I believe I have the most authority to speak on this as someone who has been trading coins for 10 years. Ten years ago, I scoffed at technology, had no interest, thought it was dry and dull, and did not believe most people's statements, thinking their technical analysis was nonsense. For three years, I was stubborn and worked hard, only to end up with nothing.
I borrowed 400,000 from my brother-in-law to continue my journey to success and even quit my high-paying job to trade coins full-time. Now I have 51 million in the market, and just from interest, I earn 50,000 every day.
Besides solid skills, I strictly adhere to the following 10 tactical iron rules:
1. Trading cryptocurrencies is about trading emotions, consensus is about trading volume.
In the cryptocurrency space, which is full of volatility and uncertainty, trading coins essentially involves speculating on market emotions. When market sentiment is optimistic, investors are confident and flock in, driving up coin prices. For example, when significant breakthroughs in blockchain technology are announced, the entire cryptocurrency circle is immersed in an optimistic atmosphere, with investors actively buying, and prices of various coins generally rising. Conversely, when market sentiment is pessimistic, investors panic and flee, leading to price drops. For instance, when rumors of tightened regulatory policies emerge, panic spreads quickly, and investors sell off, resulting in significant price declines.
2. We must have self-control and self-restraint.
Teacher Qing Tian often says that each of us is a trader, a trader. Therefore, when we operate, we must think from different perspectives. Genius traders must approach problems from a rational viewpoint and not act on feelings. Too many people in the market act on emotions, driven by greed and fear. Once your emotions fluctuate too violently, your trading will distort, so it is crucial to remain calm and think rationally.
3. Respect and fear the market.
When the market is moving in one direction, never build positions in the opposite direction until there is sufficient evidence 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, buying on dips in an uptrend and selling on rallies in a downtrend. Respect market trends and follow the trend to improve the success rate of trading. In a clear upward trend, we must establish a principle of mainly going long and being cautious about going short! Do not be stubborn!
4. Position management.
When uncertain about the market or having doubts, make sure to stand aside and wait. The area of toilet paper is only about 10%, and the remaining 90% is to prevent yourself from touching the mess. The same principle applies to the cryptocurrency space; 90% of your wealth is earned in the 10% of your time. Therefore, it is essential not to be fully invested and to befriend time by using 90% to wait for opportunities. (Do not be fully invested, wait for the right moment.)
5. Learn trend analysis.
Add to positions only after breaking resistance, and short only after breaking the main distribution area.
After a long-term rise (with significant gains close to sensitive cycles), if there is short-term fluctuation at a high level, do not chase the second breakout that occurs within 3-5 days, nor should you hold overnight positions. After a long-term rise, if there is a breakout the next day but a significant gap down occurs, do not hold overnight positions (regardless of long or short). When the low points rise and high points rise,
the trend is good; when low points rise and high points fall, the trend is blocked; if new highs or new lows cannot be created, it is a decline; (higher lows and lower highs indicate an upward trend; lower lows and lower highs indicate a downward trend). This decline lasts longer than the previous one, indicating a change in trend (at least temporarily); if the decline exceeds the previous one significantly, it indicates that a trend change has begun, and the change in time is more important than the reversal of price.
6. Reasonably allocate assets, 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. Asset allocation and diversification are very important.
Diversify investments: choose multiple cryptocurrencies for investment to avoid putting all funds into one coin. If one coin performs poorly, the performance of other coins may offset your losses.
Keep some cash: holding a certain proportion of cash (stablecoins like USDT) during significant market declines gives you the opportunity to buy at lower prices.
7. Learn to combine long-term investing and short-term trading.
The volatility of the cryptocurrency market makes it possible to achieve high returns in the short term, but it also comes with enormous risks. Therefore, combining long-term investment strategies with short-term trading can help reduce risk.
Invest in quality coins for the long term: choose cryptocurrencies that possess technological innovation, strong teams, and application prospects for long-term holding, such as Bitcoin (BTC), Ethereum (ETH), etc. These coins have stood the test of time and are more suitable for long-term investment.
Exercise caution in short-term trading: Although short-term trading (like contract trading) can amplify profits, it can also magnify losses. If you lack extensive market experience and technical analysis skills, try to minimize high-leverage short-term operations.
8. A common problem among retail investors worldwide.
Holding onto losses indefinitely while selling immediately upon a slight profit, not looking at trends or trading volumes, but only at account profit and loss ratios, ultimately leads to infinite losses and limited profits. You need to operate in reverse: take profits when in the green, and cut losses at the first sign of a decrease. My profit-taking and stop-loss principle is to take profits at 15% and stop-loss at 10% when profits drop. If the price continues to rise, keep holding and let profits run. If it drops after buying, stop-loss if losses exceed 5% of the principal. If you can ensure a profit of 10% each time and a stop-loss of 5%, even with a 50% win rate over 100 trades, your returns will reach 300%. Is that hard? The difficulty lies in human greed and fear, aligning knowledge with action.
9. Plan trades, trade plans.
Many retail investors like to trade frequently, afraid of missing opportunities, trying to fantasize about seizing every chance. Trading is not something that needs to be done every day. Those who believe they must trade at all times overlook one condition: trading requires reasons, and they should be objective and appropriate. More often than not, it is necessary to stand aside and patiently wait. The reasons for entering the market are simply two: the market trends within your sniper range and the trading rhythm that belongs to you. The market provides accurate entry signals, and if it is indispensable to trade, opportunities become fewer, leading to less workload and avoiding human excess. The process can thus be much easier and more pleasant. Do not fear missing out; the market is always there, and opportunities are available every day. Only by learning to stand aside can you say you have begun to understand.
10. Average down to break even; seeking profits is greed.
When trading coins, there will always be a few coins that get stuck. At this point, remember not to fantasize about turning losses into gains; impatience will only lead you deeper into trouble. Honestly average down to protect your capital, so you can have a steady stream.
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