1. Basic knowledge
Lists all the things that novices need to know before, during and after buying Bitcoin
The directory is as follows:
Things to know before buying Bitcoin:
1. What is digital currency?
2. What is Bitcoin?
3. The benefits and risks of Bitcoin;
4. Position management.
Things to know when buying Bitcoin:
1. Where to buy?
2. Specific steps for purchasing:
2.1 Fiat Currency Transactions
2.2 Coin-to-coin transactions
2.3 Contract Trading
Things to know after buying Bitcoin:
1. When to sell?
2. Cryptocurrency information website
In order to prevent the article from being lost, you can like + collect it before reading it~
Things to know before buying Bitcoin:
1. What is digital currency?
Digital currency is a currency developed and operated by netizens based on technologies such as public blockchain and computer encryption operations, relying on the Internet.
Bitcoin, Ethereum, etc. are cryptocurrencies among digital currencies. They are all based on decentralized currencies, which are different from the electronic currencies such as WeChat, Alipay, bank cards, etc. that we use in our daily lives.
2. What is Bitcoin?
The concept of Bitcoin was first proposed by Satoshi Nakamoto on November 1, 2008, and was officially launched on January 3, 2009.
Unlike other currencies, Bitcoin is not issued by a specific monetary institution. It is generated through a large amount of calculation based on a specific algorithm. Bitcoin confirms and records all transactions through a distributed database composed of many nodes, and uses cryptographic design to ensure the security of each link of currency circulation. At the same time, the total amount of Bitcoin is only 21 million, which is extremely scarce.
3. The benefits and risks of Bitcoin;
At the beginning of 2011, the price of Bitcoin was around $1. After three consecutive months of skyrocketing, the price fell from $29.6 to $2.05, a drop of 93%;
In April 2013, Bitcoin rose to a high of $230, and then continued to fall, falling to a low of $66.34, a drop of 71.6%;
In the same year, the price of Bitcoin reached a peak of $1,147, and then fell back. In the following two or three years, the lowest price of Bitcoin fell to $177, a drop of 84.5%;
In December 2017, the price of Bitcoin reached a peak of $19,798.68, but fell back just before breaking through $20,000. In early 2018, it fell to a low of $3,155, a drop of 84%.
In 2018, the lowest price of Bitcoin was 3155 and the highest price was 17157 USD;
In 2019, the lowest price of Bitcoin was $3,353 and the highest price was $13,968;
The lowest price of Bitcoin in 2020 is $3,728 and the highest price is $29,340
The lowest price of Bitcoin in 2021 is $27,850 and the highest price is $69,158
The lowest price of Bitcoin this year is $32,914, and the current highest price is $48,130;
From the prices over the years, we can see the great volatility of Bitcoin. Although it has increased ten thousand times from $1 to a maximum of $69,158, when your house fluctuates back and forth between a villa and a room, I believe most people will find it difficult to accept the difference.
Although the Bitcoin market is rising steadily overall, no one can predict when it will plummet again. Therefore, before buying, investors should not only look at the returns of Bitcoin, but also pay attention to the risks of Bitcoin and make arrangements based on their own risk tolerance.
4. Position management.
The so-called position management refers to the use of money in our investment process. It is the reasonable allocation of your investment funds, which includes position management and risk control.
For example, your current deposit is 100,000 yuan;
(1) 10% is reserved for daily expenses, which is short-term consumption; (2) 20% is used as daily emergency funds for unexpected events, such as illness and hospitalization; (3) 40% can be used for some capital preservation and appreciation investments, which can protect the principal and generate additional income to resist inflation, such as bonds, trusts, and other products with stable returns; (4) 30% is used for high-risk investments, which will not affect normal life and will not affect life even if the investment fails.
The above are just simple examples. You can allocate them according to your own risk tolerance.
Borrowing or investing all your money is irrational and is not advisable. Especially for beginners, you must know how to act within your means. If you invest all your money in the market, it will not only increase the risk of loss, but also affect the mentality of investors to a certain extent. Once the market goes down, it is easy to lose sleep or become anxious and panic.
