Source: Talking about Li and other things
Recently, many new friends have followed the public account of Hualihuawai, and we receive some new messages every day. I found that many people may have rushed into this circle, and after entering, they seem to have no patience to read historical articles or e-books. They just like to ask directly what coins they should buy now, or how much XX coin will increase.
Over the past few years, I have seen too many newcomers who entered the market during the bull market, but a large proportion of them also lost money during the bull market. In the past articles of Hualihuawai, we often expressed a point of view that for newcomers, the two most important things to remember after entering this field are to protect the principal and not to touch it if you don’t understand it.
However, there are not many people who can truly understand and do the above two points. Many newcomers often come with the purpose of making a lot of money in the short term, or even getting rich overnight. They basically will not listen to any suggestions that may hinder them from getting rich. In other words, they seem to understand the theory in theory, but will not implement it at all in actual action.
There are actually some differences between speculation and investment. Simply put, if you enter the crypto market for the purpose of speculation, then how much you can achieve, in addition to luck, may also have a certain relationship with your ability to obtain and process information, the accumulation of knowledge in your field of focus, and your personal cognitive level. If you look at problems and participate in the market from an investment perspective, then the key to success is more about a relatively mature investment strategy that you have built based on your knowledge accumulation and cognitive level.
But different people may have different backgrounds, experiences, and capital sizes... Therefore, there is almost no perfect strategy that suits everyone. The so-called mature investment strategy is relative, and this needs to be broken down to understand. In this issue, let's continue to discuss two basic strategies.
1. Time frame based strategies
This should be easy to understand. The so-called time frame means that we must first think clearly about whether the investment plan we are carrying out or formulating is short-term or long-term.
In other words:
In your understanding, short term means a few days, weeks, or months?
In your opinion, does the long term mean a few months or a few years?
Different people may have different understandings of this. I remember a friend bought a certain altcoin and it was cut in half. Then he left me a message in frustration saying that the XX altcoin he had held for a long time was cut in half and he felt that he could not hold it anymore. He asked me whether he wanted to sell or change positions.
I asked him: How long have you held this coin?
He said: I bought it two weeks ago.
Then it was my turn to wonder, it turned out that holding for two weeks was considered long-term holding for him. However, in this case, I basically would not provide specific guidance on changing positions. First of all, my personal principle is not to provide any specific buying and selling guidance at the transaction level. Secondly, I cannot accurately predict the market and the price trend of any currency. Thirdly, I have no obligation to be responsible for the profit and loss of other people's positions. The only advice I can give is to ask the other party to quickly list the three reasons for buying this currency. If they can list them quickly and seem convincing, then continue to hold it patiently for a while. Otherwise, you can consider reducing your position and conduct necessary review and summary.
My own understanding of the time frame (i.e. the strategy that suits me) is:
In the long term, I basically operate based on the bull-bear cycle. In other words, 4-5 years is a small investment cycle for me. What I mean by long-term is the continuous accumulation of such small investment cycles. Taking this cycle as an example, my main operation in the past few years is actually very simple. I used 80% of my position to invest in BTC for 20 months (buy once a month). I have already shared the specific operation in my previous article, so I will not repeat it here.
In the short term, I basically use 6-12 months as the minimum time unit. For this kind of short-term operation, I will mainly split 10% of my position to buy some altcoins, but my operation frequency will be relatively low, that is, I can't do a few buying and selling operations in a year, and the altcoins held at the same time will be strictly controlled within 5. For example, I bought a little FET on May 30, 2023, a little SOL on September 10, 2023, a little AVAX on November 12, 2023... I bought a little BANANA on August 4, 2024. I have mentioned these operations in my previous articles, so I won't go into details here.
The main purpose of buying these altcoins for short-term operations is to allow oneself to maintain appropriate sensitivity to transactions. The ultimate goal is actually to exchange them all for BTC.
In short, different people may treat or view time differently. Try to find a time frame strategy that suits you. If you are very optimistic about the future of the crypto industry and plan to invest in the long term, then what you may need is patience and strict trading discipline. If you just want to speculate during the bull market, don't just think about making a lot of money. At the same time, consider how to deal with it if you lose money. It is best to find some indicators that can directly assist you in making judgments (such as MACD, Fibonacci, etc.), and strictly make profit/stop loss plans. If you don't have a high probability of grasping it, don't easily add leverage to yourself.
