After 10 years of trading, I have made a huge profit in the 10-year bull market, faced 'bankruptcy' twice, and now manage to support my family through trading, having withdrawn over 8 million for expenses and still holding over 26 million in exchanges. Honestly, I made it through!
Only because of the classic buying and selling mantra of dead-knock trading on moving averages, I have almost eaten away all the profits from my holdings. The way is simple, steadfastly doing this type of trading system, over time this system will become your ATM.
A trading system includes a comprehensive system covering traders' trading philosophy, trading signals, risk management, emotional control, and other aspects.
Trading philosophy: The trader's understanding of the market and trading objectives, such as whether to pursue trend trading, swing trading, or other specific types of trading opportunities.
Trading signals: specific buy and sell point indicators, such as signals generated through technical analysis indicators (e.g., moving averages, MACD, etc.) or information based on fundamental analysis.
Emotional control: Maintain calm decision-making ability, avoiding irrational trading behaviors caused by greed or fear.
Risk management: Set stop-loss points, take-profit points, and capital management strategies to ensure losses can be controlled even in unfavorable market conditions.
Execution difficulties: including overcoming psychological barriers, strictly executing established trading plans, and continuously optimizing and improving trading systems.
The first three years of trading were a blood and tears history, suffering an 80% loss. After deep reflection, I summarized eight iron rules, firmly implemented them, and ultimately turned the situation around! Sharing with all cryptocurrency traders, feel free to take it.
1. Avoid trading cryptocurrencies on weekends. The cryptocurrency market usually has high volatility and low trading volume on weekends.
This makes it difficult to predict price movements. Crypto whales can more easily manipulate prices in a low liquidity environment.
This puts individual traders at a clear disadvantage. Additionally, weekends are a time for relaxation and entertainment; one should stay away from market charts and rest well.
2. Only trade when in a calm mindset; this is key. When I feel angry, tired, or stressed, I do not trade.
I must trade with my best judgment when I am calm and collected.
Life outside of trading is key to maintaining the right mindset; spending time with family and friends, reading, and participating in sports are all key to my trading success.
3. Observe tops and bottoms to avoid risks.
Before making a trade, check Bitcoin, see if the recent trend of the market is good or bad. If Bitcoin is going to drop, everything will also plummet.
If you think the market is dangerous today and may drop, you should reduce or clear your positions.
4. Capital management and profit management
Reasonable profit management is the best way to ensure you earn and keep your profits. We must first treat the cryptocurrency market as an ATM, not a deposit machine; as long as you do not cash out, your money is just a number, and the money you earn must be realized, not just reinvested blindly.
Only when you put the money in your pocket is it truly yours.
5. Recognize yourself again: You are not a genius, nor are you a cold expert.
Most people in the market do not die from ignorance but from self-righteousness: obsessed with predictions: trying to catch all tops and bottoms with technical obsession: piling up indicators while ignoring position and risk control, superstitious about luck: crediting themselves for profits and blaming the market for losses, overconfident: thinking they are invincible after a few profitable trades.
Please remember: discipline > technology, execution > inspiration, stability > stimulation.
The truly profitable trades are often boring.
6. Recognize the market: This is a world ruled by uncertainty.
The essence of the market is not a technical game, but a high-complexity probability game.
You must accept that no matter how brilliant a strategy is, it cannot consistently profit in all environments. Any trading system claiming '100% win rate' is a scam.
What we can do is not to conquer the market but to adapt to the market, using discipline to fight against uncertainty.
7. Correctly approach stop-loss: stop-loss means the end of a trade, and you must not act blindly out of a hurry to recover losses.
Every new trade is a completely new beginning; do not let previous operations affect current judgment and decision-making.
Keeping calm and rational is essential to better cope with various changes in the market.
8. Don't let unrealized gains turn into losses. Once there are more than three points of unrealized gains, set a protective stop-loss near the opening price to ensure that capital is not lost.
In the crypto world, gaining three points is relatively easy, especially for small altcoins, at which point you can slightly increase your take-profit level and adopt a moving stop-loss strategy, especially in a bear market.
Frequent profit-taking is essential; only in this way can you protect your profits from being taken away.
Therefore, trading must first have a good trading discipline, and then strictly adhere to it. Everything you have done, I have traded; everything you have not done, I have traded; every transaction is genuine, all are summaries of practical experience.
Life is full of randomness and opportunities; often, your efforts do not meet opportunities, and it really means nothing, let alone flying high. I don't mean to say don't work hard, but don't be too harsh on yourself.
We lack faith in trends; all we hear in our hearts is the sound of steel bouncing, trembling and cautiously accumulating small amounts of money. But what of it? Short-term relies on time to accumulate profits, and daily losses must be kept within a certain range because you can take a few days to earn it back.
Five major death traps that beginners must avoid.
1. Don't trade blindly without looking at the news: Policies can cause prices to plummet instantly.
In 2024, Hong Kong tightened cryptocurrency regulations, causing Bitcoin to drop 15% in 2 hours. Users who did not check the news were liquidated directly.
Correct practice: Spend 5 minutes daily reading the 'Crypto Morning Report' to avoid policy black swans.
