From entering the market to cutting losses, why do the cryptocurrencies you originally believed in always get you shaken out midway? Today, the blogger gives you a satisfactory answer!
For newcomers to the cryptocurrency space, the hesitation to enter, confusion about stop-losses, and panic during volatility are the three major 'roadblocks' on the path to profitability. Most people fail midway not due to a lack of profitable opportunities, but because of deviations in basic logic and mindset control. The blogger will provide practical guidelines for cryptocurrency newcomers from three dimensions: 'how to enter', 'how to set scientific stop-losses', and 'the core reasons for being shaken out during volatility'.
I. Beginners in cryptocurrency: Reject 'following news trends' and establish a rule-based entry logic.
The cryptocurrency market is volatile and the use of leverage tools is widespread. The most common mistake for beginners is 'going all in based on community news' or impulsively entering during a surge in prices, ultimately becoming the 'bag holder' of the market. The correct entry logic is based on solid evidence, with confirmation, position control, and cautious use of leverage.
1. Clearly define the basis for entry, do not trade without reason.
The market driving logic in cryptocurrency differs significantly from stocks and futures. Beginners can focus on two core signals to avoid noise interference:
- Technical signals: Choose 1-2 simple and easy-to-use indicators as core references, such as the breakout of the upper bound of the 4-hour K-line for mainstream coins like Bitcoin and Ethereum, the golden cross of moving averages (e.g., the 5-day line crossing above the 10-day line), and the golden cross above the MACD zero line. Avoid excessive indicator overlap that leads to judgment confusion; for altcoins, pay extra attention to whether they break key resistance levels and whether trading volume increases simultaneously.
- Fundamental signals: Mainstream coins focus on macro policies (such as Federal Reserve interest rate hikes or cuts, regulations on cryptocurrencies by various countries), and significant industry events (such as Bitcoin halving, Ethereum upgrades); altcoins need to be wary of 'air coins' traps, at least confirming that the project has real landing scenarios and a transparent team background, refusing coins that 'only rely on white papers to tell stories'.
2. Wait for confirmation signals, refuse to enter early and chase high prices.
Frequent 'false breakthroughs' and 'pin bar markets' in cryptocurrency make it easy for beginners to get deeply trapped when eager to enter. The correct approach is to wait for signal confirmation:
- After seeing K-line break through key resistance levels, do not rush to enter; wait for the next 1-2 K-lines to stabilize above the resistance level (for example, the closing price continuously stabilizes) and maintain high trading volume before considering entry.
- Avoid entering the market during extreme volatility, such as on Bitcoin contract expiration days, moments of major policy announcements, or sudden market movements in the late-night European and American sessions; at such times, market noise is high, and the probability of false signals is extremely high.
- Resolutely refuse to 'chase highs', especially when altcoins have a daily increase exceeding 50%; beginners are likely to be catching the top.
3. Strictly control positions and be cautious with leverage, use small positions for trial and error.
High volatility in cryptocurrency means high risk. The first goal for beginners is not profit, but survival.
- For spot trading, it is recommended to control the initial position at 1%-3% of the total capital. For example, with total capital of 100,000, only use 1,000-3,000 for a single purchase of mainstream coins, while further reducing positions for altcoins to avoid being too heavily weighted in a single coin.
- Contract leverage is a 'loss accelerator' for beginners; it is recommended not to touch it at all in the early stages. Wait until you have enough confidence in market judgments and have formed a stable trading system before trying small multiples (not exceeding 5 times), and keep each trade's position not exceeding 1% of total capital.
II. Cryptocurrency Stop-Loss: The 'Lifeline' of Trading, a lifesaving skill that beginners must master.
Stop-loss is the core risk control tool in cryptocurrency trading and a key differentiator between beginners and experienced traders. Beginners often fear stop-loss (worried that 'the market will immediately reverse after a stop-loss') or do not know how to set a stop-loss, ultimately evolving from small losses into 'liquidation'.
1. Why is it necessary to stop-loss? — To preserve capital, only then is there a chance for a comeback.
In the cryptocurrency market, daily fluctuations can exceed 20%. Without stop-losses, a single judgment error can lead to account liquidation. For example, with total capital of 100,000, if the purchased coin drops 50%, the remaining 50,000 needs to double to break even; if encountering a 'zero-value coin', it results in total loss. The core meaning of stop-loss is to limit the single loss amount and preserve capital for subsequent trades.
2. How do beginners in the cryptocurrency market set stop-losses? — 3 simple and actionable methods.
The core principle of setting stop-losses is 'allow the market to verify judgments on its own, rather than subjectively guessing stop-loss levels'. The following 3 methods are suitable for beginners in cryptocurrency.
- Method 1: Key Position Stop-Loss Method (most commonly used)
In spot trading, use the key support level at the time of entry as the stop-loss point. For instance, if entering at the lower edge of a range, set the stop-loss just below the lower edge by 2%-3% (to allow some fluctuation space and avoid being swept out by small fluctuations); if entering based on moving averages, set the stop-loss below the moving average; for example, entering at the 10-day line, set the stop-loss below the 20-day line.
