Those who want to become rich in the cryptocurrency space are basically unlikely to do so.
Those who have truly made big money in the cryptocurrency space did not initially know how profitable it was; for example, when they bought BTC at $100, they had no idea that ten years later, the price would rise to $800,000.
Because there are no limitations, there can be unlimited growth.
Those who achieve financial freedom in the cryptocurrency space are generally those who hold BTC. Some saw the Bitcoin white paper and believed it would change the world; others bought and held BTC due to their perspectives and understanding, becoming long-term holders.
These holders automatically became rich by holding BTC; they do not engage in contracts, or they have faced losses in contracts and subsequently abandoned them.
Those who become wealthy in the cryptocurrency space are definitely the ones who can remain calm and have found a method that suits them.
After 15 years of development, the cryptocurrency market has become increasingly costly to hold coins. Various strategies make it difficult to become rich overnight. Some people see a rising market as a chance to play with memes, while 99% lose money; only the remaining 1% might become rich, but that is a rare situation.
So, is it possible to become instantly wealthy in the cryptocurrency space now? The possibility is relatively low, but compared to other industries, the cryptocurrency market still has a greater chance.
I want to share some basic operational logic in the cryptocurrency space and five insights.
Following the market trend is the most reliable beacon to success. During market downturns, avoid trying to pick the bottom; that is just a mirage. When the market warms up and corrects, that is our golden opportunity to buy low, which is much safer than blindly holding at the bottom. When selecting cryptocurrencies, we need to cultivate a discerning eye. Those meteoric rises, whether mainstream or not, should be approached with caution because their rapid increases come with equally stunning corrections, and a slight misstep could lead to deep entrapment.
In the field of technical analysis, I particularly trust the MACD indicator. When the DIF line and DEA line intertwine below the zero axis and successfully break through it, that is a good buying opportunity. Conversely, if they intersect above the zero axis and extend downward, that is a signal to reduce positions.
As for averaging down, it is a thorny path that should not be easily ventured. Once you incur losses, do not blindly average down, or you will only sink deeper, possibly losing everything. Remember to decisively stop-loss during losses and only gradually increase your position when in profit.
Trading volume is also an essential factor that cannot be ignored. When the coin price breaks out at a low level, if the trading volume significantly increases, it often indicates that a significant opportunity is arriving.
The key is to follow the trend. By analyzing the daily, 30-day, 84-day, and 120-day moving averages, when a particular line starts to show an upward turning point, you can clearly discern the market's direction and make the right decisions. The journey of investing in digital currencies is full of risks but also holds infinite opportunities. Only by mastering the essence of capital management, trend analysis techniques, and having the insight to select coins can you gradually rise from a small starting point to become part of the middle class.
So, how do retail investors make money?
Many people may say that short-term trading relies on technicals while long-term trading relies on logic. In essence, short-term trading is driven by emotions, while long-term trading relies on value. Value itself also carries emotions; for instance, Bitcoin can be speculated to $70,000 and then drop back to $15,000. It is not that Bitcoin's value has changed; rather, it is the market's emotions that have shifted. Bitcoin remains the same Bitcoin.
Therefore, long-term investment value must also understand market emotions. As for short-term trading, the so-called K-line technique is essentially a reflection of market emotions. How the main capital draws K-lines completely depends on the overall market sentiment, whether there is capital following the trend, and whether there is market heat. It can be said that everything seen and heard on the K-line is what the funds want you to see, not the natural result of trading. The ultimate reflection of emotions is trading volume.
So, the rise and fall of any cryptocurrency ultimately reflects in the trading volume. Without volume, there can be no price; without volume, it can only go downhill. The first step for retail investors to combat emotions is to understand trading volume and only participate when there is volume. The principle is simple: volume represents capital at work, while lack of volume indicates that capital is abandoning the cryptocurrency in the short term.
Why do short-term traders speculate on hot trends? Because funds clustering together create the possibility of making profits. Even long-term bullish coins and value investments are accompanied by volume; during periods of low volume and consolidation, continuous observation is also necessary. Retail investors need to combat emotions; understanding trading volume alone does not solve the problem; they must have their own trading principles.
The second step for retail investors to combat emotions is to set clear buying and selling conditions. Many retail traders buy and sell based on whims, buying when they want and selling when they want.
Buying points are basically when cryptocurrencies rise sharply, and if you don't buy now, they will take off. Selling points are when cryptocurrencies fall sharply, and if you don't sell now, you will be deeply trapped. The emotions of chasing highs and cutting losses are instinctual and stem from the collapse of retail investor mentality and emotions during volatile market conditions. To combat emotions, retail investors must stop buying and selling recklessly, clearly define their buying and selling points, and determine under what conditions they will buy or sell, establishing clear principles before holding positions, rather than making impulsive decisions.
The third step to combatting emotions is to understand patience and letting go. In the retail trading mindset, there is another aspect, which is the weakness of human nature: regret. You will regret why you didn't sell at that time, leading to a decline in coin price and losses. You will regret why you didn't buy, leading to a soaring coin price and missing out. Retail investors need to learn to be patient, enduring floating losses.
As long as the investment logic does not change, accepting floating losses is necessary. This is one of the situations that will inevitably occur on the investment journey; no one can buy at the lowest point. Retail investors need to learn to let go, which means missing out. As long as a cryptocurrency does not align with their investment logic, they cannot blindly buy in, even if the coin price keeps rising. They must understand how to let go of those increases that do not fall within their understanding. Cold-blooded individuals find it easier to make money in cryptocurrency trading because having no emotions is the only way to survive in the market.
Keep learning and improve your understanding. I’ve summarized five insights filled with value, hoping to inspire friends who come across this!!!!
1. Don't rush to stop-loss after a big drop in the morning session. It is usually an overreaction to negative news from the previous night. You can wait for market correction and reversal. A big surge at the end of the session should not be blindly chased; some main players like to test the market and lure people into buying, only to depress and accumulate the next day.
2. Effectively utilize trading volume, which is a practical technique. Volume can indicate the future market direction. If there is a sustained increase in volume with a price rise, it shows that the main players are in strong control. If there is a volume decrease amid a price drop, it indicates that panic selling has not yet occurred, and the bottom has not been reached, so further declines are likely.
3. Learn to observe the top structure of sectors. Generally, sector trends are formed by five waves: the first wave creates a following, the second wave adjusts, the third wave is the main upward wave, the fourth wave is complex and divergent, and the fifth wave is a pullback to distribute. In this process, the third wave has the largest increase, followed by the first, and the fifth has the smallest. However, market conditions can change dramatically, and there may not always be five waves. You cannot memorize this blindly. When you notice that the leading stocks in the sector have risen, if the following trend does not continue with the previous strength, it is likely that a peak has been reached.
4. Each time there is a rapid acceleration at the top of the major coin, you will see some altcoin sectors surge, leading to a reversal in the major coin. Just check if the major leaders stop falling and start rising, and the index will likely follow suit.
5. Specialization is crucial for beginners, especially for new friends entering the market. Researching one strategy and mastering its techniques will yield more results than trying to learn multiple skills at once. Greed leads to loss, and lack of proficiency can easily lead to market lessons. Avoid switching strategies randomly; focus on learning, and gradually you will improve. After achieving stable profits, then learn more techniques for better integration.
Finally, I wish everyone can achieve results in the cryptocurrency space. For more cryptocurrency knowledge, please follow: Awen.
