Nothing in this world can escape the 80/20 rule, which is the so-called “8 losses, 1 draw, 1 win”. The same is true for the financial markets, including the cryptocurrency world. 20% of people control 80% of the wealth. After all, only a few people can make money by speculating in cryptocurrencies, and most players are just leeks.
I have been in the cryptocurrency industry for 10 years. In 2015, I entered the market with 500,000 yuan, and the highest amount reached more than 30 million yuan. This journey was full of trials and experiences. The following are some key experiences that I hope will be inspiring to everyone:
If you are in a state of loss but are unwilling to accept it, cannot find the reason, and are very confused, then instead of wasting time on yourself, why not find the reason first? First think through a few questions and find the rules of the market.
Before we begin, let me ask you a few questions for you to think about.
First ask yourself,
1.Am I one of the 20% or the 80%?
2. What qualifications do I have to make money in this industry?
3.Who is making money in this industry?
4. Have I studied hard? Can my knowledge surpass that of most investors?
5. Do I have the ability to think independently?
6. Is my investment strategy just to follow the orders of group friends, bloggers, and KOLs?
7. Can I remain calm in the face of the market makers’ manipulation?
Of course, there is no need to belittle ourselves. This is the law of this world. It is not our fault, and we cannot change it. If the capital market one day becomes a situation where most people make money and a few lose money, then it will become strange. The market is just a trading channel, and the market itself does not generate profits. For example, in the process of you buying and me selling Bitcoin, Bitcoin itself does not generate any profits!
The so-called making money by speculating in cryptocurrencies is the price difference generated during the transaction. To put it bluntly, if you can make money, it means that someone else has taken your order at a high price. If you make money, someone must lose money.
Suppose there are ten participants in the currency circle, and each of them has 10 yuan. If only a few people make money, and one of them earns 2 yuan from the other nine, this person will have 28 yuan, and the other nine will have 8 yuan, and the game can continue. If most people make money, and nine of them earn 2 yuan from one person, the nine people will have 11 yuan. Not only will one person lose all the money, but he will also owe 8 yuan, and the game cannot be played anymore.
When a few people make money, the market is sustainable; when most people make money, the market will collapse.
It’s the same as lottery. If most people win, the lottery company can’t continue to operate. Only when most people lose and a few people win, can the lottery company continue to operate.
Therefore, the market will use every possible means to make most people lose money.
How to become one of the few who make money?
There are many reasons for losing money in speculation. In summary, there are only six reasons. If you violate the following six reasons, you will become a maverick with serious short-term thinking.
1. To put it simply, we should take a long-term view. What everyone discusses is how much the currency has risen today and how much it has fallen tomorrow, rather than how the currency will be in half a year or a year. You can take a look at the so-called "great gods" in the currency circle who have achieved financial freedom. Which one of them made money in three to five days? They all relied on time to persevere; allocate positions reasonably, focus on the long-term and supplement with the medium and short-term, and follow the short-term trend changes that you can see clearly!
2. Buy high and sell low
Chasing the rise and selling the fall is a mistake that almost every cryptocurrency investor will make. When they see a coin soaring and the whole world is discussing it, they buy it and are reluctant to sell it when they lose 10% or 20% after buying it. They hold on to it and wait for the day when they can get out of the trap. When it continues to fall and loses 50% or even 60% or 70%, they think that this coin is not good and sell it directly to the floor. Then they repeat this step again and again. There is really no good solution to the problem of chasing the rise and selling the fall. It is a psychological problem!
3. Lack of awareness
Many people don’t think before investing, and just believe what others say. Today, a big V says this is good, so they buy it immediately! Tomorrow, XX rumor says that the coin will rise, so they buy it too... As for what is good about this coin and why it will rise, they have no idea at all; it is unfair not to lose money with this kind of investment without thinking. We can use other people’s cognition as a reference when investing, but before that, we must establish our own cognition; no matter how powerful the KOL is, he will build a position first before letting you build a position, and he will remind you after he sells his position, so you can only carry his sedan chair!
4. Too impetuous
Impatience seems to have become the norm in the market. Many people enter this market with the mentality of getting rich overnight, but they are not prepared to return to zero, let alone the ability to get rich overnight! After buying a coin, they hope that it will rise after buying it: double in three days, 10 times in half a month... If the coin they bought does not rise in half a month, or even suffers a loss, they will start to find all kinds of excuses for themselves, and then curse, scolding the project party for not doing market value management, scolding the dog dealer for crashing the market, and blaming the big V for inaccurate predictions. I have seen too many stories of getting rich overnight in the market, and there are ten-fold and hundred-fold coins born around me almost every time period. I subconsciously regard the currency circle as a 100% sure win casino, and think that as long as I buy coins, I can make money, but I don’t regard it as a real financial market. Bloodthirstiness is the essence of the financial market!
