Recently, I've come across a lot of 'wealth mentors' brainwashing people: 'With a $50 capital and 20x leverage, you can make $10,000 in a single day! Turn $200,000 into $20 million in half a year, and easily achieve a hundredfold profit!'
I couldn't help but laugh out loud. When I first jumped into the crypto world with all my savings, I was almost tricked into losing my down payment for a wedding apartment by this kind of rhetoric. Today, I'm not hiding anything; I will share the truth about making money in the crypto world through the pitfalls I've experienced and the money I've lost: Want to get rich by trading cryptocurrencies? It's not impossible, but it's definitely not about mindlessly leveraging and gambling!
First, let's talk about the tricks behind those 'get rich quick' stories: Indeed, for some previously popular altcoins, a daily increase of 30%-50% isn't uncommon, but what does 20x leverage mean? A 4% pullback can lead you to a total liquidation, leaving no chance to break even. I've seen too many novices rush in with the mindset of 'I don't mind losing $50,' only to either get liquidated instantly or make a bit of money and then get greedy, losing everything after increasing their position.
I only have one piece of advice for beginners on rolling over: Don't touch 20x leverage! 5-10x is the bottom line, and you must set stop losses properly—don't believe the nonsense that 'strong coins won't correct 10%.' The crypto market has more black swans than meals you eat. Last month, a popular coin dropped 25% in half a day, and three brothers in my group went from 'profit of 50,000' to 'capital zero.'
Let's talk about the three major common ailments of retail investors in the crypto market. I dare say 99% of people have at least one:
Frequent trading: I want to switch between 10 kinds of coins a day, chasing gains and cutting losses, only to realize that all the money earned goes to the exchange in fees, resulting in a net loss for myself;
Full margin betting: Always thinking about 'making enough in one go,' but when bad news hits, you get pressed down to the ground, losing 50% means you need to gain 100% just to break even. Do you think you have that luck?
Small profits are sold immediately, big losses are stubbornly held: Selling in a panic after making 20%, while comforting myself that 'it will go back up' after losing 20%, completely reversing the core logic of 'let profits run, cut losses short'—this is not trading cryptocurrencies, it's giving money to the main players!
After stepping into countless pitfalls, I summarized 12 iron rules for selecting cryptocurrencies. Regardless of bull or bear markets, following these can at least help you avoid 80% of scams:
Select low market cap options, but don't touch 'air low market cap': You need to look at the rationality of circulating market cap and total market cap, especially for public chains and decentralized application projects. Low market caps need to be supported by viable sectors; not just any unknown coin can double;
The sector is more important than the coin: Choose sectors with high ceilings, such as AI computing power and secure public chains, which have actual demand. Avoid those pseudo-sectors that rely solely on hype;
New narratives need to be grounded: Don't be fooled by vague terms like 'Metaverse 2.0' or 'Web3 new ecology.' Check if the project has actual products and solves industry pain points;
Dark horses hide in the obscure: Hundred-fold coins are never the popular ones trending all over the internet, but rather those potential projects on small exchanges or those not yet noticed on-chain. Of course, this requires you to spend time researching, not just lying back and waiting for others to feed you.
Early coins are often criticized for low liquidity: Real hundred-fold early coins will not have good liquidity. Once you cross this threshold, you may be able to reap the first wave of dividends;
Listing time matters: Tokens listed at the end of a bull market or the beginning of a bear market tend to take off more easily after 6-12 months of consolidation;
Affordable prices are easier to rise: Coins with many zeros after the decimal point tend to attract more participation from retail investors and often rise more sharply than high-priced coins during bull markets;
Prioritize public chains and leading protocols: Public chains have a longer lifecycle, and stable ecological development is 10 times more reliable than those fleeting altcoins;
Teams and institutions need to be reliable: Don't trust projects with 'anonymous teams.' Projects backed by well-known institutions and transparent founder backgrounds are at least not purely money-grabbing scams;
Avoid value investment traps: Tokens that claim 'deflation guarantees profits' are likely tools used by market makers to manipulate and cut retail investors. Stay away from them;
Old coins with new narratives can be worth paying attention to: If an old coin connects with a currently popular sector (like AI or computing power) and takes actual actions, not just riding the wave, it is worth researching;
Prioritize leading projects in the sector: Within the same sector, leading projects have advantages in ecosystem, funding, and users. Don't always think 'buying the smaller ones will earn more.' If the leader rises 100%, the smaller ones might only rise 20%, and are more prone to plummet.
