I was born in 1988, a full-time cryptocurrency trader with assets in the tens of millions. I withdraw 200,000 yuan from the crypto world every month, feeling no impact; my life is leisurely and free, without deceit or intrigue, living the life I want.
Now my daily routine is.
6:30 Get up and run, rain or shine.
In the morning, I usually review yesterday's market and update it with the evening's news, combining my positions and specific situations to make trades, or operate with small funds for short-term trades to enhance my market feel. Then I spend 2 hours summarizing my review, which is the most important task in the morning, with the aim of making a good profit at night!
Then write an investment article and post it on Zhihu, which can also be a record of my cryptocurrency trading life, so that when I grow old, I have a place to reminisce. When I have time, I also love to write an investment experience and insights to help others and myself.
From initially losing 85% to trading cryptocurrencies for a living, I have tried almost every method. If I had to say what truly helped me out of confusion, it would be my own summarized guiding principles, which actually apply to most people. Reading them can help avoid several years of detours, especially the tenth principle!!!
One important word in the crypto world: Endure.
Two important words in the crypto world: Avoid greed.
Three important words in the crypto world: Keep discipline.
Four important words in the crypto world: Rational layout.
Five important words in the crypto world: Follow the major forces.
Six important words in the crypto world: Focus on value.
Seven important words in the crypto world: Do what you understand.
Eight important words in the crypto world: The market is the best teacher.
Nine important words in the crypto world: Rationality, moderation, strategy.
Ten important words in the crypto world: Good mindset, no hesitation, learning is endless.
I have summarized how to avoid risks in the crypto world!
Only after fully realizing the risks and experiencing the negative consequences brought by the risks can one truly pay attention to how to avoid them. My personal main experiences are as follows:
1. Do not go all in.
Since investment has very high uncertainty and significant risks, then one should not go all in!
Going all in every time will eventually lead to zero. I am the best example of this; shortly after entering the crypto world, I went all in on BTC and BNB, making my account balance quickly approach 10 million, but later going all in on metaverse projects and contracts nearly brought me to zero twice.
The principle of not going all in is actually basic knowledge in the investment field. Many investment gurus and books will tell everyone this from the beginning, but I still made this fundamental mistake.
In fact, new investors generally do not go all in right away. I initially only invested 100,000. The problem is that if a small-scale investment quickly yields high returns, the greedy demon will be unconsciously released, ultimately consuming rationality and leading to going all in.
2. Cautiously leverage high.
Unlike going all in, leverage should be used when necessary. In relatively certain opportunities, especially in major upward trends, decisively leveraging can potentially elevate you several levels. Those who started taking loans to invest in real estate 10 or 20 years ago belong to this category.
But leveraging is a high-risk operation among high-risk operations. More seriously, when people generally start to leverage in a certain investment area, it must be when that area is experiencing long-term high-speed growth.
Everyone will see that those around them who leverage are making money or even getting rich, while those who do not leverage seem out of place, holding cash or having qualifications but not taking loans is the biggest foolishness! For decades, wasn't China's real estate investment field just like that?
This situation will bring many blind followers in investment, who, like me six years ago, lack basic understanding. When you talk to them about the risks of leverage, they will impatiently tell you that housing prices will definitely not fall.
If you ask why, just one sentence: China will not let real estate fall.
Regardless of whether Chinese real estate will fall or not, just the complete lack of awareness of leverage risks has already pushed oneself to the edge of the cliff from an investment perspective. When and where to fall may only be a matter of time!
So how to cautiously leverage? I think the most important points are three:
1) Leverage in the area you are most familiar with.
First, being most familiar will lead to a better success rate. Second, leveraging is a significant test of mindset for most people. If you do not understand enough, stabilizing your mindset becomes more difficult, leading to mysterious operations, compounding mistakes, and falling deeper into trouble.
2) Before leveraging, be sure to ask yourself repeatedly: Can I bear it if the worst-case scenario occurs?
Only when the answers are certain can we leverage! Here, we must be absolutely rational and extremely conservative. Never deceive yourself; do not blindly follow others, and do not have a gambler's mentality!
For most people, the reliable approach may be to use small positions with leverage to achieve significant gains!
3) Once you sense the smell of risk, immediately reduce leverage or stop-loss, even if it's just a slight smell! Losing money with leverage is much more stimulating than making money with it. Those who have experienced it will never forget!
Lastly, I want to emphasize that I am not encouraging everyone to leverage; I am just emphasizing the risks of leveraging and the issues that need attention. As for whether to leverage or not, that is up to you.
It actually depends on the person. As I mentioned earlier, leveraging is a high-risk operation among high-risk operations, which is more suitable for aggressive players with strong risk tolerance. If you are not such a player, I suggest not to play.
