I was once a beginner too, rushing into the crypto world, chasing highs and cutting losses, ending up losing the money I diligently earned due to my fragile abilities.
I have also followed so-called crypto mentors to do contracts and learn technical analysis, but at very critical points, I followed the mentor to short Bitcoin contracts and almost faced total loss! I eventually realized that choosing the wrong guide and not systematically learning spot trading led me down many wrong paths! Without solid professional skills and understanding the patterns of the crypto world, it is very hard to achieve sustained and stable profits through trading.
After much consideration, I ultimately chose to systematically study natural trading theory, as well as data analysis in the crypto world, combining volume and price analysis. I finally established a three-dimensional trading system that suits me, which is continuously being improved and practiced.
Before the big bull market arrives, to help more newcomers avoid the wrong paths I once took, and to seize the once-in-a-lifetime opportunity of a bull market, I specifically compiled twelve guiding principles for beginners in cryptocurrency trading. I hope to assist newcomers in grasping some trading rules and principles to avoid unnecessary pitfalls and accelerate achieving stable profits.
Back to the point
01
Only engage in spot trading, not contract trading principles
Spot trading, steady and continuous. Contract liquidation, losing everything in one go. Newcomers entering the crypto world always want to get rich overnight, with an anxious mindset and lacking professional skills and guidance. When they see others making quick money with leveraged contracts, they also try high-leverage contract trading. The result is quick profits followed by quick losses, and ultimately, they usually lose all their capital, even facing bankruptcy, with their confidence severely frustrated.
There have been many reports of financial experts facing heavy debts and even committing suicide due to high leverage in contracts after liquidation. Contracts are zero-sum games, requiring more specialized skills and good mindset compared to spot trading. If newcomers can't even handle spot trading well, they will not succeed in the fierce competition of contract trading, so they must stay away from contract trading and focus on doing spot trading well.
02
Investing spare money, not borrowing to trade principles.
Trading cryptocurrencies involves 30% technique and 70% mindset! For beginners, if you use your spare money to trade and temporarily get stuck or lose a small part of your capital, staying calm won't affect future trading opportunities. In the end, you may find clarity and seize good trading opportunities. Conversely, if you are using borrowed funds to trade, feeling highly anxious and scared, you're prone to impulsiveness. With such a poor mindset, it is basically difficult to earn consistently. Even if you occasionally encounter good coins and make profits, you still can't escape disaster.
03
The principle of going with the larger trend and against the smaller trend
Going with the larger trend addresses the issue of trading direction; going against the smaller 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 strenuous and may even lead to regression. Trading cryptocurrencies is like swimming; it requires going with the trend. When the medium to long-term trend of the market is upward, buying mainstream coins at dips will make a profit, and even chasing prices can yield profits. Conversely, if the medium to long-term trend of the market is downward, buying at dips is contrary to the trend. If one cannot withdraw in time, they will ultimately suffer heavy losses or be stuck.
Therefore, trading cryptocurrencies must follow the medium to long-term trend direction of the market. When the market is in a bull cycle, one should dare to take large positions in the right direction; when the market is in a bear cycle, one should learn to stay out and rest. This is the principle of going with the larger trend. So, what is the principle of going against the smaller trend? When the larger trend direction is upward, one should dare to look for a good entry point to buy low during the coin's short-term downward adjustment period.
04
Right-side entry and left-side exit principle
Entering to buy coins is divided into left-side buying and right-side buying, while taking profit through selling is also divided into left-side selling and right-side selling.
As shown in the figure, during the price decline, choosing to enter on the left side and buy in batches, for example, buying at points A, B, and C, may result in buying at mid-level prices or even the lowest point. The left-side entry method is relatively aggressive, with higher risks, making it unsuitable for beginners.
Point D is the entry point confirmed after the coin price breaks above the neckline of the W-bottom reversal structure, belonging to the right-side entry method. Although it doesn't buy at the lowest price, it is relatively stable and certain, suitable for beginners.
After entering from the left side, as the coin price rises, one should sell in batches: small rises lead to small sales, big rises lead to big sales, locking in profits. As shown in the figure, selling at point E belongs to the left-side selling method. If the coin price breaks below the upward trend line and sells at point F, it belongs to the right-side selling method. Beginners should prioritize the left-side selling method for greater stability and profit maximization.
Right-side buying and left-side selling methods, although not consuming the entire fish from head to tail, one can still enjoy the most delicious parts, accumulating small victories into big ones.
05
The principle of trading new coins instead of old ones
The types of coins in exchanges are categorized as new coins, semi-new coins, and old coins. Coins that have just been listed on the exchange are called new coins, those listed for several months are semi-new coins, and those listed for over six months are old coins. Traders with larger capital prioritize mainstream coins, such as Bitcoin, Ethereum, and SOL. Traders with smaller capital, including beginners, should focus on new coins and semi-new coins for greater profit opportunities.
Why trade new coins instead of old ones? This is because old coins, unless they have new technological breakthroughs or new narrative drives, will face new speculation opportunities. Otherwise, investors already know everything about these coins, and there are no fresh stories to tell. Moreover, they have already gone through several rounds of speculation, and the trapped positions are quite severe, making it difficult for major institutions to lift them up, thus failing to attract market funds' attention.
New and semi-new coins with new technologies, new tracks, new narratives, and new token models easily attract investors' attention. When new and semi-new coins complete their bottoming and break upwards, the trapped positions are relatively few, and major institutions can lift them smoothly. Once they break through historical highs, the imaginative space and potential for growth increase, leading to greater profit opportunities.
06
New Coin Six-Step Trading Principles
Based on my long-term observation of new coins listed on exchanges, I have summarized the basic operational model of new coins following their six-step process:
1 In the days following the listing, it rises sharply and then falls back;
2 Continues to decline and probe the bottom, sadly ignored;
3 Continues to bottom for several days and begins to warm up;
4 Gradual rise and explosion, attracting attention;
5 Coin prices hit new highs repeatedly, and the market is crazy;
6 Institutions distribute chips, leading to chaos.
The above is the first part of the guiding principles for beginners in cryptocurrency trading. I will continue to work hard to write the second part. If you agree and follow, I will keep updating and sharing valuable insights!
These days, I'm preparing for the upcoming layout of my divine trades.
Comment 158, I'm on board.
Impermanence brings impermanence.
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