The laws of the cryptocurrency market are similar to those of the stock market, with a ratio of one win, two breakeven, and seven losses, meaning that over 70% of participants will face losses. So, as a retail investor, how can I join the profitable 10%? I believe that institutions or large holders, in order to earn retail investors' funds, will deeply study the psychology and behavior patterns of retail investors. Retail investors might as well turn the tables and place themselves in the perspective of institutions or large holders, studying their psychology and behavior, so that they can stand undefeated in this cryptocurrency market filled with traps, fraud, scams, and rumors.
If I were an institution or a large holder looking to operate a cryptocurrency, I would first select a project with a moderate market capitalization, whose prospects may not necessarily be excellent but will not go to zero in a few years. Next, I would contact the project party to express my investment intentions and request their cooperation. How to cooperate? While I am accumulating, the project party can adjust the announcement content to make the performance appear mediocre, or even appropriately hide profits. This can be easily done by making appropriate adjustments to the financial statements, such as recognizing certain gains and losses within one quarter to show a loss; or amortizing expenses for the coming years within half a year to make the current statement look very poor.
Before this, I will first buy some chips; these chips are mainly for selling off. How do I collect these chips? I won't collect them slowly every day, as this would cause the currency price to rise daily, making it difficult to collect enough chips, and it is also easy for retail investors to grab chips, causing technical indicators to form an upward trend, increasing my collection costs. I will choose to collect chips by making a big rise on a certain day. After several consecutive days of price decline, retail investors will generally be pessimistic and disappointed; at this time, a sudden big rise will make the locked retail investors see hope and not sell; while those who profit short-term may choose to sell out. In fact, at this price level, I only need the chips for selling off; I don’t need to collect too many, so achieving the goal through a sudden big rise is quite easy (the volume will increase before reaching the bottom).
On the second day, I will choose to open low. Why open low instead of high? Because the chips I collected yesterday are not meant for immediate profit but to let the short-term chips that chased the trend yesterday help me sell off. If I open high, it’s easy for the short-term chips to profit, and they will have more capital to compete with me during the decline, so it must be a low opening to consume these short-term funds (profitable short-term positions will closely monitor this currency, while losing short-term positions will pay little attention again).
In the downward process, I will gradually use a small amount of buy orders to support the bottom because I need to form my bottom position. After several days of continuous decline, some retail investors who sold off will return to replenish their positions; at this time, I cannot let them succeed in replenishing, and I must quickly pull up, letting them chase high (the straight pull-up method is commonly used). When the chasing trend forms, I will sell some chips at the bottom; first, to reduce costs, and second, to free up capital, and then quickly sell down again. Similarly, I will support while selling down, which allows me to obtain more chips at a lower price.
When the currency price drops to a very low level, basically no one will compete with me for chips. Because in this downward process, through constant high selling and low buying, I will trap most of those who bottom-fish or seek rebounds in the downward process, or make them suffer losses until they dare not touch this currency again. At this time, my goal is achieved (to drive out all the buying). The cooperation of the project party is very crucial at this time; a long period of performance without any improvement will cause most retail investors to panic and fear due to doubts about whether the project will go to zero, and the high-position chips will continuously fall; I can then continuously high sell and low buy to collect chips in the bottom consolidation. This may take a long time, depending on how much the high-position chips drop. If the high-position chips do not loosen for a long time, then I will not pull up this currency (chip flow).
When the chips are collected sufficiently, the project’s performance will also improve. Because during my chip collection process, the project party has already spread the anticipated profits or expenses over the past year or so, and the subsequent reports will naturally look good. At this time, it will be effortless for me to pull up, and it won’t require much cost. When others in the market see that this currency is so excellent, there will naturally be many followers, and I will gradually reduce my holdings (chip structure, technical indicators, performance expectations).
How can the project party cooperate like this, what benefits can they gain? In fact, it’s very simple; if I push the currency price to a high position, they can also sell at a good price; at low positions, they can also buy their own currency, and also earn a reputation; thus, the returns will be quite considerable, why not do it?
