Many newcomers to the cryptocurrency market are in a state of blindly following trends. They buy whatever coin others say is good, resulting in losses without understanding the reasons. In fact, to avoid the fate of being a 'chives' in the cryptocurrency market, the key is to build your own investment system. A complete investment system includes multiple aspects such as asset selection, capital management, risk control, and mindset management. Today, I will explain in detail to newcomers how to build their own investment system from these aspects.
Step 1: Learn to choose quality assets. In the cryptocurrency market, the selection of assets directly determines your investment returns. Many newcomers lose money simply because they choose poor projects. So, how can you select quality assets? You can start from the following aspects:
First, look at the technical strength of the project. A quality project must have core technical support. You can check the project's white paper to understand its technical principles, innovations, technical team, and other information. If the project lacks innovation and merely imitates other projects, its competitiveness will be poor. Secondly, evaluate the project's application scenarios. A quality project must have real application scenarios that can solve actual problems. If the project is merely a concept without any practical application, it is likely a scam coin. Finally, assess the project's ecological development. You can check the project's user count, trading volume, holding addresses, and other on-chain data to understand its real popularity. If the project's ecosystem is developing well, with a continuously growing user base and trading volume, its value will continue to rise.
Step 2: Manage your funds well. Fund management is the core of the investment system and is key to avoiding losses. Many beginners lose money because they have not managed their funds well, over-investing in one cryptocurrency or putting in funds they cannot afford to lose. So, how can you manage your funds well?
First, determine your investment budget. Only use spare money for investments; do not invest money meant for buying a house, getting married, or retirement into the cryptocurrency market. It is recommended to keep the investment amount within 10%-20% of your disposable income. Secondly, do a good job of asset allocation. Do not invest all your funds into one cryptocurrency; instead, allocate funds to different types of assets, such as core assets, potential assets, and risk assets. This can help dilute costs and reduce risks. Finally, manage your positions well. For core assets, you can appropriately increase your position; for potential and risk assets, manage your positions carefully and avoid blindly over-investing.
Step 3: Establish a risk control mechanism. Risk control is the safeguard of the investment system and can help you preserve your principal during market fluctuations. Many beginners lose money because they have not established a risk control mechanism and do not understand stop-loss and profit-taking. So, how can you establish a risk control mechanism?
First, set stop-loss lines. For different types of assets, set different stop-loss lines. For example, the stop-loss line for core assets can be set at 20%-30%, for potential assets at 30%-40%, and for risk assets at 40%-50%. If the asset price drops beyond the stop-loss line, decisively exit and do not harbor any false hopes. Secondly, set profit-taking lines. For core assets, the profit-taking line can be set at 50%-100%; for potential assets at 100%-200%; and for risk assets at above 200%. If the asset price rises beyond the profit-taking line, you can take profits in batches to lock in some gains. Finally, conduct regular reviews. Weekly or monthly, review your investments, summarize experiences and lessons, and optimize your investment strategy.
Step 4: Manage your mindset. Mindset management is the soul of the investment system. Many beginners lose money due to a poor mindset, chasing highs and selling at lows, being swayed by market emotions. So, how can you manage your mindset well?
First, stay rational. Do not be swayed by market emotions; remain calm regardless of market fluctuations. Before buying, conduct due diligence; before selling, perform a risk assessment. Secondly, have patience. Investing in the cryptocurrency market is a long-term process; do not expect to get rich overnight. Many quality projects need time to develop; only by holding long-term can you achieve substantial gains. Finally, avoid greed and fear. When making money, do not constantly think about making more; learn to take profits. When losing money, do not always wait for a rebound; learn to cut losses.
Building your own investment system is not an easy task; it requires continuous learning and practice. As a beginner, do not rush for success; take one step at a time and slowly accumulate experience. I will share more practical tips and knowledge on building an investment system later, so follow me @链上标哥 to avoid getting lost! I will help you steer clear of the fate of retail investors and achieve steady profits in the cryptocurrency market.
