Trading Cryptocurrency: How I Turned 50,000 Yuan into 20 Million in Two Years
Through countless ups and downs, I’ve gained valuable insights into cryptocurrency trading. Here’s my experience and key strategies for success.
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1. Risk Management: Divide and Conquer
Fund Allocation: Always divide your funds into five equal parts. Enter the market with only one-fifth of your total funds at a time.
Stop Loss Control: Limit your losses to 10 points per trade. This means each mistake costs only 2% of your total funds. Even five consecutive mistakes will result in just a 10% total loss.
Stop Profit Strategy: Set a stop profit of over 10 points to ensure that successful trades outweigh losses.
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2. Follow the Trend: Key to Consistent Wins
Trend Alignment: Follow the prevailing market trend to improve your winning rate.
Avoid Counter-Trend Trades: In a downtrend, resist the urge to buy on rebounds. In an uptrend, capitalize on dips, which often present golden opportunities.
Strategic Buying: Focus on buying during low points within an upward trend, rather than bottom-fishing against the trend.
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3. Avoid Short-Term Surges
Beware of Skyrocketing Coins: Avoid coins that have recently experienced a sharp rise, whether mainstream or less popular ones.
Logical Perspective: Short-term surges are rarely sustainable. If a coin stagnates at a high level without further upward movement, it is likely to fall.
Risk of Gambling: Don’t gamble on coins that have already peaked; focus on sustainable growth opportunities instead.
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4. Use MACD for Entry and Exit Signals
Golden Cross Below the 0 Axis: When the DIF and DEA lines form a golden cross below the 0 axis, breaking through the 0 axis is a reliable buy signal.
Dead Cross Above the 0 Axis: When MACD forms a dead cross above the 0 axis and moves downward, it signals a need to reduce positions.
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5. Avoid Covering Losing Positions
The Pitfall of Covering Positions: Adding to losing positions often leads to heavy losses.
Reverse the Strategy: Instead of covering losses, increase your position when your trades are profitable. This ensures you capitalize on winning trades rather than chasing losses.
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6. Volume and Price Indicators Matter
Trading Volume is Key: Pay attention to large-volume price breakouts at low levels of consolidation. Trading volume drives price movement and indicates market interest.
Breakout Opportunities: Look for coins showing strong volume increases during price consolidations for potential upward momentum.
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7. Trade Only in Upward Trends
Focus on Growth: Prioritize coins with a clear upward trend to maximize winning chances and avoid wasting time.
Time Frame Indicators:
3-Day Line: Indicates short-term rise.
30-Day Line: Suggests medium-term rise.
84-Day Line: Signifies a primary rising wave.
120-Day Line: Indicates long-term upward potential.
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8. Regularly Review Your Performance
Evaluate Holdings: Regularly assess whether your chosen coins still align with your strategy and market judgment.
Technical Analysis: Check weekly K-line trends for consistency with your initial analysis.
Strategy Review: Revise your trading approach based on past results to improve future performance.
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By adhering to these strategies, I navigated the volatile cryptocurrency market and achieved financial success. Consistency, discipline, and continuous learning are the keys to thriving in this dynamic space.