This must follow the trend of the market (or overall market). In this process, retail investors should know what to do, right? Of course, if I am controlling the market, I also need to consider many issues:
The first is regulatory risk. Although regulatory agencies may find it difficult to intervene directly, they cannot be allowed to catch us with faults. At this point, it’s necessary to consider multi-account operations or to gather several private large investors for collective action.
The second thing to consider is the issues with the project party or other large investors. If we push up and they see substantial profits, resulting in a large-scale sell-off of chips, then we will be in big trouble and inevitably lose money. Before doing so, we must communicate with them to understand how many circulating chips they hold and what their intentions to sell are; this is the issue of large non-institutional investors or large investors' holdings.
The third thing to consider is the old main investors or existing large investors. If this currency has not been abandoned by the old main investors or existing large investors, I will try not to touch it because once they counteract, the consequences will be very severe. Therefore, choosing a currency is very important.
The fourth is the overall market condition. How many people are following the trend, and is there enough existing capital in society? Just like now, most retail or large investors have been severely impacted; at this time, it is not suitable to operate the currency. If you push up, others will sell, and you end up trapping yourself. Therefore, the most suitable action now is to sell off. Generally, people have a mentality; for example, if they buy a currency at 20 yuan, they won’t sell when it drops to 15 yuan, and when it drops to 10 yuan, they still don’t sell, and when it drops to 5 yuan, still not many people will sell. But if you drop to 2 yuan and then pull it back to 4 yuan, many people will see the doubling and basically will sell off, especially after a long downward trend or consolidation (of course, the probability of making an intermediate adjustment after doubling can be considered 100% in the operational system).
If all these issues are resolved, it’s time to start selling off. How much is appropriate to sell off? According to the market (or overall market) conditions, trading must follow the market every day. When the market drops sharply, you must sell off deeply; at this time the cost is very low, as long as you use a small amount of chips to break through the critical point, there will be stop-loss orders to help you continue selling. However, in the last trading period, you must buy some chips to prevent the market from falling or rising the next day; having a certain amount of chips is good for flexible control. In other words, when trading, you need to keep an eye on mainstream currencies (taking advantage of the situation is what a qualified trader does).
Why do I focus on mainstream currencies? The key lies in cost. As the market fluctuates, your cost is the lowest. When mainstream currencies fall, you also fall; the amount of chips used for selling is the least because not many dare to buy, allowing for deep selling (it’s not always possible to sell high or raise high). When the market rises, you go up; similarly, you don’t have to buy much, just buy out the chips at critical points, and someone will push the currency price up. At a certain high point, you can also sell off some chips bought at low positions, which allows for freeing up some capital to make some price differences. Therefore, the situation we see in the currency circle is that when it rises, everyone rises together; when it falls, everyone falls together.
People in the currency circle can be divided into several types: trend investors, those who are stuck and ignore it, technical analysts, fundamentalists, long-term investors, short-term traders, etc.
I want to control the market in this currency, and I have to face these people, trying to make them earn less or cut losses in the currency I control. Because if they earn more, it means I earn less; if they don’t cut losses, I can’t make money (for a particular currency, the main force must face periodic counterparties, and the same periodic counterparties also face periodic counterparties).
For trend investors, I have no good way to address them, I can only regard them as members of the locked position; but for others, my daily food, drink, and entertainment rely entirely on them.
I generally prefer those who are stuck and ignore it; these people, after handing their money over to me, have helped me lock in most of the chips, allowing me to have sufficient funds to maneuver at low positions (when the main force needs to high sell and low buy for short differences to collect currencies at low positions, but due to the small holding amount, the control over the market is weak, so locking in positions is very necessary; the inertia of locked positions leads to the main force's (new funds) anomalies).
Fundamentalists are also my second favorite because they generally take over when I raise the currency price. The fundamentals of the enterprise become very bright after I raise the currency price, and they will come to take over; after they have taken over, the project fundamentals will change, and they will return the chips to me at low positions.
