The cryptocurrency world is a place full of temptations and traps. I have been transitioning from the traditional financial market to the cryptocurrency world for six or seven years. If you are not careful, you will still be led astray by the market.
When most people lose money, they will first think about external reasons, such as a weak market, the currency they chose is rubbish, the banker is making things difficult for them, etc., but when they make money, they will think it is their own credit.
But in fact, trading should be more about looking inward, knowing one's own strengths and weaknesses. The risks in the market do not come from the market itself, but from ourselves.
I have been thinking about this for a long time. Today, based on my own experiences and lessons learned over the past few years, I would like to give you some advice on trading in the cryptocurrency world. I hope it will inspire you to think and be inspired.
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1. You can make small losses or small profits in trading, but you must never make big losses.
It is normal to make profits and losses in trading, and stop loss is like buying insurance for your car. Buying insurance does not mean that you will definitely have a car accident, but it can help you minimize the losses when an accident happens.
2. Missing out on an opportunity once will result in a loss of an opportunity, but being trapped once will result in a loss of many opportunities.
A friend said that there are no opportunities when you don’t have a position, but there are opportunities when you have a position.
After he missed a good opportunity to go long, he watched the market rise, feeling disappointed, depressed and angry. He felt that this once-in-a-lifetime opportunity would never come again, and he acted recklessly with negative emotions, and ended up getting trapped.
A similar opportunity appeared soon after I was trapped, but I didn’t dare to take the chance because of the floating loss on my trapped order and could only sigh in regret.
There is never a shortage of opportunities in the market, and market conditions are always repeating themselves. And the amazing thing is that they always repeat themselves when you lose your patience.
It is inevitable that we make mistakes in the process of trading. It is normal and forgivable to miss out occasionally. However, it is unforgivable to use missing out as an excuse to release one's negative emotions, which leads to random trading and getting stuck.
3. Taking things for granted won’t work.
There are many trading methods and information on the Internet, which can bring convenience to our trading. But any method cannot be used directly. We have a brain to think, not just to eat.
Let’s not discuss whether these trading methods and theories are real and effective. Even if they are effective, they need to be compatible with our personality and adapt to our trading rhythm. Only after they have been verified to be effective can they be put into actual combat.
Just like you just met a girl today, and without knowing each other well, you got married the next day, then the probability of divorce is still very high, so you still need to understand each other clearly.
4. Trading is like cultivating immortals. You have to take it step by step and not try to achieve it all at once. Otherwise, you may go astray.
A question I often hear is, can I learn to trade in a month? Can I make money in three months?
There are no standard answers to these questions because everyone’s learning abilities and levels of diligence are different, so the results of trading learning will naturally be different.
Trading is not something that can be achieved overnight. Everyone hopes to see results quickly, but just like when we watch martial arts movies, many people take shortcuts in order to quickly master martial arts, and the final result is obsession.
The same principle applies to trading: more haste, less speed.
5. For new traders, the trading funds should not exceed 3 months' income.
Many traders
When starting to trade, people don’t know how much capital to invest. Some people don’t understand the risks and rashly invest a lot of money. When they suffer huge losses, they continue to increase their investment in order to recover the losses, and finally dig themselves into a huge debt pit.
Therefore, when you start trading, you must control the capital you invest. It is recommended that new traders do not invest more than three months' income.
Because this amount of funds will not cause particularly great psychological pressure, even if the transaction is unsuccessful and there is a loss, you can recover by saving money for a few months, and it will not cause irreversible consequences.
6. Don't always overestimate your abilities.
Arrogance is human nature, and we often overestimate our abilities in transactions.
For example, the use of positions, the ability to withstand losses, the control of trading frequency, the control of multiple varieties, etc.
If you are a little arrogant in other matters, you may make some small mistakes without any harm. However, if you overestimate your abilities in trading, you will be slapped in the face by the market and lose money.
This kind of arrogance is too destructive in trading. We would rather be humble and cautious, and make less profit with a small position, rather than lose money because of arrogance.
7. Pay attention to the cost of your transactions.
Especially for those of us who do contracts, we must always pay attention to our handling fees, because I have seen too many group members pay tens of thousands or even hundreds of thousands of dollars in handling fees for opening contracts in a year.
Some people always fail to make a profit in trading. It’s not because your skills are not good enough. Sometimes it’s just that the transaction costs are too high. No matter what you do, you are working for the platform.
Sometimes, an order with a low transaction fee can be used to take profit, but a high transaction fee requires a larger profit margin. Sometimes it happens that just a little bit is missing and the order cannot be taken into account, and the market turns from profit to loss, which is very annoying.
If you have any concerns about your transaction costs, you can also go to my official account (Zero Points Classroom) to check out articles I have written before on how to save transaction costs.
8. Just because you can afford a car doesn’t mean you can drive it on the road.
Cars are very cheap now. You can buy an electric car for only 20,000 or 30,000 yuan. But being able to buy a car does not mean you can drive it on the road, because the car must have a license plate and you must also have a driver's license.
The threshold to start trading is very low, opening an account is very simple, and the capital requirements are not high. You can start trading at any time, but being able to trade does not mean that you can do well and make money.
The process for getting a driver's license is very strict and the tolerance for error is very low. Many people fail the test after many attempts.
However, there are no such hard and fast regulations for trading. There are no rules to constrain you, nor do you have to practice. Many people "drive without a license" and end up suffering heavy losses.
Therefore, in order to be stable in trading, you still need to restrain yourself and practice diligently.
9. Sugarcane is not sweet at both ends, so don’t pursue perfection in transactions.
Buffett also said that investing is like eating fish. It is good enough to eat the fish body. Don't try to eat the head and tail. Greed is insatiable.
