In the turbulent waters of the cryptocurrency market, newcomers often indulge in the fantasy of short-term profits, while true survivors deeply understand the iron law of "survival first." This article will construct a complete survival system in the crypto market from anti-human capital management strategies, the core logic of trend trading, quantitative models of risk control, to the practical combination of MACD and moving averages. These rules ignored by 90% of traders are precisely the key to navigating bull and bear markets. I. The triple survival rules of capital management: The mathematical logic of three chances (1) The golden formula for risk diversification. Taking 200,000 capital as an example, a 20% loss tolerance (40,000) is optimally allocated not through egalitarianism, but through a progressive risk layout of "1+1+2":
First attempt: 10,000 capital (5% position), lowest cost of trial and error
Second verification: 10,000 capital (cumulative 10% position), confirm the correctness of the logic
Third increased position: 20,000 capital (cumulative 20% position), amplify profits after trend confirmation
The mathematical principle behind this design is:
Probability advantage: One correct trade out of three can cover losses (10,000 + 10,000 + 20,000 = 40,000; if one trade profits 40,000, it can break even)
Psychological buffer: Phased losses will not instantly destroy trading mindset
Capital efficiency: Retain 80% of capital to respond to real trend opportunities
(2) Anti-human position discipline
Three major capital management mistakes common traders make:
Equal loss trap: Fixed amount lost each time, not considering market volatility
Profit-taking curse: Immediately increasing positions after making money, ignoring the increasing risk
Emotional averaging down: Increasing investment after losses, falling into the "Martingale trap"
Correct position management should follow the "three no principles":
Single loss not exceeding 5% of total capital
After three consecutive losses, mandatory rest for 24 hours
The increase in position after profit should not exceed 50% of the previous position
(3) Practical template for rolling positions
Rolling positions as an advanced capital management method must meet three major prerequisites:
Trend confirmation: Sharp decline followed by sideways consolidation and upward breakout (e.g., BTC drops from 60,000 to 50,000 before breaking 55,000)
Signal resonance: MACD golden cross + bullish arrangement of moving averages + increased trading volume
Risk reservation: The first rolling position should not exceed 10% of total capital, withdraw 50% of profits after each gain
Historical case: In July 2024, during the trend where BTC rebounded from 58,000 to 65,000, using a rolling position strategy of 10%→15%→20%, a 42% profit can be achieved within 7 trading days, with the maximum drawdown controlled within 8%.
II. Core logic of trend trading: Anti-human holding power
(1) Profit probability of trends and fluctuations
Statistics on BTC market data from 2018 to 2024:
Trend market accounts for 32%, average duration 45 days, maximum increase 127%
Sideways market accounts for 68%, average duration 22 days, maximum volatility 35%
Win rate for trend trading is 58%, average profit-loss ratio 2.3:1
Win rate for sideways trading is 42%, average profit-loss ratio 1.1:1
This explains why "chasing highs and selling lows" can actually make money: The profit efficiency of trend markets is 3.8 times that of sideways markets. In October 2023, during the trend where BTC rose from 30,000 to 60,000, traders who consistently went long averaged a return of 92%, while those who frequently bought high and sold low only averaged 27%.
(2) Three signals for trend confirmation
Price breakthrough: Closing price breaks above the 20-day moving average + 3% (e.g., ETH breaks above 2,500 USD)
Volume verification: Volume should be 50% higher than the average of the previous 5 days when breaking out
Capital flow: Exchange token balance decreases by more than 1% within 24 hours
(3) Timing the pullback buying
In an uptrend, a 10-20% pullback is the best entry opportunity, specific criteria:
Fibonacci retracement: 38.2% (e.g., BTC drops from 100,000 to 80,000)
Moving average support: 50-day moving average (e.g., ETH supported at 2,000 USD)
Emotion index: Fear index rises from 25 to 50 (market sentiment shifts from greed to fear)
In March 2024, when BTC dropped from 60,000 to 48,000 (20% pullback), after meeting the above conditions, it rebounded to 65,000, allowing those who bought on the pullback to achieve a 35% profit.
III. Quantitative model for risk control: The mathematical art of profit-taking and stop-loss
(1) Balance formula for profit-loss ratio and win rate
Total profit = initial capital × (average profit × win rate - average loss × loss rate)
When the win rate is 50%, and profit-loss ratio is 1.5:1, total profit is positive
When the win rate is 40%, and profit-loss ratio is 2:1, total profit is positive
When win rate is 60%, profit-loss ratio 1:1, total profit is positive
In practice, it is recommended to use the "5-5-50" rule:
Each stop loss ≤ 5% of total capital
Each profit ≥ 5% of total capital
Overall trading win rate > 50%
(2) Dynamic profit-taking and stop-loss strategy
① Moving average profit-taking
Bullish trend: Reduce position by 50% if it drops below the 5-day moving average, liquidate if it drops below the 10-day moving average
Bearish trend: Reduce position by 50% if it breaks above the 5-day moving average, liquidate if it breaks above the 10-day moving average
② ATR dynamic stop loss
Stop-loss position = entry price - 2 times ATR (ATR taken as 14-day average)
Case Study: BTC entry price of 60,000, 14-day ATR of 2,000 USD, stop-loss set at 56,000 USD
③ Emotion-based profit-taking method
When the community bullish ratio > 80%, take profit on 50% of the position
When the search index skyrockets by 300%, take profit on 50% of the position
(3) Quantitative warnings for overtrading
Statistics show that daily traders:
Monthly average loss rate reaches 37%
The probability of liquidation is 12 times higher for those who trade once a week
Probability of emotional collapse as high as 89%
Recommended trading frequency:
Trend trading: 1-2 trades per week
Sideways market: 2-3 trades per month
Extreme market conditions: Pause trading
IV. Practical combination of MACD and moving averages: Dialectical application of technical analysis
(1) The essence and limitations of MACD
MACD as a trend indicator, the core is to calculate the deviation between the 12-day EMA and the 26-day EMA, its pros and cons:
Advantages: Filters short-term fluctuations, suitable for trend judgment
Disadvantages: Lag behind price, easy to generate false signals in sideways markets
In the event of the BTC ETF approval in June 2024, MACD formed a death cross at 68,000, but the price still rose to 70,000, lagging by about 2 days, reflecting the timeliness limitations of indicators.
