How can beginners avoid pitfalls when entering the crypto world?|||Advice for newcomers in the crypto world
1. Do not touch contracts!!!
The crypto world has not only beginners but also many veterans! Experts! Many have failed in contracts. Beginners should safely do spot trading and hold on.
2. Do not play with small altcoins
Most small altcoins in the crypto world are scams; they can drop to zero, falling more than 99%. If you haven't heard of them and they have a small market cap, do not play. Choose mainstream cryptocurrencies.
3. Do not play with small exchanges
Small exchanges can have risks of running away or unplugging, and all the money inside may become inaccessible. It is recommended to use mainstream exchanges, and you can also separate funds across mainstream exchanges.
4. Do not have overly high expectations
The era of tenfold or hundredfold returns in the cryptocurrency market has passed; now major institutions and elites have entered the market, and the big bonuses are gone. Achieving doubled returns is already quite good, and for beginners, not losing money is enough to beat over 90% of people.
5. Do not put money in unknown wallets
If you have a large amount of capital, it is advisable to keep it in a wallet, as exchanges also carry risks. If it is a small wallet, there is also the risk of being hacked.
6. Do not play ultra-short positions
In the cryptocurrency market, volatility is significant; it is common for Bitcoin to drop 20% in a day, and altcoins may even be halved. It's hard to control in the short term; hold onto your coins.
7. Set stop-loss and take-profit
Set goals for yourself; if it drops to a certain position, execute firmly and exit. If it rises to a certain position, sell decisively, no matter how much it rises later. Many people lose in a bull market because they do not take profits in time.
8. Do not bring all your funds into the cryptocurrency market
The risks in the cryptocurrency market are high; there are risks in entering and exiting funds. It is recommended to use your spare money and small amounts first to practice in the crypto market.
9. Keep learning continuously
People cannot earn money beyond their understanding. Even if they initially earn a lot, if their understanding does not reach the level, they will quickly lose it back and possibly incur heavy losses. Continuous learning is essential to enhance understanding.
10. Find an experienced and reliable teacher
The cryptocurrency market has many pitfalls, with over 99% losing money; find a reliable and experienced teacher who can also teach you knowledge. They may not guarantee profits but can help you avoid many pitfalls. But be careful not to find teachers who lead trades in contracts.
There is a very silly method for trading coins, but this method can almost eat up all the profits, learn slowly. First, we should never do three things when trading coins.
The first thing is to never buy when the price is rising; be greedy when others are fearful and fearful when others are greedy. Develop the habit of buying when the price is declining.
The second point is to never over-leverage
Third, never go all in; being fully invested makes you very passive, and this market is full of opportunities; the opportunity cost of being all in will be very high.
Additionally, let me share six key phrases for short-term cryptocurrency trading
The first point is that after the coin price consolidates at a high level, there will usually be a new high. In contrast, after consolidating at a low level, it will typically see a new low again, so we need to wait until the direction of the trend change is clear before we act.
The second point is to avoid trading during consolidation; most people lose money in cryptocurrencies because they cannot adhere to this simplest principle.
The third point is when selecting K-lines, buy when the day closes with a bearish candle. When it closes with a bullish candle, sell.
Fourth, the decline slows down, and the rebound is also slow, followed by an accelerated decline and rebound.
Fifth, use the pyramid buying method for building positions; this is the only unchanging principle of value investment.
The sixth point is when a coin continues to rise. After a sustained decline, it will inevitably enter a consolidation state. At this time, we do not need to sell out entirely at this high point, nor do we need to buy in fully at the low point. Because after consolidation, there will inevitably be a change in trend. If the change goes down from a high position, we must clear our positions in time; just be timely in pushing forward.
Entry logic (taking the bullish side as an example):
When EMA20 crosses above EMA60 and the distance between the two gradually widens, presenting a classic 'bullish arrangement' structure, this usually indicates that the short-term trend is strongly upward. However, to enhance the stability of judgment, we can introduce the logic of a dual-line system: observe the crossover status of MA20 and EMA60. If MA20 is also rising and gradually moving away from EMA60, it indicates that the trend is not a temporary fluctuation but has a sustainable healthy rising structure. EMA provides sensitive signals, while MA offers a buffer confirmation; dual-line resonance can better eliminate false breakouts and enhance signal credibility.
1. MACD forms a golden cross, with red bars continuously increasing in volume; if the golden cross occurs above the 0 axis, it usually indicates strong trend continuation and bullish momentum; if the golden cross occurs below the 0 axis, although there is an intent to rebound, the trend signal needs further confirmation.
At the same time, we need to pay close attention to the top and bottom divergence signals provided by MACD: when the price makes a new high but MACD does not make a new high simultaneously (i.e., top divergence), it may indicate that the upward momentum is waning. However, this signal's interpretation cannot be done in isolation; it must be combined with the stage of the market.
