20 investing rules + the 3 stages of improving your trading

Core idea

Investing is a game, and every game has rules — go against the rules and you pay for it, no matter how good your technical knowledge is. These 20 rules are the visible tip; underneath them you still need a whole vault of knowledge, thinking, and tactics to actually execute them. Most people who lose money out there are wrong at the level of thinking itself, before you even need to discuss knowledge: correct thinking → correct thoughts → correct action → correct results.

Details

The 20 rules

1. When price is high, it keeps rising; when price is falling, it keeps falling. This is exactly the train-acceleration theory. When BTC ran from 10,000 to 40,000 over 3–4 months, the crowd's psychology was "it's too high already, how can I buy this" and they went short. But every technical factor was still fully intact — the correction was just the train stopping at a station. The crowd didn't buy in that zone; instead they bought at the real top that came later.

2. Take 100% responsibility for your own investment decisions. Don't listen to groups, don't listen to "experts." Their advice is correct for their own position: their capital, their allocation, their target, their timeframe, their price zone — not yours. Winning a few trades on luck without owning the knowledge yourself means the market will eventually take it back one way or another. (A gambler who wins once and then walks away is a type that almost doesn't exist.) This is a market where people eat each other alive: money flows from the pockets of the less experienced into the pockets of the more experienced. The only path forward is to become elite yourself.

3. You win not because you bought a good ticker, but because you invest BY THE RULES. No one can guarantee they'll only buy good tickers. LUNA was once in the top 10 by market cap and then went to near zero; FTX was once the #2 exchange and then collapsed. The way to survive is allocating capital by portfolio type (a safe portfolio / a high-risk portfolio — the portfolio hoping for a 50–100x only makes up ~20–30%, and within that it's spread evenly across many coins). Even if you lose, you don't lose much.

4. You must always have a "backup" portfolio in large-cap tickers. The counterpart to rule 3: you can't pour 100% into the risky portfolio. Very many people put all their capital into low-caps hoping for 50x–100x, and when the risk hits, it's total wipeout, with no way left to start over.

5. The market trend is the decisive factor. Knowing the trend tells you when to invest on the offensive (push your allocation up, make profit) and when to play defense (pull capital back out, preserve your gains). Four legs to determine it: technical analysis + crowd psychology + fundamental news/trend + money-flow analysis. Thinking "when will the market get to 80,000 so I can break even" is naive — if there's a rise, there has to be a fall.

6. The giants always leave large footprints on the chart. Don't fear the "sharks," because the price chart shows everything. Every trend from 1D upward must involve preparation and decision-making by the shark group — the crowd doesn't have enough money, enough agreement, or enough knowledge to create a 5,000–10,000-point wave. The sharks need two effects: a marketing/media effect (planting a keyword in the crowd's head) followed by a price effect (baiting price up so the crowd FOMOs in and completes the trend for them).

7. The most important factor you must perfect is PSYCHOLOGY and EMOTION. An error that sounds very academic but is extremely damaging: getting sucked into studying too much knowledge and too many trading systems. Learn Ichimoku, see it's not making money → jump to a different indicator → changing horses mid-stream, without realizing the problem sits in psychology and discipline, not in the system.

8. The market is always led by some sector group / some narrative — you have to identify that group. True both for stocks (real estate, steel, banking each lead their own periods) and for crypto (DeFi in 2019–2020, then NFTs, then the Metaverse). This is exactly the media effect from rule 6. If there's only the price effect with no media effect → that trend is very likely to be weak, because it can't pull in new money, and if the sharks push it up they lose. Before a big-timeframe pattern is about to run, ask: what narrative is active right now? which group is getting media attention? No group → be careful.

9. Any successful investor has to accept taking losses. No one wins 10 out of 10. Trading is inherently probabilistic; your job is to keep every decision's risk within the limit both your account and your psychology can bear. The math is very simple: 7 wins, 3 losses, each loss at 1% = -3%; average win 5% × 7 trades = +35% → +32%. The causal chain to remember: a goal big enough → produces discipline → discipline determines psychology. Breaking discipline directly damages your psychology. → SMART goals in trading

10. When "the leader" hits its top is exactly the moment to consider leaving the market. In crypto, the leader is BTC. When the technicals show BTC's upward momentum weakening, the smaller timeframes form a weakening pattern and hand the decision over to the higher timeframe to turn down → a sign of the top. Combine this with the money-flow factor: once BTC peaks, money flow shifts into altcoins, garbage coins fly everywhere → that's exactly the sign of a top zone.

