The Survival Rules for Retail Investors

Hello brothers, I am the trader Zhu Yidan. As we all know, I am a die-hard bull of altcoins, and the altcoin market in the past two years has been evident to all. Many retail investors playing altcoins have suffered losses and quietly exited the market. Why am I still active in this market? Today, I will share with you the survival rules for retail investors.

Among KOLs, my traits might be the most similar to everyone else's. I know nothing about technical analysis, have only a vague understanding of project research, rely entirely on intuition for trading, and my capital has always been around one million RMB. I'm not even considered a big player, just playing with altcoins, hoping to get rich overnight.

In the 12 months of a year, I spent 10 months suffering losses from long positions. I have lived this way for three years. You know how I spent these three years. When my mood was too oppressive, I would take a walk by the river at midnight to ease myself, pump myself up, and silently review the trades that were deeply trapped. I have also experienced moments of despair. When faced with substantial losses and teetering on the edge of liquidation, I would mumble madly to myself not to blow up, not to blow up, pleading with the heavens that this trade wouldn't blow up. I would wake up at 3-4 am as if an alarm had gone off, enduring the light of my phone screen just to take a quick look at the market before going back to sleep. These experiences have allowed me to understand the bittersweet nature of trading. Only then did I deeply comprehend those trading maxims, which were no longer hollow doctrines in my mind. Therefore, the first rule of survival for retail investors is to ensure that you can live long in this market.

Only by living in this market for a long time can you have the opportunity to see the full picture and rules of the market, form your own understanding of it, and thus develop your own trading system and trading discipline. All of this takes time.

So how can one survive in this market for a long time? Lower leverage, increase the fault tolerance of trading; in this market, nothing is impossible. Too many people have experienced the pain of prices returning while their positions are gone. "Liquidation" is such a bloody term. The principal means the life of trading; without the principal, trading comes to an end. Respect the market; veteran investors become more cautious the more they play. I have gone from the earliest 20x leverage to now 1.5x leverage, and I feel worried. If it weren't for this caution, I would have been eliminated by the market long ago, let alone having this understanding of trading.

I believe that trading techniques can also be distinguished between the excellent and the mediocre, just like martial arts manuals in novels, which can be divided into advanced skills and basic techniques, such as the difference between the Nine Yang Skill and the Arhat Fist. Many retail investors blindly pursue learning the trading techniques of those skilled in real trading, forgetting that mastering advanced skills requires innate talent. If you lack this qualification and talent, forcing yourself to practice is likely to lead to failure and even obsession. The second survival rule for retail investors is to find a trading strategy that suits you.

Day after day, refine your trading strategy, one skill can conquer all, find the market you are good at. Just like I excel at trading in altcoin bull markets, which last from 15 days to 1 month, I can multiply my capital by 5-6 times. So even though I lost money for ten months, during those two months of altcoin bull markets, I could cover all the losses and still make a profit. When your fundamental skills like the Luohan Fist are perfected, you can also make good money in this market, because new retail investors are continuously entering the market. They are just starting out with basic skills, and everyone is making money from the cognitive gap, which is essentially the money in the hands of newcomers.

If surviving and understanding the market is about grasping the external environment, then developing one's own trading strategy is about enhancing one's combat power. When these two aspects align, achieving an internal and external balance, money will naturally flow in.

The survival rules for retail investors state that healthy cash flow management and position management determine one's mindset. There is actually a general value for the size of the position that each person can handle at their current stage. Once it exceeds this value, the mindset starts to become unstable. This is why many friends say that once they go heavy on a position, they begin to experience gains and losses anxiety. The importance of mindset is beyond doubt; it is not something that can be adjusted merely through subjective initiative. Rather, it is determined by objective factors such as the size of the position and whether you can afford to lose the money. To give an extreme example, which is frequently discussed, should one borrow money to invest in cryptocurrencies? The biggest problem with borrowing money to invest is that you cannot afford to lose. Once you lose, it becomes very difficult to restart your life because the continuous debt will leave you with no time to focus on anything else. Not only do you have to work hard to make a living, but you also have to worry about repayments. Such terrifying consequences make it very difficult for those who borrow money to invest in cryptocurrencies to maintain a balanced mindset, and an imbalanced mindset can easily lead to mistakes.

A healthy cash flow is your confidence. During the worst times of my trading, all my living expenses came from my commissions and advertising revenue. This good cash flow helped me through the toughest moments. Therefore, this is also a question that every high-risk retail investor should consider: how should you build your cash flow? Whether it's starting a business or working a job, this is your confidence in trading.

Many people invest heavily in one asset to earn more, but often due to oversized positions, they can't hold their trades at the slightest fluctuation, and in the end, their performance review shows that they earned less than they would have with a more comfortable position.

I have a small trick, which is to continuously withdraw funds when the trading is going smoothly. The more I withdraw, the more stable my mindset becomes. With a stable mindset, I can operate with ease, and in the end, I basically play with profits. Often, I achieve a very impressive return while in a relaxed state.

Let's summarize the survival rules for retail investors: first, to survive in this market for a long time; second, to find a trading strategy that suits you; third, cash flow and position management determine your mindset. Remember these three points, young hero, go venture into the trading world.