I have traded cryptocurrencies for 10 years, suffered for 4 years, and realized one thing: trading is simply about repetition. When you reach the peak, you will have an epiphany. Today, I want to share the trading trend charts with those climbing the mountain below, hoping that the following practical insights will help you understand the truth and essence of trading!
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After trading cryptocurrencies for so many years, I have come to understand one thing: trading is simply about repetition. When you reach the peak, you will suddenly realize. Today, I want to share the trend charts of trading with those climbing the mountain below, hoping that the following practical insights will help you understand the truth and essence of trading!
As the old saying goes, 'Without unexpected wealth, one cannot become rich; without night grass, a horse cannot grow fat.' I believe many people enter the cryptocurrency space with the intention of making a big profit and reaching the peak of their lives, but due to a lack of proper methods, they end up with losses. Consequently, many people begin their learning journey, such as buying books, researching, or seeking advice from experienced individuals.
Let's talk about what kind of person can truly master Bitcoin in the cryptocurrency space?
There are only two types of people: those with vision and those with insight.
(1) Visionary people can grasp the future's general direction; insightful individuals can seize current opportunities. I can responsibly tell everyone: you can only rely on continuous trial and error to learn from losses, take various detours, and gradually find your way.
(2) There are many ways to make money in the cryptocurrency market; some may not agree, but indeed, some people can profit. You may not have seen that their growth is completely the same as yours; without laying down a solid foundation in previous years, they will not meet the subsequent explosive period. Hence, any success is certainly not a coincidence.
(3) If you want stable profits, you must go through several years of a bottleneck period: spend half a year learning techniques, one year practicing execution, and a year and a half focusing on mindset. The most important thing during this bottleneck period is to minimize losses. If you are willing to spend time, energy, and summarize experiences, with a good mentor, you can go from substantial losses to great wealth!
One, About Returns
Assuming you have 1 million, when the return reaches 100%, your assets will reach 2 million. If you then incur a loss of 50%, it means your assets will return to 1 million. Clearly, losing 50% is much easier than earning 100%.
Two, About Price Movements
If you have 1 million and your assets increase by 10% on the first day to 1.1 million, then decrease by 10% the next day, your assets will be 990,000. Conversely, if you decrease by 10% on the first day and increase by 10% on the second day, your assets will still be 990,000.
Three, About Volatility
If you have 1 million, earn 40% in the first year, lose 20% in the second year, earn 40% in the third year, lose 20% in the fourth year, earn 40% in the fifth year, lose 20% in the sixth year, your remaining assets will be 1.405 million. The annualized return over six years will only be 5.83%, even lower than the coupon rate of a five-year government bond.
Four, About 1% Daily
If you have 1 million and can earn 1% daily before exiting, after 250 days, your assets can reach 12.032 million, and after 500 days, your assets will reach 145 million.
Five, About 200% Per Year
If you have 1 million and achieve a 200% return for five consecutive years, your assets will reach 24.3 million after five years, but such high returns are difficult to sustain.
Six, About Ten-Year Tenfold
If you have 1 million and hope to reach 10 million in ten years, 100 million in twenty years, and 1 billion in thirty years, you need to achieve an annualized return of 25.89%.
Seven, About Averaging Down
Assuming you buy a cryptocurrency for 10 yuan with 10,000 yuan, and now it has fallen to 5 yuan, if you buy another 10,000 yuan, your cost will be reduced to 6.67 yuan, not the 7.5 yuan you might have imagined.
Eight, About Holding Costs
If you have 1 million and invest in a cryptocurrency with a 10% profit, when you decide to sell, you can leave behind 100,000 yuan worth of chips, making your holding cost zero. After that, you can hold long-term without pressure. If you are extremely optimistic about this cryptocurrency and leave 200,000 yuan worth of chips, you will find that your profit will rise from 10% to 100%. However, do not get complacent, as if the cryptocurrency drops by 50% later, you may still incur losses.
Nine, About Asset Allocation
With risk-free asset A (annual return of 5%) and risky asset B (return -20% to 40%), if you have 1 million, you can invest 800,000 in risk-free asset A and 200,000 in risky asset B. Your worst return for the year will be zero, and the best return could be 12%. This is the prototype of the CPPI technique applied to capital preservation funds.
Summary of Practical Experience: The 'Secret Weapon' of Trading Strategies
After many years of experience in the cryptocurrency space, I have accumulated some practical trading strategies. The following rules are the crystallization of my personal practical experience.
Entry Section
Testing the waters in the cryptocurrency space, prepare to proceed cautiously; enter steadily and refuse to rush.
