Dear crypto friends, before you dive into this article, please make sure to read it thoroughly. I can't say this article will make you rich, but it can at least help you avoid some detours and lose less money, giving you a bit more self-protection in this unpredictable crypto market.
Let's be clear, don't fantasize about making easy money in the crypto world without any experience. Whether trading or speculating, without a lot of practical training and accumulated experience, making a profit is nearly impossible. If you dive in headfirst without understanding anything, hoping to get rich overnight, that's really not a wise choice. To put it bluntly, it's no different from gambling; the odds are that you'll end up losing.
To give an analogy, if you want to set up a roadside stall to sell small goods or skewers, don't you have to go around and gather information? You need to study the foot traffic on the road, understand the surrounding consumption levels, and always keep an eye on when law enforcement officials come to inspect. You have to keep up with trends in product selection, and for barbecuing, you need a secret sauce recipe. After a whole day of work, if luck is on your side, you might just make a few hundred bucks. Now look at trading in the crypto world; while placing an order might seem simple with just a few clicks, do you really think making money is that easy, that you can casually rake in thousands and become a millionaire? Stop dreaming; let's get into the real content.
I. Technical Indicators: The Key "Navigator" in Practical Trading
Technical indicators are really useful—super useful! Many crypto moguls who focus on news hype that following news to trade cryptocurrencies can make anyone money. There are constant rumors about large capital purchases of Bitcoin and Ethereum, institutions dumping assets, or significant inflows and outflows of certain ETFs. But I have to remind everyone that news has a fatal flaw—timeliness!
Everyone, think about it calmly—every time you find out that institutions are selling off, hasn't the market already crashed? Even if you're incredibly lucky and your opening direction aligns perfectly with favorable or unfavorable news, when do you take profits and exit? How can you judge when the institution has finished selling, and how do you know when they stop buying? After going through all this, you'll find that technical indicators are like a beacon in the dark. They can help you keenly catch signs of shrinking trading volume, clearly see the ebb and flow of bullish and bearish forces, and let you know which side is about to exhaust itself and face collapse.
So, at the critical moment when the tug-of-war between bulls and bears is nearing an end and equilibrium is about to be broken, isn't the probability of entering and opening a position significantly increased? Let's take the CPI data release this month as an example. On August 30, once the CPI data was released, the market generally thought it was bad news, and logically, Bitcoin should have dropped significantly. But what happened? It actually reversed and rose by 2%, and then began its downward trend. Imagine if you blindly shorted on August 30 based only on the news. Facing Bitcoin's sudden 2% reversal, could you hold on without cutting your losses? I certainly couldn't. Even with a 20x leverage, watching my account drop to -40% without cutting losses is simply impossible. If the market continues to plummet afterward, your mindset would explode, and it feels like the sky is falling. I've personally experienced this painful scene.
As for learning technical indicators, there are countless tutorial videos online for everyone to choose from. However, it is essential to combine them with your own practical trading experience and summarize a set of indicators and parameter combinations that best suit your trading style; that's the key. What I commonly use now is MACD and RSI, which have been practically tested and are quite useful for me.
Let me add a few more words. During my process of learning indicators, I took countless wrong turns and nearly went through all the so-called high-winning-rate indicators praised by various experts on YouTube. In the end, I concluded that those expert indicators often perform worse in practice than the simple and straightforward Martingale strategy. If you want a quick start, you might as well directly reference some basic quantitative or Martingale strategy parameter settings, deeply study the operational principles of the Martingale strategy, and only when you understand it can you truly step into the threshold of becoming a trader.
II. Position Management: The "Safety Valve" that Determines Life and Death
Position management is even more critical than taking profits or cutting losses; it directly affects how far you can go in the crypto world. I'll share my personal insights: I always stick to half-position trading, regardless of whether I'm using 20x leverage or 10x leverage—this is non-negotiable. I set my stop-loss level quite extreme—directly -100%—but this method is not suitable for everyone, as I have been in the crypto world for many years and consider myself an experienced player. I choose my opening positions quite cautiously.
The core purpose of position management is to leave yourself a way to make a comeback when the market is unfavorable or your account is about to be liquidated. Just like the market on August 30 when the CPI data was released, since I was using half-positions, I likely could withstand the initial volatility. If I had gone all in, I would probably have panicked and had to cut losses, ending up with nothing. Reasonable position management can enhance your psychological resilience and enlarge your profit space when the market reverses.
For example, if you go all in and your losses reach 50%, you'll start sweating profusely, and your hands won't cooperate; if you want to cut losses, you fear the market will reverse immediately, and you could recover; but if you don't cut losses, you constantly worry about being liquidated. But if you only use half a position, your mindset is completely different—you can even calmly shout in the group, "Bring it on!" because you have a backup plan.
Doesn't it feel like position management is simply a magic tool for dealing with the extreme volatility of the crypto market? Therefore, those who recklessly go all in are either ignorant of the risks or have a purely gambler's mentality, which is very unwise.
Additionally, there's another advantage to position management: if your position is profitable, you can consider adding to your position with your floating profits. This way, if you incur losses, you still have half of your principal as a safety net; if you make profits, you can expand your gains accordingly. This is much better than going all in, only to be left staring blankly at the screen, powerless.
III. Holding Time: The "Biological Clock" for Controlling Rhythm
I am a short-term trader, used to opening 10-20x leverage positions, and my personal holding period rarely exceeds two hours. However, from my observations, those who really make big money in the crypto world usually have an average holding period of over 24 hours. For beginners or those just starting, I still recommend starting with short-term trading. The benefits are twofold: first, you can quickly accumulate experience in using indicators and practical trading; second, you start with small amounts of money, control risks, and avoid being overwhelmed by desire and losing everything.
I have a regular trading schedule, primarily concentrated between 7:30 AM - 10:30 AM and 7:30 PM - 12:00 AM. Why choose these two time periods? Because big data shows that during these times, cryptocurrency prices fluctuate relatively significantly, and the market is quite active. The reason is also easy to understand; in the past two years, Bitcoin's performance has become more strongly correlated with the US stock market, and the trading hours of the US stock market have a significant impact on the cryptocurrency market. This is a little tip.
In other words, my trading strategy mainly relies on 5-minute, 15-minute, and 30-minute candlestick charts to formulate plans, while longer-term candlestick charts are primarily used to judge the overall direction of the market.
My philosophy is that Bitcoin is traded 24/7, and combined with the amplification effect of leverage, the volatility is beyond imagination. Therefore, I generally do not recommend holding positions overnight. After all, the news in the crypto world is too crazy, and there might be significant news at any time that could turn the market upside down. I believe more in relying on technical analysis to open positions rather than relying on luck or betting on probabilities.
As for me, I'm not afraid of making small profits; I'm afraid of losing money without understanding why. Some people might think my trading style is too conservative, or maybe I'm still in the growth stage as a trader, or perhaps my asset base can't compare with the big players. But I represent the majority of ordinary players; for players with small capital, following my approach will generally not lead to major mistakes.
Those crypto moguls, holding millions in USDT, can open a 100,000 USDT position with 5x leverage, maintaining a calm mindset, believing that the market will eventually reverse and they will profit. But we ordinary players are different; our funds are limited, and we must be steady and cautious, gradually accumulating capital and operating with extreme caution. I hope everyone can make more money and avoid pitfalls in the crypto world; may you have smooth sailing!
