience shared by the instructor today. Many times you lose many opportunities to make money because of your doubts. You don't dare to try boldly, to contact, to understand, how do you know the advantages and disadvantages, you only take the first step, will know how to go next, a cup of warm tea, a suggestion, I am both a teacher, is also your good friend to talk to.
Acquaintance is fate, and knowing each other is a gift. The instructor firmly believes that those who are destined will meet each other even from thousands of miles away, and those who are not destined will pass by each other. The road to investment is very long, and temporary gains and losses are only the tip of the iceberg along the way. Know that the wise sometimes make mistakes, and the foolish sometimes gain. No matter how you feel, time will not stop for you. Pick up the boredom in your heart, stand up again, and move forward.
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