11. The crowd buys and sells by EMOTION, not by analysis. More precisely: they expect the market to rise the way they want it to. They buy because a neighbor told them to buy.

12. The market rises, falls, AND GOES SIDEWAYS. The crowd only has two modes of thinking: it went up so it must come down, it went down so it must go up. They don't know a sideways state even exists — and yet that's actually the most "brutal" state of all. The sharks' goal in each phase:

Beginners die the most during this phase, because they apply the exact same trend tactics to a sideways market and then conclude "the system is wrong" and go off looking for a new system. The knowledge stays the same, the system stays the same — only the thinking and tactics need to change.

13. Good news doesn't automatically mean the market rises. News has to be confirmed back against the technicals. If news breaks and the sharks don't push money in behind it, it won't show up on the chart.

14. Bad news doesn't automatically mean the market falls. (The mirror of rule 13.)

15. In a REAL strong trend, price usually follows a 5-wave structure. Elliott only holds true during a genuinely strong-trend phase; a sideways phase doesn't follow it. Don't ask "why do we always have to force Elliott onto this."

16. A real uptrend has to last several months. Rising for one or two months and then dropping right back down is just a minor wave. A real uptrend needs all three: an accumulation zone + money flow + a media campaign. Once you've confirmed all three and the multi-timeframe technicals still support the upward momentum → hold with confidence.

17. The A–B and A′–B′ diagram: the greedy buy at A and sell at B; the experienced buy at A′ and sell at B′. The greedy try to buy at the exact bottom and sell at the exact top. The experienced wait for the trend to be confirmed before buying (A′) and sell once there's a sign of weakness (B′), accepting they'll give up both wicks. Trying to catch A–B is a straight road to taking profit too early or catching a falling knife. → entry points

18. The crowd always finds a REASON to justify the market rising/falling. And by the time they've found the reason, price has already run away. The closing line for this rule:

News is the EFFECT. Money flow is the CAUSE. Real-world evidence: on the days the Fed raised rates, the group had already seen a technical sell signal a day or two beforehand; during the CZ–SBF clash, they had already entered short trades before the news even broke. Because the sharks always leave footprints on the chart (rule 6).

19. When everyone believes buying is a sure win — that's the moment to consider selling. (Contrarian thinking) Extremely important — this is NOT "the crowd buys, so I sell." Mechanically doing the opposite during a trend is a guaranteed death. The correct approach: when you see the crowd leaning too heavily toward one direction, have a scenario ready in advance for the opposite case, so that when a real signal appears (from fundamentals / technicals / money flow), you can act ahead of the crowd. → building out a wave scenario

20. Every uptrend has a DISTRIBUTION phase at the top. True for real estate, stocks, and crypto alike. This is the phase where the sharks take profit and unload: pumping altcoins/low-caps to lure you into selling BTC to buy alts, and then they unload the alts and sell off the remaining BTC too. Identify it through money flow + technical analysis. In Elliott terms, this corresponds to the wave 4–5 zone.

The 3 stages of improving your trading

Distilled from the account of a student who reached the point of earning ~$1 million profit per H4 trade. The three stages happen in exactly this order — you only reveal the next one once you've solved the one before it.

A principle running through all three stages: the knowledge is already enough; what's missing is practice. And the way to practice isn't waiting for the market to move — it's backtesting the past.

A reference framework for self-diagnosing where you're stuck — four factors, in exactly this order:

Knowledge → Thinking → Tactics → Psychology. If you haven't yet nailed the first three in order, then having a psychology problem is simply a given, not because "I'm just weak psychologically."

A zero-sum game — and "phantom profit"

The base mantra of the 2023 course-2 opening session: the market is a zero-sum game. Money isn't created out of nothing and doesn't disappear either — it only flows from the pockets of the less experienced into the pockets of the more experienced. There's no exception to this rule.

