At 37 years old, looking back, in 2014 when I just entered the market, the little capital I had was still borrowed, 70,000 yuan, I really had no confidence.
Now the account has exceeded 8 digits. To be honest, my feelings are quite complicated. The earnings are not fast, and it's not based on luck. It's just one step at a time, one pit after another, reflecting and climbing out.
I trade, really from long-term to short-term, from ultra-short to intraday fluctuations. I've tried various styles one by one.
Now you say I understand technology, but I'm not a top expert. However, I can honestly say that my understanding of losing money is deeper than most people.
In these 6 years, I've seen too many people build high towers only to see them collapse. From tens of thousands to tens of millions, a round of bear market wiped it all out.
Do you think they are poor in technology?
No, they are just used to holding on to orders. When their luck runs out and their bullets are used up, a single pullback wipes out their account.
Some people make money 100 times and then make it back, but if they fail to make it back once, it is not just a small loss, but a direct loss to zero.
There is another problem that really annoys me. Too many people get anxious when they lose money.
I wanted to get my money back right away, but ended up losing everything.
I am not a saint, I also have my bad days. But I know one thing: you have to admit that the market will not listen to your orders.
Don't think that "I think it will rise" means it will rise, "I think it is a trap for buying" means it will definitely trap more. If you are wrong, you should leave, not hold on stubbornly.
The essence of cryptocurrency trading is whether you can be patient, whether you can admit that you are sometimes wrong, and whether you can follow the rules.
To put it bluntly, it’s not that you don’t know how to trade, it’s that you just don’t want to admit defeat, don’t want to admit your mistakes, and are greedy.
Stop saying you have "faith" and "it will come back if you hold on". This is not faith, it is the self-deception of gamblers.
Now my assets have exceeded 10 million. There is nothing to brag about. I just practiced a simple rule to the extreme:
Trading isn't fraught with uncontrollable risk; the key lies in employing sound fund management strategies to mitigate it. For example, I have $200,000 in my futures account and fluctuate between $300,000 and $1,000,000+ in my spot account. When market opportunities are strong, I add more; when opportunities are weak, I add less.
On a good day, I can earn over 10 million RMB a year, which is quite impressive. On a bad day, the worst-case scenario is a liquidation of my futures account, but the gains from spot trading more than offset the losses. After making up for the losses, I can reinvest. Furthermore, I rarely experience liquidations because I don't blindly pursue profit; I prioritize avoiding losses. When trading futures, I often withdraw a quarter or a fifth of my winnings and keep them separately. This way, even if my futures account liquidates, I still have some profit.
For the average investor, I recommend investing one-tenth of your spot trading position in futures trading. For example, if you have 300,000 yuan in capital, invest 30,000 yuan in futures trading. If this 30,000 yuan goes bankrupt, replenish your funds from spot trading profits. After experiencing a dozen or so bankruptcies, you'll eventually develop some trading skills. If you still can't master it, it may mean you're not suited to this industry.
Many people have a misconception about trading, believing that small capital can only grow through short-term trading. This idea is completely wrong and is a misguided attempt by small investors to trade time for space and get rich overnight. In fact, small capital should be more effectively grown through medium- and long-term trading.
Let me give you a vivid example. A piece of paper is very thin, but if you fold it in half 27 times, its thickness reaches 13 kilometers. If you fold it in half 10 times, and fold it 37 times, its thickness cannot even contain the Earth. If you fold it 105 times, the entire universe will not be able to support it. The same is true in trading. If you have 30,000 yuan in capital, you should think about how to triple your capital in one wave, and then triple it again in the next wave, and repeat this cycle. You can quickly accumulate 400,000 or 500,000 yuan. Don't stare at your account every day, hoping to make 10% today and 20% tomorrow. This short-term trading approach will only get you into trouble.
The smaller the capital, the more you should invest in the long term, relying on doubling compound interest to achieve rapid growth of funds, rather than chasing short-term profits.
