So-called making money in cryptocurrency trading involves earning the price differences in trades; in simple terms, if you earn money, someone has to buy at a high price from you; if you profit, someone else is certainly losing.
Assuming there are ten participants in the cryptocurrency market, each holding 10 dollars. If only a few people make money, say one person earns 2 dollars from each of the other nine, that person will have 28 dollars, while the other nine will each have 8 dollars, and the game can continue. But if most people make money, and nine people earn 2 dollars from one person, those nine will each have 11 dollars, while that person not only loses everything but owes 8 dollars, the game cannot continue.
Only a few people make money; the market can be sustained; if most people make money, the market will collapse.
This is akin to the lottery: if most people could win, the lottery company would not survive. It can only continue to operate if the majority lose and a few win.
Thus, the cryptocurrency market will find ways to ensure that most people lose money.
So how can one become part of the profitable minority?
There are many reasons for losing money in cryptocurrency trading, summarized into six points; just do the opposite, and you can become part of the minority.
1. Excessive short-term thinking.
In simple terms, keep your eyes on the long term. Most discussions focus on how much something rose today or how much it might fall tomorrow, with little thought given to where that cryptocurrency will be in six months or a year. Those in the crypto world who achieve financial freedom are not those who make a fortune in three to five days, but those who endure over time. Properly distribute your positions, prioritizing the long term while also considering the short to medium term; if you identify short-term trend changes, you can follow along.
2. Chase up and sell down.
This is almost a mistake every cryptocurrency investor makes. Seeing a coin surge, everyone discusses it, and they buy in, only to get stuck, losing 10%, 20%, and hesitating to cut losses, waiting to break even. When it continues to fall, losing 50% or even 60%, 70%, they feel the coin is no good and sell at the bottom, repeating this process over and over. Chasing up and selling down is more of a psychological issue, with no particularly good solution; it requires personal adjustment.
3. Lack of understanding.
Many people do not think before investing, taking whatever others say as the truth. Today a certain influencer says this coin is good, and they buy it immediately; tomorrow they hear rumors that another coin will rise and they follow suit. As for why this coin is good or why that coin will rise, they have no clear understanding. This mindless investment approach is bound to lead to losses. It's fine to reference others' opinions, but the premise is to establish your own understanding. No matter how formidable the KOL, they first built their position before prompting you to buy; when they cut their losses, they will remind you—you will only be lifting their burden.
4. An overly restless heart.
Restlessness seems to have become the norm in the cryptocurrency world. Many people enter this market with the mindset of getting rich overnight, but they are not prepared for the possibility of losing everything, nor do they have the ability for overnight wealth. Buying a coin, they hope it will rise immediately, doubling in three days, or increasing tenfold in half a month. If the coin does not rise in half a month and even incurs losses, they start looking for various excuses, blaming project leaders for not managing market value, blaming manipulators for crashing the market, or criticizing big influencers for inaccurate predictions. After hearing too many stories of overnight wealth in the cryptocurrency world, and seeing people around them catching tenfold or hundredfold coins, they subconsciously treat the cryptocurrency world as a 100% winning casino, thinking that simply buying coins will make them money, yet fail to realize it is a real financial market where bloodshed is its essence.
5. Not learning.
Previous media have conducted statistics, randomly sampling 778 digital asset investors. Less than 10% could quickly and accurately describe 'what Bitcoin is', and only 17 could articulate 'what blockchain technology is'. Although the sample size is small, it highlights the current status of cryptocurrency investors. If you don’t even understand what you are investing in, how can you have faith? Without faith, no matter how low the price or how good the coin, you won’t hold on. Learning is eternal wealth, and only through continuous learning can you avoid being harvested.
6. Lack of a sound investment philosophy.
Most people enter investments without a solid plan, relying solely on instinct. This intuitive approach is likely to lead to losses when faced with unexpected situations. Only by summarizing an investment strategy that suits oneself can one deal with various conditions calmly, whether the market is rising or falling, and at least keep a stable mindset to avoid making wrong choices due to poor mentality.
In the cryptocurrency world, everyone has heard the story of 'turning 10,000 into 1 million', but the reality is that most people not only fail to make money but are instead completely shredded by the market.
We do not have insider information, funding advantages, nor the trading experience to withstand multiple bull and bear cycles. All we can rely on is to understand the market, understand ourselves, establish rules, and control our emotions.
The cryptocurrency world is not a shortcut to getting rich, but rather a battlefield where only a few survive.
1. First, recognize the market: This is a world ruled by uncertainty.
The essence of the market is not a technical game, but a highly complex probability game.
You must accept that no matter how brilliant a strategy is, it cannot provide stable profits in all environments. Any trading system that claims '100% win rate' is a scam.
What we can do is not to defeat the market, but to adapt to it, using discipline to combat uncertainty.