If the market is in a strong upward trend, especially during a complete bullish structure where EMA and MA are in a stable bullish arrangement, the appearance of top divergence often represents a 'breathing' moment in the normal upward process, and taking a short position carelessly could easily be crushed by the trend;
On the contrary, if the trend shows signs of fatigue or the market enters a consolidation phase, the reference value of the top divergence signal will significantly increase, becoming an important early warning clue.
In addition, the frequency and overlap of top and bottom divergences are equally crucial—if multiple top divergence signals appear consecutively in a certain area, especially when confirmed by resonance with MACD, K-line, and RSI indicators, it often indicates that the market's potential reversal power is accumulating. The more divergences, the stronger the signal, and the probability of reversal increases accordingly.
3. The current price is above the previous platform or resistance area, confirming effective breakthrough;
Summary: The core logic of bullish entry lies in the three-dimensional resonance confirmation—stability of trend structure, coordination of momentum indicators, and effective breakthrough of key levels. Only when these three are combined can a higher probability entry situation be constructed. In this process, the combination of EMA and MA's sensitivity and stability, MACD's momentum trend judgment, and detailed identification of support and resistance together form the underlying support of this strategy.
Exit strategy:
Set reasonable take-profit points, such as: previous highs/lows, 1.5~2 times the stop-loss distance;
If MACD shows top divergence or the price breaks below the 20-period moving average group (EMA20 and MA20), and the 20-period moving average group shows a clear downward turn and crosses below the 60-period moving average group (EMA60 and MA60), it can serve as a warning signal for market reversal or adjustment. At the same time, if trading volume significantly increases with long shadows, it indicates that those who should buy have already bought, and those who should sell have sold; if the market is at a relatively high/low position at this time, it indicates that the market may be releasing reverse momentum, and caution should be taken, considering reducing positions or exiting to avoid potential risks.
You can also adopt the strategy of partial profit-taking + trailing stop to protect profits.
Three, key positions: Technical structure determines victory or defeat
In this section, the focus is on the importance of the technical structure of 'key positions' for trading success, emphasizing that even the best indicators cannot surpass the influence of support/resistance areas. Support and resistance areas are the key zones for price reversal and breakthrough, especially in short-term trading; these areas often determine whether the market can continue or if a reversal will occur.
Detailed summary:
1. The role of support/resistance areas: Support and resistance are not static; they are determined by market historical behavior. These areas represent price levels concentrated by market participants and are often the points where prices rebound or break through. By accurately judging the support and resistance ranges, traders can control risks and make trading decisions at these critical locations.
2. How to identify key positions: Highs and lows during the Asian and European sessions: These highs and lows often serve as references for support and resistance, especially after the market's initial reactions.
Previous consolidation ranges: The upper and lower bounds of historical consolidation ranges often serve as key price levels for subsequent trades, reflecting potential reversal pressures.
Round number levels: Such as 1.0900, 1.1000, etc., are widely watched price ranges in the market, where price often encounters significant reactions.
3. Strengthen the confirmation of technical structures: The judgment of key positions should not only rely on price behavior but should also consider other technical analysis tools (such as K-line patterns, Bollinger Bands, etc.) to confirm the effectiveness of breakouts or reversals. For example, if a strong reversal pattern (such as a hammer or engulfing pattern) is observed in the support range, it can be considered to use this signal for decision-making. #Strategy increase Bitcoin
By accurately judging the key positions in the technical structure, combined with patterns, historical prices, and other technical indicators, traders can make more precise entry and exit decisions at critical moments. These 'technical structures' determine the short-term market direction, and successful trades often happen through precise operations at these key positions.
Four, risk management: strategies can make money, discipline can save lives
The essence of trading is not prediction, but probability and control. Even if the strategy is precise, it cannot succeed 100%, so the following controls must be included in the system:
1. Stop-loss setting
Generally set between 10~15 points, or adjusted to an appropriate volatility range based on the ATR indicator;
Stop-loss points should avoid the recent volatility range edges to prevent 'stop-loss hunting';
2. Position control
The maximum risk for a single trade should not exceed 2% of the account balance;
For example: Account $1000, if the stop-loss is 15 points, the maximum value per point should not exceed $1.33, calculating the suitable lot size;
3. Profit-taking mechanism
Fixed profit and loss ratio: such as 1:2, 1:2.5;
Dynamic profit-taking: exit early on MACD divergence or EMA structural changes;
Partial profit-taking: lock in profit on part, while following the trend extension on the other part.
Five, in conclusion: Take control of the rhythm in your own hands
The 15-minute chart is the art of rhythm. It does not pursue high frequency or blindly believe in long-term trends but seeks a balance in 'efficiency, rhythm, and control'.
The essence of this strategy lies not in a single winning move but in: 'waiting for three confirmations + precise execution + strict risk control.'
If you often regret 'not entering' after the market moves, or frequently chase highs and get stuck, try to slow down your trading pace.