Technical analysts generally favor short-term trades and like to do waves. People here may think their skills are high, using KDJ crossovers, MACD, CR, volume-price relationships, Fibonacci golden ratios, Elliott wave theory, and Gann angles, etc. But when I deal with currencies, I generally don’t look at these; I usually just focus on how many orders I place today, how many orders come in at certain price levels, and what price levels larger accounts enter and exit. This is very critical for me because it determines how to operate the next day. Sometimes it’s necessary to appease them, letting them hold onto the currency for a few more days to reduce active chips. But sometimes it’s necessary to force them out, especially short-term players. When I find that short-term speculative funds have increased significantly, no matter what, the next day I must force them out, even if it goes against the market trend (I have to force them out; if I don’t, the market will be out of control, disrupting the control plan). Looking back, the K-line really does fit certain technical indicator characteristics, is it coincidence or inevitability (interesting, the inevitability in coincidence).
Here, I will explain why I must aggressively kill speculative funds.
In fact, this concerns one's short-term earnings because short-term players and speculative money are easier to earn; they hold chips for a short time, allowing me to profit in a very short time. For example, in a locked position, you can only earn from them once, and then they won’t move, and you have no way to deal with them; sometimes this can last for years, during which I have to eat and drink; the fundamentalists also make me little profit because I have to share their profits with the project party.
But short-term players and speculative funds are different; I can profit greatly in one wave. So how to do it?
The first is to gradually pull up the price; at this time, the technical indicators will start to improve. When technical analysts see the technical indicators, they are generally easily tempted to come in. In this process, I will sell while pulling up; what needs to be controlled is to hand over the chips to them before the peak divergence (in the diverging segment), making it seem that the technical indicators have not yet peaked, and the currency price can still rise higher. The next day, there will be a pullback after a spike, and then a sudden drop on the third day; they will basically start to give up (this action is very common), and I won’t need to do anything, and the currency price will drop. During this period, I will naturally set the price to collect my profits.
The same is true for speculative funds; in the first half, I will pull up the price, and once the speculators see the currency price rising, they will flock in. Then in the second half, I will pass some chips to them, and the next day, I will open low and go lower. When the speculators see the trend is not right, they will immediately flee. At this time, I will look at the quantity of fleeing and calculate my results. If the quantity of fleeing is sufficient, I will pull up in the afternoon because most short-term players have left, and I won’t have to pay out much profit, making it easy to raise the currency price. And in these two days, the price difference I gain is at least about 3% of the transaction volume.
But if I find that I haven’t gone down much, then I will continue to go down. This is what many retail investors question, why does it rise when I sell and fall when I buy? Because your behavior is consistent with most people’s (those who can control the market can operate orders, and are clear about the structure of chips, the main force will certainly act according to the behavior of most short-term players).
2. What are the risks of controlling the currency?
1) Regulatory risk: First, the operator of this currency will not just be me; it generally involves inviting a few people to work together, just like hunting dogs on the vast grassland, using a group tactic to achieve success more easily. If it’s just one person, first, they may not have the strength, and second, it’s too easy to be caught; if not careful, they might not catch the fox and still get into trouble. Therefore, it’s definitely necessary to invite friends to cooperate; it’s just a matter of who leads and who follows. Since it’s cooperation, the risks are also obvious; when the market fluctuates, if one friend immediately backs out, then you will be in trouble, and all the hard work will go down the drain.
2) Market trend risk: Another issue is that when the market trend is down, you may not realize it, as the chips are still in your hands, and you want to hold on; this can lead to disaster. Many main investors have stumbled after previous bull markets ended due to this. So, how should we respond to risks? This is to pay attention to the movements of mainstream currencies because those controlling the market are very sensitive to the movement of the market index. When mainstream currencies rise, but some secondary currencies controlled by the main force are lagging behind or show signs of turning down, I must find a way to transfer as many of my chips as possible to retail investors before the market declines, freeing up cash as much as possible. As long as I have sufficient cash, I won’t fear whether it rises or falls. If it rises, the remaining chips in my hands can easily be sold; if it falls, I can buy more chips. When the market is about to reverse, the signs will also be evident (from this point of view, mainstream currencies fall while secondary currencies controlled by the main force lag behind or show signs of turning).
