Never risk all your principal on an uncertain tomorrow.
I still remember the year I first entered the crypto space. Like most novices, I would stare at the K-line charts until the early hours, rushing to jump into any coin that was rumored to rise, only to consistently buy at highs and sell at lows. After a month, I was physically and mentally exhausted, and my account balance kept getting lower.
For six years, I have led over 300 novices steadily, and the biggest insight I've gained is: in this highly volatile market, controlling risk is more important than pursuing profit. The methods I share today may not make you rich overnight, but they can help you survive in this market for the long term.
1. Most beginners lose money, starting from 'greed'
We often hear stories like this: someone became rich from a certain altcoin, while another turned their fortunes around through leveraged contracts. But behind these stories are many silent losers.
Data shows that the loss rate for cryptocurrency beginners in the first year is as high as 79%. Why is this?
Blindly chasing highs and selling lows: seeing a coin surge makes you FOMO (fear of missing out), resulting in buying at the peak, and once it drops, you panic-sell.
Blindly believing in 'guaranteed profits': following internet celebrities or community-recommended projects blindly, lacking independent judgment.
Abuse of leverage: using high-leverage contracts can lead to liquidation with minor price fluctuations.
Investing in projects you don’t understand: especially those new coins without actual products, relying solely on hype.
The most heartbreaking case I’ve seen is a beginner who invested 500,000 funds intended for marriage into a low market cap coin, only for the project team to run away, and the coin price to go to zero. This is a typical case of putting all eggs in one basket, and it’s a flimsy basket at that.
2. My core strategy: break risks into small pieces and always leave an escape route
After years of practice, I have summarized a set of 'Five-tiered Positioning Method' suitable for beginners. The core idea of this method is to control risks through position management, preventing emotions from affecting decisions.
The specific operation has only three steps:
Initial positioning: only use 1/5 of funds to enter
After selecting the right target, don’t think about ‘catching the bottom’; directly buy one share at the current price. For example, if you have a total of 50,000 funds, buy only 10,000 at first, leaving the remaining 40,000 untouched. This avoids the risk of being trapped in a deep loss due to misjudgment.
When the price drops: buy one share for every 10% drop
If the price drops by 10% after building a position, don't panic; this is an opportunity to average down. For example, if you bought coins for 10,000 and the price drops to 9,000, buy one share (invest another 10,000), reducing your average cost to 9,500. You'll profit once it rebounds above 9,500, which is much easier than being trapped at 10,000.
When the price rises: sell one share for every 10% increase
If the price rises by 10%, don't be greedy; sell one share to lock in profits. For example, if you bought coins for 10,000 and the price rises to 11,000, sell one share to secure a profit of 1,000. This way, you will never miss out on profit opportunities and won’t lose your principal due to a pullback.
This cycle continues: buy one share for every 10% drop, sell one share for every 10% rise, until the 5 shares of funds are used up or the position is sold out. The brilliance of this method lies in the fact that, regardless of market fluctuations, you have a strategy to cope and will never be passive.
3. Why do I only recommend mainstream coins? Hard lessons!
Many beginners like to chase small coins, thinking they 'rise quickly', which is actually a fatal misconception.
I strongly recommend beginners to focus only on mainstream assets like Bitcoin (BTC) and Ethereum (ETH) for the following reasons:
High liquidity: large transactions are less likely to experience slippage, and you can exit at any time.
Strong value support: there is real application and community consensus, and it won't easily go to zero.
Relative volatility is controllable: compared to small coins that may halve in a day, mainstream coins have milder fluctuations, which are suitable for beginners.
Data shows that in 2021, the survival rate of the top 50 Meme coins is only 12%. In contrast, those who have been dollar-cost averaging into Bitcoin for three years have achieved returns exceeding 200% compared to those who trade in waves.
Under my guidance, a beginner only traded Bitcoin last year using the five-tiered method, and within six months of accumulating through small fluctuations, his returns were three times higher than those of friends who were trading chaotically during the same period. More importantly, he was able to sleep well every night without constantly watching the market.
4. Two key techniques to elevate your returns
1. Idle funds can also generate money
In this strategy, the 5 shares of funds will not be used up at once. Idle funds can be placed in stable financial tools at major exchanges, such as Binance's 'Binance Earn' or OKX's 'Flexible Staking', to earn daily interest. For example, with 40,000 idle funds, at a daily interest rate of 0.02%, you can earn 8 yuan per day, accumulating little by little without affecting subsequent replenishment.
2. Regularly review, don’t act on emotions
Spend 15 minutes every weekend reviewing the week's operations: Did you strictly follow the plan? Did emotions influence your decisions? What can be improved? Regular reviews are the fastest way to enhance your investment skills.
5. Survival in the cryptocurrency world depends on mindset
Having been in this market for a long time, I deeply realize: technology is easy to learn, but mindset is hard to cultivate. Here are a few mindset suggestions:
Invest with spare cash: only invest what you can afford to lose, so you won’t feel anxious and lose sleep over price fluctuations.
Be patient: opportunities in the cryptocurrency world always exist; do not rush in out of fear of missing out.
Dare to admit mistakes: the market is always right; when you make a wrong judgment, accept it calmly and adjust your strategy promptly.
Truly excellent investors are not those who have captured hundred-fold coins, but those who can consistently profit and control drawdowns. They are like smart turtles, making steady progress and ultimately outpacing the reckless rabbits.
The cryptocurrency world is not a casino but a place for cognitive realization. You will never earn money beyond your cognitive range; even if you earn by luck, you will lose it by skill.
This 'Five-tiered Positioning Method' may seem simple, even a bit 'slow', but it is this 'slowness' that allows you to become one of the 21% winners in this market with a 79% first-year loss rate.
Remember: in this market, survival is victory. Data from Cambridge shows that beginners who strictly follow risk management rules can increase their survival rate from 19% to 68% over three years.
I hope this article can help you avoid detours. If you find it useful, feel free to share it with more friends in need. Follow Xiang Ge to learn more about first-hand information and cryptocurrency knowledge, becoming your guide in the crypto world; learning is your greatest wealth!
