I was once a novice too, rushing into the cryptocurrency world, chasing highs and cutting losses, only to lose the hard-earned profits due to lack of strength.
I have also followed so-called cryptocurrency teachers to trade contracts and learn technical analysis. At critical points, I followed the teacher to short Bitcoin contracts, and it was almost a total loss! I eventually realized that choosing the wrong guide and not systematically studying spot trading led me down many unnecessary paths! Without solid professional skills and mindset, and without mastering the rules of the cryptocurrency market, it is difficult to achieve sustained and stable profits through trading.
After going around in circles, I ultimately chose to systematically study the White Natural Trading Theory and also learned about data analysis in the cryptocurrency space, combining volume and price analysis, and finally established a suitable three-dimensional trading system for myself, which I am continuously improving and practicing.
Before the big bull market arrives, to help more new traders avoid repeating the mistakes and hardships I went through, and to seize the rare opportunity of the bull market, I specifically compiled twelve guiding principles for novice cryptocurrency trading, hoping to help newcomers grasp some trading rules and principles, avoid unnecessary paths and traps, and accelerate stable profits.
Back to the point, I encourage novice traders to carefully read, comprehend, and practice the following trading principles. Feel free to message me on Twitter for discussion.
1. Only trade spot, do not trade contracts.
Spot trading is a slow and steady process. Contract trading can lead to total loss. Novices enter the market hoping to get rich overnight, with a restless mindset, lacking professional skills and guidance. Seeing others making quick money through leveraged contract trading, they also engage in high-leverage trading, resulting in quick gains and quick losses. The final outcome is often total loss of capital, even financial ruin, leading to serious loss of confidence. There are frequent news reports of financial experts going bankrupt and taking their own lives due to high leverage in contracts. Contracts are a zero-sum game, requiring more professional skills and a good mindset compared to spot trading. If novices cannot even handle spot trading well, they cannot succeed in the fierce competition of contract trading. They must stay away from contract trading and focus on spot trading.
2. Invest with spare cash, do not borrow to trade cryptocurrencies.
Trading involves three parts technique, seven parts mindset! Novice traders, if you use your spare cash for trading and are temporarily stuck or lose a small amount, maintaining a calm mindset will not affect subsequent trading opportunities, and ultimately you can weather the storm and seize good trading opportunities. Conversely, if you are trading with borrowed funds, being highly anxious and fearful, you are likely to become impulsive. With such a poor mentality, it is difficult to consistently earn money, and even if you occasionally encounter profitable coins, you will ultimately face losses.
3. The principle of following the big trend and going against the small trend
Following the big trend addresses the issue of trading direction: going against the small trend addresses the issue of entry points. We all know that swimming with the current is easier and faster, while swimming against the current is very laborious, even leading to regression. Trading cryptocurrencies is like swimming; it requires following the trend. When the medium to long-term trend of the market is upward, buying mainstream cryptocurrencies on dips will yield profits, and even chasing highs can also be profitable. Conversely, if the medium to long-term trend of the market is downward, even buying on dips is considered counter-trend trading, and if you cannot exit in time, you will ultimately incur heavy losses or be stuck.
Therefore, when trading cryptocurrencies, it is essential to follow the medium to long-term trend direction of the market. When the market is in a bullish cycle, be bold and invest heavily in the trend; when the market is in a bearish cycle, learn to stay out and rest. This is the principle of following the big trend. Now, what is the principle of going against the small trend? When the overall trend is upward, be bold in finding a good entry point to buy on dips during short-term corrections in the cryptocurrency.
4. Buy on the right side and sell on the left side principle
Entry points for buying cryptocurrencies are divided into left-side buying and right-side buying; profit-taking sales are also divided into left-side selling and right-side selling. As shown in the figure, when the price is falling, you can choose to enter on the left by buying in batches, for example, at entry points A, B, and C, where you might buy at the midpoint or even the lowest point. The left-side entry method is relatively aggressive and risky, making it unsuitable for novice traders. Point D is the entry point after the price breaks upward through the neckline of the W bottom reversal structure, confirming the right-side entry method. Although it may not be the lowest price, it is safer and more certain, making it suitable for novice traders. After entering on the left side, as the price continues to rise, you should sell in batches: small rises, small sales; large rises, large sales, to secure profits. As illustrated, selling at point E is a left-side selling method, while selling at point F after the price breaks below the upward trend line is a right-side selling method. Novice traders should prioritize the left-side selling method for more stability and maximum profit.
5. The principle of trading new coins over old ones. Cryptocurrencies on exchanges are classified into new coins, new-old coins, and old coins. Newly listed coins are called new coins, coins listed for a few months are called new-old coins, and those listed for more than six months are old coins. Traders with larger capital should prioritize mainstream coins, such as Bitcoin, Ethereum, and SOL. Traders with smaller capital, including novice traders, should focus more on new coins and new-old coins for greater profit opportunities. Why trade new coins instead of old ones? This is because old coins, unless there are new technological breakthroughs or narrative drivers, will not attract new speculative opportunities. Investors are already aware of the old coins and there are no new stories to tell. Furthermore, they have already been speculated upon one or even several rounds, leading to heavy losses for many investors, making it difficult for major institutions to rally them. New and new-old coins, with new technologies, new paths, new narratives, and new models, are more likely to attract investor attention. Once new and new-old coins complete their bottoming and break upwards, there are fewer trapped investors, and the major institutions can rally them more smoothly. Once they break past historical highs, the potential for growth is significant, and the opportunities for profit are also greater.
These days, I am preparing for a significant trading opportunity that is about to open!!!
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