The weight of discipline is something that only those who have experienced liquidation truly understand.
As an analyst who has been in the cryptocurrency market for 6 years, I am most often asked by fans: 'Teacher, how can I avoid losses?' Every time, I first respond with a question: 'Was your last liquidation because you couldn't bear to cut losses?' Nine out of ten people nod — this field is not about intelligence; it is clearly about who can engrave 'discipline' into their bones!
Three years ago, I entered the market with dreams of getting rich overnight, imagining that I would easily achieve financial freedom. But reality was like a cruel teacher, using one 'pitfall' after another to teach me what it means to respect the market. Five liquidation experiences and hundreds of thousands in tuition finally allowed me to evolve from a novice into a trader who can make stable profits.
Today, I am sharing with you three survival rules that I learned the hard way with real money. Newcomers can avoid three years of detours, while veterans might slap their thighs and say, 'I wish I had known this sooner!'
1. Give up the fantasy of bottom fishing and top selling; rules are your best weapon.
When I first entered the market, I was also obsessed with finding the 'holy grail,' trying to accurately predict every top and bottom. What was the result? Either buying halfway up the mountain or missing out on a big trend.
Trading more frequently does not equal more profits. In fact, frequent trading often makes your wallet lighter and regret heavier. I now firmly believe that doing nothing is often the smartest choice.
Fatigue is the greatest enemy of trading. I hope someone had impressed upon me earlier: never trade when you’re tired. I used to stay up late watching charts, observing the market like an eagle, but ended up making decisions as unreliable as a bug-ridden smart contract.
Now, I treat sleep as a non-negotiable rule. If I'm not in good spirits, I don't trade. Decision fatigue can be more severe than a market crash; when you're exhausted, your brain takes shortcuts, and those shortcuts often lead directly to wrong decisions.
I established a simple rule: if I cannot explain my trading logic in one sentence, I will not trade. This method has helped me avoid countless bad decisions. The market will not run away; opportunities will always be reserved for those who are patient and disciplined.
2. Stop Loss is not cutting losses; it is buying 'accident insurance' for your capital.
This is my 'life-saving talisman'; it helped me climb out of five liquidations back in the day. The most common mistake for beginners is: 'This coin has a good outlook; it will definitely rebound after a drop,' resulting in holding onto a paper loss of 15% until it goes to zero, losing even the capital to turn it around.
Risk management might not sound sexy, but it is the pillar of successful trading. Most traders focus on entry points as if they are the holy grail, but exit points are where the real magic lies.
My red line is very clear: no matter how optimistic I am about an asset, if it drops by 15% after buying, I will immediately stop loss and exit. Even if it later rises, I won’t regret it — it’s not that the direction was wrong, but that your timing for entry was off.
The crypto market is never short of opportunities; what’s lacking is the execution power of 'cutting off decisively.' I've seen too many experts win ten times, but lose everything without a stop loss. A trade without a stop loss is essentially betting your capital on your life.
Based on my experience, the following stop loss strategies are particularly effective:
Moving Average Stop Loss Method: Stop loss when the price falls below key moving averages (such as the 5-day or 10-day moving average).
Retracement Percentage Stop Loss Method: Stop loss when the price retraces a certain percentage (such as 3%-5%) from the peak.
Support Level Stop Loss Method: Exit decisively when the price falls below a significant support level.
3. The Art of Taking Profits: Retaining profits is harder than making profits
I've seen too many people dreaming with a 10% floating profit: 'I'll sell when it rises another 20%,' only to see it fall back to the cost line. Brother, accurately catching the top is something only deities can do; we mortals must stick to our own rules!
Taking profits is an important means to secure earnings. In actual trading, investors need to flexibly choose strategies based on market conditions. Here are several effective profit-taking methods validated by the market:
1. Trailing Stop Loss Strategy
Trailing stop loss aims to respond to market fluctuations by frequently adjusting stop loss positions to secure profits. Specifically, it can be implemented as follows:
Moving Average Tracking Method: Use the 5-day or 10-day moving average as support for the price rise, setting the profit-taking position below the moving average and constantly adjusting as the price rises.
Key Support Level Method: Use previous lows and dense trading areas as key support levels. After the coin price breaks to a new high, adjust the profit-taking position to below these support levels.
2. Gradual Profit-Taking Strategy
Don't try to sell all at the highest point at once; it's recommended to divide your holdings into three parts. When the coin price reaches the first preset target, sell 1/3 of your position first to ensure some profits are secured. For the remaining position, use a trailing stop loss strategy.
3. Indicator Resonance Method
By using a combination of RSI, volume, and MACD signals, identify the peak market sentiment and take profits in a timely manner to avoid risks. When multiple indicators issue warning signals simultaneously, it often indicates that market sentiment is approaching its peak.
Remember: the market is not about who can catch the highest point, but who can steadily bring home profits before the tide recedes. Betting on 'it can still rise' based on feelings is not as good as making certain profits according to rules.
4. Selling too early is not scary; not daring to 'pick it back up' is truly foolish.
"Teacher, I sold too early, should I buy now that it's dropped?" I receive dozens of these questions every day. The answer is simple: as long as the overall trend hasn't reversed, be bold and buy when it drops; don’t let the 'awkwardness of selling too soon' hold you back!
Last year, after I sold a certain mainstream coin, it fell by 12%, and I immediately bought back the same amount — my position remained unchanged, but I gained additional profit from selling too early. Some fans hesitated and didn't buy back, and when the price rose back to the selling price, they panicked and asked if they could still buy. I directly said: 'Buy back at the original position; this little commission compared to the loss of missing out is practically pocket money.'
Selling too early is the norm; no one can sell at the highest point. But truly losing big is missing the opportunity to buy back because of fear of 'admitting a mistake.'
5. The Ultimate Philosophy of Survival: Discipline Trumps All Strategies
In the crypto market, survival ultimately depends not on how accurate your technical analysis is, but on your mindset and discipline.
Self-inflation is the nemesis of traders. One of the hardest truths to accept is: the market doesn’t care about your ego. A big win can easily lead to misjudging your abilities, thinking you can predict the market. But the market will always remind you who is the boss.
Staying humble is the only way to stay in the game. Your pride is not worth exchanging for your portfolio.
Knowing when not to trade is itself an advantage. Too many traders force themselves to bet in areas they are not good at, thinking they must remain active at all times. But sometimes, the greatest advantage is knowing when to stand aside.
Lastly, a heartfelt reminder: the crypto market is not a casino; it's a 'discipline exam.' Those who can buy are apprentices, those who can sell are masters, and those who can maintain discipline are the winners who will last.
In the crypto world, surviving longer is a thousand times more important than making quick profits. Every time you restrain your impulses and strictly adhere to discipline, you are qualifying for the real opportunities.
Surviving is more important than anything else.
If you find these experiences helpful and want to learn more practical strategies and risk tips, feel free to follow my account. In this market, let’s make steady profits together, and not be the 'chives' that get cut!