In my personal experience, trading coins doesn't end in liquidation but in getting rich.
It's not about being keen on trading coins, but about being keen on making money and striving to improve the living standards of oneself and family; there are only a few ways to make money in the world:
1. Starting a company in a time of overcapacity, under the shadow of the pandemic, is like looking for death.
2. Individual buying and selling, starting a small food stall is feasible, but you can't rent a prime location, and a bad location will have no business. Street vendors are also an option, but can you handle the hardships of outdoor living and a life full of grease?
3. The self-media entrepreneurial craze is insane, there are more self-media competing for traffic than traffic itself; those big influencers seem glamorous, but the hardships behind are known only to themselves. For example, I answer questions wholeheartedly, but can't get a few perfunctory likes.
4. Working is fine, equivalent to having a crisis high-level (boss) backing you, but working only pays you salary; can it create wealth? It can't. Of course, if you're an expert, highly knowledgeable, or a sales champion, then it's possible.
However, 99% of the world’s people are not.
Six years ago, I gave up a high-paying job in the eyes of friends and family to trade coins full-time, just because I suddenly comprehended the mysteries within!
At this moment, adhering to the principle of helping others and oneself, I am publishing the distilled trading strategies I have developed; each one is a precious insight built with real money, understanding them will save you from stumbling for four years!
No beating around the bush: this round I lost 200,000 (equivalent to fiat currency), reviewed over 30 trades and several 'light bulb moments' of investment decisions, and found that the pitfalls are not new; I've repeatedly stepped on the **position, rhythm, information, compliance, and safety** five levels. I’ll break down the lessons for you and for my future self.
1. Position and leverage: kills novices and veterans alike.
Heavy betting*: putting all bullets on a 'certain story', the result is that certainty only exists in PPT. My new rule: **uncertain position for a single target ≤ 20% of total funds**; single trade risk (stop-loss width × position) ≤ 0.8%.
Leverage mismatch*: doubling down at the end of a bull market, accelerating liquidation in a bear market. Now only use small leverage during **trend confirmation + volatility decline**; if **funding rate >0.15%/8h** for two consecutive days, then reduce leverage.
Unplanned increasing positions*: adding when it drops and adding again if it drops further. Change to preset three-tiered levels (entry, pullback -5%, pullback -10%), stop if you miss one tier.
Operable template.
> Before building positions, write down: entry price, invalid price (stop-loss), target area, reasons (fundamentals/on-chain/events), position percentage. **No written plan, no trading.**
2. Liquidity and depth: not all 'rises' will let you escape.
Only looking at price, not depth*: placing market orders can eat away the already slim profits due to slippage.
The illusion of small-cap coins*: K-line rises beautifully, but the order book is terribly empty; circuit-breaker liquidity really exists.
On-chain 'nominal TVL'*: the same funds are pledged multiple times, amplifying TVL. When looking at protocols, first check **real independent address count, activity, and TVL after deleveraging**.
Self-check.
> Average slippage over the past 30 days, **buy/sell 1% depth**, **main trading pair diversification**, and whether top market makers are present. If any dimension is below the industry median, reduce position by 1/3.
3. Tokenomics and unlocking: which side time stands on is very important.
Ignoring unlocking*: taking positions right before a large unlocking, the result of 'news realization' becomes your stop-loss.
Unilateral distribution structure*: team/institution/ecosystem incentives are too high and **lack linear release**, causing selling pressure to be a chronic poison.
The trap of deflationary narratives*: nominal destruction ≠ net deflation; check **real circulation growth rate and demand-side data** (costs, activity, retention).
Actions.
> Before entering, look at: **unlocking calendar**, **allocation ratio and release rhythm**, **real circulating market value** (FDV is just a ceiling). When encountering 'unlocking + positive news', treat the initial pump cautiously.
4. Contracts and permissions: many 'pits' are written in the code.
Honey pot/trading tax/blacklist*: can buy but cannot sell; or a hidden tax of 10%-30%.
Modifiable permissions*: contract owners can change rules, tax rates, and blacklist addresses at any time.
Unlimited authorization not revoked*: phishing or malicious contracts 'reuse authorization', funds are swept away.
Minimize exposure.
> Use **pre-simulation** (simulate trading paths and slippage), **limit orders** instead of market orders; for high-risk contracts, only give **limited authorization**, and set **expiration auto-cancellation**; establish an **authorization dashboard**, and clean it up once a week.
5. Event trading: 99% of losses are due to 'position and rhythm', not opinions.
Two-stage trading for deadline trades*: implied volatility rises before the window, unexpected volatility after landing.
Crowdedness indifference*: social media consensus on bullish sentiment = positions have already taken action.
Only focus on direction, not on protection*: the result of the event is not wrong; **path dependence** knocks you off the bus.
Practical operation.
> Event positions should be 'light, fast, and retrievable'; use **straddles/butterflies** to cover directional uncertainty, combined with **calendar spreads** to hedge time value; on the day of landing, look at **volume and price divergence** to manage positions.
6. Centralization risk: not just 'running away', but also 'policies'.
Withdrawal window risk*: concentrated withdrawals + on-chain congestion = price and net value divergence.
Upper/lower shelf rhythm*: liquidity supply is in the hands of the platform.
Region and compliance*: team, entity, license, risk control level will magnify differences in extreme moments.
Bottom line.
