The following text is summarized from the Twitter Space series #Dialogue with Traders, hosted by FC, founding partner of SevenX Ventures, Twitter @FC_0X0

Guest: Raxy, independent trader, Twitter @Raxy2001

About Raxy: From Primary Investor to Independent Trader

In January 2021, when platform Altcoins were being heavily traded, Raxy entered the Crypto industry. After working on GameFi projects, he joined the VC industry, working at Jsquare and DFG.

After over two years in VC, Raxy has reviewed hundreds of projects. At the beginning of this year, he left VC to systematically learn and engage in trading, transitioning from a primary investor to an independent trader.

The progress in trading started with losing money...

At the beginning of the year, when BTC was surging, some Altcoins also had some momentum. Raxy still used the "valuation nesting" logic of 2021 to trade Altcoins: for example, if the primary market thought a certain track would be hot and the valuation would be roughly like this, he would find a fully circulated, similar background/track, and reasonably valued target in the secondary market to buy.

Using this method, Raxy made some money, but from March, the market had some strange changes.

By comparing the market share of BTC and USDT, Raxy found that the profitability of Altcoins was too difficult, either with news or a very deep understanding of the asset, able to see the daily and weekly trends and buy at the left bottom. Later, he re-examined his trading strategy and finally concluded that:

In the crypto market, BTC is the most suitable for full-fledged gaming. Therefore, he gradually shifted his trading focus to BTC.

Currently, Raxy's capital size is about $2 million. His position allocation is clear:

1) 80%-90% of the funds are invested in the spot market, using the Turtle Trading method combined with key moving average indicators to capture market trends.

2) The remaining 10%-20% is used for futures trading, mainly relying on traditional chart pattern analysis and some small technical indicators to assist decision-making.

Through observing others' practical experience and combining his own market exploration, Raxy has gradually formed a trading style that suits his personality and goals, and can flexibly respond to market changes.

How to Trade with High Win Rate Using Moving Averages?

Raxy believes that the market can be divided into two structures: oscillation and trend, which are constantly switching back and forth. The difference is that each person's understanding of the oscillation and trend levels may be different, for example, a daily oscillation may just be a one-hour unilateral market.

Raxy uses an EMA-based moving average system, with EMA reflecting the average price of the past.

Raxy pays special attention to the EMA20 and EMA200, and also uses MACD, RSI, and SRSI as common technical indicators to confirm the trend. His specific operation rules are very clear:

1) When EMA20 crosses above EMA200, it is seen as a buy signal and a buy operation is executed.

2) When EMA20 crosses below EMA200, it is a sell signal, and a sell operation is executed.

This way, you are sure to be in the market during big rallies, and definitely not in the market during big declines.

However, moving average trading is not perfect. It actually lags behind the market response, and in a volatile market, the frequent price fluctuations will cause the moving averages to cross back and forth, resulting in significant wear and tear, meaning that during the volatile period, multiple false signals may be generated, causing unnecessary trading losses.

But Raxy emphasizes that the biggest advantage of this trading strategy is its simplicity and clarity of operation, without the need for complex analysis or subjective judgment, which can avoid interference from market noise and emotional fluctuations, so it is suitable for people whose mentality is easily affected and have poor emotional control ability. As long as they strictly execute, they can reduce the impact of subjective judgment and avoid making wrong decisions due to emotional fluctuations.

Can Moving Averages Guide Altcoin Trading?

Raxy believes that Altcoin trading can refer to the moving average strategy, but the effect will be relatively worse.

The characteristics of Altcoins are high Sharpe ratio and violent fluctuations, often accompanied by big rallies and declines. In operation, Raxy regards the daily EMA20 as an important reference indicator:

1) If the Altcoin fails to stand above the daily EMA20, he usually will not make large-scale operations.

2) Only when the daily EMA20 rises or is broken through, he believes that the market may have real buying power, accumulation or price increase momentum, at which point he can trade according to the moving average rules, i.e. buy when it stands above, and sell when it falls below.