Profit and loss come from the same source: the way you make money determines how deeply you can lose. Heavy betting can double your money or bring you to zero; high leverage in rebound trading can yield quick profits, but a single wrong direction can lead to liquidation; averaging down against the trend can sometimes rescue you, but in a one-sided trend, it’s a slow suicide.
The traders who truly survive are those who repeatedly bet in the 'probability advantage' in a systematic way—earning more when they are right and losing less when they are wrong.
2. Recognize yourself again: you are not a genius, nor are you a cool individual.
Most people do not perish in the market due to ignorance, but due to their self-righteousness: obsessed with predictions, trying to catch every top and bottom; fixated on technology, piling up indicators while ignoring position size and risk control; superstitious about luck, crediting themselves for gains while blaming the market for losses; overly confident, after a few profitable trades, believing they are invincible.
Remember: Discipline > Technique, Execution > Inspiration, Stability > Stimulation.
Trading that genuinely makes money is often boring.
3. The underlying logic that allows ordinary people to also make money.
You don’t need to be a genius; you just need to establish a replicable and sustainable trading system.
Capital management: Only use a small portion of total funds for each position, try light positions for trial and error, confirm the trend before adding more; avoid going all-in from the start, keep total position below 30%, and retain room for maneuvering.
Choose a cycle that suits you: Short-term is suitable for those with strong market feel and quick reactions; swing trading is suitable for those who can endure fluctuations and ride trends; long-term is suitable for those who understand macroeconomic and fundamental factors.
A trading system should be simple, executable, and replicable: Trend strategies should follow the trend, not go against it; oscillation strategies should sell high and buy low, with quick stop losses; arbitrage strategies should exploit price differences across platforms, small fluctuations for profit, which have high win rates but are slow.
Stop losses and take profits must be mechanically executed: Set stop loss levels before entering, and cut positions when reached; take profits can be taken in batches, do not be greedy or scared, just capturing the main part of the trend is sufficient.
Emotional management: Reduce the frequency of watching the market to avoid impulsive trading; accept losses, do not average down on losses, and do not become overconfident when winning; keep a trading journal, constantly review and optimize the system.
4. The key to truly surviving: mindset and compounding.
The hardest thing to defeat in the cryptocurrency world is not the market, but one's own greed and fear.
What you should aim for is not 'tenfold in a year', but rather stable annual returns, strict stop losses, and ensuring you are not wiped out by the market.
Do not underestimate the significance of 'surviving'; compounding is the only way retail investors can compete with institutions: 30% annual return means 20 times in 10 years; 50% annual return means 57 times in 10 years; doubling in one year followed by liquidation in the next results in zero.
And if, by chance, you incur losses—
Final advice: Do not strive to become a 'legend', but rather aim to be a 'survivor'.
In the cryptocurrency world, legendary stories only belong to a very few people; the vast majority of winners are ordinary people who can survive in a long market.
Make fewer mistakes, execute more, constantly review, and maintain rationality and patience.
The market is always changing, but the rules remain the same. Your only goal is: to not be washed out in this wave of competition. If you feel lost, consider saving this article as the starting point of your trading journey. It's not about getting rich quickly, but about staying in the game.
There are many ways to trade cryptocurrencies, but not all methods can be learned. We all hope to achieve good returns using the simplest methods, while friends in the cryptocurrency world are not unable to choose good coins; they are just overthinking!
Trading is essentially about doing four things well: selecting targets, entry points, exit points, and positioning. Traders need to have an independent trading system to execute these four actions. In trading practice, the ABC trading strategy has stable win rates and is simple and easy to understand.
(1) Source and basic connotation of the strategy.
The ABC trading strategy is derived from the abcd core trading theory developed by my teacher who teaches fishing. The teacher's methods have been effectively applied in the A-share market, and based on the characteristics of cryptocurrency trading, I have expanded on the theory. The abcd core trading theory incorporates the essence of Dow Theory, Elliott Wave Theory, Turtle Trading Rules, D'Awan's Box Theory, Trading Psychology, and other theoretical gems.
Figure 1 shows a classic upward trend. The underlying logic is an elevated bottom, continuing the upward trend.
Figure 2 displays a classic downward trend. The underlying logic is a lowered top, continuing the downward trend.
The price movements of any trading target's K-line are a continuous repetition and overlap of these two classic patterns. A deep understanding of these two classic patterns is the fundamental essence of mastering the ABC trading strategy.
(2) Entry and exit points.
The ABC strategy primarily focuses on right-side trading, pursuing a high win rate rather than extreme profits. It advocates for phased entries, phased profit-taking, and phased stop losses to minimize risk.
Taking Figure 1 as an example, the entry points appear at X and Y. The entry characteristic at point X is 'Four In' (the closing price exceeds the highest price of the four left candlesticks), while the entry characteristic at point Y is that the closing price exceeds point B. There are two stop loss points: the first is 'Two Out' (the closing price of the current K-line is below the lowest price of the two left candlesticks), and the second is at point C, with full stop loss at this point. The ABC strategy allows for a certain amount of left-side trading, with key points being controlling positions and managing stop losses.