Consolidation Section
When there is a low-level consolidation creating new lows, it is the right time to accumulate positions; when there is a high-level consolidation followed by a spike, decisively sell without hesitation.
Volatility Section
Sell on spikes, buy on sharp declines; remain cautious during consolidations and reduce trading.
Consolidation indicates a horizontal trend; hold tight to your assets, and a rise may come at any moment. During rapid rises, be wary of crashes and be ready to secure profits. A slow decline is the perfect opportunity to average down.
Timing of Buying and Selling
Do not buy on spikes; do not sell on sharp declines; do not trade during consolidations.
Buy on bearish candles, sell on bullish candles; reverse operations can help you stand out.
Buy on a big drop in the morning, sell on a big rise in the morning; do not chase after high in the afternoon, buy on a drop the next day; do not panic sell on a morning drop, if it neither rises nor falls, take a break; add positions to recover costs, excessive greed is not advisable.
Risk Awareness Section
Calm waters may rise high waves; subsequent big waves may come; after a big rise, there must be a pullback; K lines show a triangle over several days.
In an uptrend, look for support; in a downtrend, look for resistance.
Overtrading is a major taboo; acting recklessly is not advisable; in the face of uncertainties, know when to stop and grasp the timing of entry and exit.
Trading cryptocurrencies is essentially about mindset; greed and fear are the biggest enemies. Be cautious when chasing gains and losses; a calm mind leads to freedom.
In addition to the rules, I have organized several highly practical trading methods that both beginners and experienced players can benefit from.
Oscillation Trading Method
Most markets are in a consolidation pattern; utilizing high selling and low buying within ranges is the foundation for stable profits. Utilize Bollinger Bands and box theory, combined with technical indicators and patterns to accurately identify resistance and support levels. Follow short-term trading principles and avoid greed.
Trading Method for Trend Breaks
After a long period of consolidation, the market will choose a direction. Entering after a trend change can lead to quick profits. However, one must have the ability to accurately judge trend changes, maintain a stable mindset, and avoid greed and fear.
Unidirectional Trend Trading Method
After the market breaks out of a trading range, it will form a unidirectional trend. Trading in the direction of the trend is key to profit. Entering positions during pullbacks or rebounds requires reference to K lines, moving averages, BOLL, trend lines, etc. Mastery of these tools allows for smooth trading.
Resistance and Support Trading Method
When the market encounters key resistance and support levels, it often faces obstacles or gains support. Entering a position at this time is a common strategy. Accurately judge resistance and support levels using trend lines, moving averages, Bollinger Bands, Parabolic SAR, etc.
Pullback and Rebound Trading Method
Large fluctuations followed by short-term pullbacks or rebounds present opportunities for easy profits. This is mainly determined by K line patterns; good market sense can help you accurately grasp high and low points.
Time-Based Trading Method
Morning and afternoon sessions with small fluctuations are suitable for conservative investors; although the time to profit from trades is longer, the market is easier to grasp. Evening and early morning sessions have large fluctuations, suitable for aggressive investors who can profit quickly but face higher risks and require strict technical and judgment skills.
I hope these experiences and insights can help you. Remember, in the cryptocurrency space, the most important thing is to maintain a calm mindset and strict operational discipline. Wishing you success in your future investments.
Bitcoin trading, large and small cycles determine entry points, profits multiply tenfold.
Previously discussed the entry point in the trading system, the choice of entry point is very important for trading.
Those with practical trading experience know that false breakouts can occur, or entry points may not be good, leading to excessive stop losses. In such cases, the only option may be to reduce the entry capital, resulting in smaller profits in a big market move.
Everyone needs to summarize their own entry methods; don't mention those who enter based on feelings.
I often use a combination of large and small cycles to find entry opportunities.
Since we are doing trend trading, the method must include trend judgment, and then choose the trading level based on your trading style.
Therefore, I recommend using large, medium, and small cycles for analysis.
1. Long Cycle: Determine direction and analyze trends, whether it is in a consolidation or a trend phase. Only trade during the initiation and continuation phases of trends, and wait during consolidations...
2. Medium Cycle: Operation Level, Holding Level
3. Small Cycle: Entry Level, Stop Loss Level
Choose large, medium, and small cycles based on your trading habits.
The following diagram reveals the method for combining large and small cycles. The common saying in the industry is to follow the large, counter the medium, and follow the small.
Understanding trading in cryptocurrencies follows a similar process: from losing 70% to breaking even and then to making profits, it is about staying focused and not getting distracted by various profit models. Firmly stick to one trading system, and over time, this system will become your cash machine.
I have been navigating the market for many years, well aware of its opportunities and traps. If your investments are not going well and you feel dissatisfied with losses, leave a comment with 999! I will share my insights.
