After more than ten years of cryptocurrency trading, growing from $800 to financial freedom, with a monthly income in seven figures and an annual income in eight figures, I have done one thing correctly in the crypto world!
The secrets to getting rich in cryptocurrency—rolling positions +; specially designed for beginners or old hands in the crypto sphere; take a minute to read it and learn how to grow from $1,000 to $100,000!
I have personally tested this method, using the following rolling position strategy to grow from $8000 to $10 million!
01 Timing for rolling positions
02 Technical Analysis
03 Position Management +
04 Adjusting Positions
05 Risk Management +
Since the Federal Reserve's interest rate cut policy was finalized, the cryptocurrency market has welcomed a wave of new investors who, driven by a desire for wealth, hope to find their place in this field. However, the crypto market is not a land of gold; it is more like a brutal natural selection process where only those who truly adapt to market rules can stand firm. Although the market is open to all, very few investors can achieve substantial returns in this field.
For those preparing to enter the crypto world, it is crucial to recognize that the market is not a place where one can easily realize dreams of overnight wealth. Instead, it requires investors to engage in long-term market research, experience accumulation, and continuous learning. Many enter the market with fantasies of getting rich quickly, hoping to achieve significant returns from small investments. While such success stories are not nonexistent, they often require carefully planned 'rolling position' strategies, which are neither easy to execute nor achievable through frequent trading.
The 'rolling position' strategy is theoretically feasible; it requires investors to invest with appropriate positions when significant market opportunities arise, rather than frequently executing small trades. The successful implementation of this strategy often relies on accurately judging market trends and timing. Although seizing a few such opportunities in a lifetime can lead to wealth accumulation from zero to millions, it requires investors to possess extremely high market insight and decision-making ability.
In the pursuit of profits, investors should not only focus on the final profit target but should pay more attention to how to achieve these goals. This means starting from their actual situation, investing time and energy to deeply understand the market, rather than blindly chasing unrealistic huge profits. The essence of trading lies in identifying and seizing opportunities, rather than blindly pursuing light or heavy positions.
In daily trading practice, investors can use small amounts of capital to gain experience and skills. When real big opportunities arise, they can then go all in to seize the opportunities. As investors grow from small capital to millions, they gradually master the strategies and logic for making big money, leading to more mature and steady mindsets, with future operations resembling the replication and optimization of past successful experiences.
For those wishing to learn rolling position strategies or wanting to understand how to grow from small capital to millions, the following content will provide valuable guidance and suggestions. This will be a journey filled with challenges and opportunities, requiring investors to devote significant time and effort to in-depth research and practice.
Rolling Position Timing
The art of rolling positions cannot be mastered on a whim. It requires favorable timing, market conditions, and the right people to increase your odds. Here are four golden opportunities for rolling positions:
(1) Breakthrough after long-term consolidation: When the market has been in a sideways state for a long time, and volatility drops to a new low, once the market chooses a breakout direction, consider using rolling positions.
(2) Buying the dip during a bull market: In the wave of a bull market, the market experiences a strong rise, followed by a sudden drop. At this point, consider using a rolling position strategy to capture the buying opportunity.
(3) Weekly level breakthroughs: When the market breaks through key resistance or support levels on the weekly chart, it is like breaking through a solid defense line. At this point, rolling positions can capture this breakthrough opportunity.
(4) Market sentiment and news events: When market sentiment changes like the weather, or when major news events and policy changes may shake the market, rolling positions can become a powerful tool in your hands.
The odds of rolling positions will only significantly increase under these specific circumstances. At other times, it's best to remain cautious or simply abandon unclear opportunities. However, if market conditions seem suitable for rolling positions, don't forget to strictly control risks and set stop-loss points to guard against unexpected events. After all, wise investors are always those who understand how to find a balance between risk and opportunity.
Technical Analysis
After confirming that the market is suitable for rolling positions, the next step is technical analysis. First, look at the trend using tools like moving averages, MACD, and RSI to determine if the market is trending up or down. If possible, it is best to use several indicators together; this is more reliable.