Some people often believe that futures trading is extremely risky, even citing extreme examples of people jumping off buildings after losing 20 million yuan in futures. However, the real risk isn't the futures themselves, but the traders themselves. Futures trading is completely risk-free, provided you maintain a positive attitude.
Method 1: Borrowing chickens and laying eggs
Using other people's money to make your own money, the risk is borne by the client, not by the investor. Funds managed by renowned investment luminaries like Buffett, Simons, Soros, and Zhang Lei mostly employ this model. While 90% of private equity funds fail to outperform the market, the model itself is viable. In the cryptocurrency world, there are also services that offer brokerage services, but this approach is more challenging and requires a strong reputation in the market.
Method 2: Eliboli
Invest a certain amount of money in spot trading, for example, 200,000 yuan. If you're profitable after six months, take out 50,000 yuan and invest in futures trading. Even if you lose all of that 50,000 yuan, you've only lost some of your profits, so the risk is relatively low. Don't assume futures trading is risky just because you can't control your greed. Futures trading itself won't kill you; it's your own greed that truly leads to losses.
Fund management: a guarantee for continuous risk mitigation
I'd like to emphasize the importance of money management in trading, as it consistently mitigates trading risk. For example, my futures and spot trading accounts have the same capital allocation strategy as described above. This rational allocation allows me to seize market opportunities for profit while also managing risk in adverse situations.
I always adhere to the principle of not making money but not losing money, so I rarely experience margin calls. Furthermore, I withdraw a portion of my futures trading profits to ensure that even if my account were to go bankrupt, I'd still have some profit. Ordinary investors can learn from my approach by rationally controlling their futures investment ratio, supplementing their futures funds with spot profits, and gradually accumulating trading experience.
The Essence of Trading: A Game of Courage and Patience
Some people think trading is just gambling, devoid of skill. In reality, poor people often focus on skill, while wealthy people prioritize courage. If you want to change your circumstances, you don't need to learn complex techniques, but rather cultivate a wealthy heart.
In a fluctuating market, find a favorable position to open a position. If you're wrong, cut your position decisively. If you're right, set a range and increase your position, using the opening price as the closing price. Although this method may result in liquidation nine out of ten times and you may not gain anything most of the time, if you can capture two major extreme market trends in a year, you can avoid opening positions for three years.
The key to trading lies in patience. Before a major market move begins, position yourself correctly. Once it does, continue to increase your position and hold on patiently. Most people fail to make money because they frequently enter and exit the market, seeking short-term gains. They are unwilling to patiently wait for the arrival of a major market move, are hesitant to pursue large profits, and lack sufficient greed and courage. The goal of trading is to capitalize on a major market move. Before a major market move arrives, simply ensure that your capital does not suffer significant losses. Don't worry too much about short-term gains or losses. Forgo all short-term trading, volatile market conditions, and minor trends. Earn big profits.
Looking at the market over the past year, from a daily and weekly perspective, you'll find at least three or four extreme, consecutive surges and plunges. Catching any of these waves, if you're greedy enough, can easily lead to a leap in social status. However, constantly trading the market, bottom-fishing and top-fishing, ultimately only contributes to exchange fees and gives money to the market makers.
Futures are a tool for generating large returns, not just daily pocket change. Yu'e Bao's purpose is to generate stable daily profits. Traders aiming for small profits often struggle to survive in the market, as they incur significant market risks for these gains and face the risk of losing all their profits at any moment. Only by being bold and aggressive, capitalizing on extreme market trends, can one achieve social transformation. Futures traders like J.J. Livermore, Lin Guangmao, and Fu Haitang transformed their fortunes through this method. For small investors, it's practically the only way to achieve rapid capital growth.
Stop-loss setting: The wisdom of wide stops
Stop-loss orders should be set wider, for example, at least 5%. For example, with $60,000 in capital, that's $3,000. If you're going long with $60,000, your stop-loss should be below $57,000. While it might seem like a single incorrect stop-loss could result in a significant loss, in the long run, a wider stop-loss is far more effective than a single, smaller stop-loss.
