At three in the morning, the dim light of my phone screen reflected on my face as I saw someone in the investment group posting a liquidation screenshot with the caption 'Master, help! I only have one-tenth of my capital left.' This scene made me reminisce about myself from many years ago.
In 2017, I entered the cryptocurrency world, and at that time, I was overwhelmed by various myths of 'hundredfold coins', resulting in three liquidations within three years and losses exceeding 500,000 yuan. The worst one was on March 12, 2020, a day referred to by people in the crypto world as 'Black Thursday', where I lost 85% in a single day, which almost drove me to despair and leave the market.
But now, not only have I covered my losses, but I have also achieved stable profits. Today, I won't discuss complicated technical indicators; I will only share the survival experiences gained through real investment.
1. The pits I have fallen into over the years.
First liquidation: blindly following 'experts'.
In 2018, I joined a paid community where the group leader shared 'insider information' daily. One day, he recommended a small coin that was said to 'definitely double', and I actually believed it, investing a large amount of money. As a result, the price briefly rose after my purchase but then continued to fall; ultimately, the project team ran away, and my funds were lost.
Lesson: Never believe anyone's 'insider information', especially those that require payment to access.
Second liquidation: high-leverage gambling.
In 2020, I thought Bitcoin had bottomed out and opened a 20x leverage long position. As a result, the market experienced extreme conditions, and a 10% price fluctuation triggered a forced liquidation. What was most frustrating was that shortly after the liquidation, the price indeed surged.
Lesson: High leverage is an invisible killer; even if you are right about the direction, you could still die in the volatility.
Third liquidation: blindly chasing after price surges.
In the 2021 bull market, a certain animal coin surged 300% in a day. My FOMO (fear of missing out) emotions exploded, and I heavily invested. As a result, I bought at the peak, and the price subsequently halved; after panic selling, it rebounded again. That time, I realized I had become a typical 'retail investor'.
Lesson: When everyone is talking about a coin, it is usually close to the top.
Two, transformation: the four pillars from loss to profit.
1. Position management is a lifeline.
I now strictly follow the '5% principle': no single trade exceeds 5% of total capital, and if daily losses reach 2% of total capital, I stop trading.
For beginners, I suggest dividing funds into three parts: 60% for mainstream coins, 20% for potential small coins, and 20% reserved for stablecoins. This allocation ensures opportunities while controlling risks.
2. Stop-loss, not take-profit, let profits run.
I find that setting stop-losses is more important than taking profits. My method is to determine the stop-loss point before entering the market, and once the price touches it, I decisively exit. For profitable positions, I use a trailing stop-loss method to maximize profits.
Many people lose money not because they haven't made profits before, but because they make little when they gain and lose a lot when they lose.
3. Focus on your own circle of competence.
In the cryptocurrency market, there are many ways to make money, but finding a method that suits you is key. Some excel at short-term trading, while others are suited for long-term holding; it’s important to find your area of advantage and delve deep.
I now focus only on a few projects I truly understand, rather than chasing every hot trend. If you can't simply explain what a project does, it's best not to invest.
4. Market sentiment is your contrarian indicator.
When the investment group is boiling, and the screen is full of voices saying 'it will double soon', I become cautious. When everyone is in panic, shouting 'the bear market is here', I start looking for opportunities.
'When others are fearful, I am greedy; when others are greedy, I am fearful.' This old saying is especially applicable in the crypto space.
Three, practical advice for beginners.
1. Learn to identify common scams.
Investment scams: claiming to get private placement quotas at a low price, requiring you to pay first.
Exchange scams: small exchanges create false price increases by modifying data to attract users.
Ponzi scheme: promises high returns, requires constant recruitment of downlines.
Airdrop scams: soliciting private keys or mnemonic phrases under the guise of airdrops.
Remember: if it seems too good to be true, it probably isn't.
2. Control emotions, make a plan.
Emotional trading is the main reason for losses. My current practice is to write a complete plan before trading, including entry points, stop-loss points, take-profit points, and position sizes. Once made, I strictly implement it, without changing it due to market fluctuations.
3. Value the power of narrative.
In the cryptocurrency market, narrative often matters more than fundamentals. A project might have the best team and technology, but without an engaging story and community support, it’s hard to attract capital.
Researching market hotspots and capital flows is sometimes more practical than studying white papers.
Four, final advice.
The crypto market is not a casino, but a professional game. 80% of people lose money because they treat it like a casino.
Surviving is the hard truth. In this market, staying alive is more important than short-term profits. As long as you are at the table, there will always be opportunities.
After these years of ups and downs, my biggest realization is that successful investing isn't about how much you earn, but whether you can survive in this market. The crypto space is full of stories of overnight wealth, but what’s lacking are players who can consistently profit.
If you are just starting to get into cryptocurrency, remember: do not blindly follow trends, do not go all-in, and keep learning. Perhaps in the next bull market, you will achieve financial freedom.
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