Identify key support and resistance points in the market, determine whether the breakout is reliable, and use divergence signals to seize reversal opportunities. For instance, if the price hits a new high but the MACD does not follow suit, this may indicate a top divergence, suggesting the price could fall, prompting consideration for reducing positions or shorting. Conversely, if the price hits a new low but the MACD does not make a new low, this may indicate a bottom divergence, suggesting the price could rise, prompting consideration for increasing positions or going long.
Position Management
Key to reasonable position management lies in three steps: determining initial positions, setting rules for increasing positions, and formulating strategies for reducing positions. For example, this makes it easier to understand.
Initial position: If you have $1 million, the initial investment amount should not exceed 10%, which means $100,000.
Position increasing rules: When you decide to increase investment, you must wait until the price breaks through a key resistance level. Each time you increase your investment, do not exceed 50% of the original investment amount, meaning a maximum addition of $50,000.
Reducing positions strategy: Once the price reaches your expected profit target, you can start to gradually sell off. Remember, when it's time to let go, don't hesitate. Each time you sell, it's best not to exceed 30% of your current holdings to gradually lock in your profits.
In fact, as ordinary investors, we can be bolder when facing great opportunities and more conservative when opportunities are scarce. If luck is on our side, we might earn a few million; if not, we just have to accept reality. However, I still want to remind everyone that once you make money, you should first withdraw your invested capital and then continue to invest with the profits. You may not make a profit, but you must not incur losses.
Adjusting Positions
After mastering position management, we come to the most critical step—how to achieve rolling positions through adjusting holdings.
1. Timing: Enter the market only when conditions meet the criteria for rolling positions.
2. Opening positions: follow the signals of technical analysis, find the right timing to enter.
3. Increase positions: if the market moves in your direction, gradually add to your positions.
4. Reducing positions: once the predetermined profit is reached, or if something seems off in the market, gradually sell off.
5. Closing positions: When you reach your target price or when the market shows obvious signs of a reversal, sell everything.
Here's how I operate; I'll share my rolling position insights:
(1) Add capital after making a profit: If your investment has increased, consider adding more, but only if the cost has already decreased, and the risk is smaller. It's not about adding every time you make a profit; it's about adding at the right moment, such as at a breakthrough point in a trend, and quickly reducing once it breaks out, or adding during a pullback.
(2) Base position + trading: Divide your assets into two parts, keeping one part idle as a base position, while trading the other part during market price fluctuations; this can reduce costs and increase returns. There are several ways to divide it.
1. Half position rolling: keep half the funds long-term, while trading the other half during price fluctuations.
2. Base position of 30%: hold 30% of funds long-term, trading the remaining 70% during price fluctuations.
3. Seventy percent base position: hold 70% of funds long-term, while trading the remaining 30% during price fluctuations.
The purpose of this approach is to maintain a certain position while using short-term market fluctuations to adjust costs, optimizing positions.
Risk Management
Risk management simply involves two things: controlling overall positions and smart fund allocation. Ensure that your total investment does not exceed the risk you can bear, and allocate funds wisely; do not put all your eggs in one basket. At the same time, always keep an eye on market dynamics and changes in technical indicators and adjust strategies flexibly based on market conditions, and if necessary, promptly stop losses or adjust investment amounts.
When many people hear about rolling positions, they may feel both excited and scared, eager to try but worried about risks. In fact, the rolling position strategy itself is not very risky; the key lies in the use of leverage. If used rationally, risks can be fully controlled.
For example, if I have $10,000 in capital, and the price of a certain coin is $1,000, I use 10x leverage but only use 10% of the total funds (i.e., $1,000) as margin. In this way, I am actually using only 1x leverage. If I set a 2% stop-loss line, once the market turns unfavorable, I only lose 2% of this $1,000, which is $200. Even in the worst-case scenario of triggering liquidation conditions, the loss is limited to this $1,000, not all funds. Those who face liquidation often do so because they used excessive leverage or had too heavy positions, leading to liquidation with minor market fluctuations. But using this method, even if the market is unfavorable, your losses remain within a manageable range. Therefore, whether you use 20x leverage, 30x leverage, or even 3x or 0.5x, the key is whether you can use leverage reasonably and control your position.
