From entering the crypto space in 2015 with a principal of 100,000 to now stabilizing my account at over 30 million, the pitfalls I’ve encountered could fill a truck: I chased after the explosive rise of altcoins, endured a 90% drop, and suffered two liquidation events due to leverage. Looking back now, what truly made my account curve upward was not precise buy points, but these seven survival rules ingrained in my bones - beginners can avoid 80% of losses by understanding them, while experienced traders can reinforce their defenses.
1. Define spare cash with the "Three No Principles": Losing it all does not affect your three meals.
I have seen too many people invest their mortgage, betrothal gifts, or even their parents' retirement money into the crypto space, rejoicing at a 5% rise and losing sleep over a 3% drop. True "spare cash" must meet three conditions:
Funds that will not be used in the next three years (excluding short-term living expenses, education funds);
A 50% loss does not affect family relationships (don't let your spouse think you are wasting money);
The proportion of total assets should not exceed 30% (don't put all your eggs in one basket).
At the peak of the 2021 bull market, my account had a floating profit of over 10 million, but I maintained 60% of my position as "permanent capital" (not touched for over 3 years), and 40% as "flexible capital" (can be operated in the short term). Later, when the bear market plunged 70%, it was this 60% base that prevented me from being liquidated, allowing me the opportunity to recoup losses after the rebound in 2023.
2. The essence of chasing highs is to hand off the shares to others: Use "cooling-off periods" to combat impulsive behavior.
Last year when SOL surged from $100 to $250, the community was full of calls of "break through the previous high, target $500". However, looking at the K-line, it can be found that in 90% of surging markets, over 70% of the transaction volume came from retail chasing the rise, while institutions often quietly sold at this time.
My coping strategy is the "24-hour cooling method": When I see a skyrocketing asset, I first add it to my watchlist and set a 20% pullback alert. Last year, when ARB rose from $1.80 to $3.20, I waited three days until it pulled back to $2.50 (which was a 50% Fibonacci retracement) before entering, avoiding the risk of chasing high while capturing the continuation of the trend.
Remember: A true bull coin will not rise all at once; buying after a 10%-20% pullback can filter out 80% of false breakouts.
3. Understanding the "market language" from the K-line: Support levels are not numbers, but capital consensus.
Many people look for support levels on the K-line chart, believing that a certain moving average or round number is a solid bottom. In fact, the core of the support level is the "area of concentrated capital transactions":
A range that has not been breached three times in a daily chart (for example, BTC had four rebounds at $30,000);
The 50% position after a significant increase (the balance point for both bulls and bears to re-evaluate);
The concentrated area of trapped positions in the last bull market (unwinding pressure will create strong resistance).
In 2022, I bottomed out ETH at $1,800, not because it was a round number, but because this position corresponded to a concentrated transaction area in Q4 2021, where over 2 million ETH were exchanged - capital consensus determines the strength of support, which is more reliable than any indicator.
4. The core of position management is "staying alive": The 532 rule addresses volatility.
Those who go all-in with their entire capital, 99% do not survive three cycles of bull and bear markets. I now use the "532 dynamic position method":
50% of the position is allocated to core assets like BTC and ETH (the ballast that crosses cycles);
30% of the position is allocated to leading projects (such as ARB in Layer2, UNI in DeFi, following institutional funds);
20% of the position is reserved for potential new coins (not more than 5% for a single asset, not worrying about losing it all).
During the 312 crash in 2020, although my 50% position in BTC was down 40%, the 30% stablecoin position allowed me to increase my holdings at $3,800, and the 20% small position even caught the low opportunity of DOT - diversifying positions does not reduce returns, but leaves enough ammunition for market reversals.
5. Stop-loss should be like defusing a bomb: Use "dynamic stop-loss" instead of fixed points.
A common mistake for beginners is to set fixed stop-losses (for instance, selling if it drops 10%), which leads to being harvested repeatedly in volatile markets. My stop-loss logic is "look at the structure, not the numbers":
In a trend, use "trailing stop-loss": In a bullish trend, only stop-loss if it breaks the most recent low (HL);
Use "volatility stop-loss" during fluctuations: For example, if ETH's recent volatility is 15%, set the stop-loss at 2 times the volatility (30%);
For new positions, use "trial and error stop-loss": For the first build-up, only invest 1/3 of the planned funds, allow a stop-loss margin of 20%, and add positions after confirming the trend.
When shorting BNB in 2023, I did not set a fixed position, but focused on whether it broke below the upward trendline. Only after the price closed below the trendline for three consecutive days did I confirm the trend reversal - this earned me 40% more than using a mechanical stop-loss.
6. Research must drill into the "information blind spots": Don't trust white papers, trust on-chain data.
Those who call out trades always say "look at the project's white paper", but I have seen too many white papers that boast spectacularly while the on-chain data is a mess. Effective research must focus on three core aspects:
Developer activity: The number of GitHub commits has increased for three consecutive months, which is more reliable than any "strategic partnership";
Real user numbers: Exclude the addresses with inflated volume, and check if the daily active wallets are stable (for example, ARBITRUM's daily active wallets rose from 50,000 to 150,000, indicating true growth in the ecosystem);
Changes in institutional holdings: Whether whale addresses are increasing their positions (check Glassnode's large transfer data), whether ETF funds are flowing in or out.
In 2022, I heavily invested in LDO, not because of its staking narrative, but because I noticed Grayscale had increased its holdings for six consecutive weeks, and the on-chain staking volume grew by 5% each week - signals of capital voting with their feet are always more reliable than community calls.
7. The rewards of patience are exponential: 90% of profits come from 10% of the time.
In nine years, 90% of my account's profits came from three key market events: BTC rising from 10,000 to 20,000 in 2017, the DeFi explosion in 2020, and the ETH Shanghai upgrade in 2023. The rest of the time was spent either maintaining capital during fluctuations or making small gains and losses.
This is the "power law" of the crypto space: Most of the time is spent waiting, and when real opportunities arise, be bold with your capital. In 2021, I held ETH for a full 8 months, during which I experienced three 30% pullbacks, only gradually taking profits before the merge, with returns exceeding 10 times - those who frequently trade have long been washed out by volatility.
Finally, let me share a heartfelt message: The money made in trading is not from technical skills, but from understanding and human nature. When you can resist the temptation to chase highs during surges, withstand panic during drops, and endure loneliness during fluctuations, the numbers in your account will naturally provide the answers. After nine years, I still spend one hour daily reviewing trades, but I no longer expect to get rich overnight - slowly becoming wealthy is the fastest route.
Blindly going solo will never bring opportunities. Follow me, and I will guide you to discover tenfold potential coins! Top-tier resources!
