I have been in the crypto world for ten years; six years ago, I quit my job to trade crypto. From being poor to wealthy, what truly changed me was a night five years ago. A senior mentor’s words struck me profoundly, helping me position myself properly and understand the eight essential periods that every crypto trader must go through. By constantly reflecting and using this as a mirror, I finally recovered everything I had lost!
Perhaps in the eyes of some, retail investors are always lambs waiting to be slaughtered!
If you are preparing to enter the crypto world, I sincerely hope this article will help you. As someone with good summarization skills and decent expression, I believe my thoughts may be of some help to you.
Alright, let's get straight to the point~
When you find it hard to make a selling decision in trading, ask yourself: if your analysis is correct, then why is the market moving in the opposite direction? The only reason is that you are wrong because the market does not make mistakes!
A must-read for crypto newbies: hardcore strategies for position management and trading mindset
As a newbie in the crypto world, you need to learn two hard skills: position management and trading mindset. Mastering these two skills will allow you to establish a foothold in the crypto world, and making money will no longer be a dream! First, let's talk about position management, which is the ultimate protection for your wallet. You need to learn to set a safety line for yourself; once you make some money, quickly place a 'protective cover'—a stop-loss order—near the opening price. This way, even if the market turns against you, you can still protect your principal. Especially when trading small altcoins, once the price rises, you need to be alert, increase your take-profit levels, and follow the price movement, while also not forgetting to place that 'protective cover.'
Never let a little profit make you complacent; you must know when to take your gains. If you accidentally incur a loss, don’t get impulsive and double down out of spite, as this will only lead to greater losses. Remember to follow the trend and don’t always think about bottom fishing for cheap; the true bottom is determined by the market, not by your guesses.
You need to have a fixed trading system; don’t change your mind every day, as that will only confuse you. Be patient and don’t always think about chasing highs and cutting losses; corrections are good opportunities. Also, manage your position and leverage well; don’t forget your limits when you make money; know when to stop. Now, let’s talk about trading mindset, which is crucial for determining whether you can survive in the crypto world for the long term. When encountering floating profits turning into floating losses, you need to stay calm and not let emotions cloud your judgment. Remember, trading crypto is about mindset; you must learn to contend with your own psychology and not let momentary gains and losses dictate your emotions.
If you want to do well in the crypto world, you must keep learning and enriching yourself. Summarize every day, learn from practice, and improve your trading skills. Only then can you stand firm in this unpredictable market and earn a fortune. In short, position management and trading mindset are the two key tools for trading in the crypto world. Newbies, if you want to make money in the crypto world, you must practice these two moves well.
Rely on 'feeling' to trade coins
Many people around me have asked me how to trade, what strategies to use, and what the core philosophy is. My usual reply is to rely on feeling. At first glance, it may seem like a dismissive answer, and naturally, no one would believe me. If relying on feeling could really make money, then why do most people lose money in the market while only a few make profits? Is my feeling more accurate than others? Actually, it’s not that simple. The question of how to trade is indeed difficult to explain in a few words, so I simply answered with 'feeling.' But this 'feeling' is not the same as the common understanding; the 'feeling' I refer to is a term that encompasses a series of parallel factors that have been thought through, resulting in a sequential outcome. Due to the numerous factors, I refer to the decision-making results as feelings, rather than the simple emotional feelings we usually understand, which imply a belief that prices will rise or fall.
Under this decision-making logic, I will not solely rely on technical analysis, fundamental analysis, or trading experience to make trading decisions.
First, fundamental analysis in trading is the most lagging aspect; the market may have already reacted long ago before any changes in fundamentals are noticed. Furthermore, technical analysis is also lagging, but it is much better than fundamental analysis in many cases, often providing quick signals for market reversals, aiding in entry and exit.
The only thing that has a leading effect is experience. Experience can predict market trends, make anticipatory judgments, and when technical signals are given, take corresponding actions immediately, such as stopping losses or entering trades in a timely manner.
So, what I call 'feeling' is not that simple, but rather a collection of a series of complex signals. This 'feeling' is just one crucial part of my trading decision-making process, not everything. After the 'feeling' arises, I still need to consider a series of other factors, such as cost-effectiveness, fund usage, risk management, etc. Only when all these factors are considered can I ultimately decide whether to execute a trade. Thus, trading based on 'feeling' is quite reliable. The core investment logic is based on the 'feeling' generation model above. As a subjective trader, I have found an investment and trading model that suits me. Please note that I distinguish between investment and trading. Here, investment refers to holding mainstream coins with a larger position over a longer cycle, with a lower operation frequency, capturing large fluctuations at the weekly level, achieving returns in both fiat and crypto. Trading, on the other hand, refers to small position operations in mainstream coin contracts and small market cap altcoins, with a relatively high frequency and much shorter cycles. Generally, capturing fluctuations at the four-hour level can yield considerable coin-based returns, with an annualized return of 100% being relatively easy to achieve. As for altcoins, their price increases are generally significant, not less than 2-3 times, so the timing for investing in altcoins is when the market truly has heat.
