Today, let's talk about something heart-wrenching. Have you also noticed that in the crypto trading world, out of 10 people, 8.5 are losing money? Don't rush to refute, first see if these scenarios feel familiar:
Act One
: Saw a certain coin suddenly skyrocket, FOMO kicked in, and without a second thought, jumped in with all funds, only to buy at the peak and see it halve the next day.
Act Two: Set a stop-loss but impulsively canceled it, thinking to "hold on a bit longer," resulting in greater losses, ultimately cutting losses with tears.
Act Three: Finally made a 20% profit, hurriedly ran away, only to find that the coin later surged by 300%, regretting the decision.
Don't ask me how I know this; these are lessons I've learned with real money. Today, I want to share from my heart how to avoid being a victim.
1. The truth about 90% of people losing money.
1. Cognitive bias: Treating the crypto space like a casino and contracts like lottery tickets.
2. Behavioral traps: Stop-loss is just for show, holding onto losing positions is like a belief, running away with minor gains, and bearing losses.
Capital management: Avoiding full exposure at all times; never withdrawing profits.
2. Three secrets to changing your fate.
Secret 1: The Art of Choosing Coins with Insight.
The top 100 by market cap is the baseline (check CoinMarketCap anytime).
If you want to trade new coins, do so within the first three months (after that, the likelihood of failure is high).
Focus on these: ✅ How frequently is the GitHub code updated? ✅ Is the daily trading volume sufficient (at least 50 million)? ✅ How solid is the backing investor?
Secret 2: The K-Line Martial Arts Manual.
Beginner's mandatory course: (Japanese candlestick techniques) (don’t laugh, it’s really useful) Volume analysis (volume is more important than price).
Advanced Techniques:
Wave Theory TD Sequence.
The third skill, which is crucial and something I learned painfully after numerous liquidations over the years, is time-space management. It refers to managing trading time and operating space. If you do not manage this well, no matter how well you do the first two points, you will ultimately incur losses and significant losses. Specifically, how to manage it? First, you need a scientifically objective trading system or a trading plan. It must be scientific and objective; we often encounter ideas like 'turning 10u into 1 million u' or 'how many times can I multiply in a single week' on platforms like YouTube, Douyin. We should minimize such thoughts and watch related videos less.
This kind of anxiety-selling and fantasy-spreading is a scam; if you fall for it, you are just being ripped off. My evaluation is that it’s not even as good as believing I am revered like the First Emperor. Of course, I’m not saying it doesn’t exist; in the crypto world, anything is possible. But we are ordinary people, and the chances of such things happening to us are very slim. You come to this space to make money, not to gamble.
Suppose you have 30,000 to invest in crypto contracts, then 20,000 should be kept as off-exchange funds and not touched temporarily. 10,000 should be used as on-exchange funds for trading, meaning currently, your total contract funds are 10,000, equivalent to about 1428u at the current exchange rate. This is where the Kelly formula comes into play.
According to the Kelly formula, we can draw two conclusions.
First, the maximum usable position cannot exceed total funds.
Second, do not use more than 1/10 of total funds in a single transaction; in contracts, this means using 1/1110 of account funds for a single contract, and the maximum leverage should not exceed ten times. We generally have two types of contracts.
One approach is to trade mainstream coins, such as Bitcoin and Ethereum.
The characteristics of mainstream coins are that they are relatively stable, with less volatility, making them easier to grasp. However, in the short term, the probability of making a large profit with a small amount of money is relatively low. Altcoins, on the other hand, experience drastic rises and falls, with large volatility that is hard to predict. Doubling or tripling in a day feels like playing, and dropping by half or even being delisted feels just the same. But precisely because of this, altcoins are popular as they can lead to short-term wealth.
Let’s take altcoins as an example; open a position with 1/10 of the total position, and the maximum leverage should not exceed 10X.
Now let’s calculate based on the maximum multiple. The position after opening a contract is 1428u - 10x10 = 1428u. The actual position you open is 1428u. The stop-loss is usually set at 5% of your entry position. For example, if I enter a long position when a certain coin is priced at 1u, then I should set my stop-loss at 0.95u. We typically have a profit-loss ratio when trading contracts; the profit-loss ratio must be at least greater than or equal to 1 to choose to open a position. This means you should at least have a 5% stop-loss to match a 5% profit margin to qualify as a suitable trade (here, it rises to 1.05u).
