Understanding how to allocate funds is the secret to longevity in the crypto world.
Last week, while checking fan messages, one message left me stunned: “Teacher, my account has exceeded 38,000!” I repeatedly confirmed that I wasn't seeing things — you have to understand, just three months ago, this friend was almost in despair with only 600 yuan left due to losses.
After eight years of struggling in the crypto market, I've seen too many people come in with dreams of getting rich quick, only to end up being harvested like chives. This friend was able to turn things around, not because of any mysterious indicators or insider information, but simply because he learned a simple yet crucial skill: to allocate limited funds to the right places.
Today, I will share this "three amounts of money" strategy that I keep in reserve, hoping it can help you survive longer in this highly volatile market.
01 The allocation logic of the three amounts of money.
Many newcomers make fatal mistakes as soon as they enter the market: either they gamble all their funds at once, or they scatter their investments randomly. In the crypto market, fund management is even more important than timing ability. My strategy is simple: regardless of the principal amount, divide it into three independent accounts, each with a clear mission.
The first amount of money: short-term fluctuation funds, used to seize short-term opportunities in the market, with strict stop-loss settings.
The second amount of money: trend investment funds, used to layout assets with a clear upward trend.
The third amount of money: risk reserve funds, this is your lifesaving money and must not be easily touched.
Even with a principal of 600 yuan, I recommend allocating it in this proportion. Many people look down on small amounts of money, but true wealth starts from small accumulations.
02 The first amount of money: short-term fluctuations, just aim to earn enough for a cup of milk tea.
Short-term trading is loved by many, but it is also where most people lose money. Why? Because of greed. The first rule I set for that friend is: a maximum of two trades per day, with a stop-loss set for each trade.
How did he lose money before? He saw a two-point rise and greedily chased in, hoping for a double, but ended up getting trapped. After changing his strategy, he traded short with small positions, sometimes earning the cost of a cup of milk tea, sometimes enough for a hot pot, instead steadily accumulating profits.
The core of short-term trading is not to pursue explosive profits but to maintain continuous small gains. I repeatedly told him: earning a stable 1% every day is much more reliable than winning 10% once every ten days.
In terms of specific operations, I taught him several key points:
Only trade during active market hours (avoid low liquidity late at night).
Single losses should never exceed 2% of total funds.
Once profits exceed 5%, start taking partial profits.
Do not make any trading decisions when emotions are high.
03 The second amount of money: trend layout, waiting for a "stair-step" market.
If short-term trading is "gigs," then trend investing is "salary." The key for this part of the funds is the word "wait."
I had him put the second amount of money into a trend account, where he doesn't need to watch the market every day; he can spend half an hour each week analyzing weekly trends—only choosing those varieties where the candlesticks are firmly above the moving averages and the trends are clear.
Trends are like escalators in a mall; going with the flow is easier and faster. Many people lose money because they always operate against the trend or blindly enter the market based on "gossip." After learning to wait for clear signals, this friend captured a clear upward market last month, and just this part of the funds multiplied several times.
Vague opportunities are traps; clear trends are the meat. How to judge trends? I taught him a simple method:
The monthly MACD has formed a golden cross, indicating an upward medium-term trend.
When the price retraces to near the 60-day moving average and stabilizes, it is a good entry point.
Increased trading volume combined with rising prices confirms the effectiveness of the trend.
04 The third amount of money: risk reserve, your "financial lifebuoy."
This part is what I emphasize as "lifesaving money," which must not be touched easily at any time. The crypto market has too many black swan events; without a risk reserve fund, it's easy to be completely cleared out in one go.
Once, the cryptocurrency this friend held suddenly fluctuated significantly, and it looked like it was about to hit the stop-loss line. He decisively used the risk reserve funds to buy on the dip, lowering the average cost, and ultimately when the market rebounded, he not only didn’t lose but also made a small profit.
I told him: "A small loss of 5%-10% is acceptable, but if you lose your principal, you won't even have the qualification to wait for the next wave of market trends." This third amount of money is your "revival armor," allowing you some buffer during extreme market fluctuations.
05 Three iron rules in practice.
In addition to fund allocation, execution is also key. I will share three iron rules from practice, hoping to help you avoid detours.
1. Do not enter the market decisively when the trend is unclear.
When there is no clear trend direction, the best strategy is to wait. The market does not lack opportunities; it lacks patience. I have seen too many people frequently trade during volatile markets out of fear of missing opportunities, resulting in their principal being gradually depleted.
2. Profit should be withdrawn first, cashing in for safety.
Every time he makes a profit, I advise him to withdraw a portion of the profit first. My habit is to withdraw 20% for stable assets every time I make a 100% profit. The numbers in the crypto circle can look beautiful, but if they haven't turned into a balance in the bank account, they are all illusions.
3. A stop-loss is a stop-loss; do not hold a mindset of luck.
Set a 5% stop-loss line; if touched, you must exit the position. Many people refuse to cut losses when they are in the red, resulting in small losses turning into big losses. Preserving principal is more important than anything; only with principal can there be opportunities for future reversals.
06 From 600 to 38,000, the real logic behind it.
This friend's success is not because he caught some hundredfold coin, nor is it because he has any unique technical analysis ability. The fundamental reason is that he strictly adhered to the discipline of fund management.
In the crypto market, surviving longer is more important than making quick profits. Over the past eight years, I have seen too many "star" traders become rich overnight and then go bankrupt quickly, while those seemingly conservative "turtles" ultimately accumulated considerable wealth.
This market never lacks geniuses; what it lacks are disciplined players. True success is not reliant on one or two lucky trades, but on a sustainable risk management system.
Conclusion: The market never neglects those who are serious.
The crypto market is like a process of sifting through sand in a big wave; every year new faces emerge and old faces disappear. Those who can navigate through bull and bear cycles are invariably masters of risk management.
Today's market is no longer a simple frenzy of altcoins but has entered a new stage driven by narratives. In such an environment, fund allocation and risk control capabilities become even more important.
Preserve your principal, and the wind will naturally come. This is not an empty phrase, but a truth I have validated over eight years. I hope this "three amounts of money" strategy can help you go further in the crypto market.
If you have good methods for fund management, feel free to share and exchange in the comments! Follow Xiang Ge to learn more first-hand information and precise points in the crypto circle, becoming your navigation in the crypto world; learning is your greatest wealth!#加密市场观察 #ETH走势分析 $ETH
