The cryptocurrency market hides many seemingly simple yet cryptic maxims, all gained from the experiences of veteran traders through real investments. Whether you're a newbie just starting out or a seasoned player, thoroughly understanding and applying these maxims in practice can save you years of detours.
I. 9 Core Operation Maxims: Wait for the right moment to act.
1. Buy during sideways trading and dips, not during surges; the selling point is when the market is most feverish.
Meaning: You can buy during sideways consolidation, buy at the 'pits' formed after a drop (low point), but don't chase after a rapid surge; the selling point is when the market is most excited, and everyone is shouting about rising prices.
Practical case: In 2024, BTC consolidated between 38,000 and 42,000 for a month (sideways period), at which point the buying cost was stable; later it dropped to 35,000 forming a 'pit,' also an excellent buying point. And when everyone's social media is filled with news about 'Bitcoin breaking 100,000' (fever pitch), it's a signal to sell in batches.
2. Continuous small rises are genuine rises; continuous large rises mean to exit.
Meaning: A slow rise of 2%-5% daily indicates steady capital entering, which is real market activity; a rapid rise of over 10% for more than 3 days is often short-term speculation, and a pullback may occur at any time.
Note: ETH had a continuous small rise for 10 days from 1,800 to 2,200 in November 2023, later continuing to surge to 2,800; while a certain altcoin surged 50% for 3 consecutive days, followed by a direct crash of 40% on the 4th day, trapping high buyers.
3. A significant rise requires a pullback; avoid making large purchases without digging deep.
Meaning: A sudden rise of over 20% is likely to pull back; don't heavily invest in coins that haven't experienced deep declines (digging deep pits).
Operation: BTC surged from 50,000 to 60,000 (significant rise), don't rush to chase, wait for a pullback to around 55,000 before buying; and coins that have been stagnant at high levels without dropping, such as a certain platform coin that has long been around 20 dollars and has never fallen below 15 dollars (no deep pits), are not worth large capital entry.
4. When the main surge accelerates, it needs to reach a peak; sell quickly during sharp drops and sell gradually during slow rises.
Meaning: When the market enters a rapid surge phase (main acceleration), such as rising more than 10% daily, it's not far from the top; a sudden crash (sharp drop) means you should sell quickly, while a gradual increase can be sold in batches.
Example: SOL during the main surge phase in 2021 accelerated from 100 dollars to 250 dollars (150% increase in 3 days), followed by a crash to 100 dollars; while BTC slowly rose from 30,000 to 50,000, selling 10% of the position every time it rose 5% earned 20% more than selling all at once.
5. A sharp drop with no volume is intimidation; a gradual drop with volume means to withdraw quickly.
Meaning: A sudden large drop with no increase in volume (sharp drop with no volume) indicates the big player is scaring retail investors into cutting losses; a gradual drop with increasing volume (gradual drop with volume) shows that large funds are fleeing, and you must sell quickly.
Judgment: Look at the volume bars below the candlesticks; if there's a sharp drop with a volume bar similar to normal (no volume), there's no need to fear; if there's a gradual drop with increasingly thick bars (increased volume), decisively exit.
6. Don't hesitate to trade when the price breaks the lifeline.
Meaning: The 'lifeline' usually refers to the 60-day moving average. When the price stabilizes above the 60-day line, it indicates a trend reversal, and one can enter for a swing trade.
Usage: Open the candlestick chart set to daily, add the 60-day moving average indicator. When BTC breaks above the 60-day moving average and holds for more than 3 days, you can buy in batches and hold until it breaks below the 60-day moving average again.
7. Look seriously at the daily and monthly lines, and build positions alongside the main force.
Meaning: Use the daily line to observe short-term trends and the monthly line for long-term trends; combining both helps determine the main force's direction.
Technique: If the daily line is rising but the monthly line is still falling, it may be a short-term rebound; if the monthly line starts to rise and the daily line is also rising, it indicates that the main force is increasing positions, making it safer to build positions at that time.
8. If the price is attacking without volume, don't stand guard against the main player's bait.
Meaning: A price increase without corresponding volume (volume-contracted rise) indicates a false rise (bait), so don't chase; otherwise, you'll be standing guard at a high position.
Warning: A certain altcoin rose from 1 dollar to 1.5 dollars, but the trading volume was even smaller than usual, and then it fell back to 0.3 dollars, trapping those who chased high.
9. A decrease in volume at new lows is a bottom signal; an increase in volume during a recovery means to enter.
Meaning: A price making new lows while the volume shrinks (volume-contracted new low) indicates that selling pressure is quickly dissipating, possibly signaling a bottom; if volume subsequently increases and the price rises (volume-increased recovery), this is a signal to enter.
Case: In 2022, BTC dropped to 16,000 (new low) with trading volume much smaller than during previous declines (volume-contracted), then the volume increased and it rose to 30,000, making it a suitable time to enter.
II. Cryptocurrency K-line maxims: Understanding K-line to avoid pitfalls.
Candlesticks are the 'barometer' for judging price movements; these 5 maxims can help you quickly grasp buy and sell signals:
1. Don't sell if it hasn't surged, don't buy if it hasn't plunged, and don't trade during sideways consolidation.
Interpretation: Don't sell if it hasn't reached a key resistance level (surge), don't buy if it hasn't dropped to a key support level (plunge), and observe more and act less during sideways periods. For example, if BTC's resistance level is at 40,000, hold if it hasn't reached there; if the support level is at 35,000, don't buy if it hasn't dropped there.