2. Strategies based on position management
In fact, when I talked about the time frame above, I also mentioned my own position management again. That is, my position planning in this cycle mainly adopted an 8:1:1 allocation strategy, in which 80% of the positions were used for fixed investment in BTC, 10% of the positions were used to buy altcoins, and 10% of the positions were left untouched.
Remember that in many of Hualihuawai’s past articles, our advice has always been to allocate at least 50% of your positions to BTC, and then the remaining 50% can be planned at will according to your personal preferences. In this way, even if the latter is lost, BTC will help you to cover the bottom, so that you will not lose your principal too early and leave this field.
Especially for those newcomers who have just entered this field, many people may not have a deep understanding of the term risk management. As a friend in the group said before: Perhaps only after they have really lost money and suffered big losses, some people can truly understand what risk management is.
Position management is actually the most important aspect of risk management. It is not an exaggeration to say that once you have done a good job of position management, it is not too late to talk about security awareness, wallet security and other aspects.
Recently, there have been many messages in the official account, basically asking me what altcoin I should buy now. I will reply to some of them, and I will say: If you really want to participate, you can give priority to buying some BTC. If you want to buy altcoins, you can consider buying some ETH, SOL, or buying some of the top projects under the popular narratives. Whether it is buying or selling operations, they must be carried out in batches, instead of going all in directly, and make a profit/stop loss plan.
But some of my friends seemed to disagree with my Tai Chi-style reply and said: What you said is too expensive. I have little capital and cannot afford it. Do you have any recommendations for cheap coins, preferably those that can increase tenfold?
Me: There are some so-called “cheap” ones like DOGE, PEPE, and WIF, but I don’t know if they can increase tenfold in the future. Maybe a 50%-100% increase is still possible by next year.
Then the other party said: I don’t like this kind of coin that has only increased by 1 times. Isn’t the purpose of entering this cryptocurrency circle to buy at least 10 times? Otherwise, why would I enter this cryptocurrency circle?
I:……
Although I have seen many similar messages and questions, I still feel a little helpless every time I see them again. Unfortunately, the market is not owned by my family, and it is not a small shop, otherwise I would not recommend bargaining for these people. In the future, if I encounter similar questions, I will not reply if I can, because replying to these questions seems to have no practical significance except wasting time.
There is another type of people who, after entering this field, may have listened to the recommendations of some teachers or KOLs, invested in some altcoins or local dogs, and then got stuck. So they left a message asking me: I am stuck with all my altcoins, should I change my position now? What coin should I change to to get my money back?
I actually have no answer to this kind of question. I have nothing to say except to admire the courage of these people who dare to go all-in on altcoins. The only suggestion I can give is: calm down and think seriously about your own position management issues.
There is another type of people who come into this circle and because they meet the so-called "noble people" who are willing to help, they are directly lured into fake exchanges and cheated, or even fall into pig-killing schemes or participate in Pixiu schemes. Then they leave me a message asking if I can help find the corresponding scammers or project parties to help them get back their invested money. For such problems, I can only say: I am just a small blogger and I don’t have that much power. If you encounter such a problem, if the amount of funds is small, just treat it as an "entry fee"; if the amount of funds is large, just call the police yourself; if it is not convenient to call the police, you can only treat it as a very expensive "entry fee".
So, why do I always think position management is so important?
Because it directly determines whether you can make money in this field for a long time. Unless you think you are the chosen one or you think you are the god of gambling, you should honestly plan your positions. Don't just believe those so-called permanent earners, don't envy those netizens or group friends who got rich overnight, and don't just ask others (especially strangers to you) what coins you should buy to make a fortune. Anyway, in my cognitive framework, people who have such ideas may be far from making real money in the long run.
Let’s continue with my example. Although I also bought SOL in this cycle, I did not choose to go all in or go all in. Judging from the current market trend, I seem to have missed the opportunity to gain more wealth. If I did not hoard BTC, but chose to go all in on SOL, then I should be very happy now, right? But… there is no if, because I had 100% confidence to hoard $20,000 of BTC, but I did not have the confidence (or courage) to go all in on $20 of SOL. In other words, only the strategy that suits you is the best, not a possibility that you cannot be sure of.
