Recently, many friends have asked me: 'Can trading cryptocurrencies really make money and lead to wealth?'
My answer is: Yes, but the premise is that you have to survive long enough.
Everyone knows that getting rich is a relative concept. If you earn from 100,000 to 1 million, many people will think you are rich. But if you are in Shanghai, 1 million can't even buy a toilet. Only when you earn from 1 million to 10 million can you be considered to have a certain level of economic freedom. Therefore, the essence of getting rich is that the larger the principal, the more meaningful the returns will appear.
So, the question arises: how to continuously increase the principal?
The answer is simple - not relying on a single strike, but on long-term steady operations.
Here, I share a set of 'foolproof methods for trading cryptocurrencies' that are simple, practical, and can help you survive in the crypto space for a long time.
1. Risk Management: Surviving is the first opportunity to make big money.
What is the biggest fear in trading cryptocurrencies? Losses. Without capital, there is no next opportunity.
Therefore, the most fundamental thing is risk control; learning how not to die is the prerequisite for steady growth.
Position Management:
Increase positions with profits: add positions when you make money, 1→0.6→0.3 (always avoid betting everything at once).
Reduce positions during losses: cut half each time when losing; stop-loss is about protecting your capital.
Leverage Usage: Leverage should not exceed 20% of account net value.
Stop-Loss Principle:
Single loss should not exceed 2% of total capital.
Stop immediately if losses exceed 5% in a day.
If losses exceed 10% in a week, forcibly stop and review.
2. Trading Discipline: Rules determine how far you can go.
No matter how tempting the market is, discipline is fundamental to winning. Only by following the rules can you avoid various temptations and operate steadily.
Three major conditions must be met before entering a position:
The triple resonance of fundamentals, technicals, and sentiment creates valuable trading opportunities.
Clearly break through key points; do not chase high prices.
When volatility amplifies (e.g., ATR reaches more than twice), ensure there is enough space.
When not to trade?
Clear all positions 1 hour before a major market movement to avoid losses during volatility.
Stop and take a break after three consecutive losses.
Reduce positions during inactive periods (e.g., when the U.S. market is closed).
3. Psychological Management: Being able to steadily secure profits is success.
Making money is easy, but keeping it is hard.
What to do after making a profit?
When profits exceed 20%, immediately withdraw 10% of the profits.
When the net value reaches a historical high, reduce leverage by 10%.
Set dynamic stop-loss; if a drawdown reaches 30%, automatically take profits.
What to do about losses?
When facing continuous losses, stop for 24 hours to give yourself time to calm down.
Write reviews, record your emotional fluctuations and operational mistakes.
Validate with a demo account; only resume live trading after maintaining stability for 2 consecutive weeks.
4. Strategy Allocation: Diversified portfolio for stronger risk resistance.
Don't put all your money in one basket. Diversify risks to have a chance to go further.
Combine 3 strategies:
Trend Trading: Go with the trend, utilizing the market's overall direction.
Arbitrage Strategy: Buy low and sell high to steadily capture the price difference.
Hedging: Hedge risks during extreme market conditions.
Funds should be allocated in a 5:3:2 ratio, with quarterly evaluations of the strategy's effectiveness.
Response to extreme market conditions:
VIX Index > 30: Activate hedging strategy.
Black Swan Event: Immediately hedge in the opposite direction.
Poor liquidity: Reduce positions to 10% to avoid getting trapped.
Summary
This 'foolproof method for trading cryptocurrencies' may seem cumbersome, but it is the key to surviving in the crypto space for a long time. Trading cryptocurrencies has never been a game of getting rich overnight; the true winners are those who can steadily win over time.
If you're solely focused on getting rich, you will eventually crash; but if you can remain calm, disciplined, and persistently execute these strategies, 10 million is no longer a dream.
Remember, surviving is the first opportunity to earn money; if you stabilize, you can survive longer in the ever-changing crypto market.