Raxy also mentioned that Altcoin trading requires higher requirements for take-profit and position management:

Take-profit needs accurate judgment, and staggered buying must be strictly controlled, with detailed mathematical calculations, otherwise the overall profit-loss ratio is easy to become unbalanced.

Although at the daily level, moving average trading can effectively reduce oscillation wear and tear, at smaller time frames like 1-hour or 4-hour, the situation becomes much more complicated.

Therefore, Raxy is more inclined to use the daily level to guide operations.

What is the Turtle Trading Method?

The Turtle Trading method is a trend trading strategy that is relatively effective in market environments with clear trends and less noise. This method relies on clear buy and sell signals, confirming the direction of the market trend by breaking through key levels (such as recent highs or lows).

In practice, Raxy uses the Turtle Trading method together with moving averages, with the moving averages being the main focus. The Turtle Trading method can basically ensure that the trend is always there, and the small-time-frame moving averages can ensure knowing when the short-term trend ends, such as switching the time frame to 1 hour or 4 hours, and can probably know the exit point, including coordinating with some MACD and other indicators.

"I've seen too many indicators, and I've actually lost money on almost all the methods and strategies in the market. So in the end, I chose the indicators that everyone's ears are calloused from, like MACD and trading volume, which are very simple."

Raxy also mentioned that the logic of choosing the Turtle Trading method and choosing moving averages is the same, to judge the rise and fall of prices. There are too many things to think about, one is not easy to figure out, and the other is very easy to think wrong, so it's better to choose a simple and clear system to avoid letting yourself have a mess of thoughts.

What Indicators Are Used to "Escape the Top"?

SRSI is an indicator that Raxy attaches great importance to. SRSI is a superimposed algorithm based on dynamic strength RSI.

1) When SRSI forms a death cross, Raxy will adopt a defensive strategy of reducing positions.

2) When SRSI forms a golden cross, he will consider rebuilding positions.

Although SRSI can effectively reflect the market's buying power and the trend in the next period, it is still difficult to accurately judge the top in a rapidly changing trend market.

Raxy also looks for clues from the logic of large traders' behavior. For example, when large traders no longer use the spot market for large-scale buying, but start to adopt other ways to obtain returns, it may mean that the willingness to further push up the price is weakening, and at this time the market's upward momentum may be approaching the end.

But overall, judging the market top is always an extremely challenging task, and there is no single method that can accurately predict it.

The "Stop Doing List" Summarized from Two Major Losses

Raxy mentioned that the core of the Stop Doing List is to avoid trading errors caused by mental problems.

First, do not set unrealistic integer target levels for profits.

"When you make a lot of money in a short period of time, exceeding your expectations, you are very likely to set a target for a certain integer level. And once this target is established, that day is almost the beginning of your losing money - there will be no exceptions."

In addition, you should always respect the signals of the trading system and allocate positions reasonably. Avoid potential losses caused by subjective overconfidence.

Also, you absolutely cannot run two strategies on the same account, that would be a mess.

The Six Mentalities Necessary for Successful Trading

In the dialogue with Raxy, he also shared some mentalities he has learned in the process of transitioning to a trader, and encourages everyone:

1. Trading is like a hell-difficulty side quest in a life game. Completing this side quest will give you a deeper understanding of everything else.

2. Investing in primary market projects is actually investing in people, and the management of positions in the secondary market is ultimately a matter of position management.

3. There is no perfect trading strategy. You need to learn to judge whether it is a trend cycle or a fluctuation cycle, and to hedge in different market stages.

4. When you reach enlightenment in trading, it's time to start subtracting: no longer fantasizing about getting rich overnight, because you know that profits beyond your cognition will eventually be returned to the market; and you don't need to worry about the serious consequences of continuous losses, because the losses are all within your plan.

5. Go with the trend, and the certainty will be higher.

6. Opportunities are always there, the important thing is whether you are still there.

Written at the end

After talking about so many traders, I found that everyone is ultimately looking for themselves.

What is my relationship with this market? Where should I put myself, and how should I do it to be comfortable and make money? Finding a trading strategy that matches your personality and continuously adjusting the relationship between your personality and trading strategy is the underlying and particularly important thing for a trader.