1. The arrogance and lessons of entering the market

• The shattering of the illusion of getting rich quickly:

• I initially entered the crypto world with 5000 yuan, fantasizing about getting rich quickly but was quickly educated by the market.

• In 2017, I participated in the hype of altcoins (like Paul Coin) and experienced a 300% increase in one day, but ultimately due to greed, I did not take profits in time, resulting in a significant loss of assets.

• Participated in ICOs (like Yang Lin's ICO coin), but most delegated investments went bankrupt or dropped in value, resulting in significant financial losses.

• For the past few years, I have been in a state of "working to earn money to spend in the crypto world," not achieving real profits.

• The painful experiences in futures:

• In the early days of futures trading, I lacked technical knowledge, position management, and awareness of stop-loss, leading to frequent liquidations.

• Emotional trading (e.g., waking up in the middle of the night, not taking profits leading to loss of all).

2. The disillusionment and awakening of technical analysis

• The failure of relying on indicators:

• I was once obsessed with more than 20 indicators like MACD and KDJ, trying to predict the market, but the '312 crash' in 2020 proved that technical analysis is not a holy grail.

• Final realization: Technical indicators are merely lagging tools, unable to predict the market; true trading should follow the trend.

• Limitations of technical theory:

• The diversity of market trend classifications like Dow Theory and Wave Theory; when the market reaches critical points, the trends may be unique (e.g., accurately judging 15XXX as the bottom area in November 2022).

• The role of technical analysis is to help position market cycles, not to predict the future.

3. The construction of a trading system and core principles

• Position management:

• Use the "pyramid adding method"; initial position should not exceed 30%, gradually increase but single variety should not exceed 50%.

• Retain sufficient cash to cope with extreme market conditions.

• Profit-taking and stop-loss:

• Set clear profit-taking and stop-loss points to avoid greed causing profit retraction or extended losses.

• Adjust strategies according to market fluctuations (loosen stop-loss in trending markets, tighten in choppy markets).

• The importance of a trading plan:

• Plan goals, stop-loss, and risk assessments in advance to avoid emotional decisions.

• "Plan your trades, trade your plan."

4. The elevation of trading philosophy: From gambler to hunter

• Give up the obsession with the "holy grail":

• The market is unpredictable; the only thing to conquer is oneself.

• Record the psychological state of each transaction, realizing that losses often stem from a mindset of luck (e.g., "wait a bit longer for a rebound").

• Reduce trading frequency:

• Use the "three-screen filtering method" (monthly line determines direction, weekly line finds rhythm, daily line chooses timing, 4-hour line determines position) to reduce trading frequency to 1-3 times per week, increasing return rates by 47%.

• Living is more important than making money:

• Withdraw profits each year, using 50% to improve life and 50% as cash reserves.

• Trading is not everything in life; avoid tragedies caused by trading imbalance.

5. Six rules of survival (condensed version)

1. The law of leverage: more than 5x leverage is equivalent to suicide.

2. The Law of Time: Daily trading is the graveyard for retail investors; monthly trading is the path of the kings.

3. The art of stop-loss: Cut losses when breaking levels; stop-loss is the "entrance fee" to confirm the trend.

4. Macroeconomic prediction: Pay attention to major market trends (e.g., avoid shorting against the trend when institutions are buying ETH madly).

5. Cross-market verification: When trading Bitcoin contracts, refer to related markets like US stocks' Bitcoin ETFs.

6. Reverence for life: Withdraw profits each year; trading is not everything in life.

6. The final epiphany: Make peace with the market, and make peace with oneself.

• The essence of trading is not to predict the market but to manage risks; it’s not about defeating the market but taming one's inner demons.

• Discipline is the real "holy grail"; only by living can one qualify to see tomorrow's market.

• Author's current state: Zen trading, taking care of kids, futures are just a part of life, not everything.

Core ideas summary

• Slow is fast: reduce trading frequency, improve quality, and patiently wait for the best opportunity.

• Discipline is paramount: strictly enforce position management, stop-loss, and trading plans.

• Technology is a tool, not a holy grail: The market is unpredictable, but cycles can be positioned through technology.

• Living is the most important: avoid excessive leverage and emotional trading, maintain a balance between life and trading.

(The entire text is based on the author's ten years of painful experience, aimed at helping others avoid detours.)