1. Not setting a stop-loss leads to short-term trades becoming intermediate, and intermediate trades becoming long-term. As a seasoned investment professional, I am frequently asked, 'What is the most common mistake investors make in the market?' My answer is not having timely and rapid stop-losses. The dual-direction investment system, due to its leverage effect, amplifies both profits and losses. The consequences of not setting timely stop-losses are often extremely severe. The same goes for cryptocurrency markets; we all know that in cryptocurrency trading, our most valuable asset is our investment capital. Capital is like ammunition on the battlefield; without it, failure is certain. We must always pay attention to protecting our capital and not allow losses to expand without limit. Many people hope, pray, and dream of finding a perfect trading strategy that yields complete profits without the need for stop-losses. In short, regardless of the field, such a perfect method for making money is impossible. Successful trading strategies, like successful living, are not achieved by avoiding losses but rather by controlling losses effectively.
Changing time frames is also a common mistake in cryptocurrency trading. The so-called change of time frame is a form of not setting stop-losses and not admitting mistakes. It occurs like this: a trader buys a contract intending to gain a good short-term profit, but the market does not move as they expected. Instead of selling within the designated short-term time frame, this investor decides to hold the contract and switch to medium or long-term investment. This is merely an excuse to avoid setting a stop-loss. Such changes in trading time frames will inevitably lead to disaster, and setting stop-loss is our only way to prevent such disasters.
2. If you do not pay attention to capital management and do not control your position size, participating in cryptocurrency trading with your hard-earned money is no different from investing in a convenience store near your home. If a small convenience store owner came to you for investment in his store, how would you consider whether to invest or not? How much would you invest? Would you make a snap decision like when trading cryptocurrencies? The so-called capital management is about solving the questions of whether to invest and how much to invest. The advice for beginners is to divide the capital into six parts, investing only one part each time. As your experience grows and your investment accuracy improves, gradually increase your position size. However, at no time should the holding of any one asset exceed fifty percent of your total capital. Otherwise, if a mistake occurs, it will be very difficult to recover. For example, if you have one hundred thousand yuan and lose fifty percent in one go, you'll have only fifty thousand left. To earn back one hundred thousand from fifty thousand, you need to gain a hundred percent. Anyone with a basic understanding of math knows that a hundred percent gain takes much longer than a fifty percent loss. A survey in the U.S. capital management field once found that the most important factor for a fund's long-term success is not when or at what price to enter the market, but rather how much the fund has bought. This is what is often referred to in the investment community as capital management. If you do not pay attention to capital management methods in cryptocurrency trading, you will never reap the final rewards. Personal experience summary:
1. Plan your capital rationally for cryptocurrency trading, ensuring you have resources at hand and remain calm!
2. Do not trade emotionally, do not let profit cloud your judgment, and avoid placing blind orders.
3. Develop a good trading plan and follow the market.
Trade large positions for trends, small positions for swings, and control your ratios well. When trading against the market, use small positions and set stop-losses; when trading with the trend, increase your position but commit to it. There is no such thing as a trading strategy that doesn’t yield profit; only operations that fail to make money exist. Trading is a test of the correct mindset! I wish all cryptocurrency friends can find their own trading methods and earn steadily.
From tens of thousands to tens of millions! The following three points must be mastered.
Continuing to talk: If you accomplish these three points in the cryptocurrency world, it will be hard to lose money in the future!
First point: Do not check market comments after placing an order.
There are always two kinds of voices in the market; one tells you the market will fall; the other tells you it will rise. There is never a day when the market has a unified bullish or bearish outlook. If that were the case, there would only be one type of person in the market—either everyone is making money or everyone is losing money, which does not conform to market laws. Therefore, after placing an order, do not think about how others are commenting on the market's ups and downs, because such contradictory opinions will shake your basis for placing orders, leaving you unsure whether to continue holding your position or exit early. Perhaps seeing others exit like you will give you confidence that you will definitely make a lot of money, but when the directions are inconsistent, you will feel particularly anxious and may make wrong judgments and decisions in that tense state!
True investors, upon capturing trading signals, do not care about market fluctuations but strictly follow their trading plan to execute the trade!
Second point: Do not fail to set stop-loss after placing an order, leading to locking positions after losses.
Everyone knows that investment carries risks, and there is no such thing as a 100% guarantee. Therefore, when placing orders, one must formulate strict stop-loss rules. Setting a stop-loss requires great courage; many people refuse to admit defeat, believing their judgment is correct. Admitting defeat would lead to significant losses. However, the market will never show you any sympathy. After making a wrong decision, you should immediately protect your capital. What is even more troubling is locking positions; many people can relate to this. Locking up, then unlocking, only to lock up again, fearing losses if they exit short, or worrying about missing out on gains if they hold long. Locking positions is not merely about money lost; it also brings immense psychological pressure and pain.
Third point: Do not easily increase your position after placing an order.
Many people like to keep increasing their positions, charging ahead with orders. Remember not to increase your position after the direction goes against you; wait for the next opportunity to enter. If you keep increasing your position, your stop-loss will inevitably shift, and moving the stop-loss will only increase your losses. Some may say that after being stopped out, the market moves in the direction they initially wanted. In that case, one must patiently wait for the right entry point, as getting stopped out often feels unjust and frustrating. However, have you considered that such stop-outs usually happen because the entry point wasn't well grasped or the stop-loss wasn't set appropriately? Of course, if your trading plan is very thorough, appropriate position increases are feasible. Yet, once you discover your trading plan has gone wrong, you must strictly enforce stop-loss and exit.
Successful investors do not rely on luck; only by respecting the market, fearing the market, following the market, and strictly adhering to trading discipline can one survive. When trading, do not be one-sided. We must firmly grasp opportunities to minimize losses and maximize gains, discarding the mindset of being overly concerned with gains and losses to remain undefeated in the market.
A thousand words can’t compare to a single profitable trade; repeated battles and defeats are not as good as taking a bold risk! Frequent operations are not as good as precise trades; make each trade valuable. What you need to do is find me, and what I need to do is prove that my words are not empty. May our acquaintance begin with words, align with character, be bound by skills, endure through kindness, and ultimately, be based on integrity.
The market is ruthless, so we must hone our skills to survive! Success is not accidental, and opportunities are reserved for the prepared. A skilled navigator who excels in combining short and medium-term arbitrage is here; regardless of future market conditions, I will accompany you on this journey in the cryptocurrency world.