5. Not learning. Previously, the media conducted a statistical survey on investors’ understanding of digital currencies. Among the 778 digital asset investors randomly selected, less than 10% could quickly and accurately describe “what is Bitcoin?” and only 17 people could accurately explain “what is blockchain technology?” Although the statistical data is very small, it is enough to explain the current situation of the overall investors in the currency circle. How can you have faith if you don’t even know what you are investing in? Without faith, how can you hold on to the lowest-priced chips or the best currencies? Learning is an eternal wealth. Only by continuous learning can you avoid being harvested.
6. Lack of sound investment philosophy
Most people do not have a complete investment plan before investing, and they just follow their feelings. This kind of investment method that relies entirely on intuition will definitely lead to a high probability of losing money if you encounter unexpected situations. Only by summarizing a set of investment strategies that suit you can we deal with various situations, whether it is rising or falling, we can treat it calmly. This can at least make our mentality invincible and avoid the influence of mentality on making wrong choices.
There is a big difference in the definition of short-term trading. Let me first share the level of trading.
The trading levels we commonly use are: 5 minutes, 15 minutes, 1 hour, 4 hours, daily, and weekly. Of course, there are also other time levels, such as 10 minutes, 30 minutes, 2 hours, 3 hours, 6 hours, 2-day line, 5-day line, etc. 5 minutes, 15 minutes, 1 hour, and 4 hours belong to short-term trading levels. This depends on the time you usually use. Short-term trading is short and changes quickly. You must leave the market at the same time you enter the market. You cannot confuse it. For example, if you do 15-minute trading, you cannot leave the market after entering the market based on the market trend of 1 hour, because there are 4 15-minute lines in 1 hour, and profit taking will occur if you look at 1 hour, or some people define short-term trading as intraday trading, which means that you can hold this transaction for a longer time, but you will leave the market before going to bed.
Therefore, the definition of short-term trading is different for everyone, just follow your own trading habits. There are two ways of short-term trading: oscillating market and breakthrough market. Short-term trading in oscillating market means trading back and forth in an oscillating range, going long at the bottom of the oscillating range and going short at the top. The short-term space of oscillating market is often not very large. Most short-term traders like to do oscillating market because this kind of market is relatively stable.
A breakthrough market is to do short-term trend trading. There are two ways to do a breakthrough market: one is to enter the market when the market trend is relatively strong. This is a left-side transaction. If a left-side transaction encounters a false breakthrough, the loss will be stopped. The other is to wait for the breakthrough and then retrace the volume before entering the market. This is a right-side transaction.
The first one has a bigger risk, the second one has a smaller risk and is more certain, but the disadvantage of the second one is that it is easy to miss out on opportunities. When I do short-term trading in a breakthrough market, I buy a part of it when there is a breakthrough, and then add to the position when it falls back and does not break the support. The advantage of this is that it reduces the risk and will not miss out on opportunities.
There are two important points to note when doing short-term trading:
The first point is being trapped; not setting a stop loss, and then being trapped all the way, and finally being forced to liquidate or cut losses.
The second point is to turn short-term trading into long-term trading; the original strategy was to do short-term trading, but due to lack of risk awareness, or confidence in one's own trading skills, one was trapped, and then constantly adding to the position in order to lower the average price, the result of this was greater losses.
No matter which type of short-term trading you do, you must put risk first. No matter how good the market conditions are, you must set a stop loss when entering the market. If you have the technology to understand the market and your own trading strategy, the risk is controllable no matter which method you use. If you do not have the technology to understand the market trend, do not have a trading strategy, or do not execute a trading strategy, the risk is uncontrollable.
I use the dumbest method of cryptocurrency trading. I rely on a 50% position to make steady progress, and my monthly income can reach 70%. I passed this unique secret to my apprentice, and he doubled his money in three months. I am in a good mood today, so I will share these valuable methods with you, remember to keep them!
1. Divide your funds into 5 parts, and only invest one-fifth of it each time! Control the stop loss at 10 points. If you make a mistake once, you will only lose 2% of the total funds. If you make a mistake 5 times, you will only lose 10% of the total funds. If you are right, set a take profit of more than 10 points. Do you think you will still be trapped?
2. How to improve the winning rate again? To put it simply, there are two words: follow the trend! Every rebound in the downward trend is to lure more buyers, and every decline in the upward trend creates a golden pit! Do you think it is easier to make money by buying at the bottom or by buying low?
3. Don't touch coins that have experienced a short-term rapid surge. Whether it is mainstream or copycat, there are very few coins that can go through several waves of main rise. His logic is that it is difficult to continue to rise after a short-term surge. When there is stagnation at a high level, it will naturally fall if it cannot be pulled up in the later stage. It is a very simple truth, but many people still want to take a gamble.