The essence of contracts is to create a profit-loss ratio using leverage to engage with objective profits at a low cost. For example, if I think this is a very good relative bottom with the potential for expected gains, then I’ll just go in directly. This way, if I incur a loss of 5% in funds during stop-loss, and after two consecutive losses, that totals 10%, then we need to adjust our strategy.
Please remember this profit-loss formula.
If your account capital drops by 10%, that means your account has lost 10%, and you need to earn 11% to break even. If it drops by 20%, you need to earn 25%. If your account loses 70%, you need to rise by 233% to break even.
After continuous losses, your principal shrinks, but the difficulty of breaking even increases, meaning you have less money but must do something even harder than before.
Therefore, after two consecutive losses, totaling 10%, you must adjust your strategy to reduce your position size.
After losing 10%, your total funds are now 1285.2u. Based on the plan of using 1/10 of the position with a maximum leverage of 10 times, the contract position after opening is 1285.2. Continuing this way, even after ten consecutive losses, the account funds would still be 842.21, losing 584.796, meaning the total funds are down to 59%, losing 41%. At this point, having almost 60% of account funds remaining is a stark contrast to the majority’s high-leverage all-in strategy, where they might not even know how many times they’d face liquidation. But I’m not here to discuss that; according to the formula, at this time, a 67% increase is needed to break even, which is relatively challenging.
Then the best way is to use your remaining 213 in off-exchange funds to make a top-up action.
How much should I add? Do not exceed 1428u, which is the maximum value you last topped up.
Calculating this way, the account has 1428u + 842.21 = 2271.2u.
With this basis, you only need a 26% increase to recover losses. After recovering losses, you can reinstate the added position. For instance, the first 1428u withdrawal returns to off-exchange. This is how off-exchange funds are utilized.
If you continue to incur losses, then stick to the original plan. This way, you at least have the opportunity to incur losses continuously for 30 times.
I don't believe you could mess up all thirty trades. If you really can't get it right once, then you might as well withdraw your money and go back to a regular job; you really aren't suited for this space.
Now that we’ve covered the part about reducing positions during losses, we need to discuss the expansion of positions during profits. Taking 1428u as an example, after a 10% profit, the funds increase to 1570.8u. At this point, you can choose to expand your position, meaning the original contract position of 1428u can be expanded to 1576. Following this logic, with a minimum profit-loss ratio of 1:1, if we win 14 times, we can double our position. If the profit-loss ratio is exceptionally well-managed, we can double the total position with just 4 to 6 trades. How does that sound? Doesn’t it sound very tempting? Yes, the advantage of this plan lies here; it is both aggressive and defensive, a versatile strategy.
I won’t disclose specific amounts, but in the past year, I achieved a return of over 400% with this strategy, not only covering losses from the past few years but also yielding significant profits.
With position management in place, the next step is time management; this requires utilizing a particularly useful feature available on all exchanges, the contract cooling-off period.
What is the purpose of a cooling-off period?
First, it can calm your emotions and prevent subsequent massive losses.
Second, after calming down, use this time to re-observe the charts and develop strategies. Here’s a reference: you must choose a day each week as a rest day to cool down. Even those who work 996 in the country have rest days. The crypto market trades 24/7, which can easily lead to fatigue, so a rest day is essential. I choose to rest on Mondays because there’s a high probability of a good price increase over the weekends. After a long night of watching the market, I treat Monday as a rest day, taking a break from checking exchanges or any related news. Besides the rest days, after taking profits from each trade, you can choose to initiate a 24-hour cooling-off period to preserve your winning results, rather than impulsively opening a second trade and giving it all back. Anyone who has faced the experience of gaining and then losing will feel an indescribable pain and discomfort, making it easy to lose control and turn profit into loss.
