That winter in 2021, I was hiding on the balcony smoking, and my phone showed the divorce agreement sent by my wife—my million-dollar principal had shrunk to 230,000. The boast I made about being able to make the whole family live well turned into the shards of a glass cup broken on the coffee table. At that moment, I finally understood: the crypto market is not a casino; it is a hell that strips the 'greedy' bare.
Now the account number has two extra zeros at the back, but every time before I open the trading software, I always take a glance at the note I posted on the monitor years ago: 'Every penny you earn is a realization of knowledge; every penny you lose is a punishment for luck.' The pitfalls I've encountered and the tears I've shed over these 7 years can be summarized into 6 iron rules that can help newbies lose at least 500,000 less.
1. Capital allocation: put your 'eggs' in 5 'explosion-proof bags'.
My earliest foolish move was putting all my 1 million in a small token that claimed it was about to launch its mainnet, only to see the project team run off, and my account halved. Later, during my reviews, I set strict rules: split total capital into 5 parts, only invest 1 part at a time, and cut losses immediately if any single investment loses 10%. Even if I were to lose 5 times in a row, my total loss would only be 10%, leaving me with the main capital to continue.
Don’t believe the nonsense that 'full margin betting is the only way to get rich.' In the crypto market, the survivors are never the ones who take the biggest risks, but those who know how to 'survive'. Even now, when I see what seems like a sure opportunity, I only invest a maximum of 20% of my capital. The rest is like a 'fire-fighting team', always reserved for black swan events.
2. Go with the trend: don’t be a 'mantis against the trend'.
During the 2019 bear market, I watched a token drop from 10 yuan to 3 yuan, thinking 'it's hit the bottom'. After I bought in, it dropped to 0.8 yuan. During that time, I couldn't sleep, staring at the candlestick charts and cursing the main players. I later realized: trends are like floods; what you think is a 'rebound' might just be a wave, and resisting the trend will only get you swept away.
Now I only engage in 'going with the flow' trades: in an upward trend, I only enter when it pulls back to key support levels; in a downward trend, I won’t touch it no matter how enticing the rebound looks. Remember, the market never lacks opportunities, but it lacks those who can survive long enough to wait for them.
3. Stay away from 'myths of skyrocketing prices': what falls from the sky isn’t a pie, it’s a heavy disc.
When I first entered the market, I chased after '100x coins' like I was on adrenaline, buying into whichever group was yelling the loudest. Once, a token rose 5 times in 3 days, and I jumped in only to see it drop 30% on the same day. Later, I realized it was just the main players selling off. Now, when I see news about 'short-term gains of 10 times', my first reaction isn’t excitement, but rather: 'Are there enough naive investors left to take the bait?'
Reliable assets typically have steady growth; those sudden surges in small-cap tokens are 99% 'scam packages'. Instead of gambling on a 1% chance of getting rich, it's better to hold quality assets and earn steady profits.
4. Trading signal: the MACD '0 axis rule' is sufficient for beginners.
I've seen too many beginners study complex indicators, only to end up more confused. For the average person, the MACD '0 axis crossover' is enough: when the DIF and DEA cross above the 0 axis and break through the short-term moving average, it's a buying point; when they cross below the 0 axis and break through support levels, it's a selling point.
Now, 80% of my trades rely on this signal. Although it can't capture every market movement, it helps me avoid most traps. Remember, trading isn’t about who can analyze the most indicators, but about who can execute the simple things to perfection.
5. Position management: don't increase your position when losing, only add when making a profit.
In my early days of losing money, I always thought about 'averaging down my costs', but the more I averaged down, the more I got stuck, reducing my 100,000 capital to just 20,000. Later, I set a rule: never add to losing positions, and only add to winning positions if the market is favorable and the trading volume increases.
For example, after a 20% profit on a token I bought, and it breaks through its previous high with increased volume, I only add 5% to my position; if after profit it starts to decrease in volume, I will first reduce my position by half. This way, I can let profits run while controlling risks.
6. Weekly reviews: can earn more than 'watching the market daily'.
In the first three years, I traded dozens of times a day, busy as a spinning top, and ended up losing a lot. Later, I took a step back and spent 2 hours on Sundays reviewing: which trades were right? Why? Which trades were wrong? How to improve next time? Gradually, I formed my own trading system.
Now I look at the market for no more than 1 hour each day, and my profits are more stable. Frequent trading only lets emotions take over, while reviewing helps you improve your understanding in a calm manner—after all, success in the crypto market isn’t about speed, it’s about strategy.
Yesterday, a fan asked me: 'Teacher, can I still get rich by entering the market now?' I smiled and replied: 'I hope you can live long enough to make money.' The crypto market has never been a cradle for 'getting rich overnight', but rather a battlefield for 'monetizing knowledge'. The more respect you have for the market, the kinder it will be to you.
Let’s talk about you; what’s the most ridiculous pitfall you’ve encountered in the crypto market? Was it chasing highs and cutting losses, or being 'sliced' by a 'big shot' recommending a coin? Let’s chat in the comments.