3. Let's talk about the issues of peaks and troughs.
Now many people are concerned about what position the market will hit bottom, 2000, 1800, 1235? To be honest, I don’t know. I not only don’t know what point the market will fall to for a bottom, but I also don’t know what price my controlled currency will hit for a bottom; how can I estimate the market? Some say, will it fall from 20 yuan to 5 yuan? Is that the bottom? I say no; maybe it will drop to 1-2 yuan, or maybe it will hit 8 yuan and be considered the bottom. In the currency circle, there is no real concept of peaks and bottoms; what matters is the supply and demand relationship; when it falls to a point of supply and demand balance, the bottom is naturally reached.
For example, with my currency, I make it fluctuate daily, rising and falling, but one day I find that the currency I sold cannot be bought back for more or the same amount; at this point, I cannot proceed further down. This should be its bottom. Maybe it’s at 5 yuan, maybe it’s less than 1 yuan; who knows at which position it can reach equilibrium? I can only keep testing.
The same applies at the top; if I pull up but there’s no following trend, then who will I distribute the currency bought at high prices to? Of course, I raise the price for you to see, but that’s one thing, and the bottom is the same (similarly, the shakeout adjustment is actually a variant of selling and absorbing chips; the counterparties during that period are short-term positions).
In the index, it is the same; if the inflows and outflows of funds can reach a balance, then the index will be at the bottom; if not, it will continue to fall until balanced.
4. How do main investors make money during a downturn?
Many people sometimes do not understand; if the cost for the main investor is 20 yuan, and they drive the currency price down to 10 yuan or 15 yuan, aren’t they also losing money? This is really a foolish main investor; in fact, retail investors do not understand that the means by which main investors make money are often different from those of retail investors. Let me give you an example: for a certain currency, some institutions had a cost of over 70 yuan, but after opening, they continuously hit 7 limit downs, and in the end, it opened at 38 yuan. Logically, the institutions should have suffered a huge loss. If the main investor did not hit the limit down, wouldn’t the selling price be higher? Wouldn’t the loss be smaller?
In fact, it’s not like that; if you don’t sell at the limit down, retail investors will follow suit; and the buying interest is limited, the institution's goods cannot be sold off. Gradually, as the price falls, institutions will suffer more, and because the price lacks attractiveness, you cannot find counterparties, which becomes a dull knife cutting flesh, the pain is only known to oneself (the weakness of the main force).
By using the strategy of hitting the limit down fiercely, the market's attention will focus on that (market awareness). When it drops halfway, some coordinating private equity or institutions will start to eat up large orders. Because during these days of limit downs, the market's attention will be very high, and large orders will appear to buy; this indicates that the currency price should rebound. Technically oversold, the price has been halved, so it must rebound by 10% to 20%. Therefore, retail investors and large investors rush in, and the institutions’ sell orders are swept up. But the reality is not as imagined by retail investors and large investors; in a bear market, the large volume often represents selling; what seems like large orders buying is actually a trap set by the main investors, and the profits are then shared.
To give another example, when a new currency is listed, if the listing price exceeds the issue price by over 60%, and 5 institutional seats line up to be among the top 5 buyers, are these institutions foolish? Why would they pay a premium of 60% to take over, especially in a bear market, where they fear they can’t buy chips? If they wait a few days to buy, they might be able to buy at the issue price. In fact, the institutions are not foolish at all; it’s merely a performance among institutions, and those who get the 60% premium will share a certain profit with the institutions taking over, and the amount they buy is not much; more chips are given at a premium to others, including a large number of retail investors. For those who acquire most of the high-premium chips, the profit-takers don’t need to consider anything.
Let me go back to the previous example; those institutions with a cost of over 70 yuan sold at 38 yuan, isn’t that a huge loss? This is simply retail thinking. In terms of cash flow, the institutions may have lost a lot, but from the perspective of chips, the institutions can treat the current adjusted price as 18 yuan, which is equivalent to earning double the amount of chips; as long as it rises back to the 30s, their original investment will be returned, while those who are stuck above 38 yuan can only wait for who knows how long. This also does not rule out the possibility of further declines; if the currency price continues to fall, the institutions will find it even easier to profit.
