Trading rules — the foundation beneath every technique

Core idea

The trading system and analytical knowledge are things that come after; what comes first is the set of rules that decides whether you're standing in the position of an investor or a gambler. A person who analyzes brilliantly, who builds spot-on scenarios, and whose account still doesn't grow, is someone who skipped this layer of rules. Three hard rules: only trade Bitcoin (ETH at most), stop-loss never exceeds 1% of the account, and in a trend there are only two order states: with the trend, or waiting to go with the trend.

Details

0. Investor vs. gambler — the line between them is just one emotion

The line between the two positions is separated by only one very fragile emotion — you can be an investor one moment, and one bitter, resentful trade later you've flipped straight into a gambler.

The trap of a low barrier to entry. Buy a piece of land worth 10–20 billion without a title deed and everyone thinks it over carefully. But tapping a trade on your phone has almost no barrier at all — the action is done in a split second. The fix: apply the exact same mindset you'd use buying real estate to every single trade — weigh it, be careful with it, manage it tightly.

And don't think "small money means I can be loose, once it's bigger I'll be careful." That's not how it works — it's a habit, and the habit has to be trained with small money.

1. Only trade Bitcoin (ETH at most). Absolutely no Futures on altcoins.

This is the rule the teacher enforces most harshly: anyone trading altcoin Futures is invited to leave the group.

Reason 1 — the number of variables you have to handle.

The problem is 4–5 times harder.

Reason 2 — the "earning more" argument is an illusion. Say BTC runs from 1→10 (you buy at 2, catch 8 units), and in that same stretch the altcoin runs 1→30 (you buy at 8, catch 22 units). At first glance the alt catches roughly 3x more. But:

• If you enter with the same amount of capital: getting BTC wrong loses you 1 unit, getting the alt wrong loses you 7–8 units → you've already broken your risk-management rule.
• If you follow risk management (keep the loss level at 1%): you have to reduce the capital going into the alt trade — for example, if you put $100,000 into BTC, you can only put ~$20,000 into the alt → your profit range drops back down to roughly the same as BTC's.

→ Conclusion: for the same level of profit, the problem is 4–5 times harder. If you genuinely want to earn more, raising leverage on BTC is far more sensible — because you're still only solving one problem.

Reason 3 — with small market caps, the chart can be drawn to order. With market caps of a few hundred million or a few billion dollars, the market-maker crew can "draw whatever pattern they want, bend the chart whenever they want." Only at BTC/ETH's scale of market cap (hundreds of billions of dollars) can sharks still move the price but not blatantly manipulate it. Every altcoin project necessarily has marketing = a "driving" crew.

But altcoins still have their place — just in a different form: spot, medium- and long-term, at the late stage of a downtrend / accumulation, allocated across a portfolio. "When the tide rises, the duckweed rises with it" — buying alts at that stage is extremely wise. What's banned is short-term altcoin Futures, especially during a downtrend/hibernation, when the project teams are "gasping for air" and ready to devour anyone who jumps in.

2. The stop-loss absolutely never exceeds 1% of the account

It's not Futures that create the risk, it's not leverage that creates the risk — the decision-maker creates the risk. Out there, people trade x20, x50; one stopped-out trade costs 10–20% of the account, five trades and you're wiped out. Then they turn around and curse the market as a casino.

With the 1% rule:

• You'd need 100 losing trades in a row to blow up — that never happens. Even 10 losing trades in a row won't do it.
• 5 losing trades in a row is a sign you need to review your studying, not bad luck.
• With this method's R:R ratio (1:5, 1:7, some trades 1:10–1:15), one winning trade covers a whole string of small losers.

The stopping rule: 3 losing trades in a row → stop, rest, regain your calm, and only then come back to the market. Even three losses in a row only costs 3% of the account — very small, one winning trade gets it all back.

The only thing you actually control in this market is the stop-loss.

3. Four possible outcomes of a trade — and how to erase case number four

If an account only ever contains cases 1–2–3 (up 10%, up 15%, up 2%, down 1%, down 1%...) it looks extremely healthy, no problem at all. Every single account problem lives in case 4.

• Small losses: one winning trade covers several losing ones.
• Large losses (20–30% or a blowup): very hard to recover from, and worse — it paralyzes your psychology immediately, you lose confidence, then you make a string of bad decisions trying to "win it back."

How to erase case 4: always set a stop-loss + enter with a size within your allowed limit. That's it, no exotic technique needed.

The market going against your read is a COMPLETELY NORMAL thing. Even Warren Buffett cuts losses worth hundreds of millions of dollars. Nobody is right 10 out of 10. What matters is winning across the whole string of trades.

Why knowing the rule still isn't enough to keep it — an added layer of explanation

The table above doesn't answer this: everyone nods along with "always set a stop-loss," so why does case 4 still keep happening?

The teacher offers a sharp comparison: alcohol, tobacco, and drugs have been taught by all of society as harmful since people were children — heard thousands of times, from many sources, so it becomes a belief, not just information. Whereas "don't increase leverage · don't remove your stop · don't DCA against the trend" is said by only a very small group of people. A newcomer hears it a few times, understands what the sentence means, but can't picture how dangerous it really is until they've experienced it themselves.

