In my 10 years of trading coins, in the first 3 years, I lost my 3 million principal down to only 400,000; my wife's accusations and my child's confusion felt like needles in my heart. Later, I quit my job and fully committed, only sleeping 4 hours a day for reviews and summaries. Now, I have finally achieved stable compounding, and my account has grown to over 40 million. Today, I am sharing the 11 iron rules I kept hidden, understanding at least lets you lose less over 5 years.
1. The truth about averaging down: 90% of people miscalculate costs.
You think buying 10 for 10,000 and then 5 for 10,000 means the cost is 7.5? Wrong! The actual cost is 6.67 (because the second purchase quantity is larger). But don't think a low cost equals safety - averaging down must come with a stop-loss, otherwise you're just increasing your bets at the gambling table.
When I traded XRP in 2019, I averaged down from $0.5 to $0.3, lowering my cost to $0.38, but without setting a stop-loss, it eventually dropped to $0.1. The more I averaged down, the worse I lost. Later, I set a strict rule: I can only average down once, and the total position must not exceed 30% of the principal, with a stop-loss set at -20% of the initial purchase price.
2. The lie of compounding: 1% per day is a trap.
Theoretically, with a 100,000 principal, earning 1% daily could turn into 1.32 million in a year, but in reality, 99% of people cannot achieve this. I've seen too many people earn 5% today and lose 10% tomorrow, only to realize they were busy for nothing at the end of the month.
The true compounding effect is: earn 10% each month, and you can double your money in a year. My approach is: only make 2-3 trades per month, stop once I earn 10%, and never be greedy.
3. The misconception of win rate: A 60% accuracy rate can still lead to losses.
Trading 100 times, earning 10% 60 times and losing 10% 40 times theoretically nets 20%. But in reality, most people run away after making 3%, and stubbornly hold on until they lose 20%, making even a high win rate meaningless.
My strategy: earn at least 5% when making profits, and never exceed 3% when losing. For example, when buying BTC, I won't sell unless I earn less than 5%, and I will cut losses immediately if it drops to 3%; this way, even with a 50% win rate, I can still profit.
4. The illusion of getting rich: turning 10,000 into 100 million = dreaming.
Making 10% profit continuously 97 times can indeed turn 10,000 into 1 billion, but no one can do it. In 2021, I traded SOL, and when it rose from $20 to $200, after making a 10x profit, I got greedy, leveraged up, and ended up losing all my profits.
Now I understand: catching a 5x opportunity once a year is 10 times better than day trading every day. In 2023, I only traded BTC and ETH, catching a wave of 3x, which is enough for an ordinary person to work for 10 years.
5. The foolish method of making money in spot trading: buying low and selling high ≠ chasing highs and cutting losses.
Spot trading is the most stable method, but 80% of people end up "buying high and selling low." My secret is:
Bear market dollar-cost averaging: in the 2022 bear market, I bought 10,000 U of BTC every Monday, buying from $40,000 to $16,000, with an average cost of $23,000; when it rose to $40,000 in 2023, I made a 70% profit.
In a bull market, sell in batches: when it reaches the target price, first sell 30%, then sell 50% after a 20% increase, and finally leave 20% to see the outcome.
6. The essence of trading: wait, guard, and be ruthless.
Wait: stay in cash 80% of the time, only waiting for opportunities that meet the system. In 2024, I was in cash for 8 months, waiting for BTC to break $60,000, and then I made a profit of 3 million.
Guard: hold on during profits. In 2023, I held ETH from $1800 to $3200, even during a $500 pullback I didn't sell, relying on moving my stop-loss above the cost price.
Be ruthless: never hesitate when setting a stop-loss. I've seen too many people turn a 5% loss into a 50% loss because they thought, "just wait a bit more"; my stop-loss orders are always set in advance and executed automatically when triggered.
7. The iron triangle of contracts: position, stop-loss, take profit.
When trading contracts, remember:
Only trade trends with the entire position: I only dare to enter when the 4-hour chart shows a clear trend, and during sideways movement, I use at most 20% of my position.
Stop-loss should not exceed 2% of the principal: for 100,000 U traded, the maximum loss is 2000 U.
Leave some room for take profit: once you earn 60% of the expected profit, sell half, and set a trailing stop for the rest.
8. Don't earn small money, don't lose big money.
This is the truth I bought with an 800,000 loss:
In 2021, I traded altcoins, and after making 5%, I ran away, only to miss a 10x opportunity; this is the cost of "making small money."
In 2018, I stubbornly held EOS from 100 to 20 before cutting losses, losing 80%. This is the lesson of "losing big money."
Now my principle is: if the expected yield of a single coin is less than 50%, I won't touch it, and the stop-loss line must not be relaxed.
9. Understanding cycles is more important than technique.
In the early bull market, buy BTC/ETH, in the middle buy mainstream coins, and in the later stage, buy altcoins; this is the iron rule. In 2024, I heavily invested in BTC in the early bull market, switched to SOL in the middle, and played meme coins later, multiplying my investment by 8 times over three rounds.
The misconception of ordinary people: being afraid to buy at the beginning of a bull market, but then going all in on altcoins later, resulting in everything going to zero when a bear market hits.
10. Mindset is 100 times more important than technique.
After losing 3 trades in a row, I once opened a revenge trade and lost 200,000 in a day. Later, I set a rule: if I lose 2 trades in a row, I stop for 3 days; if I make 3 trades in a row, I take a day off.
Remember: the crypto market is highly volatile; if your mindset collapses, you will act chaotically, and chaotic actions are the root of losses.
11. Surviving is the only chance.
In 2022, during the LUNA crash, I protected 80% of my principal with strict stop-losses, which allowed me to bounce back later. Now, my position management is always:
Bear market: 30% position, 70% cash.
Bull market: 70% position, 30% cash.
At any time, the single coin position should not exceed 20%.
After 10 years of trading coins, my biggest gain isn’t 40 million, but the understanding that money in the crypto world isn’t made from luck; it’s made from knowledge and discipline. These 11 iron rules correspond to my blood and tears lessons.
If you are still losing now, try picking 3 rules to execute and stick to them for 3 months; maybe you will see a turning point. Remember: in the crypto world, living longer means earning more.
Brother Chao will continuously monitor the market and guide fans to position themselves in spot or contracts at the right points. There is no shortage of opportunities in the crypto world; it all depends on whether you can seize them! Opportunities do not wait for anyone; if you want to seize the meat, quickly follow Brother Chao's pace!