After 10 years in the crypto world, the key to arriving here today is having my own discipline and strictly following it during major declines. Today, I share the 'Six Great Scriptures' for guaranteed cryptocurrency trading success that I have summarized and practiced over the years. If you decide to trade cryptocurrencies for a living, I suggest you collect these six scriptures and remember them repeatedly.
First point: You must understand how to set stop-loss and take profit.
We buy and sell coins for trading, for speculation, not to hold forever! When you are making money, you think about making more, and when you are losing, you are reluctant to sell it. This mindset is definitely not advisable. When the position trend goes wrong, you need to decisively sell.
Second point: Do not always think about buying at the low and selling at the high.
Because the market will always have lower points and higher points. We ordinary people cannot achieve this mechanism, so do not pursue so-called highs and lows. What we should do is buy and sell in the bottom and top areas.
Third point: Volume and price must match perfectly.
For those with volumeless increases or new highs without volume, we must be vigilant. It is likely a signal that the main force cannot unload its positions, indicating a weakening trend; never chase it. It is better to miss out than to make a mistake.
Fourth point: Reactions must be quick.
When an information appears, we must immediately find out which beneficial sectors and companies it involves. If you cannot keep up with the first tier, then we need to act promptly; the second tier will also yield considerable rewards.
Fifth point: Learn to take breaks.
As the saying goes, it takes three months to see the bottom and three days to see the top. This means that the main upward wave of the known coin price increase cycle only lasts a short time. Therefore, we must learn to seize this main upward wave; the rest of the time is usually for resting.
Sixth point: The biggest benefit in the market is a crash.
Because after a crash, there are often many greater opportunities. When others are greedy, learn to be fearful; when others are fearful, we must be greedy. So when the market crashes, do not be afraid; at this time, we choose quality positions to build.
These six points may sound simple, but very few can truly implement them. Why? If you cannot overcome the weaknesses of human nature, you will never earn your first ten million in your life!
If you choose to trade cryptocurrencies for a lifetime, whether you will succeed is hard to say. Just like some people experience ups and downs in the crypto world, losing everything and then winning it back. Trading cryptocurrencies does not depend on looks, education, or profession, but it severely tests mindset and ability.
To succeed in the crypto world, you need solid knowledge, such as mastering the internal logic of technical indicators, overcoming greed and fear, and establishing a trading system that suits you. Make good choices regarding coins, trends, timing, and opportunities, set standards for taking profits and stop-losses, and strictly adhere to trading discipline.
Trading cryptocurrencies is like wandering the jianghu; if you do not have hard skills, you will undoubtedly fail. Some people gain wealth and growth in the crypto world, while others get cut. In short, if you trade cryptocurrencies for a lifetime, being able to profit steadily is a sign of success; otherwise, you must consider carefully. You must know the iron laws of the crypto world:
1. Asset allocation to spread risk.
Asset allocation essentially aims to spread risk; you must never, like the popular all-in emojis in various crypto groups, put all your bullets on a single coin.
There is also an extreme, which is excessive diversification. This is a common mistake for many small investors, buying a dozen coins, rushing to invest in coins recommended by big V, leading to an ant-sized position. Even if there are a few with significant gains, you actually earn little. When you see some coins skyrocketing, you start to get overly excited, and after a series of reckless operations, the average gain is still less than Bitcoin.
The ideal number of coins to hold should be around 3 to 5.
2. Think repeatedly before buying, do not be swayed by emotions.
Think about what:
Is this trade short-term, medium-term, or long-term, or is it a swing trade?
What if it drops after buying?
Should I continue to average down, cut losses, or hold my coins?
What to do if it drops severely?
If the price rises, when should I sell?
If you do not think these issues through clearly, you are very likely to encounter the following situations.
1. If it has dropped significantly and you did not think through the stop-loss point in advance, today it drops 20%, and you are reluctant to stop-loss, thinking it will rise back tomorrow. However, tomorrow it drops 30%, and you regret not selling yesterday. From then on, you are repeatedly trapped until you incur significant losses before you decide to cut your losses.
So when buying, think carefully about the stop-loss point. As soon as the price hits it, sell immediately. Stop-loss means admitting a mistake to avoid greater losses. No gambling-style averaging down!
2. After buying, if it declines or stays flat for a long time, and suddenly one day it rises several points, sell immediately, and then it may soar for several days, and you will regret it.
Correct operation: Think clearly before buying whether this trade is long-term or short-term.