Many people's margin calls aren't caused by misjudgment, but by not setting a stop-loss. After several stop-losses, they might realize they were wasted, so they stop using them again. And finding that they can usually hold onto their losses, they reinforce their misconception. But there comes a time when the market fails to hold onto their losses, such as in extreme market conditions. If you don't set a stop-loss in advance, even if you want to sell, it's too late. You can survive nine mistakes, but a single setback can ruin all your efforts.
Compounding Prerequisite: Controlling Drawdown
To achieve compound growth, it's crucial to understand that controlling drawdown is crucial, and you can't make major mistakes. For example, in my account, I can limit the maximum drawdown to 15%, meaning that at any given point, the drawdown never exceeds 15%, which is significantly lower than Bitcoin's maximum drawdown of 50%.
Compound interest is achieved through wave after wave of accumulated profits. One wave doubles or triples, the next doubles or triples again. Repeat this four or five times, and you can accumulate tens of millions, or even hundreds of millions, of dollars. The cryptocurrency market experiences several such rallies every year, and even seizing even half of these opportunities can yield enormous returns. But why do so few people profit? It's because most people fail to hold onto their profits and fail to manage drawdowns, leading to a halt in compound interest.
The Core of Compounding: Avoiding Big Mistakes
Compound interest is known as the eighth wonder of the world. In the cryptocurrency world, if you have a 1 million yuan investment and you want to double your returns every year, mathematically speaking, this is relatively easy to achieve. After all, in the cryptocurrency world, if you don't achieve a return of dozens of times per year, you'll probably be looked down upon. According to compound interest calculations, 1 million yuan, 2 million yuan, 4 million yuan, 8 million yuan, 16 million yuan, after four years, you will have 16 million yuan.
But this is only a theoretical result; it's not easy to achieve in practice. What often interrupts the compounding process is a major mistake. Missing out on opportunities isn't a major mistake, and neither is making a mistake as long as you stop losses in time. Only holding a high-leverage position and ultimately getting liquidated at a loss is a major mistake. No matter how many times you've gotten it right before, one major mistake wipes out all your previous profits, and compounding ceases.
This is why many people, even those who haven't missed out on the market in the past few years, still haven't made any money, or even suffered huge losses. Even if you miss out on five of ten major market rallies, make two mistakes but cut your losses in time, and seize three, you can still earn ten or even dozens of times more. The reason many people can't do this is because they make big mistakes, losing and gaining in the market, and failing to accumulate compound interest. Doubling your profits this time, only to lose half again when the market crashes, is pointless.
In the eyes of many users, influencers appear to be underperforming, constantly missing out on opportunities or making mistakes, often being ridiculed. But in reality, the core strength of many influencers lies in avoiding major errors. Missing out on opportunities, misjudging opportunities, or cutting losses—it doesn't matter; as long as you avoid major mistakes, compounding will continue, and you'll eventually make a fortune. Take Buffett, for example. His annual returns aren't particularly high. While he sometimes makes mistakes, buys the wrong companies, and sells off airline stocks—these are minor errors—he never makes major ones. This has enabled him to compound his profits for decades, ultimately becoming the world's richest man. Many of the fund managers who enjoyed a brief moment of fame and were ridiculed have since vanished from the scene.
Altcoins: A Temptation to Treat with Caution
Many people are drawn to altcoins because they often see multiples, tens, or even dozens of times the value of their coins. But think about it: after years in the market, how many people have you seen become rich by playing altcoins? Even if you could capitalize on a tenfold increase in two altcoins, turning 100,000 yuan into 1 million yuan, I've rarely seen such a person in reality.
