Discipline conquers volatility, and rationality prevails over greed.
Seven years ago, like many sisters who had just entered this circle, I lived in a village in the city of Shenzhen, worrying about rent every month. At that time, I entered this market with the hard-earned 190,000 yuan, feeling both excited and scared. In seven years, from 190,000 to 70,000,000, this method sounds rigid, but the real monetary returns have taught me an important lesson: in this tempting market, living longer is much more important than earning quickly.
I have no insider information and do not rely on betting on the market. The four iron rules I share today are lessons I bought with real money. I hope my experiences can help you avoid some detours.
1. Spotting a washout: Understand the 'emojis' of the main players.
When I first entered the industry, I experienced a panic sell-off when I saw a sharp rise followed by a slow decline, resulting in missing out on a subsequent 50% increase. Later, I realized that a slow decline after a sharp rise is often a sign that the major players are washing out, and there's no need to rush to sell.
The real danger signal is a flash crash after a surge in volume. For example, one time I was watching ETC, and after it surged 30% in a single day, it suddenly crashed. I decisively escaped and successfully avoided a subsequent 40% drop. The relationship between volume and price is like the 'emojis' of the main players; price movements are surface emotions, while trading volume reflects true intentions.
The key difference between a washout and a peak is the moving average system. During a washout, the long-term moving average (like the 60-day line) still trends upward, while during a peak and subsequent decline, multiple moving averages will converge and then diverge downwards. Understanding this allows you to calmly face most fluctuations.
2. High position risk: 'Silent volume reduction' is more terrifying than a crash.
I once lost 30,000 yuan during a high position consolidation. At that time, a certain mainstream coin's trading volume suddenly decreased, which I did not take seriously, and a week later, the coin price was directly halved. This lesson taught me that high-volume consolidation still has speculative space, but 'silent volume reduction' means that funds have already withdrawn.
Why is volume reduction so dangerous? Because it indicates that the market has lost interest at that price level. Without buying support, even a slight sell pressure can lead to a significant drop. It’s like a balloon being inflated to its maximum; a little stimulus can cause it to burst.
My current basis for judging a peak is: when market sentiment retreats from extreme greed to neutrality, while trading volume continues to shrink, I will start to gradually reduce my holdings. Remember, a peak is not a point but a range; you don't need to sell at the highest point, just gradually exit when risks outweigh opportunities.
3. The art of bottom fishing: Give up on lures, wait for true signals.
Bottom fishing is a technical skill. I once entered heavily after a 25% drop when it rebounded by 10%, only to be trapped for a full six months. I later realized that a sharp decline followed by a slow rise is a lure to sell; the true bottom requires patience to wait for.
The true bottom has three key signals: volume reduction consolidation, a gentle increase in volume for three consecutive days, and a gradual rise in closing prices. This indicates that the major players are accumulating positions, rather than luring in buyers to sell. Last year, after Bitcoin consolidated for two months, this signal appeared, and I decisively entered the market, earning three times my investment in six months.
When bottom fishing, I pay special attention to the bullish divergence phenomenon of the MACD indicator—when the coin price makes a new low but the MACD indicator does not also make a new low, it often means that the downward momentum is weakening. Combining this with changes in trading volume greatly increases accuracy.
4. Core principle: Trading volume is the only 'true statement.'
In this market, candlesticks can be drawn, news can be fabricated, but trading volume is the only 'true statement.' I firmly believe that trading coins is essentially trading emotions, and trading volume reflects the most real changes in consensus.
My 'non-attachment' principle is simple: not greedy or chasing highs, not fearful or blindly following, never fully cashless or fully invested, always keeping some cash on hand to await certain opportunities. The crypto circle is not lacking in trends; what it lacks is the self-control to hold back.
In terms of capital management, I strictly adhere to the '33% rule': 30% initial position, 40% added after trend confirmation, and 30% cash always kept on hand. This way, even if my judgment is wrong, I still have capital available to seize opportunities when they arise.
The miracle of compounding through simple methods.
In the past seven years, my biggest realization is that this market ultimately rewards not the smart people, but the disciplined ones. Short-term trading sounds exciting, but in reality, most people are cannon fodder.
True compounding does not come from frequent trading but from seizing a few major trends. A trend that increases tenfold, cashing out half, and waiting for the next opportunity can accumulate to achieve a hundredfold return.
My comeback is not a myth; it is simply executing each simple method to the extreme. Discipline and patience are the most scarce qualities in this restless market. I hope my experience can help you avoid detours in this market. Remember, the most stable way to make money has always been 'not greedy, not fearful, not blindly following.'
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