This outlines the basic operational process for rolling positions. Interested friends can take a closer look and study it carefully. Of course, everyone may have different views; I am just sharing my experience without trying to convince anyone.
How can small capital grow big? Compound effect +
If you have a coin that doubles in value every day, after a month, its value will skyrocket. Doubling on the first day, then doubling again the next, and so on, will ultimately lead to a staggering final number. This is the magic of compound interest. Even if you start with little capital, as long as you keep doubling, you can ultimately accumulate an astonishing amount.
For those with limited funds who want to enter the market, aim for big goals. Many people think that small funds should engage in frequent short-term trading for quick gains, but in reality, mid to long-term trading may be more suitable. Instead of making small profits every day, it's better to focus on achieving several-fold growth with each trade; what we want is exponential growth, a leap in multiples.
In position management, first, diversify risks; do not put all your funds into one trade. Divide your funds into three to four parts and only invest one part each time. For example, if you have $40,000, divide it into four parts and use $10,000 for each trade.
Use leverage moderately. The leverage for major currencies should not exceed ten times, and for smaller currencies, it should not exceed four times.
Adjust dynamically. If you incur losses, supplement with an equivalent amount of funds from outside; if you make profits, withdraw some appropriately. Regardless, don't let yourself fall into a loss.
When your funds grow to a certain extent, consider gradually increasing the amount for each trade, but do not add too much at once; do it step by step.
Through reasonable position management and prudent trading strategies, small funds can gradually achieve significant appreciation. The key is to patiently wait for the right timing and focus on the big goals of each trade, rather than daily small profits.
I also know that anyone can encounter liquidation. However, at that time, I still had profits from spot trading to make up for the losses. I also do not believe that you have not made any gains on the spot you hold. My futures only accounted for 2% of the total funds; no matter how much I lost, I would not lose everything, and my losses were always within my control.
I hope we can all grow our funds like a snowball, getting bigger and bigger.
My tested method: from May 2023 to June 2024, over 502 days and nights, growing from $3,000 to $3 million, achieving a return rate of 14,838%. In the crypto sphere, if you want small capital to grow big, the only method is rolling positions!
Today, I will share this method with those destined to receive it. If you also want a slice of the pie in cryptocurrency, then take a few minutes to read carefully, and then gradually absorb and practice to form your own stable profit system in the crypto sphere!
The first million took the longest and was the most painful; the trading system was constantly being reshaped and refined, taking a year and a half.
The second million took three months.
The third million was achieved in just 40 days.
The fourth million was only achieved in 5 days.
75% of the funds were earned within six months.
The secret to making money without liquidation in contracts! 99% accuracy!
If you have $5,000 in capital and want to trade contracts, remember to use at most 10%, which is $500, keeping the remaining $4,500 for adding positions.
Now let me share a few methods for making money.
The first type:
Focus on one coin; only trade Bitcoin!
Don't trust those altcoins, and don't be greedy. You come to the market to make money, not to lose it. I used to trade many coins simultaneously, and the result was either liquidation or significant losses, or I was always stuck.
The second type:
Always set stop-losses when opening positions; for large market fluctuations, adjust stops further away, and for smaller fluctuations, adjust stops closer.
Take profit can be optional, but stop-loss must be in place. No one can predict when the market will surge or plummet. If you set stop-loss well, even in extreme situations, you can preserve most of your capital. Don't avoid setting stop-losses out of fear of losses, or cling to hopes of immediate recovery. Such thinking is too naive.
The third type:
Set the forced liquidation price far away; it's best to halve it and halve it again.
The fourth type:
Increasing positions must be planned; do not be blind.
The remaining principal after opening a position should at least allow for four additional rounds of investment. For example, use $30 for the first round, $60 for the second, $120 for the third, and $240 for the fourth; this averages out the price. If the market adjusts appropriately, it can be easy to break even or even make a big profit.
