The ten iron laws from losing everything to earning ten million in ten years of trading currencies!
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I have spent over ten years in the world of digital currencies, starting with a capital of 5000 yuan, and made over 10 million during the bull market, then lost everything in three years and paid 7 million out of my pocket. In the end, I regained my footing thanks to 200,000 borrowed, and earned 10 million again. Throughout this journey, I summarized ten strict rules for trading digital currencies, and I share my thoughts with you today, hoping to help you avoid mistakes!
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The first rule: understand market sentiments, and trading volume is the key indicator.
• Increased trading volume and stable prices: a significant increase in trading volume while prices remain stable may indicate the end of a downtrend.
• Increased trading volume but stagnant prices: a significant increase in trading volume while there is no noticeable increase in prices may indicate that a short-term peak has been reached.
• Rise accompanied by an increase in transaction volume: during the rise, the transaction volume should remain steadily increasing; any contraction or unusual increase may indicate the end of an upward trend.
• Trading volume at key drop points is increasing: when the price drops to a key position, trading volume increases significantly, and downward trends may continue.
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The second law: key prices indicate the direction of trading decisions.
• Support, resistance, and trend lines: when the price reaches these key levels, acting decisively is key!
• The golden ratio rule: I use it to accurately predict support and resistance levels, and the results are remarkable.
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Iron is three: analyze the market comprehensively over multiple time frames.
• One-minute chart: capturing entry and exit moments accurately.
• Three-minute chart: monitoring price fluctuation trends after entry.
• Thirty-minute to one-hour chart: taking advantage of subtle changes in daily trends.
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The fourth rule: stay calm after a stop-loss.
• Stop-loss means the end of the trade: every trade is an independent starting point; do not let the past affect your judgment.
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Iron is five: effective position management strategy.
• Three-stage position building method:
1. Initial position building: the currency price exceeds the five-day average, the first purchase.
2. Increase quantity: breaking the fifteen-day line, continue to increase quantity.
3. Full wait: maintain stability on the thirty-day line, and complete stock building.
• Strict stop-loss discipline:
• Breaking the five-day line, reduce positions;
• Dropped below the fifteen-day line, reduce again;
• Fell below the thirty-day line, complete withdrawal!
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Iron is therefore six: exit strategy is equally important.
• Breaking a high level below the five-day line: moderately reduce positions and monitor the situation.
• Falling below the fifteen and thirty-day lines: act decisively and close the portfolio, leaving no regrets.
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Iron is 7: Be cautious of market news, and don't let emotions lead you in the wrong direction.
• Good news repeats but prices do not rise: beware of speculative selling, and take profits at the right time.
• Negative news continues but the price does not fall: this may be a signal for caution; keep a close watch.
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Iron number 8: commitment to review, and deepen trading experience.
• Daily review: summarizing reasons for success and failure, and drawing experiences.
• Periodic review: analyzing previous trades, correcting strategies, and enhancing awareness.
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Iron nine: set profit targets, do not be greedy.
• Clearly define profit range: when reaching the target, decisively sell profits, and do not chase highs or lows.
• Learn to take profits in batches: especially in cases of sharp rises, do not sell everything at once.
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Iron ten: the mind is king, always maintain calm.
• In case of loss: do not rush to recover money, analyze mistakes calmly.
• When making a profit: do not be blindly confident, the market is always full of risks.
• Wait for opportunities patiently: do not rush or get anxious; it's better to miss an opportunity than to make a mistake.
These iron laws are valuable experiences gained from countless failures and successes in the financial world. On the path of currency trading, I hope you can avoid traps and move forward steadily!