Altcoins may indeed have huge short-term returns, but they are often accompanied by huge risks. Because I have a low risk appetite, I have not chosen to go all-in on any altcoin in the past, and I certainly won’t do so in the future. Take the bull market in 2021 as an example. In addition to some top projects outperforming BTC, such as ETH, which has increased by about 3 times that of BTC, SOL has also increased by 79 times... The growth of many altcoins is also quite amazing. But in the bear market, most altcoins have plummeted by 85%-95%, or even more. The ICP I bought for $100 in the last cycle even fell to $3 at one point, but I only bought a small position of $50,000 at the time, and then I just left it alone.
Although I also know that the growth of some altcoins in this new bull market will eventually outperform BTC, I still decided to use 80% of my position to hoard BTC. I know that I will miss some bigger opportunities. However, missing such possible opportunities is not the most important thing in my opinion. The most important thing is to be able to grasp those opportunities that should not be missed. Altcoins can accumulate wealth in the short term, but Bitcoin can guarantee the long-term security of one's wealth, and I will always put safety first.
As for the specific classification of position management, this topic has been mentioned many times in our previous articles. We will not go into details here. Interested friends can search and review the historical articles. Here we will only briefly review and explain:
- Capital of more than 1 million USD
Then you should put safety first, and it is recommended to adopt relative conservatism in position management. For example, allocate 80% of the position to projects such as BTC, ETH, and SOL. The specific redistribution ratio depends on the individual, so as to maintain the safety and relative stability of the overall assets.
Then, you can divide the remaining 20% of the position into N parts, such as 3,000-5,000 US dollars per part, and do research according to your own time and energy, and buy some medium and low market value projects for short-term trading operations. If some of the money from this part of the operation is lost, don’t worry too much, and if you succeed in making money, you should take out the profit in time and keep it, or invest it in the BTC and other positions mentioned above.
After such basic configuration and operation, coupled with reasonable profit target setting (don’t tell me that you want to earn 10 times in a year by buying BTC now, but if you extend the time frame to ten years, 10 times is still possible), stick to a complete cycle, your assets should be able to easily increase to more than 3-5 million US dollars. And the more you go forward, pay attention to accumulating your BTC holdings, and appropriately lower your profit multiple target, so as to obtain longer-term asset security.
- Capital below $100,000
If your capital is between 100,000 and 1,000,000 US dollars, you can directly refer to the above example. The core idea is to put a large proportion of your positions in mainstream crypto assets such as BTC.
Here we focus on the example of a principal below $100,000:
At this time, your position management should be to evaluate the relationship between risk and return. For example, you can refer to the traditional financial concepts, which are also divided into stable, balanced, and aggressive types.
If you are a conservative type, then you can consider allocating 50% of your positions to BTC, 30% to projects such as ETH and SOL, and the remaining 20% to buy some leading project tokens under popular narratives.
If you are seeking balance, you can consider allocating 30% of your positions to BTC, 30% to projects such as ETH and SOL, and the remaining 40% to buy tokens of some leading projects under popular narratives.
If you are an aggressive investor, you can consider allocating 30% of your positions to BTC, 30% to projects such as ETH and SOL, and the remaining 40% to buy low-market-cap project tokens or MemeCoin.
Of course, the above are all my personal examples. You can adjust and optimize the specific proportions according to your own situation. For example, assuming you only have $1,000 in funds, you can ignore BTC transactions and directly study those low-market-cap altcoins or MemeCoins. However, try to participate in fewer transactions on the Ethereum chain and instead choose chains with low gas fees such as Solana and Base. Otherwise, the gas fees of frequent transactions will consume a lot of your principal.
If you do well in this matter, then after a complete cycle, the overall potential (opportunity) may be 5-10 times (or even more), but at the same time, you must control the number of currencies in your position. My suggestion is not to exceed 20 at most, otherwise you may spend a lot of time and energy to study or pay attention to the project. Of course, your ultimate goal must also be implemented on BTC. The money you earn is not to buy more altcoins, but to pay attention to accumulating your own BTC holdings.
If you don’t know which of the above categories you belong to, then I suggest you don’t buy anything, because you may lose money if you buy. If you have the time and energy, you can learn more about the knowledge or concepts in the field of encryption, or participate in and experience more projects. There will always be opportunities. This industry is still in a relatively early stage, so there is no need to rush to make a lot of money as soon as you enter (the actual result may be to give away your life).
In short, no matter whether your capital size is 1 million US dollars or 1,000 US dollars, although the strategies may be completely different, the core logic of investment is actually the same, that is, try to achieve a balance based on time frame and position management: maximize returns + minimize risks.