The fifth type:
Open a hedge on the same coin, only to be used when in dire straits.
If you've done everything right, opening a hedge is not significant. But remember, this method can only add positions once, so clarify whether to open a hedge or increase the fourth position.
The sixth type:
Do not hedge with different coins.
Some prefer to use several similar currencies for hedging contracts, which is highly unadvisable. If one coin is hard to study, adding another can complicate operations, leading to mutual entrapment.
The seventh type:
Open positions according to the bull market, do not go against the trend.
At the beginning of a bull market, do not easily open short positions; at the end of a bull market, do not easily open long positions; do not let intraday market movements affect your judgment, resulting in opening at the peak or the bottom.
I am the Crypto Instructor, having experienced multiple bull markets and possessing rich market experience across various financial fields. Follow my public account (Crypto Instructor) to penetrate the fog of information and discover the real market. Seize more wealth secrets and opportunities, and don't miss out on truly valuable chances!
The take profit strategy summarized from over ten years of cryptocurrency trading: This is the dividing line between novices and experts; as the saying goes, those who can buy are learners, but those who can sell are masters.
Retail investors sometimes have profit opportunities, but their greed prevents them from pocketing money, resulting in losses instead. Where are the masters of stocks? It's just a matter of grasping the level of risk. This is the dividing line between novices and experts; as the saying goes, those who can buy are apprentices, but those who can sell are masters.
Take profit strategies in cryptocurrency trading are crucial for achieving stable profits. Here are some common quantitative trading take profit strategies:
1. Fixed Ratio Take Profit
Set a fixed profit ratio; when asset prices reach or exceed this ratio, take profit. For example, take profit at a 20% gain.
Advantages:
Simple and easy to operate, clarifying profit goals helps investors lock in profits promptly when expected returns are reached. It does not rely on complex market analysis and predictions, making it more suitable for beginners or those pursuing stable returns.
Disadvantages:
You might miss out on subsequent larger trends. If the market is in a strong upward trend, taking profit too early may lead to missing out on more profit opportunities.
For different market environments and trading varieties, the fixed ratio may need to be adjusted frequently; otherwise, take profits may occur too early or too late.
2. Trailing take profit
Moving Average Take Profit
Determine take profit points based on the relationship between asset prices and moving averages. For example, take profit when prices fall below a certain moving average over a specified period. Commonly used moving average periods include 10 days, 20 days, 50 days, etc.
Advantages: Can follow market trends, allowing profits to grow significantly during sustained trends, while promptly taking profits when trends reverse to minimize losses.
Disadvantages: This may lead to frequent buy-sell signals due to market fluctuations, increasing transaction costs. Additionally, for rapidly changing markets, moving averages may have a certain lag.
Trend Line Take Profit
By drawing trend lines for asset prices, take profit when prices fall below the trend line. Trend lines can be ascending or descending, depending on the market trend.
Advantages: Can intuitively reflect changes in market trends, effectively capturing take profit opportunities during clear trends.
Disadvantages: The drawing of trend lines has a degree of subjectivity, and different investors may draw different trend lines (two-point and three-point methods), leading to discrepancies in take profit points. Additionally, during market fluctuations, trend lines may be frequently broken, generating false take profit signals.
3. Technical indicators take profit
Relative Strength Index (RSI) Take Profit
When the RSI indicator enters the overbought zone (typically when the RSI value exceeds 70), it indicates that the market may be experiencing overbuying, and there is a risk of price pullback, so consider taking profit.
Advantages: The RSI indicator can promptly reflect market overbought and oversold conditions, providing reference value for determining short-term price tops and bottoms.
Disadvantages: The RSI indicator may generate many false signals in a choppy market, and being in the overbought area does not necessarily mean the price will drop; it could just be a short-term adjustment.
Bollinger Bands Take Profit
When the price breaks through the upper Bollinger Band and then returns to within the Bollinger Band channel, consider taking profit, or when the price breaks below the lower Bollinger Band and then returns to within the channel, this can also serve as a take profit signal for reverse trading.
