I believe I have the authority to speak on this as someone who has been trading cryptocurrencies for 10 years. Ten years ago, I scoffed at technology, had no interest, thought it was dull and dry, did not believe most people's statements, and found their technical analysis nonsense. During those three years, I acted unilaterally and worked hard, only to end up with nothing.
I borrowed 400,000 from my brother-in-law to continue my path to success and even quit my high-paying job to trade cryptocurrencies full-time. Now, I have 51 million in the market, and just from the interest, I earn 50,000 daily.
In addition to solid skills, I strictly follow these 10 rules of trading tactics:
1. Trading cryptocurrencies is essentially trading emotions; consensus equals trading volume.
In the volatile and uncertain field of cryptocurrency, trading essentially revolves around manipulating market emotions. When market sentiment is optimistic, investors are confident and flock in, pushing up cryptocurrency prices. For example, when significant breakthroughs in blockchain technology are announced, the entire crypto community is engulfed in optimism, leading investors to actively buy, resulting in a general price increase across various coins. Conversely, when market sentiment is pessimistic, investors panic and flee, causing prices to drop. For instance, rumors about tightening regulatory policies can rapidly spread panic, leading investors to sell off, significantly driving prices down.
2. We must have self-control and self-restraint.
Teacher Qing Tian often says that each of us is a trader, a dealer, so when we operate, we must think from different perspectives. Genius traders must think rationally when trading; they should not act based on feelings. Too many people in the market trade based on feelings, driven by greed and fear. If your emotions fluctuate too drastically, your trading will become distorted, so it is essential to remain calm and think rationally.
3. Respect and revere the market.
When the market moves in one direction, never build a position against it until there is sufficient evidence showing that the market has turned and the trend has changed. Do not stand in front of a heavy truck to block it. Trade in accordance with the medium-term trend; buy on dips in an uptrend and sell on rallies in a downtrend. Respect market trends, follow the trend to improve trading success rates; in a clear uptrend, we should adhere to the concept of primarily going long and being cautious with shorts! Do not be stubborn!
4. Position management.
When unsure about the market or having doubts, it is essential to remain in cash and wait. The toilet paper only utilizes about 10% of its area; the remaining 90% is there to prevent you from touching waste. The same logic applies in the crypto space; 90% of your wealth is earned in 10% of your time, so it's crucial not to be fully invested; befriend time and use 90% to wait for opportunities. (Not fully invested, waiting for the right moment.)
5. Learn trend analysis.
Add to positions after breaking resistance levels, and short after breaking key distribution zones.
After a long-term rise (the increase has been significant and is approaching a sensitive cycle), if there is a short-term oscillation at high levels, do not chase the second breakout within 3-5 days, nor hold overnight positions. After a long-term rise, if there is a significant gap down the next day after a breakout, do not hold overnight positions (regardless of long or short). Low points rise and high points rise.
Strong upward trend; low points rise and high points fall, indicating that the upward momentum is blocked; unable to create new highs or lows leads to a drop. (If high and low points rise in succession, the trend is up and long; if they drop once, the trend is down and short). If this drop lasts longer than the last one, it indicates a change in trend (at least temporarily); if the drop exceeds the last one significantly, it signifies that a trend reversal has begun. The change in time is more crucial than the price reversal.
6. Allocate assets reasonably; do not put all your eggs in one basket.
"Do not put all your eggs in one basket" is the golden rule of investing, especially in the high-risk cryptocurrency market where asset allocation and diversification are very important.
Diversify investments: choose various cryptocurrencies for investment to avoid putting all funds into one coin. If one coin performs poorly, the performance of others may offset your losses.
Keep some cash: holding a certain proportion of cash (such as stablecoins like USDT) during a significant market downturn allows you the opportunity to buy at lower prices.
7. Learn to combine long-term investment with short-term trading.
The volatility of the cryptocurrency market allows for the possibility of obtaining high returns in a short time, but it also comes with enormous risks. Therefore, combining long-term investment strategies with short-term trading can help reduce risks.
Long-term investment in quality coins: choose cryptocurrencies with technological innovation, strong teams, and application prospects for long-term holding, such as Bitcoin (BTC) and Ethereum (ETH). These coins have withstood the test of time and are more suitable for long-term investments.
Short-term trading should be done cautiously: while short-term trading (such as contract trading) can amplify profits, it can also magnify losses. If you lack extensive market experience and technical analysis skills, it is advisable to minimize high-leverage short-term operations.
8. A common ailment among retail investors worldwide.
They hold onto losses stubbornly, and as soon as they turn a slight profit, they sell immediately, ignoring trends and trading volumes, only looking at account profit-loss ratios, resulting in infinite losses and limited profits. One needs to reverse this behavior: hold onto profits, and cut losses at the slightest downturn. My principle for taking profits and stopping losses is to take profits at 15% and stop at a 10% drop in profits; if it continues to rise, keep holding to let profits run. If the price drops after buying, stop losses if the losses exceed 5% of the principal. If you can ensure profit-taking at 10% and stop-loss at 5% each time, even with only a 50% win rate over 100 trades, your returns will reach 300%. The challenge lies in human greed and fear; knowledge and action must align.
9. Plan your trades and trade your plan.
Many retail investors like to trade frequently, fearing to miss out, trying to fantasize about seizing every opportunity. Trading is not something that must be done every day; those who believe they must always trade overlook a crucial condition: trading requires reasons—objective and appropriate reasons. More often than not, it is necessary to remain in cash and patiently wait. The reasons for entering the market usually boil down to two: within your targeted range, it belongs to your trading rhythm, and the market provides a reasonably accurate signal to enter; with fewer visible opportunities, the workload decreases, avoiding the overflow of human nature, and the process becomes much more relaxed and enjoyable. Do not fear missing out; the market is always there, and opportunities arise daily. Only by learning to remain in cash can you say you have begun to comprehend the path.
10. Averaging down to break even; seeking profits is greed.
When trading cryptocurrencies, there will always be a few coins that get stuck. At this point, remember not to fantasize about turning losses into profits; a quick fix will only deepen your predicament. Honestly averaging down to protect your principal is essential for a sustainable strategy.
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