After struggling in the crypto world for 6 years, I have experienced the despair of having my account wiped out after consecutive liquidations, felt the agony of sleepless nights under debt pressure, and even had moments where I wanted to give up after being crushed by the market. Fortunately, after stepping into pitfalls time and again, I have finally grasped some insights. Today, I share these hard-earned experiences, not hoping everyone replicates my path, but wishing to give you more confidence in this brutal market and help you avoid some detours.
1. Survival rule for small funds: Trade less, avoid full positions.
If your capital is within 100,000 (approximately 14,000 U at current exchange rates), remember: catching a decent market move once a day is enough.
The temptation of the crypto world lies in 'opportunities every minute', but for small funds, frequent trades only increase the probability of mistakes – fees will gradually eat into your capital, and several small losses may destabilize your mindset, ultimately leading you to over-invest recklessly.
My early lesson: I once made 8 trades in one day with 1000U, paying nearly 50U in fees. In the end, I not only didn’t make a profit but also lost 300U due to fatigue from trading. Later, I changed to 'a maximum of 2 trades a day, with no single position exceeding 30% of my capital', and started to profit steadily.
2. Good news fully priced in is bad news: Learn to exit amidst the noise.
There is an iron law in the crypto world: The moment good news is released is often the best exit point.
For example, when a cryptocurrency announces 'listing on a mainstream exchange', there may be an initial rally when the news is released, but on the actual listing day, it may be sold off by 'pre-positioned funds'. I once greedily held onto a project that 'secured millions in funding' in 2021, only to see it open high and close low, turning a 50% floating profit into a 20% loss; that memory is still fresh.
Remember: The market always 'buys expectations, sells facts'; when good news materializes, do not wait for 'one more rise', exiting decisively is the best strategy.
3. Respect the news: If you do not understand the market, it is better not to trade.
The impact of news and special events (such as Federal Reserve interest rate hikes or important holidays) on the crypto market is far beyond imagination. On the eve of the Federal Reserve's first interest rate hike in 2022, Bitcoin plummeted 12% in a single day, and how many people were liquidated overnight because they 'didn't believe in evil' and went all in.
My response principles:
Before major policies or events, reduce positions to below 30%, or even go to cash and observe.
If the market is chaotic after news breaks (for example, intense battles between bulls and bears, K-lines repeatedly showing spikes), do not enter – 'not understanding' itself is a risk signal.
During holidays (especially Spring Festival, Christmas, etc.), try to hold light positions; major funds may take the opportunity to 'create chaos', and poor liquidity can lead to slippage that makes you doubt life.
4. The core of medium to long-term trading: Light positions are to leave room for error.
When doing medium to long-term contracts (holding 1-7 days), never get carried away by 'confirmed trends'. Trends in the crypto world can be overturned at any time by a big bearish candle; even if you are correct in your direction, a small pullback may trigger liquidation of high-leverage positions.
I once heavily leveraged to go long during Bitcoin's rise from $10,000 to $20,000 in 2020, thinking 'the bull market has arrived.' However, a 15% pullback along the way led to liquidation, and I missed the subsequent rise to $60,000.
I later understood: A light position in medium to long-term trading (no single position exceeding 20% of capital) is not being timid; it is about giving the market 'room for error' and allowing yourself the chance to 'endure until the trend explodes'.
5. The essence of short-term trading: Grasp the 'momentum' quickly, exit decisively.
Short-term trading (holding 1-4 hours) is not about 'predicting price points' but about 'following the trend' and 'execution'.
When you see a clear upward/downward trend (for example, three consecutive large bullish candles breaking resistance), try a small position to test, and once the trend continues, quickly take profits.
If the market remains stagnant after entering, and there is no profit within 30 minutes, exit immediately – stagnation means 'the trend is unclear', and waiting will only waste time and fees.
After making a profit, do not be greedy; the short-term goal is 'small victories accumulate into large victories'. For example, if you earn 3%-5% each time, exit. Two trades a day could yield terrifying annualized returns.
6. Understand the rhythm of volatility: Do not chase highs during 'sharp rises', and do not bottom fish during 'slow declines'.
There is a pattern to volatility in the crypto world: slow rises correspond to slow pullbacks, while sharp rises are often accompanied by sharp declines.
When the market slowly rises along the 5-day moving average (for example, increasing by 2%-3% daily), pullbacks are likely to be gentle, and in such cases, patiently wait for the support level before entering.
If there is a sharp increase of more than 10% within an hour, do not chase – such market movements are often caused by money pushing the price up in a short time, and the pullback is typically fast and fierce, making it easy to become a bag holder.
Remember: The faster the volatility, the greater the risk, and profit taking should be more decisive.
7. Stop loss is a lifeline: Admit mistakes, do not compete with the market.
I have seen too many people blown up because they do not stop losses, hold positions, and fantasize that 'the market will come back'.
In contract trading, leverage is an amplifier – with 10x leverage, a 10% reverse fluctuation can lead to liquidation; with 20x leverage, 5% is enough to wipe out your capital. You can accept 'small losses', but you cannot allow 'liquidation', because without capital, you won't even have the chance to break even.
My iron rule for stop losses: Set stop losses upon entering (usually 3%-5% of capital), and exit immediately once triggered, even if the market reverses in the next second, do not regret it. A stop loss is not admitting defeat, but a way to preserve capital and retain the qualification to continue trading in the market.
8. For short-term trading, refer to the 15-minute K-line: Use a 'microscope' to find entry points.
For short-term traders, the 15-minute K-line chart is the most practical tool – it filters out the chaotic fluctuations of the 1-minute chart while capturing trend signals more timely than the 1-hour chart.
Combine with the KDJ indicator: When the K-line breaks through recent highs, and the KDJ indicator is above 50 with a golden cross (and not overbought), it is often a signal for an upward trend.
Watch the trading volume: When the price rises, trading volume expands (indicating funds are entering), and when it falls, trading volume shrinks (possibly a washout), this combination is more reliable.
Do not rely on a single indicator; the trend of the 15-minute line must align with the larger direction of the 1-hour line to avoid 'counter-trend bottom fishing/top touching'.
9. Technique is skill, mindset is principle: Only those who can control their emotions deserve to make big money.
The cruelest part of the crypto world is that 'one second in paradise, the next second in hell' – this morning you may have a floating profit of 100,000, but by afternoon you could be at a loss. This kind of disparity can destroy most people's mindset.
Do not become complacent when making profits: The more you earn, the more you must adhere to position discipline, and do not suddenly increase your position size to 'bet big'.
Do not panic when losing: Remember the red line of 'maximum daily loss of 6%'; if triggered, stop trading, no matter how good the market looks, emotional trading will only deepen your losses.
Always use 'idle money' to trade: Never use living expenses, mortgage payments, or borrowed funds to enter the market; financial pressure will distort your judgment, causing hesitation when you should stop losses and greed when you should exit.
Lastly, I want to say: Going from 1000U to 20 million is not about one 'magic operation', but the accumulation of countless times of 'holding the bottom line'. The crypto world lacks opportunities but lacks those who can survive until the opportunities arise. The above 9 points can be summarized in 3 core phrases: Survival first, discipline is paramount, mindset is fundamental. May you endure the pain of downturns and be able to enjoy the sweetness of upswings in this market.
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