From 10,000 to 1 million? How to establish an investment methodology that suits you?

Many people want to succeed in something, and they often have a clear ultimate goal, such as hoping to turn $10,000 into $1,000,000. However, they lack a customized systematic execution strategy to achieve that goal; in simple terms, they lack a methodology that suits them.

The formation of a methodology can actually take various paths, such as:

- Blindism

This refers to not thinking about so-called methods or strategies at all, believing that they are useless. Some may naively think that simply gambling on a few MemeCoins will lead to overnight wealth, just like the stories they have heard. They may even base their dreams of wealth on others (mostly strangers). However, the result is often that the lighter cases may lose a little tuition, while the heavier cases may end up in a scam and lose everything.

Only after one or even multiple failures can they transition to a more pragmatic or experiential approach.

- Pragmatism

This allows individuals to directly learn or copy others' methods for their own use. For example, I primarily use a DCA strategy to accumulate Bitcoin, and this strategy can be adopted by anyone. However, this method may not suit everyone. For instance, accumulating coins requires long-term commitment, and if your goal is to achieve tenfold or hundredfold returns, this approach clearly cannot help you achieve your goals in the short term.

- Empiricism

Although this group of people will learn and understand many others' experiences, they often only stay at the observational level and do not spend much time thinking about the underlying logic. They tend to trust themselves more, such as believing in their intuition or feelings, or even thinking they are the chosen ones in this field.

They will attempt to accumulate experience through their own real-money trials, which generally leads to two outcomes: one is that if they can effectively review and summarize their experiences after making money or losing money, they should be able to quickly formulate a set of execution strategies that suit them. The other is that if they do not engage in effective reflection and review after making money or losing money, they are likely to give back the money they earned due to luck or even end up losing their principal.

Although we often know that failure is the mother of success, some failures, such as high-leverage operations, leave no room for recovery once they occur, forcing one to say goodbye to that field.

However, the formation of a methodology is not only based on the execution methods mentioned above but is also closely related to one's own behavioral habits. So, how can one better form their own methodology?

1. Establish a Regular Routine

Some people enter a habitual state of monitoring the market after buying a certain coin, often staring at the charts for half a day. This is completely unnecessary; it not only wastes time but also does not significantly help with trading itself. Moreover, since this field operates 24/7, many people choose to stay up late to monitor the market. Whether this approach can make money is another discussion, but it certainly does not benefit one's health.

If you cannot even ensure a regular routine in your life, how can you maintain discipline and systematic execution in trading?

It is better to first ensure that your daily routine is regular, and then plan how to learn or trade based on that basic premise. For instance, regarding market monitoring, you can set alerts at key price levels, and check the corresponding charts only when you receive an alert. Otherwise, focus on reading articles for learning or concentrate on your work. If you do not want to learn or work for the time being, consider going for a run to exercise.

The key to trading is not to monitor the market constantly but to learn to avoid unnecessary actions during the waiting period.

2. Clarify and Reduce Your Areas of Focus

Everyone's time and energy are limited; we cannot be proficient and professional in everything. Just clarify the areas you are most concerned about and continue to delve deeper into them.

For example, I currently focus on two major areas: economics and cryptocurrency.

Since I trade infrequently (mainly accumulating coins), most of my time and energy is spent writing e-books, so I might have a broader focus. However, each major area is divided into many subfields (or tracks). If your core goal is to make money through trading, it is advisable to select only 1-3 key subfields (tracks) to focus on and study in depth; the fewer, the better.

As mentioned in previous articles, for example, in the cryptocurrency field, the market can currently be divided into at least 200+ different narrative tracks (such as AI, RWA, GameFi, etc.), including at least tens of thousands of different types of projects (if we count various MemeCoins, the number of projects has likely exceeded 1.7 million). We cannot thoroughly research all tracks and projects; it is best to choose 1-3 tracks that you find most appealing to study.

You can even use some third-party tools to optimize your time management for focusing on and researching projects. For example, you can use tools like Clockify (a time-tracking plugin) to track how much time you spend on each project website through the Chrome browser.

Time is the most fairly distributed resource in this world; everyone has 24 hours a day. Optimizing your time management is one of the key issues that can help you stay ahead of others.

