I have traded cryptocurrencies for 10 years, going from huge losses to great wealth! I have summarized these trading maxims, short yet practical. If you want to survive long-term in the cryptocurrency space, this article is worth reading carefully. After reading it, you will feel instantly enlightened!
Success is never accidental; every successful person has gone through numerous trials and has taken each step with care. It cannot be denied that some people are born geniuses, but such individuals are very rare, neither you nor I are among them.
Most people, after experiencing failures repeatedly, gradually tend toward perfection. It is precisely these experiences of failure that teach many lessons that cannot be understood through shortcuts.
A common saying is that there are no good opportunities; in reality, opportunities are reserved for those who are prepared. Only when opportunities arise can one be ready to seize them. Waiting passively like a hunter waiting for prey leads to either missing the opportunity or failing to grasp it.
After years of trading cryptocurrencies, I found that those who can achieve stable profits are all 'foolish people.'
Can you believe it? Those who have lived the longest and earned the most steadily in the cryptocurrency space are never the 'smart people' who watch the charts every day, but rather a group of 'stubborn old-timers' who stick to simple methods.
In recent years, I have seen too many stories of liquidation: some people stare at the candlestick charts for three days and nights without sleep, and end up making a massive bet that leads to liquidation; others follow so-called 'insider information' to chase highs and sell lows, ultimately wiping out their accounts. They do not lack skills; rather, they fall victim to three fatal habits.
Chasing highs and cutting losses is the biggest pitfall. When seeing a coin surge, one may become blinded with greed, fearing missing out on a hundredfold opportunity, only to find themselves stuck after entering; when the price crashes and panic ensues, they become scared and cut their losses, completely missing the rhythm. The true cyclical dividends always belong to those who engrave 'buy the dip, sell the rally' into their bones.
Heavy bets are more dangerous. One always thinks that if they are sure of the direction, they can become rich overnight by betting all their funds on a single coin. However, if the major player decides to shake the market, a slight fluctuation can lead to forced liquidation, leaving no chance for recovery.
Full position trading is the easiest way to lose control. When the market fluctuates, emotions go out of control, and one wishes to invest all their assets. Even if they correctly guess the big trend, they cannot flexibly adjust their positions and watch better opportunities slip away.
Ultimately, the cryptocurrency space is not about who can predict better, but rather about who can control themselves. I have summarized a set of 'anti-human nature operation guidelines' that are simpler and more effective, but few can adhere to them.
Never act rashly during a sideways market. Do not rush to exit during high-level consolidation, and do not blindly buy at low-level sideways markets. Before a trend change signal appears, staying put is the best action.
Enduring during fluctuations is the key to winning. Most people lose patience during sideways consolidations, and frequent trading leads to losses. Remember, the longer the sideways movement, the more violent the trend will be once it forms.
Follow the daily sentiment. Buy in batches when the daily candle closes bearishly, and gradually sell when it closes bullishly. This is much more reliable than relying on your own guesswork.
Understand the rhythm of the downward trend to find opportunities. Coins that are dropping slowly tend to have limited rebound space; those that drop quickly and sharply may have urgent rebound opportunities. The key is to grasp the rhythm.
The pyramid trading method must be used. Enter in batches; the higher the position, the smaller the size. Always leave yourself some bullets to deal with unexpected situations.
Wait for signals after a large rise or fall. After sharp fluctuations, consolidation is inevitable, and once consolidation ends, a trend change is certain. Do not go all in at highs, and do not clear positions at lows; wait for clear signals to act.
The cryptocurrency market is never short of opportunities; what is lacking are those who can stabilize their mindset, endure until opportunities arise, and survive long in the market. If you achieve these, you will find that trading cryptocurrencies is not that difficult.
What should beginners in the cryptocurrency space pay attention to?
If you plan to invest in the cryptocurrency space, please make sure to spend a few minutes.
It stems from the pursuit of an unattainable dream of making a fortune in the cryptocurrency space.
I think if I really want to continue down the path of trading, I still need to study hard. In addition to understanding the basics, there should also be research on news analysis and technical indicators.
If one does not conduct in-depth research and reasonably plan to manage their finances, the funds will only be depleted over time. In the end, as a rootless retail investor, one can only joyfully enter and then leave in disappointment.
Some well-known technical indicators have endured over time for a reason. For example, the divergence signal in MACD, the overbought and oversold signals in KDJ, support and resistance signals, etc. Although they do not guarantee profits, they allow for quantitative analysis in a relatively mature model, providing investors with a basic direction.
First, we need to know under what circumstances rolling positions are appropriate:
Currently, only the following three situations are suitable for rolling positions:
1► Choosing a direction after a long period of low volatility sideways movement
2► Buying the dip after a large drop in a bull market
3► Breaking through major resistance/support levels on a weekly chart
In general, only in the above three situations is the probability of success relatively high; all other opportunities should be abandoned.
