Eight important words in the cryptocurrency market: The market is the best teacher. Nine important words in the cryptocurrency market: Rationality, appropriate entry and exit, and having a strategy. Ten important words in the cryptocurrency market: Good mentality, no hesitation, and infinite learning. Adhere to these ten principles in cryptocurrency trading, and you will surely reap abundant rewards.
The cryptocurrency market is not a shortcut to sudden wealth, but a battlefield where few survive.
First, recognize the market: this is a world ruled by uncertainty.
The essence of the market is not a technical game but a high-complexity probability game.
You must accept -- no matter how sophisticated your strategy is, it cannot remain profitable in every environment. Any trading system claiming '100% win rate' is a scam.
What we can do is not to conquer the market but to adapt to it, using discipline to combat uncertainty.
Profits and losses stem from the same source: the way you make money determines the depth of your losses. Heavy leveraged bets: may double your investment but can also lead to zero. High leverage to capture rebounds: you may get a bite, but if you are wrong once, it can lead to immediate liquidation. Averaging down against the trend: sometimes it can rescue your investment, but in a one-sided trend, it's slow suicide.
Those who can truly survive as traders are those who repeatedly bet in a systematic manner within a 'probability advantage' -- earning more when correct and losing less when wrong.
Second, recognize yourself again: you are not a genius, nor are you a miracle worker.
Most people do not die in the market due to ignorance, but due to their own arrogance: being obsessed with predictions, attempting to capture all tops and bottoms, technical obsession with piling up indicators while ignoring position and risk control, and superstitiously attributing luck to their gains while blaming the market for their losses. Overconfidence: after making a few profitable trades, they think they are invincible.
Remember: Discipline > Skill, Execution > Inspiration, Stability > Stimulation.
Truly profitable trading is often boring.
Three, the underlying logic that ordinary people can also make money.
You do not need to be a genius; you just need to establish a replicable and sustainable trading system.
1) Capital management: Use only a small part of the total capital for each trade, start with light positions for trial and error, confirm trends before increasing positions, and ensure that the total position does not exceed 30% to retain flexibility.
2) Choose a cycle that suits you: Short-term: for those with strong market intuition and quick reactions; Swing trading: for those who can withstand fluctuations and ride trends; Long-term: for those who understand macro and fundamentals and have a better chance of success.
3) The trading system should be simple, executable, and replicable. Trend strategy: follow the trend, do not go against it; Swing strategy: buy low and sell high, with quick stop-losses; Arbitrage strategy: cross-platform price differences, small fluctuations for arbitrage, high winning rates but...
4) Stop-loss and take-profit must be mechanically executed. Set your stop-loss level before entering the trade, and cut your position when it hits that level. For taking profits, you can do it in batches; do not be greedy or fearful, just catching the middle of the trend is sufficient.
5) Emotional management: reduce the frequency of monitoring the market to avoid impulsive trading. Accept losses, do not double down after losing, and do not inflate after winning. Keep a trading journal, continuously review and optimize your system. Four, the key to truly surviving: mindset and compound interest.
The hardest opponent in the market is not the trends but one's own greed and fear.
What you should aim for is not 'tenfold in a year,' but stable annual returns + strict stop-loss + not being eliminated from the market.
Do not underestimate the act of 'surviving'; compound interest is the only way retail investors can compete with institutions: 30% annualized return yields 20 times in 10 years; 50% annualized return yields 57 times in 10 years. Doubling in the first year may lead to bankruptcy in the second year, resulting in a zero.
And if you accidentally incur losses --
Final advice: Do not aspire to be a 'legend'; aim to be a 'survivor.'
In the cryptocurrency market, legendary stories belong to a very small number of people; the vast majority of winners are ordinary people who manage to survive in a long market.
Make fewer mistakes, execute more, regularly review, and maintain rationality and patience.
The market is always changing, but the rules do not. Your only goal is to avoid being washed out in this turbulent sea. If you feel lost, consider saving this article as a starting point for your trading journey. It is not about becoming rich quickly, but about surviving at the table.
