If you plan to trade cryptocurrencies for a long time and make money, you must remember the following eight principles; otherwise, you will eventually be consumed by the market.
1. Always stay calm and be a rational investor.
The volatility in the cryptocurrency market is exceptionally fierce, with fluctuations of 10% in a single day being quite common. If you cannot stay calm, you are likely to be swayed by short-term fluctuations, ultimately leading to losses. Whether in a bull market or a bear market, rational investing is absolutely the cornerstone of success.
Remember: every significant rise or fall may be the market's "touchstone"; only by maintaining rationality and not following emotions can you go further.
2. Set stop-losses; never gamble on momentary luck.
Many people want to make a fortune through the rises in the cryptocurrency market, but investors who do not set stop-losses often end up suffering serious losses. Stop-losses are not only a means to protect profits but also a strategy to avoid significant losses.
It is advisable to set a reasonable stop-loss point before each position is opened. Regardless of the outcome, control your maximum tolerable loss risk so that you can stand firm in long-term operations.
3. Diversify investments to reduce single risk.
Investing in cryptocurrencies is full of uncertainties; the failure of any one project could lead to total loss. Therefore, never put all your funds into one project. Reasonably diversify your portfolio, preferably choosing several mainstream coins and innovative projects with potential, so that even if one project is temporarily underperforming, you still have other "insurances"!
4. Follow the trend; do not go against it.
The trend is your strongest ally. Market conditions can never remain unchanged; periodic fluctuations will inevitably affect market sentiment. Familiarizing yourself with and recognizing the trend, and acting in accordance with it, is the only way to speed up your success. When the market appears generally bullish, you can appropriately increase your position; when the market shows a clear downward trend, decisively reduce your position to control risk.
5. Focus on long-term value; engage less in short-term speculation.
Although opportunities for short-term fluctuations may seem profitable, most people who engage in short-term speculation are losers rather than winners. It is essential to fundamentally recognize that whether it's Bitcoin or other mainstream cryptocurrencies, they possess strong long-term value. When investing, keep your eyes on the long term, not just for short-term profits, but focus on projects that have strong advantages in technology, application, team, etc.