Still, the saying holds true: bulls have their strategies, and bears have their ways of playing.
Unity of knowledge and action in trading
Unity of knowledge and action means that your thoughts and strategies must align with your actions, which is actually very difficult to achieve. I often like to use the phrase 'the struggle between thought and action' to describe the conflict during trading.
If one can persist in this point for the long term, it is a breakthrough. In fact, many people analyze the market correctly and thoroughly, but in the end, the trades they make result in losses because their actions do not align with their thoughts.
Another situation is when one is uncertain about market trends. When one's viewpoint is very uncertain, it is best not to make trades. Why? It is quite simple; if you do not even believe in yourself, it is difficult to achieve good results. Many people initially choose to take a gamble or ask others how to operate. This reminds me of a friend's saying: 'Gambling is wrong; not gambling is missing out.' This saying is indeed very reasonable, but I countered him at the time, saying that in this market, I would rather miss out than make a mistake.
Therefore, at this time, it is best not to gamble—neither long nor short. In fact, many people cannot stop themselves; as long as the market is moving, they want to make trades. This issue is quite common. Thus, the simple principle of 'watch more, act less' has eliminated a group of people. If you keep making trades, there are three groups of people who will like you (people from exchanges, futures companies, and your brokers). I believe that the more frequently an investor trades in this market, the shorter their lifespan will be; compared to the other party, it is entirely detrimental.
The above also includes a situation where one asks others for opinions when they are uncertain about the market to make a decision. First, this question should clarify that this order is not placed based on your subjective judgment, but it is indeed placed by you. At this moment, you might think, 'Everyone else is doing it, so it should be fine for me to do it too.' This is a significant issue—it's a world apart.
Why? First, in others' minds, this order is usually planned with contingencies for what to do if things go wrong or how to take profits if things go right. In your own mind, however, there may be no strategy at all. Therefore, once faced with abnormal situations, you start to panic and have no idea where to begin. Even if you are correct, do you know when to take profits? In your subconscious, there may be no concept of taking profits, only the concept of when others will close their positions.
At this time, due to one's own capital and position, the mindset is different from others. Therefore, the strategies to be employed are vastly different. Another common issue among some traders is that they know what their own viewpoint is but still ask others how they see the market. This can lead to the following negative phenomena:
Your views and direction are likely similar to his.
The two people's thoughts are completely inconsistent.
The former is okay; both can feel pleased (but it may also foster their greed). The latter is troublesome; for example, when others' analyses seem more accurate and comprehensive than one’s own, one may begin to doubt their judgment, leading to confusion in thought.
At this time, making trades lacks a broader perspective and can be very limiting. Therefore, I personally think that while discussing the market is necessary, it should be context-dependent. It is better to communicate more about mindset and share past mistakes rather than discussing how to view future markets. I believe that discussing how to view future markets is of little significance; who knows what the future market will be like?
What we need to do is not to predict how accurate the market is, but rather to determine what strategy to use when the market is unfavorable to us. When the market is favorable, making money is a natural outcome. Therefore, if the strategy is well-prepared, you do not need to be overly worried or mysterious about analyzing the market. Personally, I believe that trying to predict the market is an unrealistic behavior.
The four mindsets that successful cryptocurrency traders should have
Do not be arrogant and complacent when making profits: an arrogant person often ends up destroying themselves in their pride. During the process of investment and financial management, if a person becomes arrogant due to making a profit, they will inevitably face a day of losses. The reason is that arrogant people tend to disregard the opinions and suggestions of others after achieving a little success. Even when the market changes, they stubbornly believe in themselves, thinking their decisions are correct, while also neglecting risk prevention, which can ultimately lead to losses.
Do not rush to recover when experiencing losses: making profits and incurring losses are normal phenomena in trading cryptocurrencies. After discussing profits, let’s talk about losses. Profits may make some people arrogant, while losses can ignite the desire to recover within many people. However, recovering losses must also consider timing; if one rushes to recover, it can lead to irrational decisions. For instance, some people, eager to recover, may place all their trading funds on a coin that seems to have a promising outlook. However, the market is inherently unpredictable and uncontrollable; if that stock falls, not only will they not recover, but they may lose even more.
Do not be greedy for quick gains: accumulating wealth through trading cryptocurrencies is a long process. If during this process, one is both greedy and wants to make quick money, it is essentially impossible to achieve wealth growth. Both of these mentalities lead people to chase profits blindly. When faced with high returns, one loses rationality. But high returns come with high risks; blind investment can only lead to failure. Only by pursuing stable growth of wealth can one balance risk and profit.
Do not worry about gains and losses: investors who are overly concerned with gains and losses often overthink before investing, fearing that their money will incur losses. Once they finally decide to invest, this mentality becomes more pronounced. Just seeing a decrease in their account balance can lead to anxiety and restlessness, and if the decrease is too much, they either withdraw completely or seek insider information, hoping to recover quickly, which usually ends in losses. Additionally, if they hear news about platforms collapsing or withdrawal difficulties, they may worry about the safety of their investments, and even if their platform is fine, they may choose to stop investing altogether, making it difficult to navigate the investment and financial management path.