Therefore, I hope the currency I operate can fall down as much as possible. For example, in the range of 20 yuan to 18 yuan, I sold 20% of the currency in my hand; in the range of 18 to 16, I sold another 18% of the currency, and later I will need to replenish, because in this downward situation, many stop-loss orders begin to emerge, and some people need to replenish; at this time, I need to rebound based on the chip situation. Why do I need to rebound? Mainly to attract bottom-fishing orders to come in; of course, if there are too many bottom-fishing orders, the next day I will short again.
Generally, not many people will rebound and bottom fish on the first day; as long as it takes two days, retail investors will see that this currency keeps rising, especially the selling-off positions and replenishing positions; they will generally chase in, and those at high positions will see that it has risen for a few days, so they won’t sell, waiting a few days to see if they can make some profit. At this time, I will short again to trap them. How much do I make in between? Because in the process of pulling up, I also need to distribute profits, so each segment of the decline can maintain a certain profit.
Then why do I hope the currency I control is as low as possible? Think about it, if you open a shopping mall, would you prefer the goods you manage to be cheap or expensive? Naturally, it's better if they are cheap, because that way the amount of capital required is less. If 10 yuan plus 1 yuan, people will think it’s expensive; but if it’s 1 yuan plus 1 jiao, it’s unobtrusive, and no one will quibble with you, while the profit ratio with 10 yuan and 1 yuan is the same. The same goes for currency; if a 1 yuan currency rises to 1.5 yuan, not many people will notice; but if 10 yuan rises to 15 yuan? This is the fundamental reason for the short bullish and long bearish nature of the currency circle; few hope that the currency price will be very high to increase their own costs.
5. Let’s talk about the positioning issues of retail investors and main investors.
On a vast grassland, small investors are like a flock of sheep, and the main investors are like wolves. I think this positioning is probably acceptable to everyone; 70% of participants in the currency circle lose money, which is basically true. It’s like playing mahjong; in a game of four, three lose money. Naturally, the money of those three people flows into the pocket of that one person, meaning that the trillions lost by investors have not disappeared or evaporated but have been transferred to a few pockets. This is the story of wolves eating sheep.
In the grassland, when sheep see wolves, they will run away. Why? Because they are afraid of being eaten. But in the currency circle, it’s different; most people like to buy stocks with a main force, saying that stocks with a main force will rise quickly, especially strong main forces. What do sheep eat on the grassland? They eat grass. Would they choose to go to a place with wolves? And this wolf is very ferocious. Absolutely not.
This is the error in self-positioning of investors; you are originally a sheep, just eating grass, which means finding a currency with good performance (if there is one) and buying it at a suitable price, then waiting for appreciation every year (is there a dividend in the currency circle?). But most investors do not do this; they always want to follow the wolves to eat some leftovers, how can there be no losses in this? Therefore, most of the sheep on the vast grassland remain, while most investors have been eaten.
6. How do the main forces educate and instill in retail investors?
The topic I’m talking about might seem fresh to many, never heard of such a thing; can the main force educate me? Isn’t it to stabilize or protect the property income of the masses? I say no, if you don’t feel it, that’s the success of the main force; they don’t need you to feel anything, as long as you follow their commands.
Trading currency is about repeating simple things over a long time; persistently using one method until it becomes second nature; trading currency can be like other industries, and practice makes perfect, allowing one to make each decision without overthinking.
This year marks the 10th year of my trading currency; starting with 10,000 yuan, now I support my family through trading currency! It can be said that I have used about 80% of the methods and techniques in the market. If you want to make trading currency your second profession to support your family, sometimes listening and watching more can help you discover some things outside your understanding, at least helping you avoid 5 years of detours!
A single tree cannot become a boat, and a lone sail cannot sail far! In the currency circle, if you do not have a good circle or first-hand information from the currency circle, then I suggest you pay attention to Lao Wang, who will help you get on board; welcome to join the team!!!