Among various derivatives, cryptocurrency contracts are the most dangerous. The leverage is already beyond an orderly and reasonable range, and when high leverage meets chaotic fluctuations, the trading field becomes a complete casino. Casinos never care about your education background; even if you are a graduate student or Ph.D., once dominated by gambling instincts, the ‘cloak’ of higher education can be easily pierced. Even more worrisome is that the KOLs in this circle overlap with idols from the post-85 to the post-00 generation, such as Jay Chou and Li Xiaolai. They not only fail to set a good example but also attract a large number of fans into this ‘casino.’
For those not trained in finance, mastering derivatives takes a step-by-step approach: The first step is to understand trade and market dynamics, starting with the Dow Jones Index; it is standardized, highly liquid, and has rich interpretations that can help you understand non-leveraged trading. The S&P 500, S&P 100, and Russell 1000 are also good choices. The second step is to understand leveraged forward trading; crude oil is a suitable observation target as it adds the concept of time pricing to the first step. Since 2024, the industry supply-demand ratio affecting its price has decreased, while financial and macro attributes have risen, making it easier for outsiders to observe and think. The third step is to understand options trading; it is recommended to look at options for Tesla, Meta, and Nvidia, rather than options for the indices in the first step. Options from U.S. stocks, commodities, or ETF options in ETPs are also viable. Many people have misunderstandings about options; in fact, they are excellent risk management tools. Unfortunately, education for Chinese investors is lacking, leading to frequent misunderstandings even about futures, let alone options.
Here are a few life-saving tips for beginners, based on real trading losses:
Make trades after 9 PM. During the day, news can be chaotic, with many false positives and negatives leading to large price fluctuations that can easily mislead you; after 9 PM, news stabilizes, candlesticks become clearer, and the direction becomes more definite.
Take the money and secure it as soon as you earn it. Don’t always think about doubling it. For example, if you earn 1000U, it’s advisable to withdraw 300U to your bank account immediately, and continue operating with the remaining amount.
Look at the indicators, not your feelings. Don’t trade based on feelings; that’s just blind gambling. Install TradingView on your phone and check if MACD has a golden cross or death cross, if RSI is overbought or oversold, and if Bollinger Bands are contracting or breaking out. Only consider entering the market if at least two of these three indicators give consistent signals.
You must exit every week. Without exception, transfer 30% of profits to your bank account every Friday, and continue rolling over the rest. Over the long term, your account will grow thicker.
There are tricks to reading candlestick charts. For short-term trading, look at the 1-hour chart; if the price has two consecutive bullish candles, consider going long. If the market is stagnant, switch to the 4-hour chart to find support lines, and consider entering when it approaches the support level.
Never fall into these traps! Don’t use leverage greater than 10 times; beginners should ideally keep it under 5 times. Avoid coins like Dogecoin and Shitcoin, as they are easy to get wrecked by. Only make a maximum of 3 trades a day; too many can lead to losing control. Absolutely do not borrow money to trade cryptocurrencies!
When assets exceed 30 million, there’s a simple yet effective method that can almost consume all profits from trading cryptocurrencies; with gradual learning, you can master it.
First,
When trading cryptocurrencies, never do three things:
One should never buy in when prices are rising; cultivate the habit of buying when prices are falling, practicing ‘be greedy when others are fearful, and be fearful when others are greedy.’
Second, never pressure your trades;
Third, never go all in; being fully invested can leave you very passive. The market never lacks opportunities, and the opportunity cost of being fully invested is too high.
Additionally, there are six mantras for short-term cryptocurrency trading:
First, after a period of consolidation at high prices, there usually will be a new high; after consolidation at low prices, there usually will be a new low. Wait until the direction of the trend reversal is clear before operating.
Second, do not trade during sideways movements; most people lose money trading cryptocurrencies because they can’t adhere to this principle.
Third, when selecting candlestick patterns, buy when closing with a bearish candle on the daily chart and sell when closing with a bullish candle.
If the decline slows, the rebound will also be slow; if the decline accelerates, so will the rebound.
Fifth, use the pyramid buying method for building positions; this is an unchanging principle of value investing.
Sixth, after a continued rise or fall, a coin will inevitably enter a sideways movement. At this time, there’s no need to sell everything at a high position, nor to buy in fully at a low position, because after consolidation, a trend reversal will occur. If a trend reversal happens downward from a high position, ensure to exit timely.
The old pro only does real trading, and the team still has spots available to join.
