After graduating from university, I plunged headfirst into the cryptocurrency trading field, and it has been over ten years now.
Recalling ten years ago, I entered the cryptocurrency world with a principal of 8,000 yuan. Fortunately, I entered the market just in time for a bull market, and in a short period, my assets rapidly grew to over 10 million. However, the ever-changing market always catches people off guard. In the following three years, the bear market...
I not only lost all the money I had earned before but also incurred over 8 million in debt. At that time, relatives and friends all advised me to stop and stay away from this risky market.
But I was not willing to give up, thinking of using the last borrowed 200,000 yuan to give it another shot. So, I resolutely immersed myself in it again. Hard work pays off; with this 200,000 yuan principal, I miraculously earned 27.5 million in three years. The facts prove that when you truly explore a trading method that suits you and execute it unwaveringly, it is possible to achieve a significant turnaround in life.
Next, I will share my winning rules and practical tips for cryptocurrency trading:
One, about returns
Core logic: After a 50% loss, you need to earn 100% to break even.
✅ Comment: This is fundamental mathematical knowledge of investing. Remind everyone that controlling losses is more important than chasing returns, especially in high-volatility markets (like cryptocurrency), which is a matter of life and death.
Two, about the extent of price fluctuations
Core logic: The impact of rises and falls on assets is asymmetric.
✅ Comment: Continuous rises and falls do not cancel each other out; each fluctuation is calculated against a new base. This illustrates the erosion of long-term returns due to volatility risks, focusing on controlling drawdowns.
Three, about volatility
Core logic: Even if it seems to be a long-term rise, the fluctuations in between can reduce actual returns.
✅ Comment: This indicates that stable returns are more important than drastic fluctuations. Many people only see the peaks of the return curve but ignore the valleys. In the long run, volatility severely damages compounding.
Four, about daily 1%
Core logic: The power of compounding small, continuous returns is immense.
⚠️ Comment: Theoretically valid, but practically very difficult to operate. Earning a stable 1% daily is almost impossible, with very high risks, easily leading to market liquidation. It is suitable as an ideal model to understand the power of compounding, but not recommended as a practical goal.
Five, about 200% per year
Core logic: High returns can achieve astonishing appreciation in a short period.
⚠️ Comment: In an ideal scenario, sustained high returns are almost impossible to achieve. There are many who get rich quickly in the cryptocurrency world, but very few can maintain it long-term. One point to emphasize: don't be tempted by extreme cases and ignore the law of large numbers.
Six, about tenfold in ten years
Core logic: An annualized return of 25.89% can achieve a tenfold increase in 30 years.
✅ Comment: This model has real significance, a reasonable target for long-term stable investors. For example, many successful investors (like Buffett) have an annualized return at this level.
Seven, about averaging down
Core logic: Averaging down can effectively lower the average cost of holding.
✅ Comment: Mathematically valid, but the premise is that you have sufficient confidence in the asset. Otherwise, buying more as the price falls can easily lead to 'catching a falling knife'. Averaging down should also be strategic, such as setting staggered funding and maximum position limits.
Eight, about holding costs
Core logic: The cost of chips left after partial profit-taking can be regarded as 'free', reducing psychological burden.
✅ Comment: This is a commonly used strategy among many investors, called **'snowball layout'. But be cautious of psychological traps: 'cost becomes zero' ≠ 'no risk'**, as the remaining position can still lead to substantial unrealized losses.
Nine, about asset allocation
Core logic: By allocating risk-free and risky assets, a more stable return model can be constructed (similar to CPPI).
✅ Comment: This already involves modern portfolio theory (MPT), suitable for investors who want to control drawdowns and steadily increase value in the cryptocurrency world. It’s not necessary to go all in and gamble; scientific allocation is also viable.
Summary and recommendations:
This text actually conveys an important concept: investing is not just about making money; more importantly, it is about not losing money.
The problem for most cryptocurrency investors is not earning but holding onto their gains.
I suggest you: combine these theories to formulate your own investment discipline, such as setting profit-taking and stop-loss lines, maximum drawdown limits, and allocation strategies.