2. Buy on dips, not on surges; sell on surges, not on dips; going against the market is what makes a hero.
Interpretation: Buy during a downtrend's bearish candle (buying on a pullback), not during an uptrend's bullish candle (chasing up); sell during an uptrend's bullish candle (selling into a rise), not during a downtrend's bearish candle (cutting losses). For example, if ETH rises 5% and shows a bullish candle, sell; if it drops 3% and shows a bearish candle, buy.
3. Consolidation at highs and lows, wait a bit longer.
Interpretation: When sideways trading at high or low levels, don't rush to act; wait until the breakout direction is clear. Sideways trading at high levels may lead to declines, while at low levels may lead to increases; trading during sideways periods can easily lead to losses.
4. After a period of sideways trading at high levels, if it surges again, seize the opportunity to sell quickly; if it consolidates at low levels and makes new lows, it's a good time to buy heavily.
Interpretation: A sudden surge after a period of sideways trading at high levels is the last chance to escape; a new low after a period of sideways trading at low levels often indicates a bottom, suitable for heavy buying. For example, BTC went from 60,000 to 69,000 (high surge) after sideways trading at 60,000 in 2021, followed by a crash; in 2023, BTC fell to 15,000 after sideways trading at 16,000 (new low), then rebounded to 40,000.
5. Acknowledging mistakes before entering is better; it's better to buy less than to buy too much. Invest cautiously!
Interpretation: Before buying, think about 'what if it drops,' and plan your stop-loss; it's better to buy less than to over-invest. Beginners are most prone to the mistake of 'going all in on the first buy,' leaving no room for maneuvering once the price drops.
These maxims seem simple, but they integrate trends, trading volume, and market sentiment. The key is not to memorize but to slowly comprehend in practice: for example, seeing continuous large gains immediately reminds you 'to leave the market on continuous large gains'; seeing a decrease in volume at new lows indicates 'to enter on a recovery'.
The core of making money in cryptocurrency is to combat a complex market with simple rules, using discipline to manage greed and fear. Keep these maxims on your phone, and when you don't understand the market, refer to them; perhaps you'll avoid a big pitfall and seize an opportunity. Remember, experienced traders don't avoid mistakes but rather make fewer mistakes — because they have turned maxims into reflexes.
In addition to solid techniques, I also strictly follow these 8 rules of warfare:
1. Don't panic after cutting losses: Trading contracts is inherently about leveraging small amounts for large returns, so experiencing losses is normal. After cutting losses, some may rush to open new positions, wanting to recover immediately; others may rationally pause and enter a cooling-off period. Take advice: if frequently cutting losses, don't get carried away; stop immediately, calm your thoughts, review strategies for loopholes, and rashly opening positions will only trap you deeper.
2. Abandon the desire for quick success: Trading is by no means a means for overnight profits. Once faced with losses, getting anxious and heavily investing is a common mistake for beginners. Remember, maintaining a stable mindset is key; wealth accumulation relies on slow and steady progress; being impatient won't yield warm tofu.
3. Follow the major trend: When a unilateral market comes, going with the trend is the iron rule! Both beginners and veterans easily make mistakes by trading against the trend, always hoping to 'catch the bottom or top,' and end up being severely punished by the market. Understand the market trend, patiently wait for opportunities, and only by following the big trend can you catch the right rhythm for profit.
4. Grasp the profit-loss ratio: If you want to make profits in contracts, the profit-loss ratio is the core 'checkpoint'; if this step is not done well, profits become an illusion. Ensure at least a 2:1 profit-loss ratio before opening positions to cover profit space and mitigate loss risks; don't engage in unprofitable transactions.
5. Quit frequent trading: Beginners especially need to be cautious! A slight market fluctuation leads to blindly opening positions, thinking there’s gold everywhere, but in reality, most are traps. If you haven't developed the skills of a master, controlling your hands and restraining impulses, trading less but more strategically is the path to survival.
6. Maintain cognitive boundaries: Only earn money within your understanding; this is an iron rule. Entering recklessly beyond your understanding is like a blind person trying to touch an elephant; the risks are completely uncontrollable. Deepen your knowledge, accumulate experience, and 'mine' in familiar areas for solid results.
7. Eliminate holding positions: Holding positions is like a 'death curse' for contracts; the first lesson for beginners is to learn to cut losses! Once the market moves against you, fantasizing and holding on will only lead to a snowballing loss, plunging you into an abyss; timely cutting losses is the way to stop losses.
8. Don't be impatient when profitable: Don't let profits float; if they float, something will go wrong. Arrogant soldiers are bound to fail; at this moment, one must remain calm, strictly adhere to trading discipline, operate according to strategy, and stabilize profit results.
I have seen Bitcoin drop from 30,000 to below 8,000 and altcoins surge back from the brink of zero to hundreds of times their value. In the early years, I could stare at the market for three days and nights without sleep; a 5% rise would make my heart race, while a 3% drop would make me want to cut losses, with account numbers fluctuating like a roller coaster. After three liquidation events, I slowly began to understand: the red and green movements on the candlestick chart are merely a battle between people's greed; when some are eager to snatch, others are ready to smash. The noise hides the old tricks of human nature.
Now watching the market is like watching a chess game in a teahouse; no matter how crazy the rises, I don't bother to calculate profits; no matter how severe the drops, I won't clear positions. Those concepts shouting 'disrupting the world' will mostly look like a different funding scheme in a couple of years; meanwhile, those old coins that were criticized as 'trash' have shown resilience to last until the end. There are no myths in the cryptocurrency world; some have learned to close their eyes amidst the noise, waiting to pick up shells when the tide recedes — those who rush to shore often get choked the hardest.