The third scenario is that after making a profit twice in a row, you didn't have time to close your position to take profits, and in the end, it dropped back, leading you to exit at break-even. After all that, you earned nothing. At this point, you must initiate a 24-hour cooling-off period. Watching your profits gradually disappear is a tough feeling, and this can be very dangerous.
Finally, after two consecutive stop-loss trades, you must initiate a 48-hour cooling-off period, which is two days of cooling off. This is non-negotiable. Following our plan, if you incur continuous losses of 10% of your principal in a single day, what are you waiting for without taking a break to adjust? Use this time to formulate a strategy for when you resume trading. Many friends worry about missing out on market opportunities, but no matter how big the opportunity, there’s typically only one wave per day. You can take a break, and after 24 hours, start the next wave; this is not a problem at all.
Similarly, if you suffer losses, it indicates that you are stuck in a market that is neither rising nor falling; a cooling-off period is essential. Moreover, most of the time in crypto is wasted time; whatever rises will fall, and with patience, there will be opportunities.
Control the frequency within a reasonable range, keeping emotional fluctuations and economic consumption in check. This way, you will have between 1 to 4 trades per week, and by persisting, you will get closer to success.
Finally, let’s discuss the ten trading principles to adhere to.
1. Never engage in revenge trading. After completing a trade, whether profitable or not, I steadfastly avoid temptation. I close the market charts and do not reopen them for 24 hours. This prevents me from engaging in revenge trading. We close trades for a reason, meaning there’s no reason to re-enter immediately. Revenge trading is a primary cause of losses for emotional traders. This is especially critical when leveraging to trade Bitcoin. Cryptocurrency traders often spend many hours watching Bitcoin markets, making it hard to step away after a loss and not re-enter.
2. Avoid trading cryptocurrencies on weekends. Prices in the cryptocurrency market usually fluctuate significantly on weekends with low trading volume, making it hard to predict price trends. Crypto whales can manipulate prices more easily in low liquidity situations, putting individual traders at a clear disadvantage. Moreover, weekends are for relaxation and entertainment, so one should stay away from the charts and get some good rest.
3. Trade only during specific time periods. I can only trade when I am fully focused and sitting at my desk. The cryptocurrency market operates year-round, so we cannot keep an eye on it all the time. I set specific trading hours for myself; only during this time will I check the market. This avoids the impulse to constantly stay connected to the market and my phone, allowing me to spend time with family and engage in other meaningful activities.
4. Never develop feelings for assets. If you fall in love with an asset or investment you wish to trade, it can lead to poor decision-making. Emotion-free trading means that trading is not influenced by subjective factors. People tend to have emotional attachments to specific altcoins, teams, or projects. This is good for investors but can be a potential disaster for traders.
5. Keep it simple and foolish. This is one of my firm rules. When I was a beginner, I would check multiple indicators, news sources, and patterns to try to find the best trading method. This often led to over-analysis. When I see an opportunity to trade on the charts, understanding stop-loss and position sizing is far more important than timing my entry and exit.
6. Trade only when your mindset is calm. This is crucial. When I feel angry, tired, or stressed, I do not trade. I must use my best judgment for trading while staying calm. Life outside of trading is essential to maintaining the right mindset; spending time with family and friends, reading, and engaging in sports are key to my trading success.
7. Keep a diary. Diaries can be boring and tedious, but they are important as they help us avoid making the same mistakes twice. I must remind myself to slow down, stop looking at the charts, and take time to record as much information about my trades as possible.
8, I simulate trading every day. I still regularly conduct simulated trading. I simulate trading Bitcoin and some altcoins every day, which helps to avoid risks and test new ideas and indicators.
9. Do not blindly chase the dip. Trying to perfectly time the bottom is unwise; you should wait for safer trend change confirmation signals. Trading within a trend is much less risky than attempting to buy at lows and sell at highs.
10. Do not overtrade. I find that the fewer trades I make, the more I earn. Even if the market presents many opportunities, I try to keep the number of open trades below three. Managing multiple trades is much more challenging because if every trade goes against you at the same time, you could incur significant losses.
Still, the point is that during a bull market, if you don't know what to do, click on Aze's avatar, follow him for bull market strategies, the latest news in the crypto world, contract secrets, all shared freely.