⇒ Practical consequence: don't assume that having read the rule means you already own the rule. The gap between knowing and believing has to be closed with deliberate repetition — reciting the rule out loud, writing it on paper, rewatching the video, reminding each other in the group. This is why the but giay nen exercise has to be done for a lifetime, not done once.

The typical path to case 4 (it's gradual, not sudden): earn 20–30% ⇒ feel like this pace is too slow ⇒ hit a sideways stretch ⇒ remove the stop and go against the trend ⇒ survive quite a while, because the wave keeps reversing back and forth so price often comes back ⇒ die precisely when the market suddenly runs hard in one direction. The most dangerous part of this path is the phase where it actually works — every escape reinforces the wrong belief a little more.

Two paths for your capital:

• Someone who manages risk: climbs gradually, month by month, year by year.
• Someone who won't accept being wrong: rises very fast for a stretch, then loses everything at one point in time. The teacher tells his own story: 8–9 months of building up, then one evening, about 50 minutes of stubbornness, and it's all gone.

The bottom line: over 5–10–20 years in this profession, no one escapes that moment if they ignore risk. So the question isn't "will it happen" but "how much of my capital am I exposing when it happens." See lieu khac mu.

The rule that stands above all: the market is always right. Sharks manipulating price, sudden news, thin volume during a downtrend — an unclear wave is an everyday occurrence. When you're wrong, admit it fast, review your analysis, start over. A mindset of "fighting the market" or "I'm always right" only needs one impermanent turn of the market to be finished.

4. Forget your old losses

If you keep holding onto the thought "I have to win back what I've lost," it will weigh down your entire investing process and ruin every decision. For losses that were already very large from before you had any knowledge, the teacher says it plainly: there is no piece of advice that will win it back. The only way is to forget it and start over from the beginning, with knowledge.

5. Two exercises that break a careless mindset about money

The root problem: money in an account is just a number on a screen → it generates no emotion → it's easy to be careless with. Losing 50–80% of an account still feels lighter than dropping a few million in cash.

The negative exercise (hits hardest): withdraw your entire account as cash, stack it on your desk, and sit looking at it. Then take 5–10–20% of that out, go out onto the street and drop it on the ground, and stand there watching someone else pick it up. Nobody dares do it. But that is exactly the action you're taking every time you use heavy leverage / trade without a stop. That image burns into your brain and you never forget it.

The positive exercise: take that amount of money and go do charity work DIRECTLY — no transferring through a fund, you have to show up in person. The teacher recounts an experience during the 2021 pandemic in Saigon: planning to give 1 million per gift package, a volunteer said 1 million was too much, that 250,000 VND would feed a family for 2–3 weeks; they finally settled on 500,000 VND per package to cover a month of food. One of your 1% stop-losses can be someone else's entire fortune.

The goal of both exercises: rebuild a real emotional connection to money, so that later, once your account reaches a million dollars (a 1% stop-loss = $10,000 = ~200 million VND), the discipline is already there.

6. Without enough knowledge, you don't get to use real money

A first-year med student isn't allowed to hold a scalpel. Trading is the same. Entering a trade before you have the knowledge means that trade gives you no experience or skill at all — it's pure luck.

Warning about the peak of "Mount Stupid": after the first ~10 sessions, everyone gets the feeling "I can eat the whole market." Be very careful with that feeling. After that, you'll start getting stopped out, running into trouble, confidence dropping — that's when you have to keep fixing yourself, and it's the mandatory road up to the peak of enlightenment.

The reason: correct knowledge is A, but applying it to this stage of the market gives you A', a different stage gives A'', yet another stage gives A'''. You have to pass through many variants before it's complete.

7. In a trend: only TWO order states

Once the market has entered an uptrend, there are only two order states: Buy or Wait to buy. Delete the Sell button entirely. Once the market has entered a downtrend, there are only: Sell or Wait to sell. Delete the Buy button entirely.

Why: during a strong trend phase, the market usually corrects by going sideways and then continuing up — someone sitting there trying to pick the top gets stopped out trade after trade. At best they catch a few small counter-waves for double the effort and double the risk.

The standard rhythm in an uptrend: Buy → close when the force runs out → wait → Buy again → close. That's all there is to it.

8. Two forms of corrective wave (a direct effect on tactics)

A way to verify this with the logic of force: if 1,000 buyers pushed the price from A to B, then bringing price back exactly to fibo 0.5 needs roughly 500 sellers to cancel that out; dropping below 0.5 needs ~600–700 sellers → meaning the selling pressure has become dominant.

But if price only goes sideways: those same 1,000 people just stopping their buying is enough to halt the rise — no selling pressure needed at all. Then 1,000 new buyers jump in and the price runs again.

"Pullback wave" and "corrective wave" are two names for the same thing. But "single wave" and "sideways-style correction" are two different things.

9. A trend's validity — the hard definition

An uptrend remains valid for as long as its nearest support zone holds, even if it fails to make a new high. It loses validity exactly the moment its nearest support zone breaks.