Most veteran investors have been scare off altcoins and are reluctant to venture in. While some altcoins have seen their value increase by dozens of times, this profit-making method is more like buying a lottery ticket. You might spend two yuan on a lottery ticket, but not 20,000 yuan. After you've made a lot of money, you can set aside a small amount, perhaps one-tenth of your capital, to try your luck in altcoins. However, if you start gambling with your principal, if you make a mistake once, you might not have a chance to recover.
The cryptocurrency market is fast-paced and volatile. Even if you earn 500% of your money in one year, you'll still earn 250% in two years. However, 99% of people in this industry lose money, and only a few make 100% of their money, let alone 250%. As the year draws to a close, it's worth reviewing your earnings for the year. Think clearly about how you lost money and how you made money. Try to avoid losing money in the future. When you make a profit, reflect on the reasons and repeat the correct moves next time. Don't rely on luck to make money.
I have sorted out the essence of [Counter-Trend Trading]. As long as you master it, you can use this method to trade cryptocurrencies and your account is guaranteed to increase 30 times. Today, I have specially sorted out the dry goods and shared them with those who are interested. Please keep them well.
What is counter-trend trading?
Counter Trend Trading refers to trading against the market trend.
In forex trading, counter-trend trading refers to holding positions in the opposite direction of the market trend.#BNBhits a new high
When the price is in an uptrend: Sell
When prices are in a downtrend: Buy
If you can accurately grasp the opportunity of trend change or short-term reversal, you will have the opportunity to make a profit.
However, since counter-trend trading is against the trend direction, if the trend does not reverse, losses may increase significantly and the risk is higher.
The difference between counter-trend trading and trend following trading
Trend trading is the opposite of counter-trend trading and refers to a trading method of holding positions in the direction of market trends.
When the trend is up: Buy
In a downtrend: Sell
Generally speaking, once a trend in the foreign exchange market is formed, it often lasts for a period of time, so trend trading is considered a mainstream method.
On the contrary, counter-trend trading is more effective during trend reversal or range-bound trading.
Flexibly using trend-following and counter-trend trading according to market conditions and time frames is the key to increasing profits.
Method Definition: Applicable Market: Trend Following Trading, Trend Trading, Counter Trend Trading, Counter Trend Trading, Range Trading, or Trend Reversal
Advantages and Disadvantages of Counter-Trend Trading
The following describes the advantages and disadvantages of counter-trend trading.
Advantages of Counter-Trend Trading
The main advantage of trading against the trend is the high rewards you can earn when you succeed.
If you can accurately judge the end of a trend and enter the market against the trend, once the market reverses, you can catch the initial movement of the trend and make greater profits.
Disadvantages of Counter-Trend Trading
Although counter-trend trading can be rewarding when successful, you need to be prepared if the trend continues in the same direction after entering the market.
Failure to stop losses in time may result in significant losses, so you need to be extra cautious.
How to effectively use counter-trend trading
In foreign exchange trading, the entry opportunities for counter-trend trading include the following situations:
Target important people to speak
Targeting the range market
Aiming for a rebound
Target important people to speak
In the foreign exchange market, "significant person's remarks" refer to "remarks made by people who have a significant impact on a country's financial policies or economy."
Specifically, they include the central bank governor, finance minister, and senior government officials.
In the United States and Europe, common key figures include:
Chairman and Director of FRB (Federal Reserve Board of Governors)
President and Governor of the ECB (European Central Bank)
Minister of Finance, Treasurer, Treasurer
The content and impact of these figures’ speeches are as follows:
Speech content Policy interest rate Currency value "optimistic" view of the economy Increase Increase "pessimistic" view of the economy Decrease Decrease View of prices "above appropriate levels" Increase Increase View of prices "below appropriate levels" Decrease Decrease
If you predict that an important speech may reverse the current trend, you can plan a counter-trend trade in advance. If the prediction comes true, you will have the opportunity to make a profit.
Targeting the range market
Range-bound trading refers to a market condition in which prices fluctuate within a certain range (interval).
As shown in the figure below, selling pressure is more likely to appear at the upper limit of the price range, while buying pressure is more likely to appear at the lower limit, causing the price to fluctuate up and down.