> Exchange and custody **multi-platform diversification**; set **withdrawal cold line** and **emergency SOP** (threshold triggers immediate execution), and don’t make major decisions during the worst information periods.
7. Stablecoin risk: what you think is a 'cash' equivalent may not be.
Decoupling*: liquidity tightens or reserves are slow to dispose of, short-term price fluctuations can trigger chain liquidations.
Delayed information reserves*: quarterly disclosures cannot prevent intraday risks.
Methods.
> Maintain **multiple stablecoin routes** and **redemption alternatives**; focus on **custody and legal jurisdiction** diversification; when price differences occur, reduce leverage first before buying at a discount.
8. Emotion and time: the real underlying risk factors.
Revenge trading*: doubling down immediately after a stop-loss.
Overnight trading*: cognitive functions decline, misjudging positions, misjudging directions, misjudging risk control.
Overly focused on returns*: ignoring process and discipline.
Hard rules.
> Daily maximum loss threshold triggers **forced exit**; at least once a week **full account drawdown inventory**; all temporary decisions **delayed by 10 minutes** before execution.
My current 'survival framework'.
1. Fund layering: long-term allocation 60%, swing trading 30%, events 10%.
2. Single trade risk ≤0.8%, consecutive two losses **halve the position**.
3. Triple stop-loss: if price is ineffective/volatility spikes/liquidity worsens, any one trigger means exit.
4. Review template (mandatory):
* Why did I enter? (Choose two out of funds, on-chain, narrative)
* Which indicator change counts as 'I was wrong'?
If today is a liquidation, what are the *necessary and sufficient conditions* to replicate this trade?
In conclusion.
Losing 200,000 is not to tell a tragic story but to upgrade the 'feeling' to **process**. The crypto market is never short of opportunities, but what it lacks is **repeatable winning ratios**. Turn the above checklist into your operating system, and you'll find that minimizing losses is the greatest alpha.
What I most want to say: you can make money in the crypto market, but you must first follow the rules. These ten pieces of valuable advice were all earned with blood and tears.
Don't borrow money to trade coins. I've seen too many people swipe credit cards and take out loans to jump in, rejoicing when prices rise, but selling their homes when prices fall. Experts only use their own money; losing means being disappointed, but not losing their livelihoods.
Only use spare money to enter. Money for trading coins should be something you can leave untouched for a year. In the past, I used mortgage money to gamble; losing 5% caused sleepless nights; after switching to spare money, I could calmly drink tea even after a 30% drop—maintaining a stable mindset ensures sound decision-making.
Be patient and fish for big ones. In the first three years, I traded short-term every day, paying six figures in fees, and my account kept getting thinner. Later I understood: valuable coins don't rise overnight; holding valuable targets is ten times better than blindly fiddling.
If there's no opportunity, just rest. 90% of the volatility in the crypto market is a trap. Last year, I stayed out of the market for seven months while the market was sideways for eight months, watching those who frequently traded in groups lose half their accounts while I lost nothing.
Don't be fooled by charts. MACD and Bollinger Bands are at most references; what you should really look at is: what problem does the coin solve? Is there a real-world application? Charts can be drawn, but value cannot be faked.
Stay away from junk coins. Coins with flashy names and unclear purposes should not be touched. I once bought 'Mars Coin', which rose for three days and then went to zero; the founder directly deleted their account.
Don't catch falling knives. Don't shout 'bottom fishing', the inertia of decline is greater than you think. Last year, a coin fell 70%, everyone in the group shouted it hit bottom, but I stayed put—later it fell another 90%.
Stop when the bull market ends. At the peak of the bull market in 2021, I liquidated my positions and lay idle for half a year, watching greedy friends go from making millions to losing everything. Don't covet the last penny.
When you're sure, place a heavy bet. Study a coin thoroughly, know its value, team, and ecosystem, and when it’s time to heavily invest, don’t hesitate. In 2020, I was certain about ETH and poured 300,000 spare money into it, which multiplied 20 times in two years.
Don't put all your eggs in one basket. No matter how good a coin looks, invest a maximum of 40% of your position. I currently have five targets, some rising and some falling, but overall making a profit—diversification is not cowardice, it's insuring profits.
When trading coins, you need to know these three aspects!
1. Fundamentals
Fundamentals involve mastering all aspects of the coin, from white papers, teams, technology, token mechanisms, marketing, community building, to investment institutions. After all, this coin carries your investments. According to Zha Shu, 99% of tokens currently issued are air coins, so it’s best to choose those with many retail investors and strong backgrounds in teams and investment institutions, as such coins tend to rise sharply, like BCH.
2. Technical Analysis.
Technical analysis mainly involves looking at K-lines of coins, token liquidity, and funds flowing in and out. K-lines are best referenced against Bitcoin because many altcoins hire professional teams to 'draw perfect K-lines', which have little reference value. Pay special attention to the liquidity of token movements, especially large transfers; this could be used to crash the market and offload. The flow of tokens will also accompany the inflow and outflow of funds; a large sell-off will inevitably lead to outflows, causing the price of the coin to plummet, so you should be prepared to reduce positions. Entering the dream.
3. News Front.
The news front refers to all kinds of information related to the crypto world or specific coins. News from the crypto world is generally about national regulatory policies, and this type of information can no longer constitute negative news for the current crypto world. Coin news often comes from rumors; one positive piece of news can suddenly increase the price by 50% or more, as seen recently with XRP and BCH.