A true expert is not someone who predicts the future but someone who can recognize the current situation and act at the critical moment.
Before each trade, everyone must first ask themselves three questions:
First, think about the reasons for each position you open.
Second, do you often encounter situations where profitable trades turn into losses?
Third, do you often hold losing positions until liquidation without knowing what to do? These three questions are unavoidable for anyone trading; cryptocurrency friends have encountered them to varying degrees. Everyone has gone through this, especially beginners who are often blind. The essence is that they have not established mature trading thinking and systems.
What is a trading system? It is a self-methodology for trading, opening positions, closing positions, increasing positions, reducing positions, taking profits, and stopping losses. Having such a system directly benefits you by ensuring that all your trades are traceable, significantly reducing the chances of making mistakes and the amount of loss. Furthermore, you do not need to monitor the market in real-time; by strictly following the system, you will have a clear understanding of your goals and losses, allowing you to remain steady regardless of market fluctuations.
So how to establish your own trading system? The most important thing is to have a good mindset; the cryptocurrency market is a 24-hour trading environment with erratic market movements and large fluctuations, requiring strong psychological qualities when trading. A person's trading habits, psychological endurance, strategy execution ability, and ability to overcome greed and fear vary, determining that each person needs a trading system that suits them.
From my long-term summary, an excellent system must include the following characteristics:
First, the frequency of opening positions should not be too high. Many people in the cryptocurrency market are eager for wealth; they feel they will miss out on huge opportunities if they do not open a position in a day. In fact, opening positions should be based on market conditions, not time. Blindly opening positions when there is no market will only lead to losses. There are many opportunities in the crypto market, but most are not ones you can catch; no one can capture every fluctuation. 'Waiting' is key; learn to wait, seize your opportunities, and reduce the frequency of your stop-loss orders, and your profits will naturally see a significant increase.
Second, overcome greed. Greed is the most taboo thing in cryptocurrency trading, especially in contracts; the market fluctuates daily, and with every rise, there will inevitably be a fall. I have seen too many people miss out on doubling their positions due to greed, resulting in losses, liquidation, or even bankruptcy.
Third, strictly take profits and stop losses. This is the most important operation in contract trading and is a key reason why I can achieve a maximum return rate of 11570.96%. Before analyzing the market and opening positions, always think about where to take profits and stop losses, especially where to stop losses. Calculate whether the risk-to-reward ratio is worth making this trade. When you feel it is appropriate, set these two positions; no matter how the market fluctuates, you will remain stable. Strictly stop-loss at the stop-loss position, preserve capital, and take profits in batches to lock in profits.
Fourth, control the position size of your trades. Why do we control position size? A simple calculation can help you understand: if you make a trade that earns 20% and another that loses 20%, with a 50% accuracy rate, after 40 cycles, your assets could be halved; factoring in fees, you'd have even less, and the result would surely be zero. Therefore, position control is crucial; keeping fixed capital is a good choice, and withdrawing profits is a good habit because what is withdrawn is truly yours; what remains on the exchange is only floating profit.
Fifth, practice and review summaries. After learning to control your mindset, position size, capital, and K-line operation techniques, the most critical and essential element for building your own system is to practice and summarize through reviews. Practice leads to true knowledge, and reviewing enables progress.
Reviewing trades should be done for every single trade, weekly reviews, notes, and real trades can greatly help everyone summarize their trades, enrich their reasons for entering positions, and refine their stop-loss and take-profit points.
Trading systems are not built overnight; they must be summarized through continuous practice of opening positions. No one is born understanding K-lines or contracts; all are learned through constant exploration. Who hasn’t paid tuition with losses? The key is that the tuition cannot be paid in vain; learn from failures and gain wisdom, and when facing the same market conditions next time, you will naturally know what not to do and what to do.
The above is a summary of my over ten years of practical experience and technology in cryptocurrency trading. It may not be suitable for everyone; each person needs to combine their practice to use and summarize. As a trader, the scariest thing is not having technical problems, but lacking understanding and falling into these trading traps without realizing it! There is no invincible trading system, only invincible users of trading systems! This is the truth; trading systems ultimately must return to the individual!
Because having a goal makes everything possible; the ideal of life is for an ideal life. Behavior is the answer, so I never ask why! If you don't have the fate of lying back and winning, then stand up and run, facing many difficulties and winning through them. You should prepare in advance instead of being anxious; only by giving your all can you know how outstanding you are. If you lack talent, then keep repeating; every difficulty you face will eventually lead to success. Respect all voices but only respect yourself; do what you want to do and become the person you want to be, take it slow! Everyone has a journey of hard work!
One tree cannot make a forest, a solitary sail cannot sail far! In the cryptocurrency circle, if you do not have a good community and do not have first-hand news from the crypto world, then I suggest you follow Lao Wang, who will guide you to profit easily, welcome to join the team!!!