The phone vibrating at 2 AM is the most tormenting — it’s not a message about sudden wealth, but a liquidation notice stating my account has only 28% of the capital left. Three years ago, that stop-loss message left me staring blankly at the screen: there's no such thing as 'overnight wealth' in the crypto contract market; merely surviving through bull and bear markets is a victory in itself.
I've seen too many stories of portfolios dropping from millions to zero and have stepped into the pitfalls of 'holding onto positions to recover' and 'fully investing in trends.' Today, I'm sharing from the heart my survival system that has helped me endure 5 cycles of bull and bear markets; if beginners grasp these few points, they can at least save 3 years of tuition losses.
1. First learn to cut losses, then talk about making money.
The core reason for new traders getting liquidated boils down to one: treating stop-losses as 'optional.' I've seen the most reckless operations where someone clung to the belief of 'it will bounce back if it drops' and let losses drag from 10% to 90%, ultimately watching their account hit zero — this is like running a red light while holding a bomb.
My stop-loss rules are never vague: if a single trade loses more than 3% of the capital, cut immediately, no hesitations; if cumulative daily losses hit 10%, close the software and sleep. Remember this harsh formula: losing $100 down to $50 requires a 100% gain to break even, but holding $80 only needs a 25% rise to recover.
Profits can be earned slowly, but if your capital is gone, you lose the qualification to recover. Many people calculate the entry points with complex indicators but get greedy during stop-loss: 'Just wait a little longer, it might come back,' and the scene of profits turning into losses plays out daily. Stop-loss is never a technical issue; it’s a matter of life and death.
2. Four practical strategies for taking profits and stopping losses; learn them to cut losses by half.
Don't blindly believe in 'fully automated stop losses'; true survival experts flexibly switch strategies based on market conditions.
Must take profit when the trend reverses: this is the key to making big money. For example, when BTC is in an uptrend, if the weekly chart shows a 'engulfing pattern' and RSI drops below 50, it’s a signal of trend reversal. Last November, when BTC fell from $69,000 to $41,000, those who used this tactic at least preserved 70% of their profits.
Must close positions when the price retraces to the cost line: assume you went long on ETH at $20,000, if it rises to $22,000 and then retraces back to $20,000, close the position immediately. This isn't cowardice but a way to avoid 'working hard for nothing' — how many people greedily wait for a higher point only to lose their capital?
Segmented profit-taking based on structure: I often use the 'Fibonacci + previous highs and lows' combination. For example, after BTC breaks $30,000, reduce 30% of your position at $36,000 (61.8% retracement level) and previous high of $38,000; money taken off the table is real money, and the remaining position bets on the continuation of the trend.
Trailing stop to lock in profits: give your profits a 'safety net.' When going long, use the lowest points of the last 3 candlesticks as the stop-loss line; for every 10% price increase, raise the stop-loss line by 5%. Last year, as SOL surged from $20 to $120, I successfully captured an $80 increase with this method, avoiding getting washed out by interim pullbacks.
3. Eat with the trend, die against the trend
Three years ago, I shorted BTC at $40,000 on the belief that 'it had risen too much and should fall,' only to be dragged down by the trend to liquidation. Later I understood: the market is never wrong; it's your 'I think' that is mistaken.
Judging the trend is super simple: look at daily highs and lows. If highs are getting higher and lows are getting higher, it’s an uptrend; only take long positions. Conversely, if it’s the opposite, only take short positions. The dumbest operation is to keep chasing tops in an uptrend, like smashing an egg against a rock — the rock never hurts.
Trend reversal requires an 'evidence chain': not only look at candlestick patterns but also consider trading volume (breaks of support levels) and MACD divergence; wait for at least 3 candlesticks for confirmation. Until you gather enough evidence, don’t shout 'the trend has changed'; it’s highly likely that you’re mistaken.
4. Position management: 90% of the time wait for opportunities, 10% of the time go heavy.
The harsh truth of the crypto world: 80% of profits come from 20% of quality trades; the remaining 80% of operations are either wasting time or losing capital.
My position rules:
In unclear market conditions (sideways, no direction), never exceed a 2% position; use light positions to test.
The 'perfect signal' that meets all entry conditions should have a maximum position of 5%.
Always keep 30% of your capital as 'emergency funds', only use it in extreme situations.
Just like driving, most of the time you lightly press the gas pedal, and only speed up when you hit a straightaway — those who go all-in are essentially betting that they will never encounter unexpected situations. But black swan events in the crypto world come several times a year.
5. Doing less is winning; don’t be a 'trading addict.'
Open your trading records: Are half of your trades 'impulse trades'? I’ve statistically found that when weekly trades drop from 20 to 5, the win rate increases from 35% to 58%.
Opportunities are cultivated, not forced. Real good market conditions will 'jump out' on their own — for example, a breakout after 3 months of sideways movement or a trend continuation following major positive news. Those who need to stare at 15-minute charts for signals are mostly walking into traps.
6. Six soul-searching questions you must answer before opening a position.
This is my checklist before opening a position every day, which helps avoid 80% of pitfalls:
Is the current trend bullish or bearish? Am I aligned with the trend in my direction?
Do I have clear support/resistance levels for stop-losses? How much loss can I accept?
What percentage of my capital does my position occupy? Will losses exceed daily limits?
At what profit level will I add to my position? What’s the proportion of the added position?
How many steps will it take to take profits? Where is the first target?
Am I calm right now? (Frustration trades will always lose!)
7. Don’t be greedy with indicators; mastering 2 is enough.
The most common mistake beginners make is treating indicators as gospel; looking at RSI, MACD, and KDJ all at once leads to confusion. In fact, in contract trading, mastering 2 indicators is sufficient.
RSI (Relative Strength Index): When below 30, it's oversold; look for long opportunities with an upward trend. When above 70, it's overbought; look for short opportunities with a downward trend. But remember: in a strong trend, RSI can stay in the overbought zone for a long time, so don't blindly chase the top.
MACD: The most useful signal is 'volume divergence'. If the price hits a new high but the MACD histogram gets shorter, be cautious of a pullback. Before ETH dropped from $4800 last year, the MACD divergence signal lasted for 3 days; those who understood it left early.
Lastly, I want to say: trading contracts is like walking a tightrope; balance is more important than skill. Some people made a million by luck but lost two million due to greed; others take it slow, making a steady 30% a year, and after 5 years, they become the survivors.
If you find these rules useful, like and save them, and refer back before opening your next position. Feel free to share your stop-loss experiences in the comments — admitting mistakes is the start of making money.
Follow me for strategies in spot trading during bull markets; don’t just be a participant in the bull market, be a winner in the bull market!
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