As an old player in the cryptocurrency market, I have unknowingly traded in the market for 10 years. It is indeed not easy to survive in the cryptocurrency market until now!
I have also been beaten by dogs before, and I have experienced many liquidations. I have also been confused before and countless times I hid alone in a dark corner, smoking one pack after another.
This is the price paid for growth!
Although I had also played in the stock market for many years, there are indeed many similarities between the cryptocurrency market and the stock market. However, there are still many differences.
Actually, looking back now, it wasn't that there was a problem with my direction at the time; I have always had a high accuracy in grasping direction. The problem lies in the fact that the cryptocurrency market really amplifies human greed infinitely. Without strong willpower, it's very easy to lose oneself.
After all, there’s a saying that goes well: one day in the crypto world is like one year in the stock market.
In the crypto world, you might cover in one day what the stock market takes a year to achieve!
Today, I'll share a summary of my years of trading experience for free, hoping it can help everyone. Of course, I will mainly give an overview here and based on the reactions of my followers, if everyone thinks it's necessary to elaborate, I will later publish three detailed articles to discuss these three points.
In summary, there are three core points:
First, position management.
This is paramount! If you still haven't realized the importance of position management, it means you haven't left the novice stage.
You are still in a purely novice phase! I previously talked about position management in my articles and how I manage it.
If you're interested, you can take another look. Of course, I also just briefly talked about it, providing what I believe to be the simplest and most effective, easy-to-learn method! You could say that position management determines how long you can survive in the crypto world!
Let me briefly mention again, before you open a contract, you must have already thought about where to set your stop loss, right?
Don't tell me you haven't even thought about where to set your stop loss before opening a contract. The size of your position depends on where you set your stop loss. Think about it: if this position hits the stop loss, can you psychologically bear the loss? If you can't bear it, it means your position is too large and needs to be reduced! If you can bear it, it means your position is just right! This is particularly straightforward to calculate, you can figure it out in a moment. Don't use some percentage of position size; that calculation is really difficult.
It's time-consuming; many times, the right moment to enter a trade is just a fleeting moment!
Secondly, develop good trading habits, which include several points:
1, always set a stop loss when opening a position; this is an ironclad rule for trading contracts. If you can't follow this rule, I suggest you just give your money to the market maker, saving yourself the torture!
Never hold onto a position with a lucky mindset. If you hold onto a position ten times and manage to recover it nine times, you might feel proud, thinking you can always hold on, but it only takes one time to wipe you out completely!
Such people actually make up the majority!
2, maintain a good mindset; when trading, don't get emotional. Don't think that if you lose, you need to immediately make back the loss and trade frequently; this is very dangerous.
I have seen too many people lose money on a trade, then get emotional, wanting to make back their losses immediately, engaging in reckless operations, and ending up with nothing overnight.
This goes back to what I said earlier: when you open a position, you should have already thought about where to set your stop loss. So you already know how much loss you would incur if the stop loss is hit; these are things that should have been thought about before opening the position. Therefore, if the stop loss is hit, you need to relax and maintain a good mindset, and look for good opportunities to fight again later.
3, do not have preconceived notions; if you know a bit of technical analysis, it's best, and if not, you should definitely avoid preconceived notions. I have encountered too many people who think: I believe it will drop now, it's just the market maker deliberately pushing the price up, and the main force is holding it up.
I believe it will rise; I wouldn't believe it won't rise even if it falls. I will hold onto my position; it will definitely rise with so many good news coming out. Now, just pay attention to the intentional drops, blowing up long positions.
This is a typical case of having preconceived notions. To put it bluntly, it’s being stubborn, particularly obstinate, unwilling to admit defeat after losing. The market changes rapidly, and you can't just think, feel, believe, or be sure. When the market changes, we need to adapt our thinking in real time!
When you're wrong, you have to acknowledge it. Accept the consequences!
Thirdly, when trading contracts, you must pay attention to the risk-reward ratio! Many people don't have the concept of risk-reward ratio in their minds; if the first two points are the key factors that ensure you can survive longer in the crypto world.
So the risk-reward ratio determines whether you can make big money in the crypto world. Many people trade contracts blindly; many things have not formed a system, just going by feel, and they haven't left themselves an exit, swinging wildly.
Using myself as an example, I never decide to trade based on just two things.
First, through technical analysis prediction, I am quite confident about the direction of the market, whether it will rise or fall, then take action.
Secondly, although technical analysis is not very reliable, for example, being bullish, it may not be too certain, but currently, this position is good, predicting that the downside is limited, but the upside is large, and the risk-reward ratio is high, so it can be done.
These two can be satisfied with one condition; of course, it's best if both conditions are met. Generally, when I trade, I require a risk-reward ratio starting at 1:3.
For example, a while ago I took a long position, and from a technical analysis perspective, it wasn't particularly certain, but it was decent, with a 70% confidence!
But I focused on the very high risk-reward ratio, so I took the trade, and when I finally exited, the risk-reward ratio reached 1:7. In other words, I made seven times my investment.
Then later, I can trade other contracts with the same position size, and I can be wrong seven times without losing my principal; my margin for error has greatly increased.
So my mindset for trading has improved; with a better mindset, the accuracy of my trades also improves.
And if among those seven trades, if I get just one right, then I've made a profit. If I get two right, I profit even more.
Moreover, my market analysis accuracy is still very high.
Therefore, the risk-reward ratio must be taken seriously, as it determines whether you can make big money in the crypto world. Many people do the opposite, taking small profits and holding on during losses.
Even if your direction is correct, you still can't make money.
You say you don't lose, who does lose?
The above opinions are all personal opinions for sharing and learning exchange, not as any investment advice!
Follow me, I am @加密老七 , wishing you good luck! #美联储重启降息步伐