Why: a support zone represents a group of people waiting to buy; a resistance zone represents a group of people waiting to sell. To break support, the selling force must be greater than that entire group of waiting buyers.

That gives two tight rules for reading force:

• Support zone breaks → selling force HAS appeared (on that timeframe).
• Resistance zone breaks → buying force HAS appeared (on that timeframe).

Always attach the clause "on that timeframe." If H4's structure breaks, selling pressure has appeared on H4 — that doesn't mean the 1D has any selling pressure.

10. The train theory — why a trend must have corrective waves

A train runs from Hanoi station to Saigon station. Its energy = hope + greed = buying force.

At each station (a correction zone), it has to stop to pick up more passengers and refuel. Reasons to stop:

1. The early-buying group has had their fill of profit → takes profit (taking profit is selling pressure).
2. That group has run out of money to buy more → buying pressure stops growing.
3. Some people see a psychological resistance zone (e.g. 20,000) and proactively sell.

But this profit-taking pressure isn't enough to crash the market, because small investors can't pull the market down — only sharks can do that, and the sharks still have a higher target at this point. So: selling pressure runs dry → fresh buying pressure pushes in → the train keeps moving.

After a whole uptrend structure, only then does a stretch of sideways movement long enough at the top appear, so that (a) the market maker can take profit, and (b) positive sentiment gradually erodes, greed gradually gets cancelled out — only then does it flip into a downtrend.

Practical consequence: the market can't move in one split second. You always have plenty of time to make a decision. For a weekly/monthly-timeframe wave, you can sometimes have several months to decide. Wait a day and you're already itching for the wave to run; two days and you've lost patience and sold — and that's exactly when the wave runs.

→ The wave's fuel tank (RSI = fuel tank), Wave-nature theory (permission from the higher timeframe, backing from the lower timeframe)

11. The market is sideways 70–80% of the time → you need a tactic for both

Range threshold for playing sideways:

• A range of only ~100–200 in price → skip it.
• A range of ~500–700 in price or more, even into the thousands → play it very well.

The loop you must avoid in sideways markets (everyone has been through it): buy → expect → force runs out → disappointment; 2nd time, expect → disappointment; 3rd, 4th time, "surely this time it goes up" → add more capital → it collapses. → Range vs trend tactics, Taking profit in a range

12. Three types of trader — you need to master all three

You don't pick one and abandon the other two — at each stage of the market you have to determine which role you're playing. Long-term investing takes 3–5 years to catch one wave; medium-term gets you 1–2 waves a year; so if you want to make money during a downtrend and hibernation, you must know how to trade short-term. Each school has its own thinking, skills and psychology → ba truong phai dau tu dh th nh.

Putting it into practice

A rules table stuck on the desk:

1. Am I acting as an INVESTOR or a GAMBLER on this trade?
2. BTC only (ETH at most). No altcoin Futures.
3. SL ≤ 1% of the account. A weak pattern I still want to squeeze in → 0.3–0.5%.
4. 3 losing trades in a row → STOP, rest, then come back.
5. Uptrend: only Buy / wait to Buy. Downtrend: only Sell / wait to Sell.
6. Sideways correction = NO selling pressure → the next wave is strong.
7. A trend stays valid until its nearest support breaks.
8. The market doesn't move in one second — I always have time to spare.

An emotional exercise to do once, to remember for life: withdraw cash and stack it on the table / go do direct charity work.

When you take a loss: immediately check whether the trade you just lost belongs to case 3 (small loss, followed the rules — accept it) or case 4 (large loss, broke the rules — deal with it right away).

What the teacher stresses / common traps

• "The trading system is something that comes after." Good analysis + good judgment + a spot-on scenario, and still no profit — because this layer of rules is missing.
• The market isn't a casino; the player turns it into one. "The only thing you control is the stop-loss. You let it grow to 20% of your account and then curse the market as gambling — the person you should be cursing is yourself."
• Don't push yourself into risk twice over: once by using too much leverage, again by choosing an altcoin. Both are your own choice, not the market's fault.
• Small amounts of money are exactly where discipline is trained. There's no such thing as "once it's bigger, I'll be careful."
• What's scariest isn't a student who doesn't understand, it's a student who thinks they understand but understands it wrong. "Better to not understand and know it, so you can ask." → ask as much as possible.
• Finding it hard to understand in the early stage is completely normal — the path is that things don't clear up until around session 20, and even rewatching the video at sessions 40–50 you'll still find something new.
• No practice means no questions arise; no questions means no results.

Related lessons

• 20 investing rules + the 3 stages of improving your trading — the layer of "rules of the game," broader than this layer of personal rules
• Notes & trading journal — the process that turns analysis into discipline — the tool that keeps you in the investor position rather than the gambler position
• Range vs trend tactics — details on changing thinking/tactics by shape
• Risk wave vs profit wave (the 80/20 rule) — filtering waves before discussing capital rules
• Wave validity — the equation a + b = c — wave validity, fibo 0.5
• The wave's fuel tank (RSI = fuel tank) — the train / wave-fuel image
• Multi-timeframe (multi-timeframe logic) — why each timeframe represents a different group of investors