Rules are more important than luck, especially in the volatile cryptocurrency market.
In 2017, I entered the cryptocurrency market with $5,000. Like many others, I stared at the candlestick charts until late at night, my emotions fluctuating with the price movements. After experiencing several near liquidation crises, I realized I needed to establish my own trading system.
Five years have passed, and this system has allowed my account to achieve a stable upward growth at a 45-degree angle, with the maximum drawdown never exceeding 8%. Today, what I want to share is not some 'wealth code', but the core rules that have allowed me to survive in this market.
Profit tiered take profit: Let compound interest become your friend
The first lesson I learned is that 'greed is the greatest enemy.' Many traders have made profits, but ultimately lose because they are greedy for more. Now I follow a simple rule: every time profits reach 10%, I withdraw 50% of the profits to a cold wallet.
This method sounds simple, but most people find it hard to execute strictly. I once tracked that according to this strategy, over five years, I withdrew profits 37 times, with the highest weekly withdrawal reaching $180,000. Some of these withdrawn profits were stored in stable assets, while another portion served as 'risk isolation funds' to ensure that a single misjudgment does not lead to total loss.
The core principle is: always use profits to compound positions, rather than risking the principal.
Long-short hedged grid: no predictions, only responses.
Traditional trading thinking always asks 'is it going up or down next,' while my approach is completely different. I use three-cycle directional analysis, simultaneously setting up long and short positions on the same cryptocurrency, with stop losses set within 1.5% and profit targets of over 5 times.
For example, in a volatile market where prices fluctuate within a certain range, I can set long positions near support levels and short positions near resistance levels. No matter which direction the price breaks, I can ensure that one side of the position is profitable. Even in extreme events like LUNA, this method achieved a 42% gain in a single day.
The key is to free yourself from the obsession with direction, and instead base your layout on probabilities, allowing market fluctuations to work for you.
Small losses, big profits: the risk-reward ratio is key.
My trading win rate is only 38%, but I have been able to consistently profit over five years, relying on strict risk-reward management. For each trade, I aim for at least a 4.8:1 risk-reward ratio, meaning for every $1 risked, I strive to earn $4.8 in profit.
This means I often incur small losses, but once my directional judgment is correct, I can gain enough profit to cover previous small losses. This strategy requires extreme discipline, as human nature tends to seize every small profit while allowing losses to expand.
The market doesn’t fear your mistakes; it fears that one mistake will leave you unable to recover. As long as you ensure your survival, there will always be opportunities to seize.
My practical iron rule
These rules are ingrained in my trading DNA:
Funds are divided into 10 parts, with a single position not exceeding 1 part, and total positions not exceeding 3 parts.
After two consecutive losses, force a shutdown to rest; do not make 'revenge trades.'
For every time the account doubles, withdraw 20% to purchase stable assets.
These rules may seem simple, but the challenge lies in consistently executing them. Especially during consecutive losses, the instinct is to increase position sizes to try to recover losses, which often marks the beginning of even greater losses.
Conclusion: Let the exchange work for you
I never believe in a perfect trading strategy, nor do I seek to buy at the lowest point or sell at the highest point. What I do is stick to a proven system, continuously executing and fine-tuning.
The greatest insight from my five years in trading is: in this market, those who survive are not the smartest, but the most disciplined. I hope my sharing can help you avoid some pitfalls and establish your own trading system.
Feel free to share your trading experiences and insights in the comments section, so we can learn and improve together!
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