However, for people living in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, they might just scoff. After all, in these places, 100,000 sometimes isn't even enough for a decent meal, let alone to buy a house; one probably can't even afford a decent toilet.
However, if it is possible to turn 100 (here assumed to be a certain amount of cryptocurrency) into 1000 in the crypto world, the situation would be very different. In cities like Beijing, Shanghai, Guangzhou, and Shenzhen, with this profit, one could easily choose a decent location and a reasonably good three-bedroom apartment. So, how can one achieve their first 1000 (also assumed to be a quantity of cryptocurrency) in the crypto world?
Everyone must understand that profits and losses are relative, primarily concerning your principal. If the principal is too small, even if the profit ratio seems substantial, the actual absolute profit may still be inadequate. Therefore, to develop sustainably and stably in the crypto world, all aspects must be thoroughly considered, leaving no potential situation overlooked.
Take leveraged trading as an example; its core point is that when in a profit state, one should gradually increase positions to amplify profits; when in a loss state, one must gradually reduce positions to keep losses as small as possible.
Let's discuss several important aspects in detail: First, the risk control system and dynamic management rules for positions. When in profit, we can increase our positions according to a ratio of 1:0.8:0.4.
For example, if the first position increase is at a level of 1x, the second will be 0.8x, and the third will be 0.4x. Through this planned position increase method, one can rationally utilize profits to expand gains while also controlling risks. If a losing position occurs, reduce the position by half each time to timely control losses and prevent them from expanding further, leaving some margin to avoid falling too deeply into loss.
Leverage and position limits. The leverage ratio needs to be stable and fixed; it must not be changed arbitrarily. Additionally, the position of a single trade should not exceed 20% of the total account position. The position must be kept within a relatively safe and reasonable range to better cope with market fluctuations.
Strict control of stop-loss. Stop-loss must be strictly controlled, with losses from a single trade kept within 2% of the total position. This range represents a normal loss threshold that we can accept. If daily losses reach 5%, it indicates that trading conditions for that day have exceeded normal levels, and trading must be forcibly stopped. One must calm down first. If weekly losses reach 10%, it is time to enter a review cooling-off period, completely prohibiting operations, focusing only on summarizing the review to identify the source of problems and avoid large losses in the future.
Second, basic + technical + emotional + data effective support and breakthroughs. One must pay attention to the effective support and resistance levels in the market. When there is a breakout of effective resistance or effective support, it often represents a significant trading signal that requires careful identification to make reasonable trading decisions.
Volatility threshold triggering. One must also pay attention to volatility conditions. When the Average True Range (ATR) reaches twice the average, it indicates that market volatility is significant. This may present opportunities but also hidden risks, requiring cautious operations based on specific circumstances.
Before the release of major data, it is best to empty positions one hour prior to avoid the risks of significant volatility that may arise from the data release. Moreover, if there are three consecutive losing trades, one should stop trading for that day to adjust their state and avoid impulsive trades that could lead to larger losses. Additionally, during inactive trading periods, such as when the US market is closed, positions should be halved to reduce risk exposure.
Third, psychological management model and profit state response strategy. When profits reach 20%, one should withdraw 10% of the profit to lock in that amount and secure it. One must not be too greedy. Additionally, each time the account net value reaches a new high, leverage should be reduced by 10% to make the account more stable and reduce risk. Dynamic profit-taking should also be set, for example, if profit retracement reaches 30%, the system will automatically close positions to preserve existing profit.
Loss recovery process. If a circuit breaker mechanism is triggered, meaning losses reach a certain level, trading should be paused for 24 hours to allow oneself to calm down and stabilize emotions. Then, one should conduct a loss review, detailing the times and reasons for emotional fluctuations throughout the trading process for thorough analysis. Finally, a review plan should be formulated and tested on a simulated account, which may take about 14 days. Through this process, one can summarize experiences and lessons learned to avoid making the same mistakes in the future.
Fourth, diversification of strategic operation methods. A diversified trading matrix should be constructed, configuring three trading strategies that have low or no correlation with each other, such as trend trading strategies, arbitrage trading strategies, and hedging strategies. By combining different strategies, one can better respond to various market changes, diversify risks, and enhance overall trading stability and profit potential.
Dynamic adjustment of capital allocation ratio. The capital allocation ratio cannot be fixed; it must be dynamically adjusted according to market conditions and the performance of trading strategies to ensure that capital is more reasonably distributed among different trading strategies, maximizing benefits and ensuring long-term stable development in crypto trading.