Things to know when buying Bitcoin:
1. Where to buy?
There are currently three well-known leading exchanges in China.
I have previously compiled some information about the advantages, disadvantages and differences of the three major exchanges. If you are interested, you can share it for free.
I want to emphasize to everyone again and again, do not go to any unknown small exchange!!!
Small exchanges are always at risk of running away and freezing your funds
Large exchanges are guaranteed in terms of establishment time, number of users, and transaction depth!!
Please block anyone who tells you that you can get high returns by going to a certain platform
If a friend asks you to trade on a small exchange, that person is not your friend.
2. Specific steps for purchasing:
2.1 Spot Trading
Spot trading is simply a transaction of buying coins with money, which is divided into fiat currency trading and currency-to-currency trading.
2.1.1 Fiat Currency Transactions
Fiat currency is legal tender, such as RMB, USD, GBP, etc. Fiat currency transactions are transactions between legal tender and digital currency, such as directly using RMB to buy Bitcoin.
We can use RMB to directly purchase digital currency in the quick coin purchase area of the exchange.
The advantage of quick coin purchase is that it is convenient and fast; the disadvantage is that there are not many types of digital currencies that can be directly traded with legal currency, only some mainstream currencies, such as Bitcoin (BTC), Ethereum (ETH), or Tether (USDT).
2.1.2 Coin-to-coin transactions
Coin-to-coin trading refers to the purchase of another digital currency with a digital currency, without the transfer or settlement of legal currency in between. For example, if you use USDT to purchase ETH, you will form the ETH/USDT trading pair. USDT is called the pricing currency, and ETH is called the trading currency. USDT is used as the pricing currency to define the price of ETH.
The types of digital currencies in the quick trading zone are limited. If we want to buy digital currencies outside the quick trading zone, we need to buy stablecoins first, and then use stablecoins to buy other digital currencies.
The most widely used stablecoin at present is USDT.
Stablecoins, as the name implies, are cryptocurrencies that maintain a stable exchange rate with a certain target. Stablecoins can be seen as a digital currency with "stable value". It is an intermediary connecting the digital currency world and the legal currency world. The most widely used stablecoin at present is USDT (Tether). Tether (USDT) is Tether USD (hereinafter referred to as USDT), a token based on the stable value currency USD (USD) launched by Tether. 1USDT = 1 USD. Users can use USDT to exchange USD at a 1:1 ratio at any time.
2.2 Contract Trading
Spot trading is the transaction between legal currency and digital currency. It is different from contract trading, which is also called futures contract. It refers to the view on the price change of currency in the market, such as whether you think the price of Bitcoin will rise or fall in the future.
In contract trading, if you think the price of a currency will rise, you buy a contract, which is called going long; if you think the price of a currency will fall, you buy a contract, which is called going short.
In contract trading, you can make a profit by going long or short whether the currency is rising or falling, but in the spot market, we can only make a profit by buying the currency and expecting its price to rise. There is also a concept in the contract called leverage. When placing an order for a contract, the trader only needs to pay a small amount of money at a certain ratio based on the contract price as a financial guarantee for the performance of the contract, and then he can participate in the purchase and sale of the contract. For example, if you want to buy a BTC contract of $6,000, if the leverage is 10 times, you only need to pay $600 in BTC. Margin trading is basically leveraged trading. In futures trading of digital currencies, the trading currency is used as margin.
Things to know after buying Bitcoin:
1. When to sell?
The one who knows how to buy is the apprentice, and the one who knows how to sell is the master.
I once bought LINK with 10,000 yuan, and the profit was supposed to double. In the end, because I didn't have a clear goal, I lost half of the profit before selling. If the selling target is not set well, it is very likely that the original account will show a profit, but in the end the account will show a loss.
1. Set the target points for taking profit and stopping loss
Before buying digital currency, beginners can set three points: buy point, take profit point and stop loss point.
However, the minimum requirement is to be able to understand pressure and support.