When the price approaches a "level that is difficult to break through", you can conduct counter-trend trading, such as selling at the upper limit and buying at the lower limit.
Aiming for a rebound
A rebound is a market transition from a decline to an increase (or vice versa).
"Buying on pullback" and "selling on rebound" in trend trading are in line with the overall trend, but they are counter-trend operations at a single point in time.
How to trade against the trend using technical indicators
In counter-trend trading, technical indicators are often used to predict trend reversal points.
Here's how to trade against the trend using representative indicators: RSI, KD Stochastic, CCI, Bollinger Bands, and MACD:
Counter-trend trading methods with RSI
Contrarian trading method using KD Stochastic indicator
Counter-trend trading method using CCI
Bollinger Bands Counter-Trend Trading Method
MACD counter-trend trading method
Counter-trend trading methods with RSI
RSI (Relative Strength Index) is an indicator that analyzes the degree of market overheating (overbought or oversold) based on the average increase and decrease in price changes over a certain period of time. It is generally believed that:
RSI > 70: The market is overbought and prices may pull back or fall. Consider selling or reducing positions.
RSI < 30: The market is oversold and prices may rebound or rise. It is a good time to consider buying or adding to your position.
RSI divergence: When prices hit a new high but the RSI does not, it may be a signal of a trend reversal.
The above chart shows that after the RSI shows an overbought signal, the price falls; after the RSI shows an oversold signal, the price rebounds and rises.
RSI can be used to predict trend reversals and conduct counter-trend trading to pursue profits.
Contrarian trading method using KD Stochastic indicator
The KD Stochastic indicator, consisting of two lines, %K and %D, is a commonly used oscillator indicator used to measure overbought and oversold conditions in the market. It predicts potential price reversals by comparing the current price with the price range over a certain period of time.
Its value range is 0 to 100%, and the general judgment criteria are:
Signal Type Description: %K > 80 indicates an overbought market, which may signal an impending price correction or decline, making it a good time to consider selling or reducing positions. %K < 20 indicates an oversold market, which may signal an impending price rebound or rise, making it a good time to consider buying or increasing positions. %K and %D Crossover: When the %K line crosses the %D line upward, it's a buy signal; when the %K line crosses the %D line downward, it's a sell signal.
Price divergence: When prices hit new highs or new lows, but the KD Stochastic indicator fails to hit new highs or new lows at the same time, this may be a signal of a trend reversal. For example, when prices hit new highs but the KD Stochastic indicator fails to hit new highs, it may indicate that the uptrend is about to end, and vice versa.
The chart above shows that when %K crosses below %D (above 80%), the price falls, and when %K crosses above %D (below 20%), the price rises.
However, frequent stochastic indicator signals may increase the probability of false signals.
Counter-trend trading method using CCI
The Commodity Channel Index (CCI) is an oscillator that measures the deviation of price from its statistical mean. It can help traders identify overbought or oversold market conditions and provide potential reversal signals.
Signal Type Description: A CCI > +100 indicates an overbought market, which may signal an impending price correction or decline, making it a good time to consider selling or reducing positions. A CCI < -100 indicates an oversold market, which may signal an impending price rebound or rise, making it a good time to consider buying or increasing positions. A CCI Zero Line Crossover: A breakout above the zero line from negative territory is a buy signal, while a break below the zero line from positive territory is a sell signal.
During periods of extreme market volatility, the following situations may occur:
CCI breaks through +100 and +200 simultaneously
CCI falls below -100 and -200 simultaneously
This situation usually indicates that the market is extremely volatile and difficult to predict. It is recommended to wait and see for the time being and not enter the market easily.
Although most oscillators are usually used for "counter-trend trading", a major feature of CCI is that it can also be used for "trend trading".
Bollinger Bands Counter-Trend Trading Method
Bollinger Bands use the Simple Moving Average (SMA) and standard deviation to determine the price fluctuation range and thus judge the overbought or oversold state of the market.