Advantages: Bollinger Bands can better reflect the price's volatility range and trend, providing relatively accurate take profit signals in markets with large price fluctuations.
Disadvantages: There is a certain degree of lag, and the parameters set for Bollinger Bands need to be adjusted based on different markets and trading varieties.
4. Dynamic Take Profit
Dynamic take profit is a more complex take profit strategy that adjusts take profit prices as asset prices rise to lock in more profits. When prices rise, the take profit price also goes up; if prices drop to a certain degree, take profit is triggered.
Advantages:
Able to adapt to different market environments, enhancing the flexibility and adaptability of take profit strategies.
Can avoid the limitations of fixed take profit strategies to a certain extent, better capturing market opportunities and controlling risks.
Disadvantages:
Calculating and adjusting is relatively complex, requiring certain quantitative analysis skills and experience.
May not respond promptly to rapid market changes, requiring constant monitoring and adjustment of take profit points.
A common dynamic take profit method is to use trailing stop losses. You can set a drawdown percentage (for example, 5%); when the price falls from its highest point to this percentage, trigger take profit. In practical applications, various take profit strategies can be combined and adjusted based on different market conditions and trading varieties. Additionally, consider trading costs, risk tolerance, and other factors to develop a reasonable take profit plan to achieve stable profits in quantitative trading. When market prices rise, the take profit price will rise with it to lock in more profits.
When the market price falls from the highest point by more than a set proportion, automatically trigger take profit to prevent excessive profit loss. You can use the update price function on real-time data streams to periodically update asset prices and determine whether to take profit.
Entering the crypto market with $8000, suffering a massive loss of $8 million due to liquidation, then reinvesting $200,000 into crypto. In two years, I managed to grow it back to $20 million. The core wealth secret for this turnaround and achieving financial freedom in crypto is: (the capital management methods and principles for trading). I hope to share these with you, and I hope they help you on your trading journey!
Trading is like running a business; capital management is a key factor that can determine survival. Stability should be your first consideration. Traditionally, capital management includes issues such as the profit-loss ratio of individual trades, overall trading risk, and issues of increasing positions and exiting during the trading process. We can summarize it into a few points: 1. Combination: Investment direction 2. Position: How much to invest 3. Timing: When to enter and exit
Trading is like running a business; capital management is a crucial factor that can determine survival. Stability should be your first consideration. Traditionally, capital management includes issues such as the profit-loss ratio of individual trades, overall trading risk, and issues of increasing positions and exiting during the trading process. We can summarize it into a few points:
1. Combination: Investment direction
2. Position: How much to invest
3. Timing: When to enter and exit
Question 1: Does trading accomplish nothing due to the small size of the capital?
Answer: The size of trading capital does not necessarily correlate with whether you are a successful trader. Many people cannot even manage small accounts well, so how can they believe they can manage large accounts? Different scale accounts require different strategies and methods of operation; many people fail with small capital accounts mainly due to improper methods.
Large capital accounts: strong ability to resist drawdowns, can set wider stop losses; once triggered, the losses can be significant; larger profit potential, longer return cycles: more suitable for trend trades.
Small capital accounts: weak ability to resist drawdowns, limited space for setting stop-losses, generally close to the current price, hence absolute losses are smaller; the profit cycle is shorter, and quick returns provide emotional satisfaction for traders. More suitable for segment trades.
In short, based on the characteristics of large and small capital accounts, large funds are suitable for large trends, while small funds are suitable for segments.
Question 2: Most people have small capital accounts; can you introduce management methods more suitable for small capital accounts?
Answer: If you want a small capital account to grow rapidly in a short time, you may need to pay attention to the following issues:
1. Survival first. Regardless of account size, this is the first principle.
2. Only engage in short-term segment market trades. The biggest disadvantage of small capital accounts is their weak ability to resist drawdowns, and even slightly larger drawdowns may lead to liquidation. Therefore, it's best to only engage in intraday short trades.