Intraday trading skills and points of attention
Market Popularity and Sentiment: The changes in trading volume and open interest can analyze the strength of bullish and bearish sentiment. If the volume increases but the price does not drop, it may signal a bottoming out. If the volume increases but the price cannot rise, it may indicate that the short-term rise has peaked. The volume requirements during an uptrend and downtrend are different. During an uptrend: there needs to be a continuous and uniform increase in volume. A uniform increase in volume on a 3-minute candlestick chart indicates that the uptrend will continue. If there is a significant decrease in volume or a very large volume appears, the uptrend may come to an end. During a downtrend: as long as there is an increase in volume when breaking some key levels, the downtrend will continue. If the price stops rising at a certain level while open interest keeps increasing, and the buy and sell orders are progressively lower, it indicates that the price may fall. Increasing open interest with stagnant prices is a very good opportunity to short, or increasing open interest with falling prices is likely to lead to a rebound.
Key points: Draw the resistance, support, trend lines, etc., in the chart. When the price reaches or breaks through these key points, act swiftly. I personally use Fibonacci retracement to predict support and resistance.
Trading rules: Only one type of asset can be operated over a certain period. Continuously track the operated asset until it no longer holds speculative value, at which point you should abandon it.
Market observation windows: One-minute windows are for preparing to grasp entry and exit timing; three-minute windows are used to monitor the wave conditions after entering; thirty-minute or sixty-minute windows are for continuously monitoring intraday trend changes.
Trading reminders: trading opportunities exist every day. If you get stopped out, do not rush to try to recover immediately. Once stopped out, that trade is done; the next trade is a new one, and how much to earn is entirely different. Do not let previous trades dictate the goals for the next one, as that will lead to losses every time.
It is essential to keep records: try to document your feelings and the details of your actions at the time because words do not lie. Only through real records and careful summarization can you find direction for your next correct decision.
Never go all in: whether in the cryptocurrency market or the stock market, truly mature investors do not choose to always go all in. Because black swan events and extreme situations will definitely happen, especially in markets as volatile as cryptocurrencies. This seems like a simple principle, but it is very difficult to execute in practice. Of course, you may have various reasons to go all in, such as having little principal or thinking that the asset you just bought will rise immediately. Regardless, you will always be reluctant to let your money sit idle and will have the impulse to invest it. I completely understand this feeling. However, reality often harshly teaches us lessons about being fully invested. Therefore, I decided that after the next wave of increases, I would at least keep about 15% of my position available. I initially wanted to reserve more, but I know I might not be able to part with it, so I will take it slow. After all, cultivation is not something that can be achieved overnight. This reserved capital will only be invested again when the market experiences a decline of around 30%.
A sharp drop is the best test of human nature: a sharp drop is both a mirror reflecting human nature and a touchstone for it. Just as most people can share joys but find it difficult to share sorrows, each sharp drop not only causes the price to plummet but also reveals the truth of human nature. In the past, I helped a few strangers make several times their money; some were grateful and insisted on transferring coins to thank me, while others felt very capable when they made money but shifted the blame onto me when they lost. This recent sharp drop particularly highlighted these differences. Of course, I am not foolish; after this incident, I am already clear about how to treat these people.
Always buy only those coins that you can hold onto with peace of mind: To be honest, the reason I did not panic this time is that for so many years, whether buying coins or trading stocks, I have only bought those assets that I believe would be fine even if held for more than five years. This has become my amulet for sleeping soundly. Of course, I must admit that the various fluctuations in the market recently have tempted me to buy some smaller coins, but since the amounts are small, even if they go to zero, I can accept it, so I did not panic too much. I hope everyone can remember and follow this principle, as it will help you avoid many troubles and greatly improve your quality of life. Only by holding truly high-quality assets can one truly achieve peace of mind.
Profound Insights
The survival rule in the cryptocurrency space is not to pursue short-term profits but to build a stable profit system. The effect of compound interest is like a snowball; the longer it rolls, the greater its power. Only by establishing a scientific position management and risk control mechanism can assets continuously appreciate amidst market fluctuations.
In the face of the ever-changing market, we need to establish a dynamic observation system: when Bitcoin breaks through key resistance levels, when mainstream coins show divergence signals, and when the market sentiment index enters extreme ranges, these are all important nodes worth paying attention to.
True winners in the cryptocurrency space can not only profit during bull markets but also preserve their strength during bear markets.
Trading cryptocurrencies is a process of enlightenment; it goes from losing seven times to breaking even twice, then to making a profit once. It boils down to being focused and not chasing various profit models; firmly sticking to one trading system will, over time, turn that system into your ATM.
