Survival Rules in the Cryptocurrency World: 9 Mathematical Truths from Heavy Losses to Stable Profits

Core Understanding

Trading is not gambling; it is a game of probability and risk management.

The following 9 rules determine whether you ultimately "get rich quickly" or "face liquidation".

1. The damage from losses > the gains from profits

1 million → +100% → 2 million → -50% → 1 million

Insight: Controlling drawdowns is more important than profits; single trade risk should not exceed 2%.

2. Asymmetry of price movements

1 million → +10% → 1.1 million → -10% → 990,000

Insight: Frequent chasing of rising and falling prices is bound to incur losses; wait for high-certainty opportunities.

3. Volatility erodes long-term returns

Three-year return: +40%, -20%, +40% → Annualized only 5.83%

Insight: Steady compound interest > big ups and downs; reducing leverage is key.

4. The deadly temptation of "1% per day"

1 million at 1% daily, 250 days → 12.03 million, 500 days → 145 million

Reality: 99.9% of people face liquidation due to pursuit of high-frequency trading.

5. The illusion of continuous high returns

5 years of 200% each year → 1 million → 243 million

Truth: The market is unpredictable; drawdown management is the core ability.

6. The real wealth secret: compound interest

Annualized 25.89% → 10 years 10 times, 20 years 100 times, 30 years 1000 times

Strategy: Focus on the main upward trend in bull markets, and maintain low positions in bear markets.

7. The cost trap of averaging down

Buy 10,000 at 10, add 10,000 at 5 → Cost 6.67, not 7.5

Correct practice: Average down only when the gap ≥20% to avoid exhausting ammunition too early.

8. The hidden risk of "profits running away"

Sell 90% after a 10% profit, cost returns to zero ≠ risk returns to zero

If it drops 50%, you will still incur losses; dynamic profit-taking is necessary rather than blindly locking in positions.

9. The most stable asset allocation

80% low risk (annualized 5%) + 20% high risk

Worst case is break-even, best annualized 12%+, suitable for long-term holders.

Ultimate Advice

"The secret to making money in the cryptocurrency world is not predicting the market, but controlling yourself."