The cryptocurrency circle is not short of stars, but it lacks longevity. Some methods are not advanced, but very few people can actually implement them.
Ladies, this morning when I was staring at that big bearish line on the market, I remembered that late night three years ago. During a 40% crash, I managed to avoid liquidation by sticking to the stop-loss orders I set in advance. My palms were sweaty at the time, but a rule is a rule.
In the years of trading cryptocurrency, I have seen too many people double their money today and lose it all tomorrow. To be honest, what this industry lacks is not smart people, but those who can stick to the 'foolish rules'.
The few points I share today are all lessons I learned through trial and error with my own money. They may not be advanced, but each one can help you protect your principal.
1. Emotional instability, don't touch the keyboard
Last year during the MEME coin frenzy, a friend of mine, driven by FOMO (fear of missing out), went all in and ended up as the bag holder. Such things happen every day.
When your heartbeat follows the K-line, you have already lost.
My clumsy method: set strict stop-loss and take-profit points. For example, automatically sell half when gaining 20%, and decisively exit when dropping 15%. Let the machine execute it, giving myself no chance to hesitate.
Before placing an order, I ask myself: if I lose all this money, can I still eat and sleep well? If not, then don't invest.
2. Never shoot all your bullets at once
Operating with a full position is like betting your life savings; once your mindset is disturbed, your actions become distorted. My own rule is: no single cryptocurrency position should exceed 5%, no exceptions even for the most promising projects.
What the market lacks is not opportunities, but cash. Keep enough reserve funds, so when the opportunity comes, you can say 'I can take it.'
My capital allocation is very simple: 70% in Bitcoin and Ethereum, 20% in potential Layer 2 projects, and 10% in stablecoins for emergencies. This ratio has helped me weather five major fluctuations.
3. If you don't understand the market, it's better not to engage
When cryptocurrency prices are consolidating at high levels, it easily makes people anxious. It looks like it might break out, but often you end up getting trapped at the peak.
My experience is: when the direction is unclear, patience in waiting is profitable. Most people's losses come from frequent trading, especially during sideways markets.
Now, when I see those up-and-down pinning movements in the market, I actually feel relieved—now I can take a break. Trading cryptocurrencies doesn't mean you have to trade every day; waiting is also a strategy.
4. Buy big on big drops, sell big on big rises (but take it slow)
Note, I'm saying 'consider buying in batches on the day of a big drop,' not to go all in. For example, when a large bearish candle forms on the daily chart, I'll first buy 1/3 of the planned position, and buy more if it drops further.
Building a position should be like stacking blocks, starting from the bottom. The more it falls, the more you gradually buy, flattening the cost.
The reverse is also true: during big rises, don't be greedy; take profits in batches. Remember, the market won't mock you for selling too early, but it will teach you a lesson for not selling.
5. Pay attention to changes in the speed of decline
If the speed of price decline slows down, it indicates that the rebound strength may also be insufficient. However, if it suddenly accelerates downward, the rebound is often very strong. This detail has helped me seize many bottom-buying opportunities.
For example, during the sudden drop last month, I started buying in batches during the second accelerated decline and caught a subsequent 15% rebound. The key is to have the patience to wait for that acceleration turning point.
6. Wait for the breakout after consolidation before taking action
After a big rise, there will be consolidation, and after a big drop, there will also be consolidation. Don't go all in during consolidation, and don't sell all during consolidation either.
My strategy is: wait for the market to choose its direction. Follow up when it breaks through key resistance levels upward, and exit when it breaks down below support levels. Although it might cost a bit of profit at both ends, it's much safer.
7. Use dollar-cost averaging to combat emotional fluctuations
For assets I am optimistic about in the long term, I invest a fixed amount weekly. For example, I take 2000 yuan each month and invest 500 yuan in Bitcoin every Wednesday.
This method seems clumsy, but seven years of backtesting data show that regularly investing a fixed amount in Bitcoin yields over 500% return. More importantly, it keeps you away from emotional trading.
Finally, let's talk practical matters
After years of trading cryptocurrencies, my biggest insight is: this field ultimately involves a game against yourself. All technical analysis is a tool, but the hand that wields the tool is your mindset.
These rules sound simple, but executing them requires strong discipline. I'm not looking to get rich quick; I just want to stay steady and earn slowly, that's enough.
After all, in this 24-hour sleepless market, surviving is the biggest victory.
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