3. No matter the profit or loss, limit yourself to a certain number of trades each day. It's best not to exceed three trades per trading day. If the first two trades have both hit stop-losses, it's better not to continue trading to avoid being influenced by emotions. Additionally, take profits promptly; don't continue trading just because you made a profit on all three trades that day.
Only trade one variety at a time. For small capital accounts, do not think about diversifying investments; it is unrealistic. Since the account capital is originally small, trading multiple varieties simultaneously will only reduce your risk tolerance, potentially leading to greater losses.
5. Be good at seizing big opportunities. Small accounts need to grow their funds; if you only rely on making small profits daily, it will take a long time, just like the previously mentioned compound interest model. Therefore, small accounts should grow quickly by seizing big opportunities from time to time, patiently waiting for the next opportunity to appear. This can also be understood as winning by quality rather than trading frequency.
6. Increase positions; be bold but careful. I have told everyone many times not to go heavy. However, to rely on small amounts of capital for speculative trading and achieve windfalls, one must be willing to go heavy. If you want a small capital account to grow quickly, you must seize opportunities while increasing positions. At this point, do not fear going heavy, and do not equate going heavy to liquidation. The core reason most people face liquidation is not because of heavy positions but because they enter too easily, frequently stop-loss, or do not set stop-losses at all.
A student once asked me what the most important aspect of investing is. I replied with four words—capital management. My answer surprised my students. As someone who studies trends and technical analysis, almost everyone would expect me to say that the most important thing in investing is grasping trends and following the trend.
To become an excellent investor, capital management is paramount; I call it the lifeline of investing.
The importance of capital management
Many people are looking for secrets to profit in the market, thinking that accurately judging market direction can lead to long-term stable wins, but in fact, the most important thing for stable profits in the market is capital management.
Warren Buffett believes that safety is the first principle of investing: 'The first rule is to preserve capital, the second rule is to preserve capital, and the third rule is to remember the first two rules.'
George Soros said: 'I crave survival and do not wish to take catastrophic risks. If we do not know how to stop losses, we are heading for destruction.'
Larry Williams stated: 'Capital management is the most important secret in my investment life; nothing else is more important than this.'
Many investment masters and trading experts do not have high success rates but can continually profit and earn money. The reason is that they are better at grasping trends and managing capital. Effective capital management strategies allow investors to earn enough profits in major trends and markets while not increasing risks.
It can be said that all successful investors are those who are good at capital management, while those who do poorly, even to the point of financial ruin, ultimately failed in capital management. Many excellent individuals fail due to not paying attention to capital management.
Although financial trading carries enormous risks, it does not mean one cannot go heavy or fully loaded; rather, one should accumulate positions gradually while controlling risks as the market trend persists until fully loaded. Only in this way can risks be minimized and profits maximized. This is the essence of capital management.
The concept of capital management
What is capital management? In simple terms, it is the use of reasonable capital input and strict risk control to minimize financial risks, aiming for a stable state of investment akin to a slow but steady stream. This is what we call a good capital management model.
Under an excellent capital management model, the pursuit is long-term stable returns, aiming for happy, relaxed, and fulfilling investments, rather than short-term windfalls, because the pursuit of short-term windfalls corresponds to the risk of liquidation. As long as you harbor the fear of obtaining windfalls, you will inevitably experience liquidation, fear, anxiety, and even nightmares. After all, everything has its yin and yang; what kind of light corresponds to what kind of shadow. Windfall profits correspond to liquidation, while a steady investment model corresponds to long-term and stable safe profits since the steady investment method bears low risks. In high-risk, high-leverage investment areas, ensuring your long-term survival is the true path, the fundamental principle.
Methods of capital management
Light positions for testing; enter in batches.
Hold positions in the direction of trends; increase profits; 2.
Set stop-loss levels to limit losses, 3.
4. Let profits grow sufficiently while keeping losses small.
5. Do not increase positions against the trend; avoid buying more as prices fall in an attempt to average down costs, etc.
