1. Trend Selection, 2. Coin Selection, 3. Timing, 4. Take Profit, 5. Position Management
Trend Selection: The importance of trends is self-evident. Finding the right trend and following the right direction is critical; as the saying goes, even pigs can fly on a windfall. The trends in cryptocurrency are relatively clear, with halving occurring every four years creating a cyclical trend, compounded by the monetary policy factors of the Federal Reserve. Understanding these two aspects allows you to choose trends beneficial to your trading and grasp the overall direction effortlessly.
Selecting Coins: Once you choose the right direction, it's time to decide which coin to buy. Most coins accumulated at the bottom of a bear market will perform well in a bull market, but there are also projects like EOS that are notorious for their poor performance. Therefore, choosing the right coin is crucial.
Regarding the method of selecting coins, you can explore by observing the fundamental information of the coins, traces of institutional accumulation, performance of coin price strength and weakness, as well as technological evolution, emotional evolution, narrative development, and other methods.
Timing: Once you've selected your desired token, you need to observe the market and find the right timing to establish a position. This step is also crucial; good coins are often available, but good entry opportunities require professional data support to buy in. A lower entry price and the right timing not only help you maintain a calm mindset amidst large fluctuations but also maximize profits. I recommend learning candlestick chart techniques. Various schools of thought, including Dow Theory and its derived charting styles, or Wyckoff, and commonly used modular trading systems, as well as the institutional order principles currently used by institutions, are all classic technical theories. Learning these techniques can help you find the right buying opportunities.
Take Profit: It is often very difficult to achieve precise take profit levels. I commonly use a method of taking profits in batches, leaving 10% of the position to feel comfortable with market emotions, whether they plummet or surge.
Finally, the most important aspect is position management. This step is almost related to the length of your life line in cryptocurrency; if you don't do this step well, you basically can't achieve continuous and stable profits. You can adopt the inventory method using the principles of 334 or 136. The core is that controlling your position allows you to control your mindset and emotions.
When you find the right moment to take a 30% position in a coin, you won't be hoping for it to skyrocket; instead, you think about adding more when it pulls back. If you start with a full 100% position, a pullback will affect your mindset.
If a direct surge occurs at this time and you have 30% of your position invested, you will have no psychological pressure. You can attack when the opportunity arises and defend when needed. This way, you can maintain a calm mindset and trade effectively.
The crypto world is not short of opportunities; what's missing is a clear mind when facing opportunities and risks.