If it's a long-term trade, it leans more towards value investing. Predict how large the market is for the sector where your invested project is located, and then combine it with the fundamentals to judge what share of this market your invested project can occupy, thus estimating its valuation in 2-3 years. Compare this valuation with the current price to determine if it's a good time to enter and how much growth potential there is, which is the investment return rate.
If you can see this clearly, you can add positions on dips, because you are not afraid of these declines; what you care about is future value. Do not act until you reach your psychological estimate point; refuse to sell on minor rises!
If it's a short-term trade, think clearly about the purchasing logic of this coin: is it favorable news, a main narrative, or a buying point determined by technical analysis?
Buy slowly, even slower. Don't think about the price going up later when you buy. When you have this mindset, you are being swayed by emotions! Problems are destined to arise.
Never act impulsively to chase highs or sell lows. Before buying, you must think carefully and prepare for all possible situations so that you can rest easy.
3. Cherish life, stay away from contracts.
The first element of investing is risk aversion, while leveraging in contracts is a behavior that adds risk, so I resolutely do not touch it. Maybe sometimes luck is on your side, allowing you to gain extra returns due to leverage. But if this triggers greed and damages your mindset, then this money will eventually be returned to the market.
Most of my friends who have been trading contracts over the years have lost everything; in short, they earn little and lose a lot. Don't think your operation is better than others; for 100 leveraged users, it's not easy for even one to survive two years.
In 2021, I became famous for shorting 519 during the bull market, earning 30 million overnight. However, two years later, not only did I lose everything I earned, but also my debts piled up!
When playing contracts, you can win 10 times, but one failure can bring you back to square one. Contracts, making money is just a process, while going to zero is the outcome!
4. Invest with spare money, do not borrow.
Whether in the crypto world or the stock market, any investment we make must be with spare money, we cannot use money that is needed at home; it must be spare money.
The crypto world is a market with extremely high risks. Once you lose money that you urgently need, the results are often very difficult to accept, and it can cause tremendous harm to your family.
You absolutely cannot borrow money to invest. Once you borrow, your risk is 100% because borrowing has a cost. If the market continues to be sluggish and you are in a loss while needing to repay, you can only cut losses at low prices! Be eliminated by the market!
The crypto world is always characterized by long bear markets and short bull markets. If you borrow, you will have no place to die in the crypto world!
5. Either don't buy, or buy enough.
Many people may hide in low positions, but once they see a rise, they feel they bought too little, so they keep increasing their positions as it goes up, artificially raising their average position price several times. Then one day the market turns, and they get trapped.
This is the most taboo! To put it bluntly, it is still greed, so next time when you have a good feeling about a coin, remember either don't buy or buy enough!
6. Lean towards value investing.
For some coins that you find very valuable and recognize for their excellent teams, great visions, beautiful promotions, and strong R&D capabilities, then stick with them.
These valuable coins should be included in a medium to long-term investment portfolio, allowing them to slowly ferment into fine wine. Even if the price drops, do not consider panic selling; hold firmly. Let time help you gradually become rich.
7. Maintain a calm mindset.
In fact, the most important thing in trading cryptocurrencies is mindset. Many people clearly know it is not the right buying point, yet they cannot help but act due to impatience. This is a mindset issue; feeling uncomfortable after not buying coins for a few days, they mix in various WeChat groups and big V comment sections, hoping to find a secret to getting rich. Unbeknownst to them, the more they watch, the more they lose, and the more they act carelessly, the less money they have. Hahaha... You must control your hands, spend the most time researching, and the least time trading!
Also, absolutely do not chase highs to buy coins. You must have this mindset: it can rise as much as it wants; consider that this coin does not exist. Only ambush valuable coins at low prices and wait patiently for them to bloom. Making money is not as difficult as you think.
Of course, there are thousands of trading disciplines, and those that can be ingrained in your bones are the core genes for making money. Many things, even if taught to you, if you don't make a single mistake, you still can't remember. Often at such times, you need guidance from others or masters.
Trading cryptocurrencies is not that difficult, but many people always get themselves into misunderstandings. When I first started trading cryptocurrencies, everyone, like me, spent a lot of time and energy studying various skills, only to find that they were useless. The so-called 'cryptocurrency trading secrets' are just empty talk; what really matters is mindset and discipline.
Many people are greedy; when they see the market doing well, they frantically increase their positions, which will lead to being swept away by market emotions. For example, my friend, with small capital, desperately chased highs and lows, and ended up empty-handed. Learn to stay in cash, especially when the market is bad; not losing is a victory.
Remember, do not blindly pursue short-term profits; patiently waiting for the real opportunity is the best strategy.
I once made the mistake of frequent trading, but later I understood that stabilizing my mindset is the most important trick.