1. When the market crashes significantly, if your cryptocurrency only experiences a minor drop, it indicates that there are market makers protecting the price from falling. Such cryptocurrencies can be held with confidence, as future gains are certain.
2. For beginners trading cryptocurrencies, there is a simple and direct method: Look at the 5-day moving average for short-term trades; as long as the price is above the 5-day line, hold it, and sell once it drops below. For medium-term trades, look at the 20-day moving average; if it is above the 20-day line, hold it, and exit if it drops.
The best method is the one that suits you; the key is to stick to its execution.
3. If the primary upward wave of the cryptocurrency has formed and there is no significant volume increase, buy decisively. Continue to hold during a volume increase, and hold even if there is a decrease in volume but the trend has not broken; if there is a volume drop and it breaks the trend, quickly reduce your position.
After a short-term purchase, if the cryptocurrency price does not move within three days, sell if possible.
If the price of a cryptocurrency drops after you buy it and your losses reach 5%, cut your losses unconditionally.
5. If a cryptocurrency has dropped 50% from a high and continues to decline for eight days, it indicates that it has entered an oversold state, and a rebound may occur at any time. Consider following up on this.
6. When trading cryptocurrencies, choose leading coins, as they rise the most when they go up and are the least likely to drop when they fall. Do not buy just because the price has dropped significantly, nor refrain from buying just because it has risen a lot. The most important thing about trading leading coins is to buy at high points and sell at even higher points.
7. Trade in accordance with the trend; the price at which you buy should not just be the lowest possible but the most suitable. Do not easily call a bottom during a downturn; give up on poorly performing cryptocurrencies. The trend is the most important.
8. Do not let a moment of profit make you reckless. Understand that sustainable gains are what matter.
That is the hardest part. You must conduct a serious review and see whether your profits are due to luck or skill. Establishing a stable and suitable trading system for yourself is the key to continuous profits.
9. Do not force trades without sufficient confidence. Being in a cash position is also a strategy; learning to hold cash is important. The primary consideration in trading should be capital preservation, not profit. The competition in trading is not about frequency but about success rates.
Ironclad rule of trading cryptocurrencies:
First, for situations that are complex and unclear, do not rashly enter; pick the soft ones first, and trading cryptocurrencies is the same.
Second, do not invest all your money in the same cryptocurrency at once, even if you are very optimistic about it. Even if it later proves to be the right choice, do not invest all at once. Because the market is unpredictable, and no one knows what will happen tomorrow.
Third, if you mistakenly buy a cryptocurrency in a downward trend, you must sell quickly to avoid further losses.
Fourth, if the cryptocurrency you bought has not yet lost value but has entered a downward trend, you should also quickly exit and observe.
Fifth, for cryptocurrencies that are not in an upward trend, it is recommended to pay less attention. No matter what happens in the future, do not accompany the main forces in building positions. Retail investors do not have time to waste with them.
Sixth, do not fantasize about making money while continuously engaging in short-term trades every day. Frequent in-and-out trades may give you a sense of excitement, but they will cost you a lot of money, with the only benefactor being the exchange, and you won't reach such high levels.
You are not the market maker. Do not buy too many cryptocurrencies; it is best not to exceed ten. You do not have the energy to monitor them all. It's like wanting to marry five wives; even if you are in good health, you won't be able to satisfy them all. The story of Wei Xiaobao only happens in novels.
Seventh, just because a cryptocurrency is cheap now and has dropped a lot does not justify your reason to buy in. It can always drop even lower!
Eighth, just because this cryptocurrency is very expensive and has risen a lot does not justify your refusal to buy or sell. It could rise even higher!
The three thresholds of life and death for ordinary people entering the cryptocurrency market.
I have seen too many stories of overnight wealth in the cryptocurrency market, but only two types of people can truly change their fate.
The cryptocurrency market indeed has open windows, but 99% of people are on the wrong ladder.