When the price hits the upper band, the market may be overbought; when the price hits the lower band, the market may be oversold. Traders can use these signals to make buying and selling decisions.
However, it should be noted that if the trend continues after the K-line breaks through the channel, it may lead to prediction errors.
To improve trading quality, you can use the "expansion" and "squeeze" features of the Bollinger Bands.
One way to tell is that when the channel is narrowing, it may indicate an upcoming price swing; when the channel is widening, it may indicate increased market volatility.
MACD counter-trend trading method
On the MT4/MT5 platforms, the MACD indicator is typically displayed as a bar chart and a signal line (the MACD line is not displayed separately by default). Here's how to interpret it:
Crossover Type Description: Golden Cross: When the MACD-Histogram turns from negative territory (below) to positive territory (above), it means the MACD line (fast line) has crossed above the signal line (slow line), forming a "golden cross." This is usually considered a buy signal, indicating increased market momentum and the potential for price increases. Death Cross: When the MACD-Histogram turns from positive territory (above) to negative territory (below), it means the MACD line (fast line) has crossed above the signal line (slow line), forming a "death cross." This is usually considered a sell signal, indicating weakening market momentum and the potential for price declines.
When the two lines cross, it usually indicates a trend reversal and is an effective time to enter the market against the trend.
In addition, the "histogram" formed by the difference between MACD and the signal line is 0 when it crosses, which can also be used as a reference for entry.
Things to note when entering a counter-trend trade
In foreign exchange counter-trend trading, you need to pay attention to the following points:
Avoid unplanned increases
Preset stop loss line
Trade for clear reasons
Avoid unplanned increases
When trading against the trend, avoid unplanned increases in positions (averaging down).
Scaling means adding positions to lower (or increase) average costs when the market moves against expectations.
Since counter-trend trading goes against the trend, the risk of loss will increase significantly if the prediction is wrong.
Preset stop loss line
Counter-trend trading is against the trend and carries a higher risk of losses if the trend continues.
Therefore, stop-loss needs to be strictly implemented more than trend trading.
Before entering the market, you should clearly set a price point where you will give up if the loss reaches this level.
Trade for clear reasons
Counter-trend trading should not be carried out blindly, but should be based on technical indicators or fundamental analysis to ensure that it is reasonable and well-founded.
Even if the prediction is wrong, a well-founded transaction can help analyze the reasons for the failure and improve the accuracy of the next prediction.
Q&A about counter-trend trading
The following are some frequently asked questions about forex counter-trend trading:
Q1: What is the key to winning in counter-trend trading?
A key is to target calm periods when range-bound trading is frequent.
The foreign exchange market is more active when the London and New York markets are open (approximately 16:00 to 5:00 the next day Beijing time) and trends are more likely to form.
Therefore, choosing time outside this period, such as 10:00 am to 3:00 pm Beijing time, is more likely to result in range-bound market conditions, which is suitable for counter-trend trading.
Q2: Which is less likely to cause losses, following the trend or going against the trend?
For beginners, it is less likely to lose money by trading with the trend.
Because trend trading follows an existing trend, the risk of loss is lower; whereas counter-trend trading can easily lead to losses if a reversal does not occur.
Q3: Is contrarian trading suitable for beginners?
Newbies can also try counter-trend trading, but because it is against the trend, it is more difficult than trend trading.
Trend trading is more intuitive and suitable for beginners to master first.
Q4: Which indicators are recommended for counter-trend trading?
Oscillator indicators are suitable for counter-trend trading and can be used to determine overbought or oversold conditions.
Common examples include:
RSI (Relative Strength Index)
RCI (Rank Correlation Index)
Psychological Line
Stochastic
Summarize
Counter-trend trading is a trading strategy that moves against the market trend, such as selling when prices are rising and buying when prices are falling.
It has advantages in trend reversal or range-bound markets. If you can accurately seize the reversal opportunity, you can get high returns, but if the trend does not reverse, the risk of loss is higher.
