Let go of the obsession with 'breaking even', and you can truly see the market.
I still remember that phone call clearly. At two in the morning, the K-line waterfall on the screen hadn't stopped, and Old Li's voice came from the other end of the phone: “It exploded, it exploded again. This time it’s really gone.” He endured from the 2021 bull market to now, and last year's extreme market conditions directly evaporated $25,000, leaving the account balance at 2000U, like the last gasp.
He told me that during that time, opening the trading software every day required courage. Watching others flaunt their profits felt like being forced to watch an ex's new partner—my heart was blocked, but my fingers couldn't help but want to click the loan button.
When he asked me 'Can it turn around?' I only replied, 'First, give up the thought of 'recouping losses' and learn how to breathe in the market.'
We thus established three iron laws.
1. Three Iron Laws: The survival rules for staying alive.
Rule One: Only do one trade a day, catching big fish instead of small ones.
What the market fears most is not the lack of opportunities, but too many opportunities. Most people lose not because they can't seize opportunities, but because they want to make a profit from every fluctuation. I let Lao Li trade only once a day, choosing the most certain opportunity, like a cheetah waiting for prey, patiently lurking, and striking with precision.
Rule Two: Cut immediately when the direction is wrong, without hesitation.
This is the most counterintuitive rule. When losing, the instinct is to hope the market will 'turn back' and even continuously add positions to average down costs. But this is like trying to catch a falling knife. We agreed that as long as the price touches the preset stop loss, we exit unconditionally, leaving no room for 'let's see.'
Rule Three: When you make a profit, add gradually and always leave a backup.
After making a profit, people's confidence can easily swell, leading them to bet all their profits at once. We adopt a strategy of adding gradually: after a profit, a portion of the profit is used as a 'safety cushion,' and only the remaining portion continues to be traded. This way, even if the next judgment is wrong, the principal will not be harmed.
2. From 2000U to recouping: The path of discipline execution.
In the first ten days, Lao Li's 2000U slowly grew to 3700U. During this time, there were two instances where the price briefly breached the stop loss and then rebounded. He was hesitant to hold the position, but I directly forced him to cut it. He himself shook his head, 'If I had been this ruthless earlier, it wouldn't have turned out this way.'
This 'ruthlessness' is essentially the instinct to fight against emotions. After a liquidation, investors are most susceptible to falling into the trap of 'revenge trading,' and rushing to recoup often leads to greater losses. Emotions must stabilize before rational decisions can be made.
Once the rhythm stabilized, we started to try rolling positions. I remember that when ETH surged to $2360, he began to build positions gradually from the bottom, exiting at $2390 with a steady profit of over 80 points. I told him, 'Getting rich is not a one-time deal; it’s a long-term battle. Surviving gives you the qualification to enjoy the next round of dividends.'
In this way, the account funds grew from 8600U to 14700U, and finally, with the key market breakthrough of Bitcoin, the position grew all the way to 25400U—just enough to cover his losses and achieve recouping.
On the day of settlement, he stared at the screen for a long time and said something heartfelt: 'It turns out the hardest part is not making money, but how to survive in the market without being eaten.'
3. The mindset repair after liquidation: A lesson more important than technique.
After a liquidation, the real fear is not the loss of funds, but the collapse of the psychological defenses and the failure of the decision-making system.
Many people enter a state of 'stress' after experiencing significant losses, blindly pursuing quick recouping, which often leads to deeper entrapment. Lao Li was no exception at first; he once wanted to borrow money for 'one last fight,' which is the most dangerous path.
The first thing I had him do was to completely leave the trading interface for a few days. Not looking or operating allowed his brain to recover from continuous stimulation. Only by breaking the cycle of 'loss - wanting to recoup - further losses' can the essence of the problem be seen clearly.
At the same time, I had him start a trading journal, recording the reasons for entering and exiting each trade, emotional state, and market environment. A few days later, upon review, he found that most of his losses occurred during times of high emotional volatility and when he casually violated his trading plan.
4. How to find a new way of living in the next round of the market.
With the market active again, should we continue to be the chives, or find another way to live? The difference lies in whether we can replace emotions with a system and use rules to confront uncertainty.
1. Position management is the foundation of survival.
The risk exposure of a single trade must not exceed 2% of the total capital. This means that even if you face ten consecutive stop losses, you still have 80% of your principal in play. Many people go to zero overnight, not because they judged the direction incorrectly, but because they bet everything on one trade.
2. Follow smart money, not noise.
During market frenzy, various calls for trades are incessant. What should really be focused on are the on-chain data of capital flows: the net inflow and outflow of stablecoins, changes in exchange holdings, and the dynamics of whale wallets. These are the true map of opportunities for the next round.
3. Build a foundation with mainstream assets before discussing innovation.
For most ordinary investors, a better strategy is to allocate the main position to mainstream assets like Bitcoin and Ethereum, using only a small amount of funds to participate in high-risk, high-volatility innovative tracks. This ensures that they do not miss out on mainstream trends while still chasing the innovative dividends at the forefront of the market.
Lao Li's story is not particularly inspiring; it is simply about finding the right rhythm, controlling one's actions, and strictly executing the plan. And this is precisely the hardest truth of recovering in the cryptocurrency circle.
The market never lacks opportunities; what it lacks are players who survive to the next opportunity. A liquidation is not the end, but an opportunity to examine one's strategy and mindset. When you are no longer driven by the obsession of 'recouping losses,' but focus on the rationality of each trade and the long-term stability of the system, only then can you truly breathe in this market and survive until you seize the opportunity that belongs to you.
After all, in this market where the only rule is 'survive,' being alive itself is the greatest victory.
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