The direct consequence, and the teacher's closing line: the first job is to HOLD ONTO your hard-earned money; earning it sustainably is the second job. Whoever reverses that order becomes a source of money for someone else.

"Phantom profit": profit during an uptrend that you haven't withdrawn yet isn't your money yet. Rising water lifts every boat — it's only when the tide goes out that you find out who's swimming naked. Very many people in 2022–2023 gave back all of their 2021 profits plus debt on top.

The end of the "nouveau riche" era — and the rule that money leaves the same way it arrived

There used to be an era of getting rich through policy connections, through relationships, through buying land ahead of a project. From roughly 2020 onward, almost the only path left is: putting knowledge and experience into your own head.

Along with it comes a rule worth writing down: money leaves the same way it arrived. Getting lucky once and then continuing to trade the same way will eventually lose it all — no different from winning the lottery once and then continuing to play until it's all gone. This is a downside of "a blind cat finding a fried fish" during an uptrend season that hardly anyone thinks about.

The system comes AFTER

A priority order that's easily inverted: newcomers go looking for "the best system" first. But without thinking + tactics + psychology, the system is worthless — and every system shares the exact same nature (a price chart = buying pressure/selling pressure), none is better than another. The analogy the teacher uses when a student who works in IT asks: "it took you 5–7 years to master repairing phones; do you think my profession is easier than yours?"

Putting it into practice

Use the 20 rules as a context filter, not an entry setup. Before each cycle / each week, answer for yourself:

- What phase is the market in: rising / falling / SIDEWAYS?             (Rule 12)
- What narrative is leading right now? Is there a media effect?         (Rules 8, 16)
- Where is the money flow? BTC or altcoins?                             (Rules 10, 20)
- Which way is the crowd leaning? What's the opposite scenario?         (Rule 19)
- This week's news: has it been confirmed back by the technicals yet?   (Rules 13, 14, 18)
- Does my portfolio have a large-cap backup? How much is in the risky slice? (Rules 3, 4)
- Am I on offense or defense right now?                                  (Rule 5)

Self-diagnose the 3 stages (do this at month's end): count your trades for the month

• Wrong a lot because of bad reads → Stage 1 → backtest your analysis.
• Reads correct but missed / entered early / entered late → Stage 2 → reset your psychology to accept small stop-outs.
• Entered correctly but profit drifted back to breakeven → Stage 3 → backtest your take-profit points specifically.

What the teacher stresses / common traps

• "Life is a game, investing is a game too. Every game has rules, and going against the rules means paying for it."
• Being wrong at the level of thinking means knowledge can't save you. Correct thinking → correct thoughts → correct action → correct results. People out there losing money haven't even reached the discussion of knowledge yet — they're already wrong at the very first level.
• Black swans are a rule, not an accident. The house needs them to reset the game, to make people afraid or greedy. And as the community's collective knowledge rises, the event has to be that much bigger to shake them. Quoting Jesse Livermore: there's nothing new on the financial markets — because human nature and human emotion never change.
• At some point, the difference between people stops being about knowledge. By session 47, a student's analysis was no different from the teacher's own. "The only remaining difference is psychology, discipline, and emotion."
• Trading is an extremely independent and solitary job — not something you bring to a group to discuss. You have to sit and talk with yourself to find out what needs fixing.
• A common trait among everyone who's profitable: working with extreme detail and extreme discipline. No exceptions.
• Don't measure your progress against someone else's speed. A focused person takes 3–4 months; if you're busy, setting a 1–2 year goal is fine too. Progressing bit by bit still beats standing still. Rushing to finish in 6 months isn't necessarily better than going slow for a whole year.
• You can't fight the house — you can only understand its rules. Understanding the clues the sharks leave behind is the only way to limit your risk.
• The goal isn't predicting correctly — the goal is profit. If your guess is wrong and the market shows you the opposite, change direction right away and the profit still comes. However far it runs, hold on for that much.

Related lessons

• SMART goals in trading — rule 9: goal → discipline → psychology