I've been in the cryptocurrency space for a few years now; starting as a small retail investor with 50,000 yuan, I've struggled in the crypto world to now achieving a level of tens of millions. Today, I want to share my personal experiences with you all.
Let’s talk about capital management first; never throw all your money in at once. I prefer to operate in batches, so even if I incur losses, they won’t be too severe. I’ve set a rule for myself: once I lose to a certain extent, I’ll decisively withdraw, regardless of market conditions. This way, even if I incur a few consecutive losses, it won’t hurt badly, but if I profit, the returns can be quite significant. Even if I get trapped, I can maintain my mindset.
Going with the market trend is the right move. When the market is falling, don’t always think about catching the bottom; it’s unrealistic. When the market is rising and retracing, that’s the good opportunity; buying low is much safer than stubbornly trying to catch the bottom.
Choosing coins requires vision; be cautious of those that suddenly surge, whether mainstream or altcoins. Rapid increases often lead to equally rapid corrections, making it easy to get trapped.
On technical indicators, I often use MACD. When the DIF line and DEA line cross below the zero line and then break through the zero line, that’s a buy signal. If they cross above the zero line and then decline, you should reduce your position. Don’t easily try to average down; if you lose, don’t average down. Many people end up losing more and losing everything. Remember, losses should be cut, and profits can be increased.
Trading volume is also crucial. When the price breaks through at a low level with increased trading volume, it may present a significant opportunity.
The most critical thing is to go with the trend and seize it. By combining daily and monthly charts for comprehensive judgment, when a line turns upward, you'll know how to act.
In conclusion, trading cryptocurrencies carries both risks and opportunities. I hope my experience can help everyone, but I must remind you to invest cautiously!
The basic principles of the Dow Theory, when applied to the cryptocurrency space, can be summarized in the following six points:
First, average prices encompass and digest all factors. Fundamentals, policies, news, and funding can all affect supply and demand, and all of this will be reflected on the charts, with the market ultimately digesting it through price changes.
Second, the market has three types of trends. Dow categorizes trends into three types: major trends, necessary trends, and minor trends.
The major trend is like the tides of the ocean, belonging to a long-term trend, similar to the cyclical seasons of the cryptocurrency space, with bull and bear cycles having no beginning or end.
The minor trend is the waves in the tide, representing the retracement in the main trend, usually retracing to the three important Fibonacci levels of 38%, 50%, and 62%. The short-term trend is the ripples, referring to the subtle fluctuations that have high uncertainty and change rapidly.
Third, the major trend can be divided into three stages. The first stage is the accumulation phase, similar to yin giving rise to yang. It means that at the end of a bear market, although everyone is bearish, the price has already dropped as much as it can, and the main players start to accumulate in batches at this time.
The second stage is the bull market attack phase, where favorable news begins to emerge, and most retail investors with some technical knowledge gradually enter the market, leading to a gradual price increase.
The third stage is the climax sprint, where major media begin to flood with good news, boldly predicting continued price rises. Retail investors actively buy, unwilling to sell, fearing they’ll miss this once-in-a-lifetime opportunity to make money. However, the main players who bought at the bottom have already started to sell.
Fourth, various average prices must verify each other. For example, only when the joint rise of Bitcoin and mainstream coins exceeds the peak of the previous mid-trend can it be called the arrival of a large-scale bull market! Similarly, if the joint decline of Bitcoin and mainstream coins breaks below the neckline of the high consolidation phase in a bull market.
Fifth, trading volume must validate the trend. Dow believed that volume plays a second role in technical analysis; when prices move along the main trend, trading volume should also increase accordingly.
Sixth, we can only determine that an established trend has ended after indisputable reversal signals occur. A major trend has inertia and generally continues to move in the main direction for a while, so one must wait for trend confirmation of reversal, such as when the head and shoulders pattern confirms a break below the neckline, signifying a trend reversal.
The Dow Theory is a macro technical analysis system aimed at capturing the segment of the market's significant movement with the largest amplitude, that is, the most delicious part in the belly of the fish.
Its advantage lies in successfully determining the major trends of bulls and bears, but its drawbacks are also obvious: signals are usually delayed, often missing 20%-25% of profit opportunities.
Share cryptocurrency trading insights:
1: Regularly invest in mainstream coins and leading coins. Regular investment has a higher probability of making money than going all-in at once. If you invest everything at once and the price drops later, it becomes difficult to average down. Watching the price drop while being unable to accumulate coins is particularly frustrating, and you miss the opportunity to lower costs. Even in a bull market, your returns will be significantly lower.
2. Improve your ability to make money outside of trading.
In the market, the main focus is on buying coins and accumulating them. If you want to hold onto coins, you also need to enhance your ability to make money outside the market. Your ability to make money depends on your work; if you have plenty of time, invest in yourself more, learn more, and acquire skills. Following me to become a Twitter KOL can convert traffic into cash.
3. Invest more in familiar fields.
Invest more in familiar fields; this allows for better risk control. Investing in unfamiliar areas can lead to greater losses. By investing in what you know, you can increase cash flow, and with cash flow, you can achieve greater returns, thus avoiding selling valuable coins due to price drops.
4. Deeply research the techniques of speculators.
Familiarize yourself with the development trajectory of historical hundredfold coins. You need to establish your own profitable trading strategy and continuously optimize your coin selection and timing in practice.
Revealing some tips for learning how to trade cryptocurrencies:
1. Invest with spare money and avoid borrowing to trade cryptocurrencies—money + investment effort.
2. Rigorously filter valuable coins and create a reasonable capital allocation plan that aligns with reality—Yanyang investment strategy.
3. Averaging down—experiencing a pullback after entering is perfectly normal, so funds should be allocated reasonably and entered in batches.
4. Refuse to go all in; allocate positions reasonably. Don’t put all your eggs in one basket to effectively reduce risk.
5. Keep an eye on all directions—look at crypto news frequently, stay updated on the latest financial news, know early, understand early, and earn early.
6. Think contrarily; do not fight against the market or the operators; go with the flow and follow the trend.
7. Open contracts without being fully invested, use leverage below 5 times, avoid using 100x leverage, and don’t seek to get rich overnight; focus on steady profits.
8. Manage your own positions well—managing your positions is more important than anything else. If you are unsure, don’t act lightly. Not acting means no risk and no losses; frequently check your assets to see if they are managed properly and reasonably.
9. The bottom is in your mind, the top is in your mind; do not fear. The crypto space will only make you grow; mindset is more important than operation. Remember the cryptocurrency trading methods; there's no need to worry about not making money!
Investing is not a competitive game; it is a personal journey of life cultivation.
In fact, there is another saying: Every penny you earn is a manifestation of your understanding of this world.