In practical application to Figure 3, an upward ABC structure has been formed, with Arrow 1 indicating the 'Four In' entry point (the entry points X and Y described in Figure 1 overlap in practice in Figure 3). The two stop loss points are the potential 'Two Out' that may appear after Arrow 1 and point C.
Note: 'Four In, Two Out' is also derived from the teacher.
Compared to stop loss points, the profit-taking points model is relatively complex, with multiple dimensions to choose from, and it needs to be divided into several profit-taking actions.
The three basic profit-taking methods are:
'Two Exits' for taking profit. In Figure 3, Arrow 2 indicates that when the closing price is below the lowest price of the two left candlesticks, take profit.
Take profit on excess profits. When any time dimension K-line shows a rapid increase in volume over a short time, take profit as it belongs to left-side profit-taking.
Multi-point overlapping for profit-taking.
Draw horizontal lines at the closing price of point D, with multiple points on the right side near the same horizontal line, then you can choose to take profit near that line. Additionally, there are low volume profit-taking, critical point profit-taking, box doubling profit-taking, etc.
(3) Positioning.
The size of the position determines the extent of profit, with many factors at play, each with different weights.
The main principle is:
When the overall market is in an upward trend, positions can be larger when going long, while going short requires lighter positions. The opposite holds true.
The more significant the volume of the bullish vs. bearish, the higher the position ratio; if the volume is dull, the position needs to be controlled. The opposite is also true.
Left-side entry generally does not exceed 1/4.
The above outlines the key points of the basic version of the ABC strategy. Based on this, combined with complex candlestick patterns, aiming for a higher win rate, one must also use tools like Fibonacci retracement, multi-point connections, ascending/descending channel lines, and triangles, in conjunction with the ABC strategy application. This content will be shared in the advanced version of the ABC strategy, along with detailed explanations of left-side entry, more profit-taking methods, 'Four Not to Enter', 'Two Not to Exit', and other advanced techniques.
Three rules for volume-price relationship: Volume increases, price rises; volume levels out, price falls out!
When volume increases at high positions, it is best to exit.
High positions usually refer to coin prices being near historical highs, or operating at high positions for 3-4 major cycles. If volume appears at this time, it indicates that the main force is dumping, distributing chips to retail investors; at this point, it’s best to exit and observe. If no relatively large volume appears at this position, do not exit lightly.
Low volume at lows is the best strategy.
Low volume at lows indicates that the main force may still be distributing, and has not yet reached the accumulation stage; as long as it has not accumulated, it has not reached the timing for a real surge. Only when volume increases can one confirm that the main force is acting. Therefore, one must dare to follow when volume increases at the bottom; even if wrong, it can be tolerated, but waiting time may be longer, yet it will not lead to losses.
Entering the market when volume increases and prices rise is not scary.
As the trading volume increases, prices are continuously rising, indicating the market has momentum; according to trend principles, this will lead to subsequent actions, not just a single wave, so one must dare to enter; however, also be cautious when encountering rising volume with stable prices or increasing volume with rising prices.
Regarding the broader market:
If the overall market volume continues to strengthen, there will be more opportunities for various coins, and the overall operating guideline is to exert full force and push upwards; conversely, if the volume is not very pronounced, it is best to strike with light positions; if the volume weakens, individual stock opportunities are scarce, and it’s best to exit, avoiding rash actions.
Regarding individual coins:
1. When trading volume expands, the overall market is still gearing up for a significant rise; when trading volume contracts, energy diminishes, there’s no need to focus too much on coins with low volume.
2. Pay attention to positioning; both high and low volume can lead to trend reversals, so don’t ignore this.
3. High trading volume, significant price drops; if a volume contraction occurs in the later stages, it indicates that the downward trend is about to end. When the price drops less, that is the day of reversal.
How to maintain a 90% win rate in the cryptocurrency world?
In this world filled with temptation and risk, many investors yearn to maintain an extremely high win rate.
However, achieving a 90% win rate is not easy; it requires deep market understanding, rigorous investment strategies, and strong risk control capabilities.
The hardest part of trading cryptocurrencies is not choosing the coins, nor buying and selling, but waiting; the hardest part of life is not hard work or struggle, but making choices. A downturn cleanses restlessness, while an upturn tests restraint. Trading cryptocurrencies can help us grow continuously, and growth is painful, not because of growth itself, but because of the many changes and profound experiences we must face during growth.
For disciplined individuals, pain is also joy in the cryptocurrency world; where there is hope, hell is also heaven.
In the cryptocurrency world, retail investors always give up on what hasn’t risen and chase into what has risen high; in life, people tend to cherish what they haven’t obtained while forgetting what they already have. The reason retail investors lose money in cryptocurrency is not because their thoughts are simple, but because their desires are complex; people are happy not because they gain more, but because they care less.
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