Six years ago, I quit my stable job and plunged into the cryptocurrency world, thinking I had grasped the "code for wealth", but in the first month, I was in debt of 200,000 due to frequent liquidations. When I was staring at the K-line chart late at night, an old veteran who had been trading cryptocurrencies for ten years said to me: "The cryptocurrency world is not a casino, but a training ground. You have to learn to 'live' before you can talk about making money."
This sentence was like a bucket of cold water that woke me up. Looking back now, the eight stages that newcomers to the cryptocurrency circle must go through (blindly following the trend → frequent trading → leverage addiction → fear of gain and loss → fear of the market → rational analysis → cyclical layout → inaction) are actually cognitive "disasters". It took me five years to go from debt to tens of millions of assets. It was not luck that I relied on, but I understood these five truths -
1. Rolling is not a gambler’s poker, but a hunter’s ambush
Newcomers always equate "rolling" with "leveraged all-in", but the real rolling is the strategy of "three years of no business, three years of profit after opening". I have summarized four major signals suitable for rolling:
Sideways breakthrough: like a spring being compressed to the extreme and suddenly rebounding (such as Bitcoin breaking through 10,000 yuan after sideways trading in March 2020);
Bull market squat: a sharp drop in a bull trend (such as the rebound of Bitcoin from 60,000 to 30,000 in May 2021);
Weekly Breakout: Breaking through key resistance levels at the weekly level (e.g. ETH breaking through the all-time high of $4,000);
Emotional resonance：The market collectively panics/frenzy due to policies or events (such as a country declaring the legalization of Bitcoin in 2024).
Key reminder: Use 10% of the funds for trial and error, and do not increase your position by more than 50% after a breakthrough, just like a hunter putting out bait first, and then casting the net after making sure the prey is hooked.
2. Position management: always leave a "safety door" for emotions
Common mistakes made by newbies: either they miss the big market with a light position, or they go bankrupt with a heavy position. My "135 Position Method" may help you balance the risks:
Initial position 10%: 1 million yuan of capital, first use 100,000 yuan for trial and error (for example, buy 5 bitcoins when the price is 30,000 US dollars);
Add 30% if the price breaks through a key level (e.g. 35,000), add 300,000 yuan (total 400,000 yuan);
Take profit minus 50%: when it reaches the target price (such as 40,000), sell half first to lock in the profit, and use the remaining half to bet on a higher point.
Case: In 2023, ETH rebounded from 800. I entered the market with 10% of my position, increased my position when it broke through 1200, reduced my position by 60% at 1800, and finally kept 20% of my position at 2400, with a total return of over 200%.
3. Leverage is not a monster, but a scalpel with scales
90% of people who get liquidated die because of "greed leverage": 50 times all-in, covering positions against the trend, and holding on to orders. But leverage is used like a scalpel:
Bitcoin 10x cap: Bitcoin volatility is low. Under 10x leverage, the stop loss is set at 3% (e.g. buy at $30,000 and exit when it falls below $29,100), and the loss is controllable.
4x limit of altcoins: altcoins are highly volatile. Under 4x leverage, use 2% of funds for trial and error (1 million yuan of principal, use 20,000 yuan to open an 80,000 yuan position), stop loss when it drops 15%, and only lose 3,000 yuan;
Dynamic portfolio adjustment: withdraw the principal when making a profit, and use the profit to play (for example, if you make 50,000 yuan from a principal of 100,000 yuan, withdraw 100,000 yuan, and the remaining 50,000 yuan can be used for leverage), your mentality will be more stable.
Remember: Leverage is an amplifier. First learn to make money without leverage, then practice "dancing with a sword".
4. The truth about how to make small capital big: replace “linear efforts” with “exponential thinking”
Many people use 10,000 yuan to do short-term trading and think they are great if they can earn 3% every day, but the compound interest formula tells you:
10,000 × (1+3%) ^ 100 = 192,000. It seems tempting, but in fact, 99% of people die in the 10th pullback.
My approach is:
Ambush by splitting warehouses: 100,000 is divided into 5 parts, 20,000 each, and invested in Bitcoin, Ethereum, and potential altcoins (such as LTC and ATOM in 2023);
Waiting for the wind to come: Use a 6-12 month waiting period, for example, in the 2024 halving market, Bitcoin will go from 16,000 to 32,000, and if you hold on, it will double;
Earn "multiples" rather than "points": Small funds should grab 5-10x coins (such as RNDR in 2023) rather than earning 3% every day. The former depends on vision, and the latter depends on luck.
5. More important than technology: sticking to the "anti-human" trading discipline
Three principles of profit:
Make 20% and withdraw the principal (e.g. make 20,000 from 100,000, take 100,000 and leave, leaving 20,000 to play);
The single-coin position does not exceed 30% (to avoid "heavy positions stepping on thunder", such as when UST collapses, the full position will be reduced to zero);
Don’t add to your positions when the price plummets, and don’t chase highs when the price soars (90% of those who chased highs when SHIB soared 20 times in 2021 were trapped at the top of the mountain).
The Iron Law of Loss:
1. The stop loss for a single transaction shall not exceed 2% of the total funds (exit the market if you lose 20,000 yuan from 1 million yuan to avoid being trapped);
2. Stop loss 3 times in a row and take a week off (the market is telling you that the rhythm is wrong);
3. After making a profit, transfer some money to your family first (to avoid false joy of "digital wealth", such as those who cashed out before the FTX crash in 2022 and luckily escaped).
A heartfelt message to newbies: The cryptocurrency world is an “anti-human” training ground
I've seen too many people:
Use "grocery money" to invest in altcoins, hoping to make 10 times the money in 10 days, but end up losing everything;
He made 5 million in the bull market but didn’t withdraw the money, but lost 8 million in the bear market because “digital assets are just a string of codes”;
If you are addicted to short-term trading, the handling fees will eat up 30% of your profits. It is better to save yourself the trouble of "regular investment".
Real masters are all doing "subtraction":
Only 3-5 big opportunities a year (such as halving, favorable policies);
90% of the time, watch from the empty position, 10% of the time, strike hard;
Put "survival" first, and control the rate of return at 20%-50%/year instead of pursuing doubling.
There is no shortage of myths in the cryptocurrency world, but behind all the myths is the "survivor bias". If you want to survive for a long time, remember what the old predecessors said: "First learn to stop loss, then learn to stop profit; first learn to be short, then learn to open a position; first learn to be a person, then learn to trade."
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