2. News
Of course, we can study more knowledge and accumulate basic knowledge. However, some experiences or pitfalls of people who have experienced it can make us grow faster. It is said that reading history makes people wise! The same is true in the cryptocurrency circle. Usually, when we judge the trend of the market, we will combine the news and technical aspects.
Take the recent market situation for example. The regulators have taken frequent actions, and global crypto assets have suffered heavy losses, with prices plummeting. Under this extremely negative situation, the future market of the crypto market is not optimistic. This is a more intuitive news impact.
In addition, you need to know the most basic things such as the price, circulation, total volume, current market value, and transaction volume in the past 24 hours. The second is the computing power, number of active addresses, block size, Google search index, and fear and greed index of the currency. In addition, the net inflow and net outflow of funds of the currency, as well as the long and short positions of the trading platform, these data can be used as a reference for predicting short-term price fluctuations.
There are many information platforms where you can find this data. The ones that are more familiar to everyone may be CoinWorld, Feixiaohao, Lianwen, etc.
In addition, I have also compiled some information that can be shared with everyone for free!
1. Cryptocurrency Forum
2. Foreign information
3. Must-see websites in the cryptocurrency world
4. Chinese information website
5. Transaction-related websites
How to see the newly issued digital currency first?
3. Technical aspects
Everything cannot be considered individually. News is only one way of judging, and indicators are also a way of judging. That is to say, the so-called news and technical aspects should be combined to judge the current market trends. The vision cannot be too single!
Of course, there are many technical indicators, and I certainly cannot cover them all in one article.
Below I will give an example of one of the indicators for accurate buying and selling in the cryptocurrency circle - KDJ.
1. What is KDJ?
The KDJ indicator, also known as the stochastic indicator, introduces the concept of fast and slow moving averages to calculate the fluctuations between the highest, lowest and closing prices within a certain period of time, reflecting the strength of price trends and overbought and overbought dynamics.
2. How to understand the KDJ indicator?
On the charts of general stock market software, the yellow K line represents the fast indicator, the white D line represents the slow indicator, and the red line is the J line. Generally speaking, in terms of sensitivity, the J value is the strongest, the K value is the second, and the D value is the slowest. In terms of safety, the J value is the worst, the K value is the second, and the D value is the most stable.
Specifically, the calculation principle of KDJ is to calculate the immature random value RSV of the last calculation period through the highest price, lowest price and closing price of the last calculation period within a specific period (usually 9 days, 9 weeks, etc.) and the proportional relationship between the three, and then calculate the K value, D value and J value according to the smoothed moving average method, and draw a curve chart to judge the price trend.
The calculation formula of KDJ indicator
The domestic calculation cycle of KDJ indicator is 9 days, and the K value and D value are 3 days. RSV(9)=(today's closing price - lowest price in 9 days) ÷ (highest price in 9 days - lowest price in 9 days) × 100 K(n)=(RSV value of the day + K value of the previous day) ÷ N D(n)=(K value of the day + D value of the previous day) ÷ N J=3K－2D
3. Application of KDJ indicator
According to the value of KDJ, it can be divided into several areas: overbought area, oversold area, and hovering area. According to the general classification standard, when the three values of K, D, and J are below 20, it is the oversold area, which is a buy signal; when the three values of K, D, and J are above 80, it is the overbought area, which is a sell signal; when the three values of K, D, and J are between 20-80, it is the hovering area, and it is advisable to wait and see.
1. Generally speaking, when the D line turns from bottom to top, it is a buy signal, and when it turns from top to bottom, it is a sell signal. 2. KD fluctuates in the range of 0 to 100, and 50 is the long-short equilibrium line. If it is in a long market, 50 is the support line of the retracement; if it is in a short market, 50 is the pressure line of the rebound. 3. When the K line crosses the D line at a low level, it is a buy signal, and when the K line crosses the D line at a high level, it is a sell signal. 4. When the K line enters above 90, it is the overbought zone, and below 10, it is the oversold zone; when the D line enters above 80, it is the overbought zone, and below 20, it is the oversold zone. It is advisable to grasp the buying and selling opportunities. …
I have compiled some study materials, which are as follows. They can all be shared for free with friends in need!
