1. Acknowledging Failure: How I exchanged 1.5 million in tuition for three iron rules
I have seen too many people, including my former self—treating trading like gambling. In 2008, I rushed into the stock market and, like that friend, lost the entire family savings at one point. But what truly turned my fortunes around was not luck, but finally understanding: a trading system is not a 'holy grail,' but a reflection of character.
Iron Rule One: Your system must be 'like you'
An impatient person cannot do long-term value investing, and a patient person cannot handle ultra-short-term trading. I forced myself to learn from Buffett, but I always missed the stop-loss points. Later, I admitted: I am just a technical trader who prefers volatility. Therefore, I simplified my system to moving average trend following + strict stop-loss, and finally I no longer felt conflicted.
Iron rule two: Risk control determines life and death.
The lesson from losing 1.5 million is: always wanting to 'recoup losses' leads to heavy gambling. Now, my single trade stop-loss never exceeds 2% of my capital (for example, with a 10,000 USD account, stop-loss amount ≤ 200 USD). Surviving gives you the qualification to wait for the market.
Iron rule three: Don't 'fall in love' with the market.
I used to stubbornly hold losing stocks, and the losses just deepened. Now my system has strict rules: breaking a position must be cut, profit-taking should not be greedy. For example, if the moving average turns down and a ZigZag reversal signal appears, I exit immediately even if it means a loss.
2. My core system: A single moving average rules the market (adapted for cryptocurrencies).
This system I migrated from the forex market to cryptocurrencies; its essence is to catch trends and ride the body of the fish. Specific rules are as follows (including adjustments from actual trading):
1. Trend judgment: The 150-day moving average determines long or short.
Rule: Only go long when the price is above the 150-day moving average; only go short when it falls below.
My adjustment: Cryptocurrencies are volatile, so I added filtering conditions—a continuous 3 four-hour candles closing above the moving average confirm the trend.
Entry point: Confirmation of ZigZag retracement.
Rule: In a trend, when the price retraces to the moving average and the ZigZag shows a turning point, enter when it breaks the previous high/low.
Note: I set the ZigZag parameters to (12,5,3) to avoid false signals. The closing price cannot breach the moving average during a retracement; otherwise, abandon the trade.
3. Risk control: Place your stop-loss at 'the last drop of blood.'
Stop-loss: Set at the lowest point during the retracement phase (for long positions) or the highest point (for short positions).
Take profit: 1.5-2 times the stop-loss distance (cryptocurrencies are highly volatile; I often use 1.8 times).
Key point: Never move the stop-loss; don't fantasize about 'holding on just a bit longer.'
Position size: The mathematical formula controls your hands.
Formula: Position size = predetermined stop-loss amount / stop-loss points.
Example: Initial capital of 10,000 USDT, single trade stop-loss limit of 100 USDT, stop-loss distance of 50 points, so position size = 100/50 = 2 lots.
My habit: Use 1.5% risk in a bull market, reduce to 0.5% in a bear market.
3. Why do most people fail to use trading systems effectively?
Misconception 1: Pursuing a 'perfect win rate.'
I once tested 100 systems and found that a trend system with a 40% win rate could be more profitable than a short-term system with an 80% win rate—the key is the risk-reward ratio. Currently, my system has a win rate of about 50%, but the average winning trade is three times that of the average losing trade.
Misconception 2: Blindly copying the masters.
A friend made a fortune using grid trading, but I lost money with the same strategy. His system relies on ranging markets, while mine focuses on trends. A system that suits others may be poison for you.
Misconception 3: Always trying to predict the market.
In the past, I was obsessed with 'catching tops and bottoms,' but it always backfired. Now my system only follows: no shorting above the moving average, no going long below it; abandon the fish head and tail, only eat the body.
4. Special adjustments for cryptocurrencies: Volatility is both a friend and an enemy.
Cycle adaptation: Bitcoin halving cycles, Ethereum upgrades, and other events will change trend rhythms. The 150-day moving average I use shrinks to 120 days in a bull market and expands to 200 days in a bear market.
Take profit optimization: Cryptocurrencies often surge and plunge; I changed to a stepwise take profit: 50% of the position is closed at 1.5 times the stop-loss, and the remaining part trails the moving average.
Pitfall reminder: Altcoins have poor liquidity; my system only operates on the top 20 cryptocurrencies by market cap (they must be able to be closed within an hour).
5. The final mindset: Simplicity to the extreme is faith.
The essence of a trading system is a probability game. But what is harder than the technique is accepting the following reality:
It's normal to have 5 consecutive losses; as long as the system logic is sound, keep executing.
Don't be envious when others double their money; your system only earns the money that belongs to you.
Simplicity is the ultimate sophistication: I now spend less than 2 hours a day watching the market, and the rest of the time on fitness and reading. Less action, more waiting, leads to steadier profits.
As my grandmother said: 'A good soup is fragrant when the timing is right.' Trading is the same. Follow Ake to learn more firsthand information and knowledge about cryptocurrencies, precise points, and become your guide in the crypto space; learning is your greatest wealth!#加密市场观察 #ETH走势分析 $ETH
