Top Five Self-Risk Management Tips for Cryptocurrency Secondary Market Traders
On the one hand, writing this post is to summarize and alert myself. On the other hand, I hope that sharing it can give some inspiration to many newcomers who have just joined.
The five major risk management are: fund management, position management, opportunity management, message management, and mentality management.
1. Fund management:
1. Fund allocation: leave yourself a way out
It is recommended that you use half of your available liquidity for trading and speculation, and keep half of the funds for real life. Stud will only turn you into a complete gambler. Affected by the gambler's psychology, all your transactions will become irrational.
You can never know which one will come first, tomorrow or the accident. You must leave yourself a way out and be prepared to speculate in stocks until they return to zero. If you stud, you won't care. If you only use half of your capital to speculate in coins, you still have the opportunity to start over.
2. Fund protection: stop loss if you lose 3%
The volatility of cryptocurrency is very high. It is normal to make small losses and make small profits every now and then. It is also normal to make big losses and big profits occasionally! All sources of profit and capital accumulation are occasional big profits, and the real source of losses is also occasional big losses!
So what we have to do is to allow ourselves to often make small losses and make big profits, but to prohibit big losses!
Stop loss is the only way to prevent yourself from losing a lot. Stop loss if you lose 3%.
If you can lose 3%, it's either because you didn't find the right position or you went in the wrong direction. There are still many opportunities after the stop loss. You can find a better point to enter the market, or reverse the direction and re-enter the market.
We must always remind ourselves that in the cryptocurrency secondary market, we will never lack opportunities, but sufficient funds!
3. Be safe when you lose money: be diligent and stop profits
Floating profits are all imaginary, only when profits are cut can you really feel safe!
So how to stop profit?
First of all, you need to know whether the currency you buy is long-term or short-term. My point of view is that holding a position within one month is ultra-short-term, holding a position within three months is short-term, more than three months and less than six months is medium-term, and six months is long-term. More than a month is considered long-term.
①Super short-term, pull the plate up and insert the needle and leave without hesitation! Don’t be pity even if you pull the offer again later, don’t continue to chase! We must get used to frequent small losses and small profits. As long as we make money, we will continue to accumulate funds. We have no shortage of opportunities!
② In the short term, after pulling the market up and checking the needle, you will take half of the profit and leave half to see if it can continue to reach new highs. If not, just clear the position and exchange for the next coin. One thing to note here is that many coins can double within a month, so you can hold them for a long time at zero cost after doubling your capital. After all, this is the end of the bear market and the beginning of the bull market. If you have more patience and get the bull market at zero cost, there will be very generous returns!
③ Mid-term and long-term profit taking means doubling the capital and holding the position at zero cost. Continue to buy at periodic lows, continue to pay out capital after doubling, and continue to accumulate the currency and quantity of zero-cost positions. For me, encountering new lows is the most popular thing to see. It means that the number of positions can increase again, and the average price of positions will also decrease.
These are actually the contents of position management.
2. Position management:
All the purposes are to increase the currency and quantity of zero-cost positions!
The spot contract is 91 cents, the long-term and short-term contracts are 73 cents, and the buying position is 1234 cents.
1. The recommended proportion of contract funds is 10%
The leverage ratio of the contract makes the risk dozens or hundreds of times that of the spot. We are here to make money, not to gamble. We want to do things with less risk and more certainty.
As we said before, if we often suffer small losses and make small profits, and occasionally suffer big losses and make big profits, the contract will infinitely increase the probability of big losses, but the probability of big profits will not change! Why do you have to do something so stupid?
In the cryptocurrency secondary market, slow is fast. Spot is the safest and most effective way to accumulate funds. You will often suffer floating losses, but you will not be liquidated. In addition, there is a risk mechanism of stopping the loss if you lose 3%, and you can at most Small losses occasionally.
You still need to reserve 10% of the funds for the contract. If you are relatively confident, you may earn more by doing the contract than spot trading. But it should be noted that when you open a contract, you must be mentally prepared for a liquidation. Therefore, every time I open a contract, I only have a deposit of one or two hundred U. My attitude towards the contract has always been that I am happy if I make a profit, and I am happy if I lose money. It's not a pity.
In addition, my contract position is more about reducing the price of doubling my spot capital.
For example, for a coin, I buy 1k units at the spot price of 1u, and at the same time open a long contract of 1k quantity at the price of 1u. So originally I could double the principal of the spot with 2u, but when the spot contract opened long at the same time, I could double it with 1.5u. After paying the capital, I could hold 500 coins at zero cost, which was great.