1. What is resistance and support? 2. What is a trend and how to determine it? 3. Dow Theory 4. Bollinger Bands 5. Elliott Wave Theory 6. Stochastic Index 7. Relative Index
4. Classic books
I will divide the book recommendations into three parts: the first is the study of the basic theory of digital currency, the second is the study of trading technology, and the third is the study of investment psychology.
1. Basic Theory of Digital Currency
1. (How to invest in digital currency) Author: Wang Bo/Zhou Zhaohui
This book is divided into three sections:
Basic knowledge: Let readers fully understand the concept of digital currency and the current status of its development in the past six years;
Part 2: Investment and Trading: Introduces all the types and technical points of digital currency investment currently available to readers, especially how ordinary investors can choose a trading platform, open an account, top up, buy, sell, and withdraw coins to successfully complete investment transactions;
3. Investment philosophy: From the perspective of the source of human history and the digital currency ecosystem, supervision and development, it is argued that long-term investment in digital currency is a wise choice.
Suitable for people: Mainly inclined towards conceptualization, suitable for beginners who don’t know much about digital currency.
2. (Decrypting Bitcoin) Author: Liu Ning/Shen Dahai
This book was written by a technical geek and evangelist in the domestic Bitcoin field, and its professionalism and authority are unquestionable.
From a professional perspective, it comprehensively introduces the development history, basic concepts, monetary significance, monetary characteristics, generation principles, operating mechanisms, acquisition methods, trading methods, circulation principles, attitudes and policies of governments around the world towards Bitcoin, as well as Bitcoin investment common sense, principles, strategies, techniques and investment risk avoidance in easy-to-understand language.
2. Trading Technology
1. (Technical Value Selling Point Analysis) Author: Yang Bo
This book introduces dozens of technical indicators in detail, and elaborates on the principles, usage, and practical skills of each technical indicator, striving to demonstrate the practical use of each indicator from different aspects and in an all-round way. It can be used as a manual for investors to consult various indicators, and can also be used as a handout to improve investors' practical skills.
In addition, relying on years of accumulated experience, the author summarizes the complex technical analysis knowledge and methods according to the principle of from shallow to deep, in order to enable readers to master the technical analysis in the shortest time and open the door to profit in the stock market.
Suitable for people: This book starts with the basic principles and gradually transitions to actual practice, with illustrations. This classic work of the technical school adopts a step-by-step, easy-to-understand approach and is suitable for novices who want to get involved in trading.
2. (A New Interpretation of Japanese Candlestick Charting Technology) Author: Steve Nison
Introduction: Candlestick chart is the most popular and oldest form of technical analysis in Japan. Its origin is earlier than the point chart in the West and also earlier than the bar chart. The first part of this book details the basic knowledge of candlestick chart, candlestick chart combination patterns, candlestick chart and the overall technical aspects of the market. The second part explains the difference index and new price chart, including the three-line direction breakthrough chart, brick chart and key chart, so as to help readers better invest.
Suitable for people: The author systematically explains the core candlestick chart in a simple, popular and thorough way, while integrating candlestick chart analysis with trading, market status and actual combat. It is so detailed and logically clear that it is suitable for beginners.
3. (Chanzhongshuochan: Illustrated Technical Theory) Author: Bodick
This book is divided into 6 chapters, which comprehensively analyzes the essence of Chanzhongshuochan's technical theory and analyzes the Chanzhongshuochan technique. It includes specific operation steps and analysis of difficult points, and is supplemented by actual combat diagrams to help readers quickly master Chanzhongshuochan from the shallow to the deep.
The biggest feature of this book is the illustrations. It also includes a large number of stock charts and schematic diagrams, using pictures and texts to interpret the profound content, making the book full of interest and readability.