By using technical indicators such as RSI, KD Stochastic, CCI, Bollinger Bands, and MACD, you can improve forecast accuracy, determine entry timing, and strictly implement stop-loss orders.
For beginners, it is recommended to master trend trading first, and then gradually try counter-trend trading.
Let's talk about something more practical: perpetual contracts are essentially a futures market with no expiration date. You don't have to worry about delivery dates; as long as you're not liquidated, you can hold your position for as long as you want. It's a true favorite for those who stay up late to watch the market!
How to choose leverage? Insiders have different opinions
In the trading community, some people are rock-solid with 30x leverage, while others are aggressive with 50x leverage. But honestly, when trading futures, what's the difference between 1x leverage and spot trading? For example, for a popular cryptocurrency, 100x leverage is enough to enter with 5 units, while 30x requires 16 units. In the same market, a 100x return would allow for a smooth trading experience, while a 1x return might not even cover the transaction fees...
But! Yes! (Here comes the point)
Never use a meager amount of capital to enter a high-risk game! I've seen too many people use 500U capital to force 100x leverage, only to be eliminated at the slightest market fluctuation. Remember: leverage is an amplifier, not a money-printing machine. It is recommended to set aside an additional 20% margin to add a layer of "protection" to your account and strengthen its risk resistance.
Explosion Warning! Don’t imitate these operations
1. Holding onto a trade: Thinking you can handle anything, only to end up with a margin call
2. Going all-in: This isn’t investing; it’s giving money to the exchange.
3. Investing against the trend: Buying more as the price drops? Exchanges love these "good Samaritans."
Life-saving tips:
Using the position-by-position mode, if you lose money on this order, you still have the opportunity to place another order.
Set a stop-loss and be more decisive than you would with your ex
Set a small daily goal (e.g. earn 50U with 5000U capital), and stop when you reach the goal
Real income calculation (know the answer)
Assuming you earn 1%-2% every day, and you reach that goal 20 days a month:
- 5000U x 1% x 20 days = 1000U
- Even if there are a few days of losses, the bottom line is still a few hundred U
Isn't this more exciting than bank financial management? But remember - a contract is not a casino, and planning is the key to going far.
Finally, I would like to give you a tip:
"Lower leverage, set stop-loss earlier,
Run fast to make money and stay away from bankruptcy."
If you want to make money by speculating in cryptocurrencies, you only need to do one thing: Don’t be greedy.
I think if you want to make money in the cryptocurrency world, you will definitely make money if you don’t get greedy.
If you are greedy, most people will lose a lot of money, while a small number of people will make a lot of money.
Why do I say this? Because the cryptocurrency market is relatively mature, and the more mature the market, the fewer opportunities there are to get rich quick.
First of all, if you are not greedy, making money is easy.
In the long run, cryptocurrency is still developing gradually. In a gradually developing industry, it is definitely possible to gain a certain amount of wealth.
At worst, you can also invest in BTC. In the long run, investing in BTC is definitely a good way to manage your finances.
Secondly, if you are greedy, you will lose a lot of money with a high probability, but make a lot of money with a small probability. If you pursue excess returns, want to make ten or a hundred times more, then you will probably end up losing everything. For example, in the bull market of 2023-2024, many people do not buy Bitcoin.
Develop profitable investment habits in 21 days and teach you how to build your own trading system!
Creating a system isn't that hard. What's hard is following the rules you set when you created the system.
Goals of a trading system
When you build your system, you have two very important goals:
1. Your system should be able to identify trends as early as possible.
2. Your system must be able to protect you from two-way losses.
If your trading system can achieve the above two points, your chances of success will increase.
What makes these goals difficult to achieve is that they are contradictory.
If you have a system that is characterized by the ability to catch trends quickly, then there is a high probability that you are catching a false trend.
On the other hand, if your system places a heavy emphasis on avoiding losses, you may be late in trading or miss out on many trades.
