As an old player in the crypto world, I have unknowingly been trading in it for 7 years now. Surviving in the crypto world until now is indeed not easy! I have also been beaten by the market, experienced many liquidations, and have been lost at times, hiding alone in dark corners, smoking one pack after another. This is the price of growth!
Although I have played in the stock market for many years, there are many similarities between the crypto world and the stock market. However, there are still many differences. Looking back now, it wasn't really a problem with direction; I have always been quite accurate in grasping the direction. The issue is that the crypto world truly amplifies human greed to an unlimited extent. Without strong resolve, it is very easy to lose oneself. After all, there is a saying: one day in the crypto world is like one year in the stock market. One day in the crypto world can cover what the stock market takes a year to complete!
Today, I will share a summary of my years of trading experience for free, hoping it can help everyone. Of course, this is mainly a general overview. Depending on the feedback from my followers, if everyone feels it's necessary to go into detail, I will later publish three separate detailed articles to discuss these three points. To summarize, there are three core points:
First, position management. This is of utmost importance! If you haven't realized the importance of position management, it means you haven't left the beginner stage yet. You are still in a pure novice phase! In my previous articles, I discussed how I manage my positions. If you're interested, you can take a look; of course, I only briefly covered it and provided what I consider the simplest and most effective method that is easy to learn and grasp! You could say that position management determines how long you can survive in the cryptocurrency market!
Let me briefly mention this: 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 put your stop loss before opening a contract.) The size of the position depends on where you set your stop loss. Think about whether you can psychologically bear the loss if the stop loss is hit. If you can't bear it, then it means your position size is too large and you need to reduce it! If you can bear it, it means your position size is just right! This is very easy to calculate, just calculate it once. Don’t use a percentage of your position; that’s really hard to calculate. It takes time, and many times, finding a good entry point is a matter of an instant!
Second, develop good trading habits, which include several points:
1. Always set a stop loss when opening a position; this is an ironclad discipline for trading contracts. If you can't follow this rule, I advise you to just hand your money over to the manipulators to save yourself the trouble! Never have the mindset of taking a chance to hold on to a position. If you manage to hold on nine times out of ten, you might feel pleased, thinking that you can hold on, but just one time could wipe you out! Most people fall into this trap!
2. Maintain a good mindset. When trading, never get too emotional. Don't think that after a loss, you must immediately recover it by making frequent trades; that is very dangerous. I've seen too many people lose a bit, get emotional, and then continue to make reckless moves, ultimately losing everything overnight. This goes back to what I mentioned earlier: when you open a position, you should already have thought about where to set your stop loss. Then, you know how much you might lose if the stop loss is triggered. These are things you should have considered before entering the trade. So, if the stop loss is hit, take a deep breath, maintain a good mindset, and look for better opportunities to trade again later.
3. Don’t have preconceived notions. If you understand some technical analysis, that’s best; if not, then you really shouldn’t have preconceived notions. I’ve encountered too many people who think: 'I believe it's going to drop now; the manipulators are intentionally pushing it up.' Or they think: 'I believe it's going to rise; I won't believe it if it doesn't.' They stubbornly hold on to their position thinking it will definitely rise. With so much positive news, how could it not rise? They are only paying attention to the intentional drops and liquidations of long positions. This is a classic case of having preconceived notions, which, to put it bluntly, means being very stubborn. They refuse to admit defeat. The market changes rapidly; we can't just say, 'I think, I feel, I believe, I am convinced,' etc. When the market changes, we need to change our thinking accordingly! If you're wrong, you must admit it and stand tall!
Third, when trading contracts, you must pay attention to the risk-reward ratio! Many people do not have a concept of risk-reward ratio in their minds. If the first two points are key factors that ensure you can survive longer in the cryptocurrency market, then the risk-reward ratio determines whether you can make big money in the cryptocurrency market. Many people trade contracts blindly, without forming a coherent system, relying on feelings without leaving themselves an escape route, swinging from one extreme to another.
Taking myself as an example, I will not decide to trade based on two things.
First, through technical analysis, if I am reasonably confident about the direction of the market, whether it’s going to rise or fall, then I will trade.
Second, although I am not very confident in technical analysis, for example, being bullish, I am not very sure, but the current price level is good. I predict that the downside is limited, while the upside has a lot of room, with a high risk-reward ratio, so it can also be traded.
The two can be satisfied with one condition, and it’s best if both conditions are met. For example, when I usually trade, I require a starting risk-reward ratio of 1:3. For instance, some time ago, I made a long position. From a technical analysis perspective, I wasn't particularly confident, but it was acceptable with a 70% confidence level. However, I saw a very high risk-reward ratio, so I went ahead. In the end, when I closed the position, the risk-reward ratio reached 1:7. That is to say, I made seven times my investment.
So later on, I used the same position to trade other contracts. I could be wrong up to 7 times without losing my capital, which significantly increased my margin for error. Thus, my mindset for trading would be much better, and with a better mindset, my accuracy in trading improves. If, after those 7 trades, I get just one right, I make a profit. If I get two right, my profit increases even more. Moreover, my analysis of the market has a very high accuracy rate.
So, the risk-reward ratio must be taken seriously; it is fundamental to whether you can make big money in the cryptocurrency market. Many people do the opposite: they run away after a small profit but stubbornly hold on to losses. Even if you're right about the direction, you won't make money. If you say you're not losing, then who is?
The above opinions are personal opinions shared for learning and communication, and should not be taken as any investment advice!
Old Wang only does real trading. The team still has spots available, come quickly.
A single tree cannot make a forest, and a lone sailboat cannot sail far! In this circle, if you don’t have a good network, and no insider information from the cryptocurrency world, then I suggest you follow Old Wang, who will help you get on board without spending your own money. You are welcome to join the team!