Many people want to succeed in doing something. They often have a relatively clear ultimate goal, such as hoping to make $1 million with $10,000, but they lack a systematic execution strategy customized to achieve their goals. Simply put, they lack a set of methodologies that suit them.
There are many ways to form a methodology, such as:
- Blindism
They never think about the so-called methods or strategies, believing that they are useless. They naively believe that as long as they gamble a few MemeCoins, they can become rich overnight like the stories they have heard. They even build their dreams of getting rich directly on others (mostly strangers). However, the result is often that at best they may lose some tuition fees, and at worst they may directly fall into a pig-killing scheme and lose all their money.
Then, after one or even multiple failures, we can turn to borrowing or empiricism.
- Take what you want
You can directly learn or copy other people's methods and use them directly. For example, I mainly use the DCA strategy to hoard Bitcoin. In fact, anyone can directly adopt this strategy. But this method may not be suitable for everyone. As for hoarding coins, first, it is something that requires long-term persistence. Second, if your own goal is to increase tenfold or a hundredfold, then this method obviously cannot help you achieve your goal in the short term.
- Empiricism
Although these people will also learn from other people's experiences, they often just stay at the perspective of watching, and most of the time they don't think about its underlying logic. This is because they trust themselves more, such as trusting their intuition or feelings, and even believe that they are the chosen ones in this field.
They will try to accumulate experience through their own real money attempts, which will basically lead to two results. First, if they are good at reviewing and summarizing their experience after making money/losing money, they should be able to summarize and form a set of execution strategies that suit them relatively quickly. Second, if they do not reflect and review effectively after making money/losing money, there is a high probability that they will return the money they earned by relying on their own luck, or even be directly trapped or lose all their principal.
Although most of the time, we all know that failure is the mother of success, but some failures, such as high-leverage operations, once they occur, there is basically no turning back and we can only say goodbye to this field.
But in fact, the formation of methodology is not only based on the above-mentioned execution methods, but also has a lot to do with one's own behavioral habits. So, how can we better form our own methodology?
1. Make your daily routine regular
Some people habitually stare at the market after buying a certain coin, often staring at the chart for a long time. In fact, this is completely unnecessary. It not only wastes time, but also does not help the transaction itself. Moreover, because this field is traded 24 hours a day, many people will choose to stay up late to watch the market. We will not discuss whether this method can make money, but it is definitely not good for your health.
If you can't even ensure that your daily routine is regular, how can you be disciplined and systematic in your trading operations?
It is better to make sure that your daily routine is regular, and then plan how to study or trade based on this basic premise. For example, you can set corresponding alarms at key price levels, and then check the corresponding charts if you receive an alarm. Otherwise, just read some articles to learn, or focus on your work. If you don't want to study or work for the time being, you might as well go out for a run to exercise.
The key to trading is not to watch the market all the time, but to learn not to do unnecessary things while waiting.
2. Clarify and narrow your areas of concern
Everyone’s time and energy are limited. It is impossible for us to be proficient and professional in everything. We just need to identify the areas we are most concerned about and continue to go deeper into them.
For example, I am currently focusing on two major areas: economy and encryption.
Because I trade very infrequently now (mainly hoarding coins), and I spend more time and energy on writing e-books, so I may focus on a wider range of areas. However, each specific major field is divided into many sub-fields (or tracks). If your core goal is to make money through trading, it is recommended to only select 1-3 key sub-fields (tracks) for attention and in-depth research. The fewer the better.
Just like what I mentioned in my previous article, taking the crypto field as an example, the current crypto market can be divided into at least 200+ different narrative tracks (such as AI, RWA, GameFi... etc.), including at least tens of thousands of projects of different types (if various MemeCoins are included, then the current number of projects is estimated to have exceeded 1.7 million). It is impossible for us to thoroughly study all tracks and projects, so we can just choose the 1-3 tracks that look best to study.
You can even use some third-party tools to optimize your time management for the projects you focus on and research, such as using tools like Clockify (a time tracker plug-in) to track the time you spend on each project website through the Chrome browser.
Time is the most equitable distribution in this world. Everyone has 24 hours a day. How to optimize your time management is one of the most critical issues to get ahead of others.