Your task in developing a mechanical system is to find a compromise between these two goals: to identify trends as quickly as possible while distinguishing between false trends and true ones.
Finally, here's some solid advice! I hope you'll keep these seven ironclad principles in mind, ensuring they truly integrate knowledge and action.
1. Do your homework and understand the market
The most important step to avoiding losses is to fully understand the cryptocurrency market. There are numerous cryptocurrencies, each with its own unique technical background, application scenarios, and market performance. Be sure to thoroughly research the cryptocurrency you're interested in before investing.
Technical analysis: Learn technical analysis tools such as candlestick charts, moving averages (MAs), and relative strength indexes (RSIs) to help you judge market trends.
Fundamental analysis: Understand the cryptocurrency project background, team strength, application prospects, etc. to ensure that the project you invest in has long-term value.
Pay attention to news and market sentiment: The cryptocurrency market is very sensitive to news, regulatory developments, and policy changes. Staying informed can help you make more informed decisions.
2. Control your emotions and don’t blindly follow trends
The cryptocurrency market is extremely volatile, and large price swings often tempt investors to make emotional decisions. Avoiding following the crowd during periods of market frenzy or panic is crucial.
Avoid FOMO (Fear of Missing Out): When the market is rising, many people rush to buy higher for fear of missing out. Don't blindly follow the market frenzy. Stay calm and analyze whether the market is over-hyped.
Stay calm when the market falls: Don't rush to sell when the market falls, especially without clear analysis. Holding high-quality projects for the long term may benefit from future rebounds.
3. Allocate assets wisely and don’t put all your eggs in one basket.
“Don’t put all your eggs in one basket” is the golden rule of investment, especially in the risky cryptocurrency market, where asset allocation and diversified investment are very important.
Diversify your investments: Choose a variety of cryptocurrencies to invest in, rather than putting all your money on one. If one cryptocurrency underperforms, the performance of others may offset your losses.
Keep some cash: When the market drops sharply, holding a certain proportion of cash (stablecoins such as USDT) can give you the opportunity to buy at low prices.
4. Set stop-loss and take-profit strategies
In a volatile market, a sound stop-loss and take-profit strategy is key to protecting yourself from significant losses.
Set a stop-loss level: For each trade, set a stop-loss level based on your risk tolerance. If the price hits this level, your position will be automatically closed to avoid further losses.
Regularly lock in profits: When you achieve a certain level of profit, lock in some of it promptly. Avoid greedily waiting for higher profits and missing out on opportunities. By taking profits regularly, you can guarantee a certain level of profit and avoid losses due to market pullbacks.
5. Learn to combine long-term investing with short-term trading
The volatile nature of the cryptocurrency market makes it possible to achieve high returns in the short term, but it also comes with significant risks. Therefore, combining long-term investment with short-term trading strategies can help mitigate risk.
Long-term investment in high-quality cryptocurrencies: Choose cryptocurrencies that demonstrate technological innovation, strong teams, and promising applications, such as Bitcoin (BTC) and Ethereum (ETH), for long-term holding. These time-tested cryptocurrencies are more suitable for long-term investment.
Be cautious when trading short-term: While short-term trading (such as contract trading) can magnify gains, it can also magnify losses. If you lack extensive market experience and technical analysis skills, avoid high-leverage short-term trading.
6. Learn risk management and reduce risk exposure
The most important thing in cryptocurrency trading is to always control risks and ensure that the potential loss of each transaction is within an acceptable range.
Small investment: Only invest a small part of your total capital in each transaction to avoid investing too much at one time and being unable to cope with emergencies.
Maintain a margin of safety: Avoid excessive leverage trading, especially in highly volatile markets, as high leverage can significantly increase your risk of loss.
7. Keep learning and keep up with market trends
The cryptocurrency market is changing rapidly, with new technologies, regulations, and projects constantly emerging. Continuous learning and staying up-to-date can help you stay competitive.
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