In the cryptocurrency market, one day is equivalent to one year in the stock market. Those who engage in cryptocurrency trading will have no further interest in stock trading. The all-day trading and unlimited price fluctuations satisfy many people's dreams of getting rich overnight, which is one of the reasons why virtual currencies are so popular. This is also why losses in the cryptocurrency market have become a common phenomenon.
Every investor who comes to the cryptocurrency market will experience significant losses, liquidation, and the transition from profit to loss in their trading career. Among the large army of cryptocurrency traders, the only people who get rich are those who experience bankruptcy, summarize their experiences, and have a strong mindset.
Without experiencing liquidation and significant losses, one will never know what stop-loss means; without experiencing profit turning into loss, one will never grasp the mindset shift from heaven to earth.
One, survival is the first principle.
Sun Tzu said: The good warriors of old first made themselves invulnerable, and then awaited the enemy's vulnerability. It is very simple to avoid major losses; make survival the first principle. When there is a danger that impedes this principle, abandon all other principles. Because regardless of how many excellent performances of 100% you have had in the past, if you lose 100% now, you will have nothing. Once your capital is wiped out, it is destined that you will be eliminated. To play this game well and achieve ultimate victory, all systems and rules must be based on the principle of preserving the principal.
Two, correct capital management:
Each success will only allow you to take a small step forward, but a single failure can make you take a big step back. This big step hinders the accumulation of funds, which requires opportunities and time. Human nature is always like this: the pain of losing 1,000 yuan far exceeds the joy of gaining 1,000 yuan. A loss of 1 million becomes 500,000, while increasing 500,000 to 1 million requires a 100% profit. It takes an hour to walk from the first floor of the Empire State Building to the top, but it only takes 30 seconds to jump down from the roof and return to the ground.
You cannot control the direction of the market, so there is no need to waste energy and emotions on situations you cannot control. Don't worry about what changes the market will bring, worry about how you will respond to those changes. Judging right from wrong is not important; what matters is how much profit you gain when you are right and how much loss you can bear when you are wrong. Every time I see many people in the market crowd bargaining for the price of a piece of clothing for a long time or shopping for half a day, but investors think about buying for no more than a few minutes, this is a common trait among many. It is certainly not the behavior of someone who wants to make big money in the investment market. If you want to make big money in the market, investors must be cautious and protect their accounts as if walking on thin ice.
When entering the market, have a clear operating system:
(1) How much do I plan to earn in this wave of market?
(2) How much loss can I accept at most? If the market retraces, how much loss must I exit immediately?
(3) I must ensure that a certain percentage of the profits from each operation is secured.
(4) Gradually increase positions, avoid full investment trading. As profits rise, continuously raise the profit stop-loss position, never allow already acquired profits to turn into losses; (5) Always give yourself another trading opportunity, strictly operate according to your trading system.
Three, trends are the best friends.
The biggest enemy of trading is the patience to wait for a clear market trend and over-trading. A bull market does not end in a day, nor does a bear market. The cryptocurrency market is a place where I have seen no trades for three years, and those who start trading can make profits for the next three years. As long as you have patience, wait for the clear arrival of the market trend, find the leading stocks, and hold on until the entire bull market ends without excessive trading, you can achieve unexpected profits.
When the trend comes, respond accordingly and follow it. When there is no trend, observe and remain calm.
Over-trading operations are also a major enemy of investment. Those who trade for price differences can only earn a little sweet profit but cannot make big money. Let’s calculate the transaction fees for over-trading: Currently, virtual currency exchanges calculate a fee of 0.2% for each buy and sell, so a completed transaction incurs a fee of 0.4%. If a trader operates once a day, calculated over a year with 365 days, then this trader loses 4/1000 * 365 = 140% due to transaction fees. You did not read it wrong. It is 1.4 times. Think about it; even Buffett works hard for 30%, and what about you? Your transaction fees for a year are 140%; there is another trader who often overlooks this.
The more frequently a person enters and exits the market, the more likely they are to frequently change their mind. As the saying goes: the more you do, the more mistakes you make; the less you do, the fewer mistakes you make; if you do nothing, you won't make a mistake, but excessive trading can lead to missing out on major market movements.
Plan carefully before taking action, based on obvious price breakpoints, market atmosphere, trading conditions, and capital flows provided by the market, determine the arrival of trends. Maintain a broad perspective on market trends and do not be misled by short-term fluctuations.
Four, psychological quality is the core.
Trading cryptocurrencies goes against human nature; it is a game that only a few can profit from, while the vast majority merely provide capital to play.
In trading, one needs to have strong psychological quality, must have a mindset and pattern that can withstand a catastrophic loss. If you enter the market with 10,000 yuan and your heart races for a fluctuation of 100 yuan, I advise you to leave this market as soon as possible, as it also ensures your personal safety.
If you have a strong mindset to earn 100 million, then fluctuations within 1 million will not affect your mindset, because what I ultimately want is 100 million, and 1 million is not within my consideration, thus providing an opportunity for substantial profits.
Trading is not just a game against large institutions, against big players, and against retail investors, but also a game against oneself. As the ancients said: fighting against the heavens is enjoyable, fighting against the earth is enjoyable, the highest realm of struggle is to fight against oneself. Trading cryptocurrencies is a process of constant psychological struggle, continuously questioning oneself whether to sell or hold at this price level, and what to do. This is always a psychological game that requires strong psychological quality. Additionally, one must ensure good physical condition; good health is crucial. Why do people live? Living is merely the process of having a healthy body and continually refining one's soul in this world.
Five, a trading philosophy suitable for oneself.
The way represents the logic of things, while the skill represents the methods and approaches.
As the saying goes:
There is knowledge without skill, skill can be sought; there is skill without knowledge in skill.
The birth of a trading philosophy represents a person's knowledge, insights, and courage, and through constant ups and downs in the market, one ultimately grasps the basic logic of trading, which is in accordance with the rules.
The biggest enemies of investors are: hope, fear, and greed. With one's own trading philosophy, one still needs to overcome human weaknesses: hope, fear, and greed.
When the market is about to decline, which should be filled with fear, investors feel hopeful instead.
When the market is rising, fearing a pullback, one should ideally have the greatest hope, but instead begins to fill with fear. This is the reason why traders cannot make big money.
Having your own trading philosophy and forming a trading system helps you overcome the weaknesses of human nature. When the market arrives, let profits run. When capital incurs losses, allowing yourself to stop-loss and exit is fundamental to gaining great wealth.
I am Aze, after experiencing multiple cycles of bull and bear markets in cryptocurrencies, I entered the industry three years ago, became proficient in five years, and dominated for ten years. I possess rich trading experience in various areas of the cryptocurrency market, closely following Xiao Yan to clear the fog of information and insight into the real cryptocurrency market. Seize more opportunities for wealth growth and discover truly promising currencies, don't miss out on great opportunities!
