Some friends ask me, what is the basic foundation for entering the crypto space?

Some friends asked me, what are the basics for getting started in crypto?

Combined with years of spot trading experience, I’ll break down the must-master fundamentals for newcomers into 5 major sections to help you avoid the pitfalls that 90% of beginners fall into.

1. Foundational Mindset: First recognize the risks, then talk about profits

1. Understand asset nature: Cryptocurrencies are extremely volatile and are not principal-guaranteed investments. Only use spare money you can afford to lose—never touch living expenses, borrowed funds, or working capital. Avoid borrowing money to trade crypto or going all-in with heavy positions.
2. Abandon the get-rich-quick fantasy: There is no shortcut to guaranteed 100x returns or mindless copy trading. Short-term surging small-cap new coins and meme coins are mostly tools for hot money to harvest retail investors. Chasing pumps will likely lead to deep losses.
3. Distinguish赛道本质: BTC and ETH are the core blue chips of the market; DeFi, RWA, and public chains belong to thematic sectors; newly issued small-cap coins have strong narrative-driven speculation but weak fundamental support.

2. Trading Tool Basics: Distinguish between spot and futures, and maintain safety boundaries

1. Prioritize spot trading only: Futures come with leverage—while they may seem to amplify gains in the short term, they actually amplify losses. Beginners are very prone to liquidation. Stay away from all leveraged products at the entry stage.
2. Understand basic trading terminology:
- Buy the dip: Accumulate in batches within the support zone, don’t chase rallies;
- Take profit: Sell in batches when the preset profit target is reached, don’t get greedy;
- Stop loss: Decisively reduce or close positions when a key support level is broken, capping losses;
- Position management: No single coin position exceeds 15% of total account funds; diversify holdings to hedge risk.
3. Wallet and asset security: Keep your private keys and seed phrases safe; never disclose them to anyone. Avoid unknown small exchanges and shady meme coin projects to reduce risks of exit scams and theft.

3. Fundamental Analysis Basics (Key to Holding Your Coins)

Many people lose money because they don’t understand the coin’s fundamentals—they panic sell on every dip. Only by understanding these four core dimensions can you hold long-term:

1. Cash flow: Does the project have stable fee income or real business revenue? Can it achieve self-sustaining cash flow?
2. Tokenomics: Is the total supply fixed? What is the unlock schedule? Is there a buyback and burn mechanism? Does the token distribute dividends or capture value?
3. Sector moat: Is it the leader in its sector? Does it have regulatory compliance, institutional partnerships, and long-term real-world use cases?
4. Valuation: Use PS (price-to-sales) valuation to determine whether the current price is a low-value area or a high bubble. Never chase hot sectors at high valuations.

4. Technical Analysis Basics (Simple enough, no need for complex indicators)

Beginners don’t need to study dozens of indicators. Mastering the basics is enough:

1. Bollinger Bands: Identify support and resistance—the upper band is a short-term selling pressure zone, the lower band is a short-term accumulation zone;
2. MACD: Distinguish bullish and bearish momentum—red bars indicate strengthening bulls, green bars indicate bearish pressure;
3. Key highs and lows: Previous highs are resistance; previous launch lows are lifelines—if broken, the trend weakens.
Core logic: Technical analysis is only used to find entry/exit points; never make decisions without considering fundamentals.

5. Trading Mindset Basics: Most losses come from losing emotional control

1. Don’t chase news: Good news often coincides with distribution by smart money. For example, small-cap meme coins that surge on hype often quickly reverse after the news breaks;
2. Don’t overtrade: Frequent short-term trading erodes profits through fees. Beginners should focus on long-term low-position accumulation to reduce trading frequency;
3. Don’t hold losing positions blindly: Don’t average down by adding to losing positions without reason. For coins without fundamental support, the downside is unlimited;
4. Think independently: Don’t blindly follow influencers or copy trades. Only by understanding the logic behind a coin can you withstand volatility and fully capture the trend.

Summary

The core sequence for getting started in crypto is: first build risk awareness and manage capital and positions → then learn basic trading rules → thoroughly understand coin fundamentals → simply read chart levels → and finally cultivate trading discipline.

The sequence must not be reversed. Jumping straight into price movements and chasing pumps is the root cause of losses for newcomers. Sticking to spot accumulation at low levels, strictly controlling positions, and staying away from leverage is the fundamental logic for ordinary people to survive long-term and steadily profit.