1. Capital management.
Divide the principal into 10 parts, using no more than one-tenth of the principal in a single trade. For example, if you have 10,000 to trade, then your stop-loss cannot exceed 1,000. Set positions based on loss, and when you find a suitable entry point, calculate the stop-loss at 1,000 before opening the position. If you are a novice with lower risk tolerance, you can also divide the principal into 20 or 50 parts to proportionally reduce losses.
2. Always use stop-loss when opening positions.
Open positions with stop-loss, protecting your principal. Plan the stop-loss position before opening the position, rather than impulsively opening it and then thinking about when to stop-loss. At that time, you have no plan and likely do not know where to stop-loss, which is very dangerous.
3. Do not overtrade.
Overtrading violates the first principle of capital management. If capital is divided into 10 parts, losing 1/10 each time means that with frequent trading, if all ten trades in a day are wrong, the principal will be lost. Do not overtrade; maintain patience and wait.
4. Do not let profitable trades stop-loss you out.
Do not let unrealized profits turn into unrealized losses. Once you have a certain level of unrealized profit, set a protective stop-loss near the opening price. If a formerly profitable position turns into a loss, the psychological impact will be significant, much worse than if you had originally closed it at a stop-loss. This point should be understood by anyone with experience. As for how much unrealized profit to set a stop-loss, it depends on personal acceptance, generally above 3%.
5. Do not go against the trend.
If you are unsure of which way the trend is going, then do not trade. In a bull market, the trend is clearly upward, while in a bear market, the trend is clearly downward. Do not confidently try to time the top or bottom against the trend.
6. Exit and observe when confused.
Continuing from point 5, if you cannot tell the trend, then stop trading and wait for the trend to clarify before entering.
7. Buy liquid and actively traded cryptocurrencies.
Stay away from illiquid assets. For example, newly listed coins on exchanges often have poor liquidity. Even with airdrop tokens, you know there will be significant sell-offs, but in reality, you can't grasp them. In cases of insufficient liquidity, your short positions can easily hit stop-loss or even lead to liquidation. Illiquid assets generally do not conform to technical analysis.
8. Diversify risks.
Trade multiple assets instead of going all in. Do not put all your eggs in one basket. Even in a clear trending market, there can be fundamental issues with a single asset that lead to adverse movements. My advice is to diversify investments from mainstream coins and those with relatively high trading volumes.
9. Try to use market orders more often.
Do not only use limit orders; be effective and flexible in responding to market orders. Sometimes the market moves very quickly, and limit orders can often miss the opportunity. For example, when stopping losses, if the market moves very fast, the exchange's limit stop-loss can easily miss the stop-loss opportunity, leading to significant losses.
10. Do not terminate trades without reason.
Strictly execute plans without sufficient reason to change them casually. Many people, after opening positions with some profits, get anxious about securing gains. When prices move in the desired direction, patience is required. If you are concerned about significant profit retracement, refer to point 4 to set protective take-profit or trailing stop near the cost price.
11. Timely withdrawal.
If your trading is going smoothly, you can transfer some of your profits to a backup account or withdraw them for emergency needs. Money that hasn't left the casino never belongs to you. When trading, do not reinvest all your earnings into the market; instead, take out a portion and place it in another account for emergencies.
12. Do not buy for a single dividend.
In cryptocurrency, do not buy certain coins just because of profits from airdrops or staking, as it often leads to small losses turning into large ones.
13. Do not attempt to add holdings to lower costs.
Try not to continuously add positions to lower costs, as this is the biggest mistake traders can make. Buying as the price falls may yield a few lucky rebounds to profitable positions, but if it continues to fall without rebounding, a single one-sided market can take away all your principal. Many big players on Wall Street have gone bankrupt due to bottom fishing.
14. Do not exit due to loss of patience.
Do not enter the market out of impatience from waiting too long. Wait patiently for trading opportunities; do not place orders just for the sake of trading, and do not leave the market due to a lack of patience. When you have orders, patiently wait for the results of take-profit and stop-loss.
15. Avoid small profits and large losses.
Do not take small profits prematurely before reaching your take-profit level, and do not hold positions at planned stop-loss levels, allowing a small stop-loss to turn into a large loss. Losing big and gaining small ultimately results in loss.
16. Do not revoke the stop-loss point you have set in the trade.
Continuing from point 15, once a stop-loss is set, do not casually cancel it, lest small losses magnify into large losses.
17. Avoid frequent trading.
Frequent trading fees can unknowingly erode your principal, and frequent trading increases the probability of losing your principal. Keep patience and wait.
18. Do not only go long and not short.
Speculation is not investment. During a bull market, the market trend is very clear that it is rising, and you love to go long. But during a bear market, when there is a clear downward trend, do not stubbornly go long. Instead, short at highs and align your trades with the trend; this is the way to make money.
19. Do not buy because the stock price is low, and do not sell because the stock price is high.
Some cryptocurrencies were originally worth 100 USD, but during a bear market, they dropped to only 1 USD. At this time, do not buy just because the price is low; in fact, it can drop by another 90%, like Luna. Conversely, if a cryptocurrency is only worth 1 USD and rises to 100 USD during a bull market, do not short it just because the price is high; it could actually rise to 1000 USD.
20. Pyramid adding method.
The pyramid adding method refers to opening a relatively large position initially, and then adding small amounts as the market moves in the desired direction. For example, during an upward trend, after a certain rise, entering a consolidation area, wait until this area breaks upward before adding positions. If it does not break, do not add positions.
21. Go long on small-cap stocks and short on large-cap stocks.
In the crypto world, during a bull market, it's very easy to double with small coins. Illiquid assets can have huge slippage when closing and stopping losses, while shorting liquid mainstream coins, like Bitcoin, is relatively safe.
22. Do not engage in hedging trades.
When the direction is wrong, clear your positions and admit your mistake while waiting for opportunities. Many people do not stop-loss when their long positions reach the stop-loss point, but instead open a short position to hedge. This is meaningless. If you believe the price will continue to drop, you can close your long position and open a short, or stop-loss at the stop-loss point and take a break. Leaving the original long position and then opening a short will only waste margin.
23. Plan your trades, trade your plans.
Without sufficient reason, absolutely do not casually change your trading plan. Each trade must have sufficient reason and be executed according to the established plan. Do not exit easily before the trend reverses.
24. Do not increase positions after making profits for a while.
Do not increase your position size after making a few profits. If you always trade one Bitcoin, after many profitable experiences, you will be very confident. When the next opportunity arises, you may increase your position to 10 Bitcoins. If you incur a loss then, you will lose all the previous 10 profits. As the saying goes, every time you think about going all in, you will always be caught in a big loss.
In a bull market, we must not miss any opportunity for continuous gains. If you desire to double your capital, wish to make a big profit, and want to recover losses, then please closely follow the steps of 'Toxin Brother' to layout for the upcoming big bull market! Toxin Brother will do his best to help you realize your dreams of capital doubling in a bull market, making your investment journey easy and enjoyable!