To me, the contract is just a tool to help double the capital as quickly as possible. Coins that have not opened a contract can only wait for the currency to double before paying out the capital.
2. 30% short-term position
These are actually some of the currencies that rotate in the sector, such as the previous AI, storage, staking, second-tier and other tracks, and now education, RWA, monthly Binance Launchpad, etc.
The reason why only 30% of the funds are allocated is because these are only short-term hot spots. Once the hot spots pass, they are likely to fall back to where they were pulled from. If you only focus on short-term gains, you will be too busy chasing hot spots like a headless fly, and you will probably lose money because of chasing the rise.
If the goal is clear, all the transactions you make are just to lay out a few leading coins on the track, double the capital, and hold the position at zero cost. After the hot spots pass, you will continue to buy when there are new lows and wait for the next wave of pullbacks to double the capital. The cycle continues. You will hold more and more currencies and quantities, and only in the bull market can you have generous returns. Ten times and hundreds of times the coins come out of these new track faucets.
So why do you only use 30% of all spot funds for deployment?
There are too many uncertainties about whether we can hold it or not. Excessive allocation of funds will also create a gambler's mentality. When the hot spot arrives, the price will be raised very high, and when the hot spot passes, it will be almost cut in half. At this time, too much funds are allocated, and you will be very anxious in the process of chasing hot spots, and it will be easy to make mistakes, and you will frequently stop losses or cut profits. Watching the assets continue to decrease every day, continue to chase, continue to stop losses, a vicious cycle (just talking about a scenario with a high probability).
Therefore, if you put more funds into medium and long-term holding currencies, your income will almost continue to increase. Such as btc, eth, bnb, etc.
3. Position buying management
①1234 buy
10% of bottom position
Add 20% to your position
Target 30%
Defend or chase positions 40%
First of all, each currency will have its own psychological buying price range.
For example, BTC is currently around 29,300, and around 27,000 is the bottom of the current channel. My target price is expected to be 25,000, so my psychological buying price range is 27,000-25,000. Then I will buy 10% at 27,000 to make a bottom position. If it continues to fall to 26,000, I will increase the position by 20%. If it falls to the target price of 25,000, I will buy another 30%. Reserve 40% for defense in case the price drops to 20,000 in extreme circumstances.
Or maybe after setting the bottom position at 27,000, it goes up directly and stops falling. Then I will pursue 40% of the position at 28,000, and the remaining 50% will not move.
This is a long-term holding currency that is bought in batches such as btc, eth, bnb, etc.
For short-term currencies, hot coins, and rotations in the track sector, 235 or just 55 points is enough. If you have been reading my posts, every time I recommend a currency, I have a range of entry points. Buy 20% of the highest entry point, 30% of the middle point, and 50% of the lowest point. Or buy 50% of the highest entry point and 50% of the lowest entry point.
②Monthly fixed investment purchase
For btc and eth, you can invest and buy a fixed amount every month
In this way, most currency price fluctuations can be ignored, and the risk is extremely low. It is highly recommended for newcomers to buy BTC and eth in this brainless way.
3. Opportunity management: where blessings lie and misfortunes lie, misfortunes lie where blessings lie.
1. Stop it
A person's wealth also fluctuates like the K-line. When the luck is average, small losses and small profits are made. When luck is good, big profits are occasionally made. When luck is bad, we try to avoid it through the stop loss mechanism.
But there is a certain period of time when our luck is bad. No matter how we operate, stop losses occur frequently. Then at this time, we have to control our own hands, stop trading, stop watching the market and looking at the K-line (if we continue to watch, it is easy to lose control of our hands).
We have many opportunities. When the period of bad luck has passed, we can come back and continue to look for opportunities. We must control our hands!
2. Circuit breaker mechanism
Stop loss twice during the day and no longer continue trading. For example, after stopping the loss once during the day, do not continue to operate during the day. Review the market carefully and look for new buying points or exchange coins. If you feel confident, you can operate again at night and stop the loss. This means that you have no luck all day. Hey, let’s stop cooking, just turn it off, stop looking at it, and come back the next day.
Stop losses three times during the week and do not continue trading throughout the week. You can review the market, study, and read research reports, but no more trading.
Stop losses five times during the month and will not continue trading this month.
This circuit breaker mechanism is especially suitable for newcomers who don’t know anything and follow the influencer’s orders to buy.