You can enter the market later; small funds can be considered a lottery. Through this kind of combination strategy, multiple benefits can be achieved.
1. Large positions in spot trading can truly capture the benefits of a significant rise in coin prices.
2. Small position contracts isolate risks; even if unexpected events occur, there will be no systemic risk.
3. Futures contracts are for medium to short-term strategies, replacing frequent operations in spot trading and avoiding the risks of chasing highs and cutting losses.
Of course, the biggest premise for the above strategies to be applicable is that we believe the bull market for cryptocurrencies has not yet ended, and there is still significant room for future market value growth.
Space. Personally,
This strategy shows that I am firmly optimistic about the great opportunities in the cryptocurrency field, which is the coin-centric thought. More accurately, if a bull market does not come, I will always be a coin-centered investor; when the bull market arrives, I may shift to fiat currency-centered.
Trading psychology helps overcome human weaknesses.
Any crypto trader must have a strong inner self after being tempered by the market; otherwise, they will never become a qualified crypto investor, and making money will be as hard as reaching the sky.
Everyone knows that the crypto market has two significant characteristics: trading 24/7 all year round and extremely high volatility. These two points coexisting in a trading market can only be found in the crypto world, bringing both great opportunities and high risks.
So, if you want to make money in the crypto world, besides having the decision-making logic and investment trading logic mentioned earlier, you must have a stable mindset and learn to restrain human instincts of greed and fear. Greed and fear are also the two main characters in trading psychology, leading to most trading behaviors.
As a trader, you can't avoid the psychology of getting rich quickly, which is greed. 'Newbies die from chasing highs, veterans die from bottom fishing'—this phrase speaks to the consequences of greed.
This kind of greed exists in all financial markets, including the stock market and crypto market. Regardless of the financial market, stories of getting rich quickly abound, and it is precisely this psychology that drives everyone to trade. Once trading begins, the desire to make immediate profits intensifies, especially in the crypto world, where many retail investors want to turn 10,000 into 1,000,000.
The desire for quick wealth has easily clouded their judgment; they charge forward with money, never considering the risks. In the end, those who want to earn 100 times quickly either end up with nothing after being cut by altcoins or are caught in futures contracts that explode and force them out. The intense greed and eagerness to get rich are significant reasons why most retail investors get cut. Little do they know, the trading market always follows the 80/20 rule—where a minority makes money while the majority loses; I estimate that in the crypto world, it might even be 90/10.
If you think carefully, you will easily understand that very few players in the crypto world who have made significant money have done so within a few days or through a single trend; they have all earned money after trading for a long time. In short, it requires trading time for space; the appreciation space for digital assets is still there. Whether it’s holding coins or trading, as long as you have enough patience, abandon the mindset of getting rich quickly, and control your greed, there will always be a day of success.
Contrary to greed is panic, but they are like twin brothers, inseparable. Whether chasing highs or cutting losses frequently, the root cause is this trading psychology at work.
In the minds of retail investors, there are a million directions in a minute; when prices rise, they rush in, and when prices fall, they sell quickly. In reality, prices haven’t fluctuated much; it’s just that their inner demons have amplified that panic. The result is that retail operations and market trends are like two sine waves out of phase by 180 degrees, never in sync, as if being targeted by the big players, becoming counter-indicators. They are exhausted, constantly cutting losses. I believe everyone has had such experiences; newbies often do this, and even veterans can act similarly when they are not in the right state. The root of it all lies in mindset, which is essentially trading psychology. It shows how crucial trading psychology is for traders.
It is important to remind you that this psychological growth process is not something you can master just by reading others' articles; it requires true internal cultivation through the trading process, needing to be experienced, practiced repeatedly, and corrected to gain rewards. It can definitely be described as a war without gunpowder, a game between human nature and the market. Only by overcoming human weaknesses can one achieve victory in this war; hence the saying 'trading is against human nature.'
If you are still feeling confused and don’t know how to start in this market, leave a 333 and get on board!
