Former U.S. President Donald Trump publicly supports cryptocurrencies and vows to make the U.S. a 'global cryptocurrency center.' He may implement more favorable regulatory policies after taking office.
Some countries are also considering including Bitcoin in their sovereign wealth funds or establishing national Bitcoin reserves, such as Brazil, Poland, and Russia, which will bring more legitimacy and stability to the cryptocurrency market.
The cryptocurrency market is highly competitive, with new crypto projects continuously emerging, which may impact the market share and value of existing projects. Investors need to conduct in-depth research and analysis on different projects, selecting those that are competitive and have growth potential for investment.
If you plan to trade cryptocurrencies for a long time to make money, you must remember these five principles, or you'll eventually be consumed by the market.
1. Always stay calm and be a rational investor
The volatility in the cryptocurrency market is extremely intense, with fluctuations of 10% within a single day not being uncommon. If you can't stay calm, you may easily be swayed by short-term fluctuations, ultimately leading to losses. Whether in a bull market or a bear market, rational investing is undoubtedly the cornerstone of success. Remember: every major rise or fall could be the market's 'touchstone'; those who can maintain rationality and not follow emotions will go further.
2. Set stop-losses; never gamble on a moment's luck
Many people want to make a lot of money from market gains, but investors who do not set stop-losses often end up suffering heavy 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 entering a position; 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 risks
Investing in the cryptocurrency space is full of uncertainties; the failure of any project can lead to complete losses. Therefore, never put all your funds into one project. Diversify your investment portfolio wisely, preferably choosing several promising mainstream coins and innovative projects. This way, even if one project temporarily underperforms, you still have other 'insurance'!
4. Follow the trend, do not go against it
The trend is your strongest ally. Market conditions cannot remain unchanged; periodic fluctuations will inevitably affect market sentiment. Familiarizing yourself with and recognizing trends, and acting accordingly, can help you gain momentum. When the market is generally bullish, you can appropriately increase your position; when the market shows a clear downtrend, decisively reduce your position to control risk.
5. Focus on long-term value, minimize short-term speculation
Although short-term volatility may seem profitable, most people who engage in short-term speculation are losers rather than winners. It is essential to fundamentally recognize that both Bitcoin and other mainstream cryptocurrencies possess strong long-term value. When investing, keep a long-term perspective, not just for short-term profits, but focus on projects that have strong advantages in technology, application, team, and other aspects.
I'd like to share some of my trading experiences:
1. Why do most retail investors incur losses? It's not that retail investors can't pick coins; a significant reason is that they don't know how to operate. They either trade too frequently or invest everything at once, without understanding the larger trends in the crypto market.
Every time I have time, I watch the market, and when I see a drop, I panic and want to make a move, which often leads to missing out on significant market movements. Sometimes when the currency shows a clear downward trend, people still try to hold on; short-term trading ends up becoming long-term holding, resulting in increasing losses. The correct approach is to select a coin with good fundamentals and growth potential; as long as its overall trend is upward, you can continue to hold onto it.
2. Opportunities arise from declines, while risks arise from rises. Retail investors often like to chase uptrends and fear declines. When they see their coins not rising for a day, they get anxious and want to chase after rising coins, resulting in always standing at high points. If their coins undergo significant adjustments, they can't handle it, disregarding the larger trend, leading to missed strong opportunities and significant profits. In reality, declines present opportunities, especially during volume contraction pullbacks in an upward trend; such opportunities are golden pits.
3. Only operate within your own system. Once you have your own trading system, you will find trading becomes much easier, and you will no longer be swayed by market hotspots but remain calm. For example, if I focus on trend value trading, I will only look for undervalued sectors with good fundamentals to add to my watchlist; when market funds enter, I will follow along for trend trading, taking profits and then looking for the next target, clean and straightforward. Therefore, I rarely get stuck at high positions; it only happens if the price movement does not meet expectations, leading to my exit.
4. Set take-profit and stop-loss levels. Trading is inherently a probabilistic event, and there will be successes and failures. For most retail investors, setting take-profit and stop-loss levels is crucial.
When the price trend does not meet expectations or breaks the trend, you must unconditionally stop-loss, and do not just hold on. Similarly, if the price has already yielded significant profits, exiting at any time is a good decision; do not feel regret. Very few people can exit at the highest point; exiting at a relatively high point is sufficient.
Learn to diversify your holdings; do not put all your eggs in one basket. For example, if you are very optimistic about a coin and invest your entire capital, and then it drops by 10%, you will be left with no options but to stare blankly. However, if you enter with only 30% of your capital, you can choose to average down or exit since the loss won't significantly affect your overall position.
6. Patience is key; waiting is also a form of trading. We are not gods and cannot simply enter and profit immediately; often, we need to wait, and time can compensate for operational errors. If your trading skills are lacking, then use time to make up for it.
7. The gold emerges from the sand; during a weak market, it is easier to find truly strong stocks. When the index drops significantly, if your coin rises or only slightly declines, it indicates that there is strong support behind that stock, which can be held long-term, with great potential for future growth.