Do not always chase after various hot topics for opportunities; instead, try to dig deep in the areas you are focused on and discover potential opportunities.

3. Appropriately Eliminate Various Influences of Information

Some people, in order to keep themselves learning, may install dozens of different news apps or follow many people on social platforms, spending most of their time and energy scrolling through news.

On the surface, it seems that they learn a lot every day, but if they take a moment to reflect and summarize, they might realize that spending 5-6 hours daily scrolling through miscellaneous information does not provide much effective help. It may even interfere with their plans due to various information distractions.

We are now in an era of information explosion, which can easily make people restless. When most people become increasingly restless in this environment, we should strive to remain calm. It is better to delete unnecessary apps, read more high-quality long articles or books, and spend more time recording, thinking, and summarizing, while minimizing behaviors or activities that do not help achieve our goals. Spend your time on things that can create higher value.

I now hardly look at various so-called news updates, and I rarely scroll through Twitter. However, I do spend time reading various latest research reports and in-depth articles, such as those from CMC Research, Messari Research, Coingecko Research, Binance Research, etc.

4. Execution Discipline and Strategy Optimization

Execution discipline refers to the process steps set to achieve your own goals, and these steps must be strictly followed according to the plan.

Whether you are doing long-term dollar-cost averaging or short-term swing trading, you need to clarify what your execution discipline is, such as:

• Proper position management; never go all-in

• Always allocate a large position to Bitcoin, with MemeCoin positions not exceeding 1%

• Avoid excessive diversification; hold no more than 10 different coins

• Buy in batches and sell in batches

• Before trading, not only set a profit-taking plan but also a stop-loss plan is equally important

• Always keep at least 10% of your position in stablecoins to ensure liquidity

• As we have mentioned many times before, the two most important points for newcomers: protect your principal and avoid what you do not understand

• And so on…

The above may be relatively general execution disciplines, and different disciplines may suit different people. Different individuals should customize different disciplines, which requires personal expansion, reflection, and execution attempts.

Based on execution discipline, some plans can also be optimized and adjusted as necessary with market changes, but such adjustments must be made under the premise of execution discipline. For example, if your original discipline was to allocate 60% of your position to Bitcoin, but you find that a certain altcoin is suddenly performing well, and you decide to sell all your Bitcoin to buy that altcoin, this would not be an optimization but a destructive change, which also implies a change in your risk preference.

5. Reasonably and Effectively Utilize Various Tools and Data

On-chain tools are an important component series mentioned in previous articles. Effectively utilizing various on-chain data can make our research work much more efficient. Although some may say that on-chain data is only for novices, as long as the data or indicators from the corresponding tools can provide us with new help or guidance, it is still worth using and researching as necessary. Everything is dialectical, and we can hold an inclusive attitude towards any matter.

On-chain data mainly targets two groups: those who use on-chain data for research and analysis (such as institutions or media) and those who use on-chain data to discover profit opportunities (such as traders or investors).

From a trading perspective, if you want to find profit opportunities using on-chain data, then:

First, determine the direction for seeking data. For example, focus on finding highly liquid assets (to avoid slippage), identifying trending assets (using momentum), discovering smart money, etc.

Second, use different tools for necessary exploration. There are many types of tools available, and different tool platforms may have different focuses. Some commonly used tools can be further explored through the "toolbox" organized in previous articles.

Next, let’s provide a brief step-by-step explanation of how to use on-chain tools to establish trading strategies:

Step 1: Find Projects Based on Data Dimensions

Step 2: Create Your Observation List

Step 3: Customize Strategies for Trading

For example, we can use Momentum (to identify trending coins) and Mean Reversion (to identify volatile coins) strategies.

Momentum is a common trading strategy that involves buying or selling based on the recent price trends of cryptocurrencies, focusing on riding the trend and closing positions before a trend reversal.

Mean Reversion is a quantitative trading strategy based on statistical arbitrage, which trades based on the short-term deviations of prices and their long-term mean reversion relationship. The core idea of this strategy is that when prices deviate from their long-term mean, there is a tendency for prices to revert to their mean level. Therefore, this strategy can also be used to identify volatile coins and profit from their volatility.