4. MACD can be used to determine the entry and exit points. If the DIF line and DEA form a golden cross below the 0 axis, once the 0 axis is broken, it is a steady entry signal. When MACD forms a dead cross above the 0 axis and then moves downward, it can be regarded as a signal to reduce positions.
5. I don't know who invented the term "covering a position", which has caused many retail investors to suffer heavy losses: many people cover their positions as they lose more, and the more they cover, the more they lose. This is the most taboo in speculation, which puts oneself in danger. Remember never cover your position when you are losing, but add to your position when you are making a profit.
6. Volume and price indicators are the first to bear the brunt, and trading volume is the buying soul of the circle. When the price breaks through with large volume at the low level of consolidation, we should pay attention to it, and when the price stagnates with large volume at the high level, we should exit decisively.
7. Only trade in the market with an upward trend, which will maximize your chances of winning and save time. If the 3-day line turns upward, it means a short-term rise; if the 30-day line turns upward, it means a medium-term rise; if the 84-day line turns upward, it means a major upward trend; if the 120-day moving average turns upward, it means a long-term rise.
8. Adhere to reviewing each game, check whether the currency holdings have changed, technically check whether the weekly K-line trend is consistent with the judgment, whether the direction has changed, and adjust the trading strategy in time!
If you are also a technology geek and are devoted to studying the technical operations in the cryptocurrency circle, you may wish to follow Gong Zhonghao (Chief Crypto Instructor), where you will get the latest market intelligence and trading skills;
How can we make stable profits in the cryptocurrency world?
1. Learn how to “not lose money” first, then talk about making money!
"In the cryptocurrency world, only those who survive are qualified to talk about profits." Newbies always want to go all in and make a hundred times the money, but veterans are studying "how to lose money slowly"
Stop loss is a life-saving talisman: if a single loss exceeds 3% of the principal, close the position directly, and don’t ask “what if it rebounds?” - In 2021, Moon fell from 1 million to 0.0001 dollars. How many people lost all their pants because of the phrase "value investment".
Stay away from leverage: Chen Xiao's story of using 20 times leverage to go from 70 million to 4 million is a bloody lesson. Remember Ding Hongbo's formula: leverage multiple x probability of liquidation = 100%.
1. Only make money within your knowledge, and other ups and downs have nothing to do with you. Before ORDI rose 10 times in 2023, I studied the 0rdinals protocol for three months and even read the GitHub records of Bitcoin core developers. Those who called me "idiot" dared to do so without even understanding the difference between NFT and BRC-20.
Build a circle of competence: only play projects that you understand (such as BTC/ETH), and the Shansai coin position does not exceed 10%.
Refuse FOMO: When others call for orders, you check the white paper; when others go all-in, you calculate the risk-return ratio. 3. Fund management is mathematics, and emotional management is philosophy. Position allocation:
Take Profit Strategy:
Sell half when it rises 50%, and sell half again when it rises 100% to hold the bottom position until the end of the bull market (refer to Tony's principle of "don't leave the market until the trend is broken")
Total position ≤ 30% (keep 70% in cash to buy at the bottom of the market)
Single currency <5% (to prevent being killed by monsters!
Counterexample: When Dogecoin skyrocketed in 2021, someone invested 100,000 yuan and rolled it up to 5 million yuan without taking profit. In the end, it fell back to 200,000 yuan and he cried and quit the circle.
4. Replace emotions with rules and replace luck with systems
Create a trading list:
1. Only buy the top 50 coins by market value
2. Open positions in batches only after a 10% drop
3. Stop trading for a week after three consecutive losses
4. Compound interest is the only holy grail, but 90% of people misunderstand it
Ding Hongbo has calculated: 30% annualized, 13.78 times in 10 years; 50% annualized, 57.66 times in 10 years. But the premise is: the maximum retracement ≤ 15% (otherwise 10 times of profit is not enough for 1 loss) only use profits to increase positions (the principal will never be moved) hoard coins in a bear market and sell coins in a bull market (anti-human operation)
Negative example: How many people relied on DeFi mining to earn an annualized rate of 500% from 2020 to 2022, but returned all of it to the local dog project in 2023
To say something offensive:
The secret to stable profits in the cryptocurrency world is just eight words: "Don't be greedy, don't pretend." Don't be greedy: Three times in three years? You deserve to be a leek.
Don’t pretend: If you make money, buy some secretly and don’t post screenshots on Weibo.
To sum up: There is no stable way to get rich in the business circle, only stable living. Tony has long revealed the secret: "People who live long will eventually get rich, but people who get rich may not live long.
To put it bluntly, playing in the cryptocurrency circle is a contest between retail investors and bankers. If you don’t have cutting-edge news and first-hand information, you will only be cut!
