Today, I won't discuss complex strategies or the myths of getting rich quickly. I just want to share a simple method that allowed me to avoid liquidation and zeroing out in my first two years in the crypto world, while steadily accumulating.
1. Those moments that made me decide to 'slow down'
In the summer of 2019, I watched my account experience two 20% fluctuations in three days—one up and one down. Excitement and panic alternated, and in the end, I realized that apart from my racing heart, I gained nothing.
That night, I did two things:
Cleared all positions;
Wrote in my notebook: “If investing keeps me awake at night, then I must have done something wrong.”
From that day on, I began to search for a trading method that would allow me to sleep peacefully.
Three months later, I found it—it's simple to the point of doubt, but effective enough for me to stick with it until now.
Two, my 'five-step grid method': how to remain calm amidst volatility
Step one: layer funds, never all in
I divided the funds available for investment into five equal parts, each completely independent.
For example, total funds of 100,000U, each portion 20,000U.
This simple action fundamentally eliminates the possibility of 'all in'.
Step two: the first position is always 'testing the waters'
No matter how optimistic you are, only invest one portion of funds (20%) the first time.
This position has two missions:
Validate your judgment;
If, unfortunately, there is a drop, you have the chips to average down.
Remember: in the crypto world, never fire all your bullets at the first shot.
Step three: drop by 10%, average down by 20%
If the price drops by 10% (calculated from the purchase price), I will invest the second portion of funds.
The math here is beautiful:
Assuming the first purchase price is 100U, buy 2000U (20 coins);
If the price drops to 90U, then buy 2000U (22.22 coins);
Your average cost becomes: (2000+2000)/(20+22.22)=94.74U.
You do not need the market to rise back to 100U to break even; rising to 94.74U is sufficient.
Step four: rise by 10%, take profit by 20%
If the price rises by 10%, I will sell 20% of the current holdings.
Doing this achieved:
Lock in part of the profits;
Recycle funds waiting for the next opportunity;
Retain a base position to not miss the potential big market later.
In the crypto world, knowing how to sell is more important than knowing how to buy.
Step five: cycle execution until funds are used up or the target is achieved
I will continue to follow the rule of 'drop 10% average down 20%, rise 10% sell 20%' until:
Invest all five portions of funds (fully invested);
Or sell all holdings (liquidate);
Or reach the preset profit target (e.g., total capital growth of 30%).
Three, why is this method suitable for beginners?
Advantage 1: Automated emotional management
Most beginners' losses stem from emotional trading:
Panic sell when it drops;
Chase high greedily when it rises.
And this method replaces emotions with rules: average down as planned when it drops, sell as planned when it rises.
You no longer need to conquer greed and fear, just follow the rules.
Advantage 2: Cost control visualization
Each time I average down, I am lowering the average cost, and each time I take profit, I am locking in part of the profits.
You can see clearly:
What is my average cost?
What is my profit and loss situation at the current price?
How much space is left until the next operation?
Clarity brings a sense of control, and control brings calm.
Advantage 3: Time liberation
You don't need to watch the market 24 hours a day, just need to:
Set price alerts (notify when rising or falling by 10%);
Execute operations after receiving alerts;
Spend 5 minutes reviewing every day.
In the remaining time, you can learn, work, and live.
Investing should improve life, not occupy it.
Four, my practical optimization tips
After two years of practice, I have summarized a few tips to enhance the experience:
Tip 1: Choose suitable assets
This method is most suitable for:
Mainstream coins like Bitcoin and Ethereum (relatively mild volatility);
Highly liquid currencies with daily trading volume exceeding 100 million USD (to avoid unexecuted trades);
Assets you are optimistic about in the long term (to avoid losing confidence during downturns).
Do not use this method on small-cap altcoins—they may drop 50% without rebounding.
Tip 2: Effective use of idle funds
Do not let uninvested funds lie idle:
Put into the exchange's liquid financial products (annualized 3-5%);
Or buy short-term government bond ETFs (like SGOV);
Or as 'rescue funds' in extreme market situations.
Make every penny work for you.
Tip 3: Dynamic adjustment of parameters
If you feel the 10% spacing is too large, you can adjust it to:
For highly volatile currencies: 15-20% spacing;
For stable currencies: 8-10% spacing;
For large amounts of capital: 5% spacing + smaller position ratio.
The key is to find a rhythm that feels comfortable for you.
Five, three risks that must be vigilant
Risk 1: One-sided downtrend
If faced with a collapse like LUNA, any averaging down would be futile.
Defense measures:
Only use for assets you deeply understand and are optimistic about long-term;
Set a maximum number of averaging down (e.g., at most three times);
Retain at least one portion of funds as the 'last line of defense'.
Risk 2: Long-term sideways consumption
If the price fluctuates within a narrow range, funds may remain idle for a long time.
Response strategies:
Use idle funds for other investments;
Appropriately reduce grid spacing (e.g., 8%);
Accept that 'sometimes not trading is the best trade'.
Risk 3: Missing the main upward trend
If a surge starts right after you sell, you may miss most of the profits.
Balancing methods:
Always retain a base position (at least 20%);
Pause profit-taking in a clearly trending market;
Remember: just get to the fish's body, leave the head and tail for others.
Six, a 'startup guide' for beginners
If you decide to try this method, I recommend:
First week: simulation practice
Choose a mainstream coin and operate with a demo account for a week.
Key feelings:
Psychological feelings of averaging down during a drop;
Psychological feelings of taking profit during a rise;
Whether rule execution is smooth.
Second week: small funds in practice
Start with an amount you can afford to lose completely (suggested not exceeding 1000U).
The goal is not to make money, but to:
Familiarize yourself with the exchange operations;
Validate whether your parameter settings are reasonable;
Establish execution discipline.
Third week: review and optimize
Check your operation records:
Which trades are emotional?
Do parameters need adjustment?
How to improve the execution process?
Remember: the initial slowness is for later stability.
Seven, final heartfelt words
I know, the returns of this method may not compare to those 'hundredfold in a year' myths.
But it allowed me to:
Three consecutive years of positive returns;
Maximum drawdown controlled within 15%;
Sleep soundly every day;
Have plenty of time to learn and live.
A friend asked me: "Isn't it too boring to trade coins like this?"
I replied: "I came to this market to improve my life, not to seek thrills. And real improvement often comes from those 'boring' persistences."
That friend who used to trade dozens of times a day and eventually blew up started using this method last year.
Yesterday he told me: "It turns out, the days without watching the market are so comfortable."
If you are also looking for a more relaxed and sustainable way to participate, consider following me.
I will continue to share:
Strategy adjustments in different market environments
Specific optimization tips for grid trading
And how to maintain a balance in life while investing
There are no overnight riches here, only sincere practice of long-termism.
After all, in this marathon—running steadily is more important than running fast.
Follow me, and don’t get lost! Move forward steadily and wait for the flowers to bloom. 🌱
