Today, I will share a summary of my years of trading experience for free, hoping to help everyone. Of course, I will mainly provide an overview here. Depending on the reactions from my fans, if everyone feels it is necessary to elaborate, I will later publish three detailed articles to discuss these three points separately. The core can be summarized in three points:
First, position management. This is the most important thing! If you still haven’t realized the importance of position management, it’s like saying you haven’t left the beginner village yet. You are still in a pure novice stage! I have discussed position management in my previous articles and how I manage it. If you are interested, you can check it out again. Of course, I just covered it briefly, providing what I believe is the simplest, most effective, easy-to-learn method! It can be said that position management determines how long you can survive in the crypto space in the future!
Let me briefly explain here: before you open a contract, you must have thought about where to set your stop-loss, right? (Don’t tell me you haven’t even thought about where to set your stop-loss before opening a contract.) The size of the position depends on where you set your stop-loss. Think about it; if this trade hits the stop-loss, can you psychologically bear the loss? If you can’t bear it, it means your position is too large and needs to be reduced! If you can bear it, it means your position is just right! It’s easy to calculate this; you can do it quickly without thinking about what percentage of the position you should use. It’s time-consuming; many times, a good entry point is just a momentary thing!
Second, develop good trading habits, which includes several points:
1. Always set a stop-loss when opening a position; this is an ironclad discipline for contract trading. If you can’t adhere to this point, I advise you to just give your money to the dog house, saving everyone the trouble! Never have a mindset of taking chances by holding a position; even if you manage to recover from losses nine out of ten times, you might feel smug and think you can always recover. But just one time can wipe you out!
2. Maintain a good mindset; never get too emotional when trading. Don’t lose and immediately think about recovering the loss, leading to frequent operations; this is very dangerous. I’ve seen too many people lose a bit and then get emotional, trying to recover immediately, leading to reckless trades and ending up with zero overnight. This goes back to what I mentioned before: when you open a position, you should already know where to set the stop-loss. So if the stop-loss is hit, you already know the loss you will incur, which is something you should have thought about beforehand. So if the stop-loss is hit, relax your mindset, maintain a good attitude, and look for a good opportunity to fight again later.
3. Don’t have preconceived notions. If you know a bit of technical analysis, that’s good, but if you don’t, then you should definitely avoid preconceived notions. I’ve encountered too many people with preconceived notions: they think a certain asset will drop, believing that the market is intentionally pushing it up to squeeze shorts; or they think it will rise and refuse to believe it can drop. They hold on to their positions, convinced that it will rise because of all the positive news. This is typical of preconceived notions; to put it bluntly, it’s being stubborn. They won’t admit defeat even after losing. The market changes rapidly, and you can’t just think, feel, or believe something. When the market changes, our mindset must change in a timely manner! If you’re wrong, admit it, and stand straight after taking a hit!
Third, when trading contracts, you must pay attention to the risk-reward ratio! Many people do not have the concept of risk-reward ratio in their minds. If the first two points are key factors that ensure your longevity in the crypto space, then the risk-reward ratio determines whether you can make big money in the crypto market. Many people trade contracts blindly, without forming a system, relying solely on feelings, and they don’t leave themselves an exit strategy, swinging wildly between different strategies.
For example, my decision to trade depends on two things:
First, predicting the market direction through technical analysis. If I feel confident about whether the market will rise or fall, then I’ll trade.
Second, although my technical analysis isn’t very certain, for example, I’m bullish but not very sure, if the current price level looks good, I predict that the downside is limited while the upside is significant, and the risk-reward ratio is high, then I can still trade.
Either of these two conditions can suffice for me to trade; of course, it’s best if both conditions are met. Typically, I require a risk-reward ratio starting at 1:3 when I trade. For example, some time ago, I took a long position that wasn’t particularly certain from a technical analysis standpoint, but it was okay—about 70% confidence! However, I was focused on the very high risk-reward ratio, so I entered the trade, and by the time I exited, my risk-reward ratio reached 1:7. In other words, I made seven times my investment.
So later, if I use the same position to trade other contracts, I can afford to be wrong up to seven times without losing my principal. My margin for error has greatly increased. Therefore, my mindset when trading will be better, and with a better mindset, my accuracy in trading will improve. If out of these next seven trades, I just need one to be correct, then I’ve made a profit, and if two are correct, I earn even more. Moreover, my accuracy in market analysis is still very high.
So the risk-reward ratio must be given importance; it fundamentally determines whether you can make big money in the crypto space. Many people do the opposite: they take small profits and hold on to losses. Even if you’re right about the direction, you still won’t make money. You say you’re not losing; who is?
Opportunities arise; assets double! Follow Biao Ge closely and easily make big money.
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