Protect your capital, and profits will come naturally.
Let's talk about something practical today. Do you often see stories like this: someone turned 5000 yuan into 1 million in just a few months in the cryptocurrency market? Then you feel tempted and dive in, only to end up as the 'cut grass'?
I've seen too many friends like this. They often make a fortune when the market is good, only to be knocked back to reality overnight, even ending up in debt. It's not that their skills are lacking, but rather that they overlook the true core of trading: surviving is more important than making quick profits.
After struggling in the cryptocurrency world for so many years, I have grown from an impulsive novice to a steady trader, all thanks to three "counterintuitive" iron rules. These lessons may seem simple, but they were hard-earned with real money.
1. Leverage: Better to earn less than to be liquidated.
When I first entered the industry, I was also fascinated by the 'magic' of high leverage. 20 times, 50 times, or even 125 times; I thought that this was the way to quickly achieve financial freedom. What happened? A slight market fluctuation could instantly wipe out the wealth I had accumulated with great effort.
Data shows that users with 10 times leverage have an average survival period of only 17 days, while users with 5 times leverage can survive for 89 days. This is the difference!
The strict rule I set for myself is: leverage should never exceed 3 times; my usual operations are mainly at 1-2 times.
Some may laugh at my conservatism, but I know that 3 times leverage means the market must fluctuate 33% to trigger my liquidation line, which gives me enough buffer space. But with 10 times leverage? Just a 10% fluctuation and you're out. In a market like cryptocurrency, which has daily fluctuations of 5%-10%, 10 times leverage is simply a suicidal move.
My advice: If you are a beginner, start with 1-2 times leverage. Do not envy those who make quick money with high leverage; most of them are just 'shooting stars' in the market—brilliant but short-lived. What we should aim to be is the 'longevity' in the market; living longer is the true path.
2. Increase positions: profits pave the way, capital remains unchanged.
The essence of rolling positions lies in the word 'rolling,' but many people misunderstand its meaning. True rolling positions use profits to seek greater profits, rather than continually reinvesting the capital.
My operational strategy is: after the first order is profitable, withdraw the capital first. For example, if I have 5000 capital and earn 1000, I will immediately transfer out the 5000 capital and only use the 1000 profit to continue trading. This way, even if I lose everything later, I will only lose the money I earned, and my capital remains intact.
This tactic may seem simple, but it's the stabilizer for one’s mentality. Many people lose money because they confuse profits with capital. As a result, once the market reverses, not only do they give back their profits, but their capital also suffers.
Another stable way to roll positions is 'base capital + T trading.' For example, divide funds into 70% base capital and 30% flexible capital. Hold the base capital long-term to seize the major trend; use flexible capital to buy high and sell low, reducing costs. This way, you won't miss major market movements while also profiting during fluctuations.
Key point: add to positions after making a profit, and after adding, immediately move the stop-loss up to the added position price to ensure no loss of capital.
3. Stop-loss: mechanical execution, no illusions.
"Just wait a little longer; it might rebound"—this statement has harmed countless people in the cryptocurrency world. A stop-loss is like an amputation; painful but necessary.
I am currently implementing a mechanical stop-loss system: if a single loss reaches 2% of the capital, I must exit the market without hesitation. You may think 2% is too conservative, but this is the secret to long-term survival.
Once, I went long on Bitcoin with 3 times leverage. After buying, the price fluctuated downwards, and I was about to hit the stop-loss line. A voice inside me said, "Major good news hasn't come out yet; just wait a little longer, it will definitely rebound." But I still gritted my teeth and executed the stop-loss. As a result, the price later fell all the way down. If I hadn't stopped, I would have lost 30% of my capital.
This experience made me deeply realize: a stop-loss is not a loss but a cost. Using small losses to avoid larger disasters makes this trade worthwhile.
My stop-loss system is like this:
Floating profit within 50%, set the stop-loss 3% below the opening price.
Floating profit exceeds 50%, stop-loss moves up to the cost price to ensure no loss of capital.
Floating profit exceeds 100%, stop-loss moves up to 'opening price + 50%', locking in half the profit.
The true wisdom of rolling positions: waiting and choosing.
The core of the rolling position tactic is not 'frequent operations' but 'patient waiting.' The truly profitable people spend 90% of their time observing and waiting, only acting on the 10% of certain opportunities.
The cryptocurrency world will never lack opportunities; what it lacks is capital. Preserve your capital and patiently wait for your own opportunity; this is the highest realm of rolling positions.
Additionally, be sure to learn to take profits in batches. Many people are greedy, wanting to sell at the highest point, and often miss good opportunities. My strategy is:
Floating profit of 30%, take profit of 30%.
Floating profit of 50%, then take a profit of 40%.
Floating profit of 100%, liquidate or leave 10% to speculate on the market.
After three years of rolling positions in the cryptocurrency world, my biggest realization is: stability beats speed, and living longer beats earning fast. Those three 'anti-human' iron rules—low leverage, rolling profits, strict stop-losses—may seem conservative, but they are the key to my survival through countless fluctuations.
The market is always changing, but human nature does not. Those who can overcome human weaknesses and execute discipline are the ones who will become the final winners.
I hope my sharing can help you avoid detours and walk more steadily and further on this road in the cryptocurrency world. Remember, what we pursue is not overnight wealth but long-term stable profits. Let's encourage each other!
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