You have surely seen stories like this: a college student turns 5000 yuan into tens of millions, an unemployed uncle makes a comeback through DeFi. But no one tells you that behind these survivors lie three deadly rules:
1. Only with money that you wouldn't feel sorry to lose can you aim for hundredfold returns.
I know true reversal players whose initial capital did not exceed 30% of their monthly income. Conversely, those who gamble by mortgaging houses and cars cannot even afford the gas fees during the 312 crash, watching NFTs drop in value helplessly. Those who dollar-cost averaged during the bear market are now in Sanya, while those who chased prices during the bull market are still delivering takeout. In 2020, I created a 'Bear Market National Currency Party' group with the rule of discussing the market only on Thursdays. As a result, last year, when I opened the group, 5 out of 7 members had retired early. Meanwhile, in another group focused on 'technical analysis,' 80% of the members had experienced more than three contract liquidations.
2. It is not code that changes fate, but the information gap.
During the lockdown in Shanghai last year, a vendor at a vegetable market made more profit exchanging USDT for vegetables for her neighbors than selling three years' worth of cabbage. She had no understanding of TVL+ or hash rates, but she knew that the wealthy women in Jing'an District were afraid of starving and were willing to pay 20% more to exchange stablecoins for groceries.
Three gates of life and death for ordinary people
1. Cognitive tax (every story of sudden wealth pays an intelligence tax)
"Bitcoin will reach $100,000" and "the state will soon ban it" are essentially the same FOMO emotions. I have seen the most tragic brother, who in 2021 believed "Filecoin will replace Alibaba Cloud," and exchanged his house down payment for FIL, and now he is constantly chased by his fiancée.
Liquidity trap
Last year, when a certain meme coin surged, a group member made enough profit to pay for a down payment at its peak. However, the exchange suddenly 'maintained' for eight hours, and after the price plummeted, he couldn't even afford toilet paper in his account. The cruelest truth of the market is that paper wealth is only real money once it can be cashed out.
2. Survivor's curse
I had an early disciple who made his first pot of gold on Dogecoin, and now he scorns 'technical analysis is all crap.' As a result, last year he lost all his profits from five years in just three days due to AI involvement in Luna. The scariest part of the cryptocurrency market is not going to zero, but that those who made quick money can no longer look down on practical efforts.
Cryptocurrency market risk warning: Risks are eternal.
Someone once asked Livermore: With your extensive experience, how do you still allow yourself to do such foolish things?
Livermore said: It's simple; I'm human and have human weaknesses. Like all speculators, I sometimes let my impatience cloud my judgment and impair my good decision-making.
In my view, the cryptocurrency market is a place where one must compete against the market, even at a loss. Your profits come from others' losses, and your happiness is built on others' pain. This is an anti-human battlefield. Why is it so difficult to make money in the cryptocurrency market? The difficulty lies in the challenge of breaking free from the shackles of human nature, which can be summarized as the five poisons of Buddhism: greed, anger, ignorance, arrogance, and doubt.
It is precisely because of the existence of the five poisons that we can profit in zero-sum games. If all cryptocurrencies were correctly priced, it would mean that every participant is devoid of humanity. Then the market would have no arbitrage opportunities, and there would be no speculative market. The true masters of speculation are not only adept at controlling their own human nature but also excel at leveraging the dynamics of the masses. Therefore, refining one's character is crucial for market operations. In the cryptocurrency space, it serves as the best test and training ground for human nature. Each of us will inevitably expose our human flaws in investment trading; below are the five most common types of investment personality disorders, for you to reflect on your shortcomings.
Five major personality traits that lead to failure in the cryptocurrency market
1. Gambler type
Gained from clubbing with models, lost and went back to work. Each of us is a gambler because gambling is human nature. Throughout human history, regardless of the oppression faced, the demand for gambling has never changed.