4. Characteristics shared by great traders
First, the funds used for investment should not be your life savings but rather funds that will not affect your life after losses; this can be considered the first step in capital management.
Second, decisively increase positions when the trend is clear to amplify profits. However, I must emphasize that the most important aspect of increasing positions is moderation; it should not violate the basic principles of capital management.
Third, do not be greedy. Even in a clearly defined trend, when increasing positions, you should still fully consider the potential adverse effects of sudden reversals on total capital. This point is crucial.
The key to effective capital management is overcoming greed. Only by overcoming greed can you better avoid omnipresent risks, make rational choices, and let operations follow reason and wisdom rather than desire or imagination. When desire burns, when imagination ignites, wisdom turns to ashes, leaving no room for rationality.
Previously, I have guided many students to trade together; many people started trading with the same method and plan, but after some time, some lost money while others made profits. The gap remains significant, mainly due to differences in capital management—light positions when making profits and heavy positions when losing; running fast when making profits and slow when losing, and I often encounter individuals who place orders, then refuse to admit mistakes and stubbornly hold until liquidation or major losses.
I must particularly remind you that when investing, you cannot always fantasize about obtaining windfalls; this is the most fatal flaw in the investment process, and it is also a common mistake many people easily make. Investing based on fantasies, relying on illusions—imagine a general leading troops into battle, if he constantly fantasizes about achieving glorious victories and being honored, how terrifying that would be.
Therefore, we must stay away from illusions and think calmly. Consider what your opponents are thinking, what the market is thinking, what large investors are thinking, and what ordinary retail investors are doing. Whether you are investing in real businesses or leveraging cryptocurrencies, you must pay attention to these factors and think from these perspectives, especially in leveraged investments like forex or futures. These are zero-sum games; the money you lose is precisely someone else's profit, and your profit is someone else's loss. Every market participant wants to make money. In this case, not only should you think about what you should do, but you must also consider what others will do, what choices they will make, and your thinking must be serious and in-depth. Only after seeing through the other party and understanding the market can you act accordingly, ensuring thoroughness and success.
The basic principles that capital management should follow
The first principle: control your position.
Always keep positions light; never go heavy, especially in leveraged markets. Have a scientific position management plan and strictly implement it.
My capital management method includes volatility, such as the 'number of hands to buy' and 'average volatility' provided in my morning analysis, where the calculated number of hands considers the normal volatility range of the variety, and operations are strictly according to that number to generally avoid incorrect stop-losses.
The second principle: implement risk control well.
1. Start from opening positions and control risk at the source.
2. Reduce positions before major risk events, or even go into cash.
3. Put money first; if capital decreases to a certain percentage, liquidate unconditionally.
Many people do not truly understand what investing is. What is investing? It is essentially a game of avoiding traps and seeking treasure. The premise of treasure hunting is to avoid traps; only after effectively avoiding traps can one successfully find treasure. Over 95% of investors fail because they do not understand this principle, focusing solely on treasure while neglecting traps, leading to failure on the road to finding treasure.
Always remember a principle: the importance of survival is always greater than the importance of profit. In other words, ensuring your safety greatly enhances your survival capability, and your ultimate investment returns will also be considerable.
For those engaging in high-leverage investments, you should at least allow yourself 10-20 opportunities to bear significant risks, meaning you should have the ability to sustain 10-20 losses without hitting liquidation. Therefore, divide your funds into 10-20 parts, only using one part for investment while reserving the rest as risk preparation funds, which is risk control capital. Even if the funds are divided into several parts, you must wait for a particularly clear trend and significant market movement before entering.
Incorporating this into our investment, dividing funds into 10-20 parts may reduce your short-term profit capability, but due to greatly reduced risks, you gain the ability for long-term profitability.
That concludes the trading experience I shared with you today. Often, doubts lead to missed profitable opportunities; if you don't dare to try, to engage, to understand, how can you know the pros and cons? You only understand what to do next after taking the first step. A cup of warm tea, a word of advice; I am both a teacher and your friendly advisor.
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