When I wrote this, I suddenly remembered two interesting little things.
One is that I remember a few days ago, a new friend followed the Hualihuawai official account and left a message directly saying: I don’t have money, but I want to join your group. I feel that your group threshold of 55 US dollars is too expensive. Can you directly invite me to the group to learn first, and I will give it to you when I make money in the future.
Well, there are many ways to get something for free. For example, you can study how to get airdrops, how to do arbitrage, etc., or you can consider joining some free circles provided by other bloggers to learn and communicate. There is no need to get something for free everywhere.
One is that I remember a while ago, a new partner left a message asking: Is it illegal to run a self-media like yours? I also want to do one, but I don’t know if it’s possible? How much money can you make from this self-media?
I don't know whether it is illegal to do self-media in the field of encryption, but I know that there are a lot of such self-media now. To be more specific, as long as you do not use the name of encryption to conduct illegal fund-raising, pyramid schemes, provide deposit and withdrawal services, then in theory it is not illegal to just share some of your personal views on the field. Although the management here is stricter than in some Western countries, we still have the most basic freedom of speech here.
Many people always have high expectations but low skills, and lack some effective execution. If you are optimistic about it, do it, if you are not optimistic about it, don’t do it. In fact, many choices are so simple. For example, BTC has been called a scam by many people in the past decade, but this has not affected the increase of BTC by more than 1.5 million times (158460270.98%). In this process, the buying and selling of BTC are free, and no one can stop you from holding BTC.
As for whether you can make money by doing self-media, it depends on your original intention and purpose. I don’t know about others. Maybe some crypto bloggers can use self-media to make millions or tens of millions of dollars a year, but compared with the time and energy I personally invest, the self-media "Hua Li Hua Wai" is basically not profitable. Doing this is more based on my personal hobbies and interests. If I just hope to make money through this self-media, I probably won’t even be able to pay the property fee. My core is still on hoarding coins (trading).
In short, the articles of the Hualihuawai public account are for everyone. There is no threshold or upper limit for following the public account. Everyone can read it and can also freely leave messages under the article to communicate. This can basically meet the learning or communication needs of most people. The maximum upper limit of the group is only 500 people. This is not for everyone. The group plays more of a "bridge" and "connection" role, mainly to meet the needs of a small number of people and allow a small number of partners who have this need to have the opportunity to find people with the same frequency and engage in more in-depth communication. There is no need to set a follow-up threshold for the public account, nor does it need to do any liquidity management. There is no essential difference between 10,000 followers and 100,000 followers for me. But the group needs to set a basic threshold for filtering, and also needs to manage liquidity to maintain a certain level of activity.
Whether we are doing trading, self-media, or group, we need to try to think about its essence or underlying logic, and we also need to figure out what the ultimate purpose or goal of doing this is. There are millions of tokens in the crypto market. We need to understand where the liquidity of the market comes from, and we also need to understand how to choose based on time frame and position management. There are also many self-media bloggers targeting the crypto market, and there are also many corresponding groups of various forms. Different bloggers or groups may have their own characteristics. For example, the characteristic of Huali Huawai is long articles + methodology, which is more suitable for those who are patient, and cannot directly provide you with the so-called wealth code or the code for getting rich. Therefore, you have to think clearly about what you need most now, and then only pay attention to those bloggers or groups that are helpful to you. Many people have not made money on BTC, but you can't blame BTC for not being free to buy and sell. Many people will complain that some bloggers are stupid, but you can't blame these bloggers for preventing your freedom of thought.
Many times, people will choose to envy others' fate or good luck, but ignore themselves. We can no longer change the past, but you still have the opportunity to make your own choices in the future. Sometimes, choice is more important than hard work, but we must also work hard to preserve learning and keep thinking, only in this way can we have the opportunity and ability to make choices. Choice is not a matter of luck or gambling, but a kind of cause and effect based on personal experience, knowledge accumulation, resource integration, etc.
Note: The above content is only a personal point of view and analysis, which is only used for learning records and communication, and does not constitute any investment advice. If any project or website is mentioned in the article, it has no direct interest relationship with Hualihuawai (Hualihuawai does not accept any advertisements from any project party). Please evaluate the security of the corresponding project or website by yourself. Investment is always risky. Don't enter a game that you don't understand, and don't play a game that you can't afford to lose.