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The capacity of the cryptocurrency world is huge, and you can never eat it all up no matter what you do. The market will not lose a piece of meat because of your greed and mistakes, so it is enough to earn the money you should earn and the money you can earn. Don't be greedy.
10. The smartest trading method is to pay less attention to the trading software.
In my own experience, when I first formed a trading system, my execution was very poor. I kept checking the software, and there was a serious anchoring effect.
For example, if you see that the profit is 1,000 this time, and it becomes 900 the next time you check, your heart aches. If you check it again and it becomes 800, you start to get anxious.
In fact, the market is always fluctuating. If you look at the software too much, you will easily ignore the objective facts. Emotions will overcome reason. It is very likely that you will lose confidence in the original trading plan, often close your positions early, and miss out on profits.
At that time, a senior told me not to look at the software. After entering the market, set the stop loss and take profit, let it run, and force physical withdrawal. After a long time, you will get used to it and your emotions will be more stable.
11. What is my trading advantage compared to others? Nothing else, just practice.
This sentence comes from "The Oil Seller"
”, I think everyone understands what it means, so I won’t elaborate here.
After so many years of trading, I found that trading technology is ultimately a matter of practice makes perfect. After you do a pattern 100 or 200 times, you will be familiar with the subtle deformations of this pattern.
What will happen if the big K-line breaks? What will happen if the small K-line breaks? How to deal with the trend of callback after the break? How to deal with the trend of no return?
The more thorough and detailed your understanding is, the more confident you will be when trading, and the more you will be able to play to your strengths and avoid your weaknesses, achieving better profit results. Once you have made a profit, you will have more confidence, and this will be a virtuous cycle.
12. The essence of transaction is the law of the jungle.
The world of trading is very cruel. Your profit comes from other people's losses. Either your money is taken away by others, or you take other people's money.
Therefore, the trading market is a bloody jungle law. People often complain to me that the dealer's methods are too dark and false breakthroughs are too complicated.
There are too many and the rules are imperfect, these cannot be denied, these are facts.
But is there any absolute fairness in this world? In comparison, the trading market is relatively fair. All we can do is accept reality and go against human nature. When others are fearful, you should be greedy; when others are greedy, you should be fearful; when others are lazy, you should be diligent; when others are emotional, you should be stable. Then you will naturally make money.
13. Whether you can make money by growing crops depends on the weather and yourself.
I come from a rural family. I lived in the countryside before elementary school. My parents contracted more than 30 acres of land and we had 3-4 cows. Thanks to my parents' hard work, we had a worry-free life at that time.
Planting crops depends on the weather. If the weather is good, you can save effort and money, the price of grain will be high, and the harvest will be good.
But crops do not grow out of thin air. Only if you work hard can you have the possibility of a harvest.
One thing we traders often do is to hold the crop seeds and do nothing, just wait for the rice to grow. As the saying goes, "God helps those who help themselves, and God abandons those who abandon themselves." You must first help yourself before God can help you. Remember this.
14. Don’t always watch short videos, watch more in-depth content.
Trading is a job that requires a lot of "mental cultivation". Nowadays, everyone likes to watch short videos because fast and fresh content can give us instant satisfaction, but my attention is also being quickly diverted. After a long time, it is difficult to calm down and accept in-depth content.
Trading requires extreme patience, stable emotions, and focused attention. Watching short videos will have a great impact on our self-discipline.
You can read more books in your daily life, especially some brain-demanding books. Try to leave your phone for a while and read immersively. Summarize while reading, and even repeat them to your family and friends. Over time, you will regain the ability to learn in depth.
15. Correct your view on money from time to time.
There is a view in "Reminiscences of a Stock Operator" that after making money, it is best to take out a portion of the profit, put it in your pocket, and use the money to consume. In this way, you can feel the existence of the money and how much the money can buy.
Because in trading, money has become a bunch of numbers. Sometimes, after a long time of trading, the concept of money will be distorted, especially for those who make short-term profits. They may make or lose tens of thousands of yuan in one night. The whole person will be inflated, and the concept of money will be shattered. They will no longer look down on small amounts of hundreds or thousands of yuan. So you can take out some of the money you make and feel the "money power" from time to time, so that you can be closer to reality.
16. Don't quit your job to do business.
Many people are obsessed with full-time trading. Some people feel that their lives are too dull and want to find a breakthrough, or they feel that trading is too easy to make money and too addictive, so they want to quit their jobs and become full-time traders.
People will have an inexplicable fantasy and yearning for industries they don't understand. If you don't have a stable profit model and have not experienced the beatings of trading, don't give up everything easily and engage in full-time trading.
In fact, having a full-time job and doing trading part-time is the ideal situation. Because a fixed income will give you a sense of security, and part-time trading can make up for your lack of interest and may even bring in extra income. The two are not contradictory.
17. Trading is like finding a wife. Passion is temporary, but suitability is eternal.
Each of us has a time when we are in love and we love to death. After a long time, the relationship becomes dull. In the daily life of firewood, rice, oil and salt, we find that our personalities are suitable for each other and we can live a stable and peaceful life. This kind of ordinary and warm life is the real good life.
However, most people can easily become immersed in the passion brought by trading. For example, after experiencing short-term huge profits, they can no longer accept long-term steady profits; after making $100,000 in three days, they can no longer stand even a little loss.
We must not fall in love with trading, making it inseparable and causing each other pain. We should establish a trading method that fits our personality, constantly adapt to it, and maximize profits within our comfort zone, so that we can live a good and long trading life.
In short, there is no end to the money to be made in the trading market. If you maintain a habit of learning and a clear mind, you will not have a bad time in the market. I wish you all the same.
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