In numerology, whether it is the Book of Changes, the Eight Characters, the Ziwei Dou Shu, or even the Western Tarot and astrolabe, there is a saying about the sun and the moon. If you just have bad luck one day, then don't trade. There is no need to fight to the death. If your luck in a certain month can stop losses no matter how you operate, then stop it and give yourself a circuit breaker. In the currency circle, preserving funds is the first and most important goal. Increasing funds is based on protecting funds.
3. Time period
0 o'clock, 4 o'clock, 8 o'clock, 16 o'clock, before and after the opening of US stocks
These 5 time periods are the time periods with the highest probability of market movements, so you must always pay attention! Opportunities almost always arise during these times.
4. Message management:
1. Macroscopic category
We need to know about macro news. After all, if the economic conditions of the general environment are poor, the liquidity of funds will be poor, the funds flowing into the currency circle will decrease, and it will become difficult to pull the market. For macro news, just look at Twitter: @Phyrex_Ni. It is worth reference, but actual transactions will vary greatly.
2. Research reports
Detailed analysis and research reports on some tracks and currencies can make your transactions and layout more targeted, which every trader should pay attention to and keep learning.
We recommend Daewoo’s Telegram channel, which can be found on Daewoo’s Twitter. His Twitter: @BTCdayu
Ps: I often read the research reports he shared, but I never follow them in trading.
3. Give some kol
I won’t recommend or brag here. Everyone’s style and approach are different, but those who sensationalize, provoke war, constantly brag about one or two glorious moments in the past, constantly delete wrong points, and charge groups are strongly recommended. Get off!
It is impossible for all the points given to be correct. If there is a profit, there will definitely be a loss. If you can make a profit overall by following the order, it is worthy of your continued attention. If you follow the order several times and fail to make any profit, then you probably will not continue to pay attention.
I will not delete posts. If you are wrong, you are wrong. There is no need to cover it up. If you are wrong, I will review what went wrong. If it is right, I will continue to review and see where you are right.
I will give clear points and logic. If I am wrong, please include more information, and please be sure to bring a stop loss. If it's right, please give me a thumbs up and be sure to stop profit.
4. Hot news
This needs to be collected slowly and with relatively high sensitivity, otherwise you won’t know what effect the information will have. There are many news websites, you can find them by yourself. In fact, it is enough to just look at the tweets posted by the special person.
5. Alternative emotional feedback method
Join a lot of lively cryptocurrency speculation Telegram groups. You don’t need to see what is being talked about in them. You don’t even need to click in. You only need to see the number of messages every day. For a period of time, there will be several thousand messages. Suddenly one day it will drop significantly to a few hundred, or even Some people stopped talking.
Then it’s time to buy BTC, when there is a lot of people, very lively, and explosive FOMO, it’s time to sell.
It is strongly recommended that friends who are short on time and hold coins for a long time use this method.
5. Mentality management:
From knowing nothing, to following orders, to learning some technical aspects on your own, to understanding some K-lines, to tracking hot spots through news, to continuous accumulation or clearing of funds, etc., everyone will go through rough stages.
You can also deeply understand the importance of mentality, and your emotions will directly affect your operations. Fear will make you lose money, and greed will make you work in vain or even lose money.
Therefore, by maintaining a good attitude, you can make your transactions more objective and safer.
I will share my method with everyone for your reference.
I will get up early at 7 o'clock every day to do Tai Chi. Yes, those old men only do Tai Chi.
When watching the market or studying, I will listen to some ancient Chinese health music, the five tones of metal, wood, water, fire, and earth, which can be found by searching Douyin.
I will read the Book of Changes, especially the life wisdom corresponding to the sixty-four hexagrams of the Book of Changes explained by Zeng Shiqiang and Zeng Lao. I will read the Yangming Mind Study and learn how to grasp my own desires and control my ego as much as possible.
When it comes to emotional management and peace of mind, nothing compares to the wisdom of the ancient sages.
I will learn Ziwei Dou Shu numerology, not to learn fortune telling, but just to understand the wisdom of the ups and downs of life and the interdependence of blessings and misfortunes.
My transactions all have an ultimate goal, which is to increase the currency and quantity of holdings at zero cost and achieve a big bull market. With this goal in mind, my layout and trading became very clear. The mistakes and losses incurred during the process are all within the tolerance range, and you can always maintain a better mentality.
I wrote so many words without realizing it. I hope it can be inspiring and helpful to everyone. The above.