In contract trading, stop-loss levels need to be more rigorous. Refer to recent market 'turning point lows' and adjust according to leverage; the higher the leverage, the closer the stop-loss level should be to the entry price.
- Method 2: Fixed Ratio Stop-Loss Method (the simplest)
Based on one's own risk tolerance, set a fixed loss ratio, such as a maximum loss of no more than 1%-2% of total capital per trade. For example: with total capital of 100,000, a single trade allows a loss of 1,000 (1%). If buying 50 coins of a certain type at 20 per coin, the stop-loss price can be set at 18 per coin (a loss of 2 per coin, total loss 1,000). Sell immediately upon reaching the stop-loss price, without hesitation.
- Method 3: Volatility Stop-Loss Method (adapted for high volatility in cryptocurrency)
The daily volatility of mainstream coins in the cryptocurrency market usually ranges from 5%-15%, while altcoins are even more volatile. Set stop-losses based on the daily fluctuations of the coins. For instance, Bitcoin typically fluctuates by about 8% daily; after entering, you can set a stop-loss range of 5%-6%, which avoids being triggered by minor fluctuations and allows for timely exit when the market reverses. For altcoins, the stop-loss range can be appropriately increased to about 10%, but positions should be lowered simultaneously.
3. The core discipline of stop-loss: once set, enforce it resolutely, do not change it arbitrarily.
The most common mistake beginners make is treating stop-loss levels as if they don't exist: when the market approaches the stop-loss level, they subjectively believe 'it will rebound', and thus manually cancel or lower the stop-loss level, ultimately turning from 'small loss' into 'deep trap' or even 'liquidation'. Remember: once a stop-loss is set, it must be strictly enforced. The cryptocurrency market never lacks opportunities. A single hesitation in executing a stop-loss could lead to completely losing your trading qualifications.
III. Why do most beginners in cryptocurrency get shaken out? — 4 core reasons, see early to avoid pitfalls.
Volatile markets are the norm in cryptocurrency, with prices oscillating within a range, and most beginners lose and exit during volatility. The core reasons are the following 4 points:
1. Misinterpreting volatility as a trend, frequently chasing highs and cutting losses.
In a volatile cryptocurrency market, coin prices often fluctuate back and forth within a range of 5%-10%. Beginners, lacking trend judgment skills, easily mistake short-term fluctuations for trend signals. Seeing prices rise, they chase after it; seeing prices fall, they cut losses and chase shorts, resulting in being stuck at the 'top of the range' each time they enter, frequently triggering stop-losses, leading to continuous shrinkage of account funds and ultimately collapsing their mindset and exiting the market.
2. Stop-loss levels set too narrowly can be 'washed out' by pin bar markets.
Some beginners set their stop-loss levels too narrow to 'control losses', ignoring the characteristic of 'pin bars' in the cryptocurrency market. For example, when Bitcoin suddenly drops 5% during volatility and then rebounds, beginners with narrow stop-losses will be swept out prematurely, while the subsequent market moves in the direction they predicted. After being washed out multiple times, beginners often give up on stop-loss discipline and ultimately fall into larger losses.
3. Lack of patience, frequent trading accumulates high transaction fees.
In a volatile market, effective trading signals are few, requiring long periods of waiting. However, beginners are often eager to profit and cannot tolerate the 'vacuum period without trading', frequently buying low and selling high within a range, resulting in not only no profit but also accumulating high trading fees and slippage costs. The trading fees for spot trading in the cryptocurrency market may seem low, but with frequent trading, the fees can consume a large amount of capital; the fees and funding rates for contract trading are even higher, and frequently operating in volatility is like 'giving money to the exchange'.
4. Imbalanced mindset, emotional trading dominates decisions.
The emotional influence of cryptocurrency communities is extremely strong. During volatile markets, beginners can easily be affected by the community's 'signals' and 'profit screenshots', falling into emotional trading: seeing others' coins rise causes them to blindly follow suit, and when their coins are stagnant, they anxiously cut losses; after suffering losses, they rush to recover, even taking risks to increase leverage. Emotional trading can lead beginners to deviate completely from trading rules, falling into a vicious cycle of 'the more they trade, the more they lose, the more they lose, the more they trade', ultimately being eliminated from the volatile market.
Conclusion: Trading in the cryptocurrency market is a marathon; survival is more important than profit.
For beginners in cryptocurrency, the initial stage is not about pursuing 'quick doubling' but rather establishing replicable trading rules and strong risk control capabilities. Before entering, clearly define the basis, wait for confirmation, and strictly control positions; after entering, set reasonable stop-losses and enforce them resolutely; when faced with volatile markets, maintain patience and refuse to trade frequently.
Most people are eliminated from the cryptocurrency market not because the market is complicated, but due to a restless mindset and lack of discipline. Remember: the cryptocurrency market is never short of opportunities; what is lacking is the patience and ability to 'stay alive'. Start with basic logic and gradually accumulate experience to establish a long-term foothold in the cryptocurrency market.
