At three in the morning, the cold light of the phone screen illuminated Xiao Li's excited face. He had just seen news of '100 times potential' in a altcoin group and invested all his funds. In the next five hours, he kept refreshing the candlestick chart, his heart racing with the price fluctuations. The next day at noon, that coin plummeted by 40%, and Xiao Li cut his losses, with his account shrinking by nearly half.

This story plays out every day in the cryptocurrency circle. The cryptocurrency market, with its 24/7 operation, extreme volatility, and wealth effect, attracts countless newcomers, yet few are prepared for its brutal side. Real trading is not gambling, but a skill that requires systematic learning and continuous evolution.

Why do 90% of traders lose money?

The cost of emotional trading

The most common pattern for newcomers in the cryptocurrency world is 'FOMO chasing the rise and panic selling.' When a coin suddenly surges, FOMO (fear of missing out) drives them to buy at the peak; once the price retraces, fear makes them cut losses at the bottom. This high-buy low-sell pattern is a wealth crusher.

Information overload and noise differentiation

The information environment in the cryptocurrency circle is extremely noisy: exchange announcements, project updates, KOL calls, community rumors, macro policies... Newcomers are often overwhelmed by various 'inside information' and 'excellent opportunities,' lacking the ability to filter out real signals.

The deadly temptation of leverage

"10 times leverage, a 10% increase doubles your investment!" This mathematically correct statement conceals a harsh reality: with 10 times leverage, a 10% reverse price movement will lead to liquidation. Leverage amplifies not only profits but also human greed and fear.

Systematic trading: the transformation from gambler to trader

Step 1: Establish a trading framework

Mature traders all have their own trading systems, which include:

1. Market analysis framework: Combine technical analysis (trend lines, support and resistance, indicators) and fundamental analysis (project team, technical strength, ecological development, token economics)
2. Risk management rules: Single trade risk does not exceed 2% of total funds, total exposure controlled at a certain percentage
3. Entry and exit standards: Clear buying conditions, profit-taking point, and stop-loss point

Practical case: The operation log of rational traders

Taking Ethereum trading as an example, assume the current price is $3,000:

Technical analysis: The daily chart shows $3,000 is an important support level, RSI is close to the oversold zone, and a bullish divergence appears on the 4-hour chart

Fundamental judgment: Ethereum's ecology continues to develop, Layer 2 adoption rate is rising, and there are expectations for an ETF

Position management: Total funds of $10,000, deciding to build positions in batches in the $3,000-$2,900 range, with risk control as follows:

· First purchase: $3,000, invest $2,000 (20% position)
· If it drops to $2,900: add another $2,000
· Stop-loss point: $2,800 (breaking key support)
· Position limit: 40% of total funds ($4,000)
· Maximum potential loss: If the stop-loss is triggered, the loss will be about $400 (4% of total funds)

Exit strategy:

· Short-term target: $3,400 (previous resistance level), partial profit-taking
· Medium-term target: $3,800 (trend line resistance), further profit-taking
· Long-term holding: Retain part of the position, move stop-loss to protect profits

Step 2: Emotion and psychological management

80% of successful trading relies on psychology. You need:

1. Trading journal: Record the decision basis, emotional state, and results of each trade, review regularly
2. Stress testing: Clarify your psychological reactions at different loss levels
3. Discipline execution: Even with strong impulses, strictly adhere to the trading plan

Step 3: Continuous learning and adaptation

The cryptocurrency market iterates extremely quickly: from DeFi summer to NFT frenzy, from Layer 2 competition to RWA narrative. Traders need:

· Keep the tech stack updated, understand newly emerging protocols and token models
· Pay attention to on-chain data, such as smart money flow, exchange traffic, and position distribution
· Learn macroeconomics, understand the impact of interest rate cycles on risk assets

Risk management: Surviving is more important than how much you earn

The art of position management

"Don't put all your eggs in one basket" has a special meaning in the cryptocurrency circle:

· Mainstream coins (BTC, ETH): 50-70% of the position, serving as ballast
· Mid-tier coins (ALT with real ecology): 20-30%
· Small-cap potential coins: no more than 10%
· Always retain a portion of stablecoins to respond to extreme markets and bottom-fishing opportunities

The philosophy of stop-loss

Setting a stop-loss is not an admission of error, but rather paying an insurance premium. A reasonable stop-loss should be:

· Set below key technical levels (such as breaking support)
· Consider market volatility (ATR indicator)
· Form a reasonable risk-reward ratio with profit targets (at least 1:3)

Bear market survival guide

In a bull market, everyone is a 'trading genius'; the real test comes in a bear market:

· Reduce trading frequency, avoid 'bottom fishing traps'
· Shift to a dollar-cost averaging strategy, gradually accumulating quality assets
· Use the bear market to learn and prepare for the next cycle

Path to advancement: Find your trading style

Four types of traders

1. Day traders: Utilize minute-level and hourly fluctuations, requiring high time and psychological demands
2. Swing traders: Capture trends over days to weeks, balancing opportunity frequency and pressure
3. Trend traders: Follow major trends, holding positions for weeks to months, requiring immense patience
4. Dollar-cost averaging investors: Ignore short-term fluctuations, buy regularly, hold long-term

Newcomer friends are advised to start with swing trading or dollar-cost averaging, gradually finding a rhythm that suits them.

Tools and resources

· Analysis tools: TradingView (technical analysis), Dune Analytics (on-chain data), CoinMarketCap (basic information)
· Learning resources: Classic trading books (Reminiscences of a Stock Operator), well-known trader blogs, high-quality podcasts
· Community choice: Stay away from signal groups, join communities focused on analysis and education

Conclusion: Trading is a form of practice

The essence of trading in the cryptocurrency circle is to find limited certainty in extreme uncertainty. It tests not only analytical ability but also control over human nature. Those who ultimately survive in this market are often not the smartest, but the most disciplined, the best at learning and adapting.

Remember, in the ever-unresting market of cryptocurrency, your primary goal is not to get rich overnight, but to survive until the next bull market. When you are no longer emotionally tied to candlesticks, when your trading decisions stem from a plan rather than impulse, and when you can remain calm amidst volatile surges and drops—you have surpassed 90% of market participants.

This path has no end, only continuous evolution. Start today, build your system, record your trades, and manage your risks. In the wild world of cryptocurrency, be a strategic surfer, not a drowning person swept along by the current.