Rules are dead, the market is alive, but only by protecting your principal can you stay at the table.
I still remember that night three years ago when Bitcoin suddenly plummeted by 20%. I watched helplessly as my account shrank, not knowing what to do. That lesson taught me: in the cryptocurrency market, risk management is not optional, but an essential survival skill.
Over the years, I have walked through countless pitfalls and have summarized my own trading rules. What I share today is not some 'wealth secret', but practical strategies that can genuinely help you avoid these pitfalls. First, we pursue survival, then we pursue profit.
First layer: profit harvesting technique — securing the earnings.
The biggest trap in the market is 'paper wealth.' How many people have doubled their accounts on paper, only to leave in embarrassment? My solution is: profits must be realized in a timely manner.
Specific operation: as long as a single trade profit reaches 10% of the principal, immediately transfer half of the profit to a cold wallet or other safe account. For example, if you made $100 from a $1000 investment, transfer $50 to a 'no withdrawal' savings account; the remaining $50 can continue trading.
There are two benefits to doing this:
Truly locking in profits: the portion withdrawn is no longer affected by market fluctuations.
Maintaining eligibility: the remaining funds allow you to continue participating in the market, not missing out on subsequent opportunities.
I set a strict rule for myself: withdraw profits regularly each week, as naturally as a farmer harvesting crops. This habit allowed me to preserve most of my gains during last year's bull market peak, avoiding losses during the subsequent crash.
Second layer: multi-timeframe layout — not betting on direction in a single dimension.
Beginners like to guess price movements, while experienced traders focus on probabilities. I never believe anyone can predict the market accurately, so my strategy is to improve the odds through multi-dimensional layouts.
Daily chart trend analysis: This is the strategic direction, determining whether the market is primarily bullish or bearish.
4-hour position finding: This is the tactical level, identifying key support and resistance areas.
15-minute precise entry: This is specific execution, looking for the best entry point.
In actual operations, I will simultaneously lay out two trades:
Trend trade: enter the market in the direction of the trend after the price breaks through a key resistance level, setting the stop loss below the previous low.
Rebound trade: Place limit orders in overbought or oversold areas on the 4-hour chart to capture retracement profits.
The key is to strictly control the stop loss for each trade within 1.5% of the principal, with a profit target set to be at least three times the stop loss. Even if the directional judgment is wrong, I can often recover losses through another trade, or even profit in a volatile market.
Third layer: using the risk-reward ratio to overcome the market — no need to pursue a high win rate.
The most counterintuitive truth is: you can make money without a high win rate. Many beginners pursue winning every trade, resulting in small gains and large losses, ultimately leading to an overall loss.
My strategy is to pursue a risk-reward ratio of at least 3:1. That is, the profit target is more than three times the risk amount. Even if the win rate is only 40%, it will still be profitable in the long run.
Specific capital management plan:
Position management: Total capital is divided into 10 parts, with only 1 part used for each trade, holding a maximum of 3 positions simultaneously.
Emotional circuit breaker: stop immediately after two consecutive losses, rest for at least 2 hours to avoid 'revenge trading.'
Profit locking: After the overall account profit doubles, withdraw 20% and allocate it to stablecoins or other stable assets such as government bonds.
The core of this system is acknowledging that you can be wrong, so each risk taken requires a sufficiently high return compensation. I don’t pursue heroic precision predictions; I only engage in trades where the probabilities are in my favor.
Survival is the top priority
After three years of practical experience, my biggest realization is: the market always has opportunities, but the premise is that you can stay in the game.
Those who chase every hot trend, blindly use high leverage, and stubbornly hold without stop losses have long disappeared into the crowd. And I, relying on this seemingly clumsy method, not only survived but also achieved stable growth.
The essence of trading is not to show off skills but to survive continuously. There’s no need to watch the market day and night, nor to chase every hot trend; just strictly follow the rules, and the market will naturally give you the returns you deserve.
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