I used a very simple retail investor method for trading cryptocurrencies, and my win rate is close to 100%! (A must-read for all cryptocurrency traders)

1. Stop Loss and Take Profit

Setting a stop loss is key to protecting capital. When the price of the cryptocurrency you invested in drops to the predetermined stop loss level, sell decisively to avoid further losses. For example, if the purchase price of Bitcoin is $10,000 and you set a 10% stop loss, you should sell when the price falls to $9,000. Similarly, take profit is also important. When the price of the coin rises to a certain level and reaches your set profit target (e.g., a 20% increase), lock in your profits.

2. Control Position Size

Always maintain a reasonable position size as the core of risk management. In the cryptocurrency market, excessive leverage is one of the common causes of investors being liquidated. Generally, for investors with lower risk tolerance, full position trading is not recommended; keeping the position size below 50% is advisable. During times of significant market uncertainty, you might even reduce your position further to below 30%.

3. Responding to Emergencies

The cryptocurrency market is full of unexpected news, such as major technical vulnerabilities being exposed, well-known project teams falling apart, or governments suddenly implementing strict regulatory policies. Investors should prepare response plans in advance. For example, when sudden news that could lead to a significant market drop arises, how to quickly adjust the portfolio—whether to liquidate entirely or partially reduce positions, etc.

4. Diversify Investments

In the cryptocurrency market, do not put all your eggs in one basket. Different types of digital currencies (such as major cryptocurrencies like Bitcoin, public chain coins like Ethereum with unique application scenarios, and various niche altcoins with potential) perform differently in various market environments. By reasonably allocating different digital currencies, you can reduce the impact of single asset volatility on the overall investment portfolio. For example, you can allocate investment funds in a certain proportion (e.g., 60% in major currencies, 30% in public chain coins, 10% in promising altcoins) across different types of coins.

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