Intro: Stop using "full leverage" for thrills; the "money" in the cryptocurrency market is only earned by those who understand "slow".
I've seen too many people dive into the contract market because they think "spot trading is too slow": chasing after rises, chasing after falls, using maximum leverage, only to go from 100,000 to debt. They believe the "thrill" of the cryptocurrency market will lead to wealth but forget that the fastest ways to make money are often the fastest ways to go bankrupt.
I've been trading cryptocurrencies for 10 years; I lost 2 million in the first 3 years due to contracts, and in the following 7 years, I earned back 8 figures relying on a "counter-intuitive" trading system. Today, I won’t discuss complex theories; instead, I will share 8 practical rules that helped me survive and a "guaranteed tool" that even beginners can quickly understand — even if you just entered the market, understanding these can help you avoid 90% of the pitfalls. One, 8 "survival rules": each rule helped me avoid a liquidation; these rules were bought with real money, remembering one might save you 100,000.
"Don't average down when you're losing; preserving capital is paramount."
I've seen too many people average down after losses, going from 10,000 to 100,000, only to get trapped deeper. The correct approach is: if you lose 10%, set a stop loss; preserving capital is more important than "breaking even". In 2020, I bought an altcoin and sold decisively after losing 8%; it later dropped 90% — I felt pain at the time, but looking back, I'm glad I sold quickly."Don't be greedy with small bullish rebounds; be cautious of a major drop behind it."
In a bear market, after significant price drops, there will often be small rises for a few days; many people mistakenly think "the bottom is in" and jump in, only to get burned. Remember: if the rebound lacks volume (the trading volume does not increase), it is a "trap for buyers", especially after 3 consecutive small bullish candles — this is a signal from the market makers to "distribute"."After five waves of increase, there will be a drop; buy again after three drops stabilize."
The price of the currency often rises in 5 waves (each wave higher than the previous one). After completing these 5 waves, it is very likely to drop in 3 waves; conversely, if it has dropped 3 waves without making new lows, it presents a buying opportunity. Last year, Bitcoin rose from 15,000 to 69,000, which precisely marked 5 waves. I liquidated my position at the end of the 5th wave, avoiding the subsequent crash."When a bearish candle engulfs a bullish candle, it may be an opportunity; when a bullish candle breaks new highs with volume, be cautious."
For example, if a certain coin rises for 3 days, then suddenly a large bearish candle engulfs the gains of the previous 3 days ("bearish engulfing"), if this happens at a low point, it may be a "washout"; you can wait until it stabilizes before buying. However, if it is at a high point and a bullish candle suddenly breaks new highs with volume, it is often the "final rise" and it's time to sell."If it fails to break the high point three times, it is likely to fall; if it falls without breaking the low point four times, it can be bought."
If the price of the currency fails to break the same high point three times, it indicates that "the pressure is too great" and it is likely to fall; conversely, if it falls to the same low point four times without breaking it, it shows that "the support is solid", and you can buy in batches. This year, ETH failed to break 2400 USD three times, so I reduced my position in advance, and it indeed fell by 30% afterwards."Once the trend line is broken, run; if it breaks and retests, then enter the market again."
Draw an upward trend line (connecting each low point); if the price of the currency breaks below this line, it indicates that the trend has changed, and you must sell. If the price breaks above the downward trend line, don't rush to buy; wait for it to retest near the trend line ("retest confirmation") before entering the market — this way, the win rate can increase by at least 50%."Full positions are a death wish; diversified positions allow for longer survival."
Never put all your money in at once, even if you think it is "100% going to rise". My approach is to buy in 3 batches: buy 30% initially, buy another 30% after a 5% drop, and buy the remaining 40% after another 5% drop; when selling, also divide into 3 batches: sell 1/3 at a 20% rise, sell another 1/3 at a 50% rise, and set a "trailing stop loss" for the remaining portion (sell everything if it drops 10% from the peak)."Trading is about refining the mind, not the technique."
In the end, in trading cryptocurrencies, it is not about who can read the candlestick chart better, but who can control greed and fear. When the price rises, don't think "just a little more before selling"; when it drops, don't hope for "just a little drop before buying" — following the plan is 100 times more reliable than acting on feelings.
Two, a beginner-friendly "Bollinger Band": use 3 lines to judge "strength and weakness", even better than MACD.
Many people think indicators are complex; in fact, the Bollinger Bands (BOLL) can be used effectively, and beginners can learn it in 5 minutes:
The middle band is the "dividing line of strength and weakness": if the price is above the middle band, it indicates strength and you can buy when it retraces near the middle band; if it is below the middle band, it indicates weakness and you can sell when it bounces back to the middle band. For example, this year SOL stayed above the middle band, and every time it retraced to the middle band was an opportunity; I made 40% profit from this.
The upper band is "not to be touched", and the lower band is "not to be greedy": when the price hits the upper band, it is likely to retrace (don't chase the price up); when it hits the lower band, it may bounce back (but don't assume it is a "reversal", just a short-term overshoot). Last year, when Bitcoin dropped to the lower band, I made a small rebound trade, earning 15% in 3 days before selling — taking profits and not being greedy.
Summary of usage: open the candlestick chart, draw the Bollinger Bands, and only buy "above the middle band and sell below the middle band", simple enough not to need to think. Three, position management: how to invest 10,000 yuan so that "you are not afraid of drops and can profit from rises"; the core of making money in cryptocurrencies is not "picking the right coin", but "managing your positions well". If you invest 10,000 yuan according to this method, you can make a guaranteed profit.
Invest only 3000 yuan initially: even if you are optimistic about a coin, do not exceed 30% of your principal. The remaining 7000 yuan is "emergency funds" — if it drops, you can average down; if it rises, you can increase your position, but never bet everything at once.
Take profits in 3 steps: when you earn 50%, sell 1/3 (locking in profits); when you earn 100%, sell another 1/3; set a "trailing stop loss" for the remaining 1/3 (for example, sell everything if it drops 10% from the peak). Last year, I sold ETH using this method; although I missed the last 20% of the increase, the profits I secured were enough to buy a car.
Stop losses must be "decisive": if it breaks below the middle band or drops by 10%, sell immediately. Don't believe in "waiting for a rebound"; crashes in the cryptocurrency market often "don't give you the chance to wait". Now, I set stop losses for every trade, and even if I sell wrongly, I never regret it — as long as the principal is there, opportunities will still be present.
Four, the last word: the "money" in the cryptocurrency market is only earned by those who "stay alive".
From bankruptcy in contracts to stable profits, my biggest realization is: the cryptocurrency market lacks opportunities, but it lacks "patience to wait for opportunities" and "determination to control risks". 8 rules, one Bollinger Band, and a set of position strategies may seem simple, but they can help you avoid most pitfalls.
