In the world of cryptocurrency, many investors lose all their capital just by participating in high-leverage contract trading while ignoring risk management. To protect capital and maintain stable profits, it is necessary to adhere to the following 3 basic principles:

Principle 1: Protect capital first, prioritize 80% for spot trading

Spot trading (direct buying and selling) is the safest way to accumulate profits without facing the risk of liquidation.

Illustrative example:

  • Total capital: 10,000 U

  • Allocate 80% of capital (8,000 U) to buy potential coins like SOL or DOT.

  • Within 2 weeks, if the price of SOL increases from 186 to 206 and DOT from 6.8 to 8.2, the profit will be about 1,600 U just from spot trading.

The remaining part (20% of capital) can be used to open short-term positions with low leverage to hedge risks, earning an additional 5% profit during a downtrend.

It is important that spot trading does not require much operation, just a few times a month but brings stable profits, which can annualize around 60% if discipline is maintained.

Principle 2: Contracts are just "spices", never the "main dish".

Many investors fall into traps when tempted by high leverage:

  • "20x leverage, 10% volatility doubles the investment"

  • One misstep can liquidate all capital in an instant.

Correct approach:

  • Only use a maximum of 10% of total capital to trade contracts with high leverage.

  • For example: if you earn 2,000 U from spot trading, only use 200 U for a 5x contract.

  • Profits will increase, but losses will not affect the principal capital.

A stable mindset, not chasing "all or nothing" is a crucial factor for survival and long-term growth in the crypto market.

Principle 3: Focus on long-term stability, not chasing short-term gains.

  • Continuously trade, putting all capital into high-leverage contracts, or looking for a "big spike" often leads to total losses.

  • Reasonable strategy:

    1. Earn stable profits from spot trading.

    2. Use a small portion of capital to experiment with contracts, without affecting the main capital.

    3. Always have a plan for stop-loss, profit-taking, and smart reinvestment.

Smart investors know that protecting capital is the first step, large profits will come from discipline and stability, not from reckless bets.