2. Holding onto positions against the trend: 'Liquidation accelerator' that leads to increasing losses.
Error case: Xiao Wang opened a long position at 40,000 in Bitcoin, did not stop-loss when it dropped to 35,000, instead added to the position, and ultimately faced a liquidation at 30,000, with a capital of 100,000 reduced to zero.
Iron rule 2: Never hold onto a position! Close the position immediately if it falls below the stop-loss line, keeping the capital intact, and don't worry about running out of resources.
3. Frequent operations: Fees eat up 80% of profits.
A certain user traded 50 times a month, spending 12,000 on fees, and ended up with only 5,000 in profit, losing 7,000.
Best frequency: Do not operate more than 3 times a week; just capture key market movements.
4. Emotional trading: The vicious cycle of adding to positions when making money and averaging down when losing.
When making money, feel like 'the Buffett of the crypto world', using 100x leverage; when losing money, think 'as long as I can break even', constantly averaging down, ultimately falling into the abyss.
Iron rule 3: Write down the trading plan on paper, execute it strictly, and do not be swayed by emotions.
Three advanced strategies used by experts.
1. Hedge strategy: The 'winning formula' that makes money whether the market goes up or down.
Operation: Open both a 10x long position and a 10x short position (each accounting for 5% of the position); when the price fluctuates over 2%, close the losing position and hold the profitable one.
Case: Bitcoin fluctuated between 30,000 - 40,000; using a hedge strategy, one can earn 5%-10% monthly with near-zero risk.
2. Ladder-style position increase: 'bottom-fishing artifact' during sharp declines
Steps: If the price drops by 10%, open a long position of 1%; if it drops another 10%, open a long position of 2%; if it drops another 10%, open a long position of 3%, and so on.
Advantage: Reduces average cost, and a rebound of 15% can turn losses into profits (for example: opening a long position at 30,000, when it drops to 24,000 the total position is 6%, a rebound to 27,600 can break even).
3. Capital management: Use the 'liquidation price calculator' to stay alive.
Tool: Input margin, leverage, and position size into the trading platform app to automatically calculate liquidation price (e.g., 10x leverage, 10,000 margin, liquidation price = opening price - opening price × 10%).
Iron rule 4: Ensure the liquidation price is at least 20% away from the current market price (e.g., open long at 30,000 Bitcoin, set liquidation price at 24,000, leaving enough buffer space).
Final advice for beginners: Contracts are not ATMs, but the battlefield of 'cognitive realization'.
1. First practice with a demo account: Practice with 10,000 virtual funds for 3 months.
Recommended platform: Binance 'Contract Demo Account', 1:1 restores real trading, and can be reset if lost.
Goal: Achieve 'no liquidation within 3 months, win rate over 50%' before depositing for real trading.
2. Always remember: contracts are 'the icing on the cake', not 'a gamble to turn the tables'
Correct mindset: Use no more than 20% of spare money to trade contracts; primary income is fundamental (for a salaried worker earning 3,000 per month, using 600 for contracts is sufficient; do not bet all your wealth).
3. Liquidation is not the end, but the beginning of growth.
Every liquidation is the best teacher: Record the reasons for liquidation (was it too much leverage? No stop-loss set? Or emotional trading?), and form your own 'pitfall avoidance guide'.
Psychological and behavioral principles**
- Anti-human nature training: Loss aversion leads to holding onto losing positions; preset stop-losses; confirmation bias causes people to ignore reversal signals, requiring multi-period verification of trends.
- Log review: Record the triggering conditions and execution deviations of each trade, and analyze the reasons for the capital curve drawdown.
- Being in cash is also a strategy: When the market has no clear direction, hold stablecoins (like USDC) and wait for opportunities.
Accurately grasp trends and entry timing.
The primary upward wave is undoubtedly a fast track to wealth in the cryptocurrency market. Once it roars in, investors must decisively jump on board to travel towards the shores of wealth. In determining whether the primary upward wave is coming, volume is a key judgment indicator. When the market shows a trend of increasing volume, it means the market enthusiasm is high, and a large amount of capital is pouring into the market, with bullish strength exceptionally strong. At this time, investors should firmly hold their assets and let profits run.
Strictly adhere to stop-loss and take-profit disciplines.
1. Stop-loss: In the investment process, stop-loss is an important defense line to protect investors' capital. For example, if investors buy a certain cryptocurrency and the price remains stagnant for three days, it likely means the market's attention towards this cryptocurrency is low, and the possibility of a short-term rise is small. At this time, decisively stopping loss can avoid long-term occupation of funds and missing other investment opportunities. For example, if losses exceed 5% after buying, a stop-loss should also be decisively executed. Taking EOS as an example, after its launch in 2018, the price continued to decline.
Some investors did not stop-loss timely when losses exceeded 5%, holding onto hope for a price rebound. However, the price of EOS continued to decline from a high of around $20 to below $1, causing massive losses for those who did not stop-loss.
2. Take-profit: For severely oversold cryptocurrencies, when confirming they enter a rebound channel, investors can consider following in. However, while following in, definitely set a take-profit point. For example, when profits reach 20% or 30%, one should decisively take profit and secure the gains.
Once there was a cryptocurrency that showed signs of a rebound after a long period of decline. Some investors did not take profits after following in, and when the price dropped again, not only did they lose profits, but they also fell into losses.
