Welcome to the newcomers who just entered the crypto world! I know that facing the unknown trading world can be both exciting and confusing. Today, I will share a set of operational suggestions suitable for starting with small capital, based on my years of experience in the crypto space, to help you establish a foothold.
1. Capital Allocation: Don't Put All Your Eggs in One Basket
Assuming you have an initial capital of 1000U, never invest it all at once! My suggestion is to divide this 1000U into 10 portions, each worth 100U. For each trade, use one portion, which is 100U. Keep the remaining 900U in a wealth management account to earn some stable returns while serving as a 'safety cushion' for future trades.
2. Leverage Choice: 20X Leverage, Control Mindset and Risk
For newcomers, while high leverage can bring high returns, it also comes with enormous risks, and the mindset can easily collapse. Therefore, I recommend 20X leverage, which allows you to experience the charm of leveraged trading without letting risks spiral out of control. For instance, with 10X leverage, if the direction is wrong and the price drops 10%, you get liquidated, while in crypto, a 20% fluctuation in a year for BTC is quite common, and full position trading can easily lead to total loss.
3. Loss Management: Reflection, Rest, and Restart
If the 100U you invested is lost, don't think about averaging down! At this point, what you need to do is calm down and reflect on what went wrong—was it a judgment error or an operational mistake? Then take 1-2 days off to distance yourself from the market. Don't worry about missing opportunities; there are daily fluctuations in the crypto market, and every month presents big opportunities. Once you're in the right state, evenly divide the remaining 900U into 10 portions, each 90U, and cautiously re-enter the market to try to make back the losses.
4. Profit Management: Take Profits in a Timely Manner
Assuming you made a profit of 300U from this trade, remember to set aside 100U for further trading and withdraw the remaining 200U. This way, on one hand, you lock in some profits, which gives you peace of mind and improves your trading mentality; on the other hand, it helps you avoid losing all your profits and capital due to a black swan event.
5. Position Management: Crucial
In the crypto world, position management is crucial. Even the best traders can only achieve a success rate of 60%, which is already impressive. If position management is poor, even with a 90% win rate, a single mistake could wipe out your capital. For example, if you lose more than 2% of your total capital in one day, you need to be alert; if losses reach 6%, immediately clear all losing contracts, set a breakeven price for profitable contracts, and then take a 2-3 day break.
6. Trading Principles: Avoid Common Pitfalls
Don't Chase Prices Blindly: Unless market conditions are very clear, chasing prices is risky and can easily lead to holding positions at high levels.
Cautious Position Scaling: Be careful when scaling in after making profits, especially after significant gains, as new positions often fail. If you need to scale in, either act immediately after profits or wait for a major pullback to end, following the pyramid scaling method (i.e., gradually decreasing position size as the price rises).
Protect Profits: When margin profits exceed 200%, set half to take profits with a 40% retracement stop, and set the other half to breakeven to prevent significant profit retraction.
Emotion Management: If you are feeling down, troubled by life, or have overall losses in the past 24 hours, do not trade. Maintain a calm and rational trading mindset.
Follow the Trend: Never go against the trend, reduce trading frequency, patiently wait for the right entry timing, and seize the correct trading opportunities to continuously expand profits.
7. Newcomer Advice: Stay Away from Contracts, Start with Small Capital
Finally, I give newcomers the most sincere advice: contract trading is extremely risky, especially for newcomers; it’s like a harvesting machine for inexperienced traders, so it's best to avoid it. If you really want to try, start with a small capital of 30-50U. Set a stop loss upon entry, and decisively stop loss if you lose 20-30 dollars; for taking profits, you can use a hedging strategy, for example, take profits if profits retrace by 30%. Deposit 500-1000 USD each time, and don't invest too much at once.
The crypto world is full of challenges and opportunities. I hope everyone remembers these suggestions, trades cautiously, and gradually accumulates experience and wealth!