(2) Three practical rules of MACD
① 0-axis rule
Bull market: MACD golden cross above the 0-axis is more reliable
Bear market: MACD death cross below the 0-axis is more reliable
Case study: In October 2023, after the MACD golden cross above the 0-axis, ETH rose from 1,500 to 2,500 USD
② Divergence rule
Bottom divergence: New low in price + MACD not at new low, bullish (accuracy 72%)
Top divergence: New high in price + MACD not at new high, bearish (accuracy 68%)
Note: Bottom divergence may appear multiple times, must be confirmed with trading volume
③ Cycle resonance rule
Daily MACD golden cross + 4-hour MACD golden cross, bullish probability increases to 85%
Daily MACD death cross + 4-hour MACD death cross, bearish probability increases to 82%
(3) Coordinated strategy of moving averages and MACD
① Moving averages determine direction, MACD determines timing
Above the 20-day moving average, only go long and do not short
Below the 20-day moving average, only short and do not go long
MACD golden cross / death cross as entry signals
② Moving average and MACD divergence strategy
Price drops below the moving average but MACD does not drop below the previous low, buy signal
Price breaks above the moving average but MACD does not break the previous high, sell signal
③ Moving average system and MACD resonance
Bullish arrangement (5>10>20-day moving averages) + MACD golden cross, strongly bullish
Bearish arrangement (5<10<20-day moving averages) + MACD death cross, strongly bearish
V. The path for ordinary traders to counterattack: From losses to profit cognitive upgrade
(1) Three cognitive traps of losing money
Attribution error: Credit profits to skill, blame losses on luck
Confirmation bias: Only focus on information that supports your point of view
Loss aversion: Early profit-taking, stubbornly holding on to losses
(2) The four steps to turning losses into profits
Record review: Establish a trading log, record the time, variety, position, and reasons for each trade
Data analysis: Monthly statistics on win rate, profit-loss ratio, maximum drawdown, etc.
System optimization: Improve strategies for the trading types with the most losses
Small capital verification: Test new strategies with 10% capital for at least 3 months
(3) Cultivation of wealth-bearing capacity
Bear Market Training: Learn technical analysis, practice with small funds, outperform 90% of investors
Bull market layout: Enter at relatively low levels, patiently hold until the trend ends
Mindset management: Do not pursue short-term profits, accept "getting rich slowly"
VI. Building and iterating a trading system: The moat for long-term survival
(1) Elements of a personalized trading system
Trading cycles: Intraday, short-term, medium-term, long-term (recommended for beginners to start with medium-term)
Variety selection: Mainstream coins (BTC, ETH) or altcoins (top 50 by market cap)
Entry signal: e.g., "Above the 20-day moving average + MACD golden cross"
Exit signal: e.g., "Falls below the 5-day moving average + MACD death cross"
Position management: e.g., "Initial 5%, confirm and increase to 15%"
Risk control: e.g., "Single trade stop loss 2%, total drawdown not exceeding 15%"
(2) Principles of system iteration
Annual overhaul: Adjust 20% of system parameters according to market conditions
Quarterly adjustments: Optimize specific entry and exit signals
Monthly review: Analyze the system's performance in different market conditions
(3) Discipline is more important than the system
Mechanical execution: Do not modify system signals without authorization
Emotional isolation: Do not look at social media while trading
Crisis response: Handle according to preset plans in the event of a black swan
VII. The ultimate rule for survival in the crypto world: Anti-human discipline training
In the cryptocurrency market, successful trading relies not on talent, but on anti-human discipline. While most people lose themselves in chasing highs and selling lows, smart traders are practicing these overlooked rules:
Capital management: Always give yourself three chances, use the "1+1+2" strategy to diversify risk
Trend trading: In an uptrend, a 10-20% pullback is a money-giving opportunity
Risk control: Adhere to the "5-5-50" rule, let probabilities work in your favor
Technical analysis: The resonance of MACD and moving averages is more reliable than a single indicator
Mindset training: Bear market subdued, bull market rises, patiently wait for your opportunity
Remember: The crypto market is not about who earns more, but about who survives longer. When you can remain calm in the fluctuations at 3 am, dare to buy during market panic, and exit early before the good news is realized, you have already surpassed 90% of traders. Investment is a lifelong endeavor; only by building your own survival system can you achieve long-term stable profits in this uncertain market.