Don't always chase after various hot spots to seize opportunities, but try to delve deeper into the areas you are interested in and discover potential opportunities.
3. Appropriately eliminate the impact of various messages
In order to keep themselves learning, some people may install a dozen different news apps, or even follow a lot of people on social platforms, and then spend most of their time and energy every day on checking messages.
On the surface, it seems that you have learned a lot from browsing every day, but if you calm down and review and summarize, you may find that browsing 5-6 hours of miscellaneous information every day does not bring you much effective help. It may even affect and interfere with your plans because of various information.
Now is an era of information explosion, and it is also an era that easily makes people impetuous. When most people are becoming more and more impetuous in this environment, we should try to calm ourselves down. It is better to delete unnecessary software, read more high-quality long articles or books, record more, think more, and summarize more, try to reduce those behaviors or activities that are not helpful to your goals, and spend time on things that can create higher value.
I basically don’t read all kinds of so-called quick news, and I rarely check Twitter, but I will take the time to read the latest research reports and in-depth articles, such as CMC Research, Messari Research, Coingecko Research, Binance Research, etc.
4. Optimization of execution discipline and strategy
The so-called execution discipline is to set the process steps to achieve your own goals, and these steps must be strictly carried out according to the plan.
Whether you are doing long-term fixed investment operations or short-term swing operations, you must think clearly about your execution discipline, such as:
- Manage your positions well and never go all-in
- The majority of positions are always placed on Bitcoin, and MemeCoin positions do not exceed 1%
- Avoid over-dispersing your positions and hold no more than 10 currencies
- Buy in batches and sell in batches
- Before trading, it is not only necessary to customize a profit-taking plan, but also a stop-loss plan.
- Keep at least 10% of the stablecoin position to ensure a certain liquidity
- We have said many times before that the two most important points for newcomers are: protect your capital and don’t touch anything you don’t understand
- etc……
The above may be relatively common execution disciplines, and different disciplines may be suitable for different people. Different people should also customize different disciplines. This requires you to expand your thinking and execution attempts.
On the basis of executing discipline, some plans can also be optimized and adjusted as the market changes, but such adjustments must be made in the early stages of executing discipline. For example, your original discipline is to give 60% of your position to Bitcoin, but because you find that a certain altcoin is suddenly growing very well, you simply sell all your Bitcoins and replace them with the corresponding altcoin. This is not an optimization, but a disruptive change, which also means a change in your risk preference.
5. Make good use of various tools and data
On-chain tools are an important part of the previous articles of Hualihuawai. Proper use of various on-chain data can make our research work more efficient. Although some people also say that on-chain data is for leeks to see. But even so, as long as the data or indicators of the corresponding tools can provide us with some new help or guidance, then it is also possible to use and study them as necessary. Everything is dialectical, and we can be tolerant of everything.
On-chain data is mainly targeted at two groups of people: those who use on-chain data for research and analysis (institutions or media, etc.) and those who use on-chain data to explore money-making opportunities (traders or investors).
From a trading perspective, if you want to use some on-chain data to find opportunities to make money, then:
The first thing is to determine the direction of finding data. For example, focus on finding highly liquid assets (to avoid slippage), identifying trending assets (using momentum), mining smart money, and so on.
The second is to use different tools to carry out the necessary excavation work. At present, there are actually many kinds of tools, and different tool platforms may have different focuses. You can also consider learning more about some commonly used tools through the "toolbox" compiled by Huali Huawai.
Next, let’s give you a brief step-by-step guide on how to use on-chain tools to build a trading strategy:
Step 1: Find projects based on data dimensions
Step 2: Create your own watch list
Step 3: Customize your strategy for trading
For example, we can use Momentum (used to identify trending currencies) and Mean Reversion (used to identify volatile currencies) strategies.
Momentum is a relatively common trading strategy, the core of which is to buy or sell based on the recent price trend of cryptocurrencies, focusing on following the trend and closing the position before the trend reverses.
Mean Reversion is a quantitative trading strategy based on statistical arbitrage, which uses the short-term deviation of prices and the regression relationship of long-term mean to trade. The core point of this strategy is that when the price deviates from its long-term mean, there is a trend that the price will return to its mean level. Therefore, this strategy can also be used to identify those volatile currencies and use their volatility to trade profitably.
