Staring at the candlestick chart with that guillotine-like bearish candle, my palms were sweating, yet my mind was exceptionally calm.
On March 12, 2020, the Bitcoin market was a bloodbath. The price plummeted from $8,000 to $3,800 in free fall, with countless leveraged traders being liquidated completely that evening.
And yet, I achieved a single-day profit reversal of $440,000 that evening. This is not luck, but a realization earned through enduring 576 liquidations and losing $400,000 in principal. Once, like most traders, I was addicted to the thrill of 50x leverage, only to truly understand that contracts are not gambling, but a game of probability when my family was on the brink of collapse. Today, I am sharing this 'life-saving profit method' with everyone without reservation.
01 Leverage control, a key step from gambling to a probability game.
Do you remember the first time I got into leveraged trading? I was overwhelmed by the instant profits brought by 50x leverage. What was the result? A small market fluctuation devoured my years of accumulated principal. Such stories are replayed every day in the cryptocurrency market.
Overusing leverage is one of the main reasons traders incur huge losses.
I now strictly control leverage within 3 times, but this is not a random number; it has scientific basis.
If you have a principal of less than 100,000, 3x leverage can ensure your margin is sufficient during market fluctuations; and when the capital reaches over 500,000, I recommend further reducing it to 2x leverage. Why? Because large funds need to consider liquidity risks and slippage issues more seriously.
I have a painful lesson: never 'chase after rising prices with leverage'. When Bitcoin rises from 40,000 to 45,000, even if you are optimistic about the market, do not add to your position at that time. Chasing high and increasing leverage is one of the fastest ways to get liquidated.
Every night before bed, I make sure to close positions over 2x. Why? Because the cryptocurrency market trades around the clock, and sudden price movements often occur in the early morning, leading many traders to be liquidated in their sleep.
Leverage itself is not a bad thing; it is a tool, just like a knife, and the key lies in how to use it. When used properly, it can enhance capital efficiency; when used poorly, it can hurt oneself.
02 10% take-profit method, three key steps to preserve profits.
While stop-loss is indeed important, knowing how to sell is key. The '10% take-profit method' I’ve developed has three key steps.
Step one, calculate the take-profit line. For example, if you have 200,000 in principal, 10% is 20,000 in profit. You need to calculate in advance at what price Bitcoin needs to rise to reach this profit target. Without a clear take-profit plan, it’s like driving without a destination, making it easy to lose direction amidst market fluctuations.
Step two, partial withdrawal is a must. When profits reach 20,000, I will immediately withdraw 10,000 to my bank card. This not only locks in profits but also psychologically confirms the success of this trade. Many people are too greedy, and eventually give back profits because they are unwilling to turn paper profits into real wealth.
Step three, set a stop-loss for pullbacks. This is a step most people overlook. If your profit drops from 20,000 to 15,000, regardless of subsequent trends, you should decisively close the position to secure the remaining 50% profit. Discipline is the lifeline of trading.
I will also use a trailing stop-loss strategy. When prices continue to rise, gradually move the take-profit point up, which can lock in more profits.
In terms of tools, I recommend using the take-profit order function provided by exchanges; once the cryptocurrency reaches a specific price, it will automatically sell.
03 Hedging secrets in extreme market conditions.
That night of '312', the key to my profitable counter-trend trade was the hedging effect of options. Many people only know to blindly go long or short, neglecting the most important tool of risk management—hedging.
My hedging formula is: use 5%-10% of the spot market value to purchase options. For example, if you have 100,000 worth of Bitcoin in spot, spend 5,000 to 10,000 to buy put options. That night, my spot position indeed lost about 52,000, but the put options earned 68,000, not only covering the losses but also netting a profit of 16,000.
The core idea of hedging is not to put all your eggs in one basket. In the cryptocurrency market, this means we need to spread funds across different asset classes.
Besides options, I have a few other hedging methods:
Allocate a portion of funds to stablecoins, such as USDT or USDC. When the market fluctuates violently, stablecoins are important safety tools, as they maintain value stability through pegging with fiat currencies.
Diversify assets across exchanges. Don’t put all cryptocurrencies on one exchange; this can reduce counterparty risk.
Avoid being overly concentrated in a single asset. Even if you are optimistic about a project, you should not invest all your funds into it.
If you encounter a sudden surge and find yourself missing out, you can buy call options in the same proportion. This way the cost is low, and you can catch the trend, avoiding the irrational decisions caused by FOMO (fear of missing out).
04 Trading psychology, a key factor often overlooked by most people.
In cryptocurrency trading, technical analysis only accounts for 30% of the success factors, while the remaining 70% is psychological and risk control. This is also why most traders who have good technical analysis still end up losing.
Emotional trading is one of the main reasons for investment decision-making errors. Stick to your plan, avoid panic selling, and resist the urge to chase trends.
During market crashes, emotional decisions often lead to the worst outcomes for investors.
My own psychological construction methods include:
Limit the frequency of checking your investment portfolio. Set specific times to review your holdings instead of constant monitoring. Research shows that frequent checking increases stress and prompts emotional decisions.
Avoid trading during emotional fluctuations. When you are angry, excited, or fearful, it’s best not to make any trading decisions. I have a rule: any major trading decision must be executed after a night’s sleep.
If a position keeps you anxious to the point of insomnia, it means the position is too large. At this point, it should be reduced to a level where you can sleep soundly.
Remember, the market is always volatile. Throughout Bitcoin's entire history, it has never failed during significant downturns of 2-3 years. Those who can focus on long-term goals rather than daily fluctuations usually achieve better returns.
Every market crash is a mirror, reflecting not only account balances but also the greed and fear deep within human nature. That night, when I saw that the profits from my options covered the losses from spot trading and achieved a net profit, I understood one truth: the real risk is not in the market but in our hearts.
Those who panic sell during a crash often regret it when the market rebounds. Meanwhile, those like me with clear strategies and hedging protection can turn crises into opportunities.
There’s a saying in the crypto circle: 'What can stop you is never the market’s volatility, but your own fear.' There are no born traders, only survivors who learn to turn techniques into habits from their losses.
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