The Essence of Trading: Cognition and Discipline
After six years of ups and downs in the crypto world, I lost over a million in the first three years, and only earned back a few hundred in the following years. Every bit of profit was bought with hard lessons learned.
I finally realized a harsh truth:
90% of people chase news to trade cryptocurrencies,
9% try to track the movements of the big players,
and only 1% of traders use a simple moving average system to see through the market's DNA.
📍 Step One: Understand the Language of Moving Averages
Imagine the daily moving averages as three doctors:
- The 5-day line is the head of the emergency department, quick to react but easily nervous;
- The 30-day line is the internal medicine expert, calm and stable, with a clear trend;
- The 60-day line is the seasoned traditional Chinese medicine practitioner, with a long-term vision and composed decision-making.
When the 5-day line rapidly crosses above the 30 and 60-day lines (golden cross), it often signals the start of a market rally;
when the 5-day line drops below the 30 and 60-day lines (death cross), it is a clear warning of impending risk.
📍 Step Two: Use a System to Counter Emotions
Please stick a phrase next to your trading screen:
"When moving averages intertwine, it’s best to wait and see."
When short-term and mid-term moving averages repeatedly cross, it indicates that the market direction is unclear, and forcing a trade is no different from gambling.
Real opportunities arise when all three lines point in the same direction.
The more complex the market, the more simple rules are needed:
A breakout of the 5-day line is a signal to enter;
A turn of the 60-day line indicates a time to exit.
📍 Step Three: Embed Discipline into Every Step
Many people talk about discipline but often get shaky and anxious when the market fluctuates.
The cruelty of the moving average system lies in its demand for you to execute mechanically;
and its kindness stems from this as well—if you hold firm, you can avoid the vast majority of emotional traps.
Have you heard a true story?
A trader who consistently profited using the moving average strategy even continued to execute trades upon receiving a signal at his wedding before proceeding with the ceremony.
It seems crazy, but the results speak for themselves:
Proper cognition + complete discipline = an account that speaks for itself.