Suitable for people: This book first arouses readers' interest through rich pictures, and then conveys the essence of the Chaos Theory to readers, helping them master the Chaos Theory techniques. This distribution of content from the outside to the inside is suitable for people who want to make the leap from novices to masters.
3. Investment Psychology
1. (Rich Dad Poor Dad) Author: Kiyosaki
I won’t say much about how famous this book is!
Main content:
Kiyosaki has two fathers: "poor dad" is his biological father, a highly educated education official; "rich dad" is his good friend's father, an entrepreneur who did not graduate from high school but is good at investment and financial management.
The "poor dad" who worked hard all his life lost his job, and the "rich dad" became one of the richest people in Hawaii.
Kiyosaki resolutely followed the footsteps of "Rich Dad", entered the business world, and boarded the express train to wealth. Kiyosaki used his personal wealth story to show the completely different views on money and wealth between "Poor Dad" and "Rich Dad". The poor work for money, while the rich let money work for them!
Recommended reason: This is not a book of chicken soup for the soul. The investment suggestions it puts forward are of great significance to practical operations. In addition to investment and financial management, it also contains content such as emotional sublimation and exploration of the meaning of life.
2. (Investment Psychology) Author: John R. Noffsinger
After reading this book, you will realize the value of traditional financial instruments. Perhaps most importantly, investors' reasoning errors can affect their investments and ultimately their wealth.
Recommended reason: By reading this book, you can learn many psychological biases that may affect investment decisions; understand how these psychological biases affect investment decisions; see how these wrong decisions erode your wealth, etc.
I have compiled some good books, which can be shared with everyone for free.
1. Dow Theory and Practice 2. He Zaozhong interprets Gann Theory 3. The Secret of Main Chip Distribution 4. Flush Formula from Beginner to Master 5. Investment Psychology Analysis 6. Detailed Explanation of Volume-Price Relationship 7. Decryption of Market Prediction and Practice ……
4. Trading Psychology
I often have people come to me and say that they suspect that the market makers are eyeing the little money in my pocket as a small retail investor. Otherwise, why does the price drop every time I buy and rise every time I sell? Why do the operations always go in the opposite direction of the market trend?
This question is actually very simple. The banker uses the trading psychology of retail investors such as chasing ups and downs to complete the construction of positions, washing, pulling up and shipping. Therefore, as a newcomer to the cryptocurrency circle, you must understand the following!
Gambler fallacy: The tendency to believe that the odds of something happening in the future will be changed by past events.
Just like when we are trading, due to the psychological effect of people, at certain key prices, there will be certain resistance and support, which will form a similar pattern. However, we must know that history will repeat itself, but it will not be a simple repetition. Therefore, as an investor, we cannot gamble!
Loss aversion: A strong preference for avoiding losses. That is, not losing money is more important than making money.
For a qualified trader, losing 100 yuan and making one yuan should be the same thing. However, there are always some people who can accept not making 100 yuan, but cannot accept losing 100 yuan. This is actually a manifestation of immature investment psychology!
Disposition effect: taking profits early and letting losses persist.
For example, you bought a currency at a cost of 100, and it kept rising at the beginning. But when the bull market turned to bear market, it fell again. You said you would sell it when it returned to 100 at the beginning, but the situation did not improve. You then said you would sell it at 70, and then when it fell again, you said you would sell it at 50. In the end, you sold it at 20!
Outcome bias: Judging a decision based solely on its outcome, without considering the quality of the decision itself.
For example, the cryptocurrency industry had a black swan event on May 19 last year, and many people began to doubt themselves. However, Nassim Taleb once pointed out in his book (The Black Swan) the concept of "narrative fallacy", that is, how imperfect past events affect our worldview and our expectations for the future. Therefore, we often make up far-fetched explanations for past regrets and believe them to be true, in order to deceive ourselves.
Recently, I plan to ambush a potential coin that is ready to explode. It is very easy to double it. At the same time, I am also preparing to find some potential coins to hold by the end of the year. The expected space is more than 10 times, and there is no problem. Follow up and eat meat below 999