The cryptocurrency market may not be a casino, but it must be admitted that most people's speculative methods in this market are essentially akin to gambling. Losing money often starts with winning, and after unexpectedly gaining profits initially, gamblers become overly confident. After facing a collapse, they attempt to recover their losses, at which point their bets become larger, disregarding everything to recover their original investment.
Wanting to win after winning, trying to recover losses after losing, waiting for rebounds when trapped, fearing missing out, chasing highs and selling lows, etc., are all gambling mentalities. Setting a virtual target in your mind, completely ignoring the current market trends, and operating based on your greed, fear, and hope. Why is fortune-telling sometimes so accurate? Because what determines a person’s so-called 'fate' is habit, the inertia of behavior, and karma. Karma forms the cause of an event and is also the result of that event; it is a process from cause to effect. Entering the market with a gambler's mentality (cause) already pulls you into the web of karma, making a tragic outcome (effect) inevitable.
2. Stubborn donkey type
Hold on, the team is doing their job. The most typical behavior of a stubborn person is to hold on till the end, especially in the face of significant losses during a market crash. Minor fears lead to panic, and major fears lead to paralysis; the bigger the drop, the more they hold on. For example, a friend in my group faced a market crash and didn't cut losses in time, resulting in a total loss of a million assets. I was curious at the time and asked why he didn't cut losses sooner; he said that after seeing the massive loss, his mind went blank, and he was completely stunned.
People have a stronger emotional response to results due to actions taken than to results from inaction. Therefore, people often choose not to act out of fear of regret. What if I sell now and it rebounds? Wouldn't I regret it more? Hence, they stubbornly hold on. Another aspect is that position size determines mindset; they fall in love with the project. After buying a cryptocurrency, they automatically filter out negative news about the project and changes in market trends. They refuse to listen to any advice and selectively seek information to validate their so-called truths.
Is the market still afraid of the stubborn? The main forces love these stubborn individuals.
3. Sudden wealth type
It is undeniable that the vast majority of people enter the cryptocurrency space attracted by the wealth effect, including myself. There is nothing wrong with becoming wealthy, who doesn't want to achieve a leap in class through investment? What truly harms people is the fantasy of changing one's destiny through sudden wealth, and market gains do not come from mere imagination. Overemphasizing money itself makes it difficult to cut losses when losing and even impossible to hold on when making profits.
Those with a mentality for sudden wealth often exhibit the following three traits:
In terms of selecting cryptocurrencies, they tend to prefer small-cap altcoins because the market generally believes that small coins have more explosive potential. However, the fact is that explosive dark horse cryptocurrencies are extremely rare, and 99% of cryptocurrencies, when compared to Bitcoin, show a continuous downward trend.
In terms of risk control, those with a sudden wealth mindset tend to have small capital, making it difficult to talk about allocation and diversification of risk. They often buy in full positions, greatly affecting their investment mindset. A slight drop in net value causes significant psychological pressure on the investor, resulting in frequent operations that resemble a fan oscillating back and forth, making them easy prey for exchanges.
In terms of profit-taking, there is almost no concept of taking profits; 'just one more rise, then sell' often leads to missing the peak at crucial moments. This is also the reason why many individuals who became wealthy during the 2017 bull market fell back to the bottom or even worse afterward. Greed is endless; the word 'greed' is close to 'poverty,' and the word 'greed' is almost 'burning.'
4. Zhao Kuo type
Knowing so much, yet still losing money. After losing money, most people turn to learning to enhance their understanding, reading books, and enrolling in courses. They believe that knowing more makes them better, often sharing insights in forums but privately losing terribly. Why? Because they mistakenly think "analysis = prediction = trading."
However, analysis and trading are completely different things. Analysts adhere to the philosophy of making every prediction as correct as possible and love to exaggerate analytical skills, belonging to the theoretical school. Traders, on the other hand, never predict future trends; their focus is on studying price distribution characteristics and establishing orderly trading rules from a chaotic market. Investment is not pure theoretical research; the market is the market, just like a battlefield. Many people can analyze but cannot trade; in other words, their trading systems are fuzzy. They only see the trend but do not know how to buy and sell, and often cannot even control the most basic psychological fluctuations.
