Discipline is not a shackle, it is an oxygen mask. It won't stop you from flying, it will only prevent you from crashing headlong when the pressure drops at ten thousand meters.
The numbers in the upper right corner of the screen are still jumping, it's three seventeen in the morning. I received a message: 'Teacher, in two nights, 3000 U turned into 20000 U, can I resign now?' The sender is a newcomer who just joined the circle three months ago, and their profile picture still has a cartoon bull terrier's flashy effect.
I didn't reply, I just silently changed his note to 'Fireworks Boy'. Seven days later, the black swan flew by, the market's drop of eighteen points combined with his twenty-fold leverage, the sound of the account going to zero was crisper than the New Year's fireworks.
When he flew to Shenzhen to see me, he had dark circles under his eyes and was holding a printed screenshot of his total loss. I pushed an A4 paper towards him with only three lines on it. He was stunned, then smiled wryly, saying, 'Is it really that simple?' I replied, 'Simple things, when done repeatedly, become extraordinary skills.'
1. Position is life, not chips.
At first, he couldn't grasp the significance of 'no more than 2% of principal per trade'. Before the total loss, he was used to operating with half the position, believing that 'fortune comes from risk'. Until I made him calculate: if each loss does not exceed 2% of the principal, even if he loses ten times in a row, he can still retain 80% of the principal. And winning ten times in a row could lead to a steady increase in the capital curve.
The essence of position management is survival. In the cryptocurrency market, 90% of traders ultimately lose money, not because they don't understand the technology, but because they don't understand survival. I compare position to an oxygen mask: when the market fluctuates violently, a reasonable position keeps you calm and avoids making wrong decisions in panic.
He followed my advice and divided the remaining 15,000 U into 20 parts, reducing leverage to 2 times. In the first month, he missed two so-called 'hundred-fold coins' and was mocked by friends in the community as a 'coward'. But he no longer chased those myths of getting rich overnight and instead focused on his own trading system.
2. Stop-loss is a brake, not a surrender.
'Stop-loss written before entering the market' is like checking the backup parachute before skydiving. Many people fail because they are unwilling to set stop-losses, fantasizing that the market will return to a favorable direction, resulting in small losses turning into huge losses.
I told him a fact: professional traders also frequently set stop-losses, but they can afford to lose. Retail investors who are unwilling to set stop-losses once may be eliminated from the game. Setting a stop-loss is not admitting failure but leaving yourself an opportunity to re-enter the market.
He used to be unable to understand this, always adding positions when he was in the red, hoping to average down the cost. As a result, the market continued to move against him, and losses increased. Now, he clearly defines his stop-loss points before entering the market and executes them resolutely.
3. Profits need to take the shape of life.
What most overturned his understanding was the third principle: 'Immediately withdraw half of the profits, exchange it for steak, paper books, subway annual passes.' This means bringing profits back to reality, connecting numbers with real life.
The biggest illusion in the cryptocurrency world is the digital wealth on the screen. Many people think they are geniuses when their accounts are up, but once the market turns bearish, everything turns to dust. I have seen people who made millions in the 2017 bull market, only to lose all their profits and even go into debt in the 2018 bear market.
He began to regularly convert profits into tangible values: wagyu in the fridge, 'Reminiscences of a Stock Operator' on the bookshelf, and a massage chair for his mother. These tangible items constantly remind him: the purpose of trading is to achieve a better life, not just a digital game on the screen.
Six months later, he sent me a screenshot: a new high in net worth, with a note saying, 'Teacher, I am no longer afraid of missing out; I am just afraid of not having a life to seize it.'
I replied to him: 'The market is always there, opportunities are available every day, but the principal is only once.'
4. The transformation from fireworks to snail.
Now, he calls himself 'Snail', saying he wants to crawl slowly to a place where no one can bomb him. He shuts down his computer at exactly eleven o'clock at night and runs five kilometers downstairs. His trading frequency has significantly decreased, but his profitability has steadily increased.
This transformation reminds me of my own experience. I once faced three total losses, and finally understood one principle: in the cryptocurrency world, it's not about making money from market trends but making money from understanding. The deeper your understanding of the market, the higher your account balance.
And those who try to get rich overnight mostly end up being the ones harvested. In this market, living longer is more important than earning faster.
Last night, he sent me a photo: a corner of his study filled with classic investment books he has read, with sunlight streaming in from outside. There was no display of numbers, only a single sentence: 'Teacher, I finally understand what the rhythm of breathing is.'
The market will never lack opportunities; what it lacks are people who can survive long enough to seize those opportunities. Position management, stop-loss discipline, and profit extraction—these seemingly simple principles are, in fact, the cornerstones of long-term survival.
For you in front of the screen, will you choose to continue being the fleeting fireworks, or steadily move forward like a snail? Follow Xiang Ge to get more first-hand information and precise points on cryptocurrency knowledge, becoming your guide in the crypto world; learning is your greatest wealth!