The saying 'those who can talk can't do it, and those who can do it can't talk' likely encapsulates this principle. Do not strive to be an analyst; instead, work hard to become a trader.
Bottom-fishing law: When a strong cryptocurrency has fallen for nine consecutive days, this is likely an excellent bottom-fishing signal. At this point, do not hesitate; take decisive action. Such consecutive declines often lead to genuine investment opportunities, known as 'golden pits.' In the cryptocurrency market, significant corrections are sometimes the best opportunities to acquire low-priced assets, seizing such chances lays the foundation for future wealth growth.
Profit-taking rule: If the cryptocurrency you hold rises for two consecutive days, you must consider reducing your holdings to lock in profits. The market is unpredictable, and there is no myth of perpetual rise. Timely securing already gained profits is the most practical approach. Avoid missing the best profit-taking opportunity due to greed, as it may lead to profit loss.
Signal for a price surge: When a cryptocurrency experiences a 7% increase, this is merely the beginning of the market trend. Generally, the next day, the cryptocurrency will continue to rise due to inertia. Therefore, investors should closely monitor the market and should not rush to exit. Patiently waiting for further price increases can yield larger profits.
Trend code: For cryptocurrencies with long-term upward potential, the end of a pullback is the best entry point. In cryptocurrency investments, it is essential to reject the blind chase after rising and killing trends. Patiently wait for the market to pull back adequately; entering in line with the trend is like waiting for the wind to come, allowing you to easily catch the ride of wealth growth.
Market reversal warning: If the price of a cryptocurrency remains flat for three days, further observation is necessary. If it continues for six days without a breakthrough, investors should decisively choose to switch positions and not fall in love with the battle. A prolonged period of flatness without a breakthrough often indicates that the market may soon experience a reversal, and timely adjustments in investment direction can effectively avoid risks.
Stop-loss iron rule: If the cryptocurrency you bought does not return to cost the next day, you should clear your position and exit immediately. In cryptocurrency investments, stop-loss measures must be decisive and resolute. Once you find the investment direction wrong, you must swiftly cut your losses. Hesitation often leads to greater losses; strictly executing stop-loss strategies is essential to maintain strength in the market.
Continuous rise law: When a cryptocurrency rises for three consecutive days, it often indicates that there may be a five-day rising trend to follow. On the fifth day, investors should take profits. In the cryptocurrency market, knowing when to sell is the key to successful investment. Accurately grasping the timing of selling can maximize profits.
Volume-price scripture: When a cryptocurrency shows a breakout with increased volume at a low point, this is a clear entry signal. The increase in trading volume indicates active market participation, and prices are expected to continue to rise. Conversely, if there is a surge in volume but stagnation at a high point, this is a strong alert to exit. At that time, investors should decisively leave the market to avoid falling into the trap of declining prices.
Moving average strategy: In technical analysis, the 3-day line can be used to judge short-term trends, the 30-day line can help observe mid-term trends, the 80-day line is often related to primary upward waves, and the 120-day line can serve as a reference for long-term investments. Investors should choose cryptocurrencies whose moving averages show an upward trend for investment, following the trend not only achieves steady profits but also avoids fatigue and risks associated with frequent operations.
Reversal mindset: Even with a small amount of capital, significant returns can be achieved in the cryptocurrency market. The key lies in refusing to be influenced by FOMO (fear of missing out) and strictly adhering to trading discipline. Persistently learning and practicing every day to improve oneself by 1% in investment knowledge and skills, creating miracles of wealth growth through the power of compound interest.
Even the most diligent fisherman will not go fishing in a storm; instead, they will protect their boat well. This season will pass, and sunny days will come! Follow me to teach you both fishing and how to fish; the door to the cryptocurrency market is always open. Acting in accordance with the trend allows you to have a life that flows with the current; save this in your heart!
