Coinworld.com Reports:
Author: Duo Nine Source: yourcrypto Translation: Shan Ou Ba
Making profits in the cryptocurrency field is a great thing that everyone likes to talk about. It is attractive and can increase engagement. However, people rarely talk about losses.
Anyway, everyone will experience such moments in the cryptocurrency field. How you overcome them determines whether you can ultimately become a winner. Next, I will share my best tips with you:
How to protect profits
Buy during market panic, sell during excitement
Do not trust altcoins
Do not do cryptocurrency full-time
Avoid quick profits, as they will lead to destruction
Accept failure and losses
1. How to protect profits
Closing and selling is not enough. You must also protect these profits! If you have not established a clear system, the cryptocurrency market can quickly take them away from you.
A recent example is a guy who lost $400,000 in one trade. He didn’t initially invest $400,000. He initially only invested $500. He lost all his profits in one trade.
In addition to impulsive trading caused by greed, anyone who profits by luck will sooner or later encounter misfortune, and the ultimate result is loss.
To avoid this situation, please follow these steps:
If you are as lucky as the person above who turned $500 into $400,000,
then your top priority is to protect those profits.
This means
do not trade with profits
, but transfer them out. You can convert them into fiat currency (will be explained in detail later) or use them to buy gold or Bitcoin. That’s it!
After you have ensured the safety of your profits, you can continue to trade with your principal.
In this example, the person above can trade again with $500 or a little more, because he can afford it now. In any case, those profits should
not be invested in the market again
.
The benefit of doing this is that even if the market is unfavorable to you and you lose your principal ($500), you still have $400,000 in profits as a guarantee. This will make you a better trader/investor over time and allow you to refocus faster after a loss.
Only when you stick to your strategy in the long run and achieve good results can you increase your principal, trading funds, or investment portfolio. Only then can you consider using a small portion of the profits to increase your trading funds or investments. That’s it.
2. Buy during market panic, sell during excitement
You should only invest your profits during a bear market (a period of market downturn), ideally when people start tweeting that Bitcoin is dead. This is the best time to start buying and taking risks. Always strive to
maximize your risk/reward ratio
, which means looking for asymmetric trades!
Continuing with the example above, in the current market conditions where Bitcoin appears weak, I would deposit the $400,000 into USDC (a stablecoin pegged to the US dollar) and earn passive income, as mentioned in Alpha Post #29 Guide.
The current annual yield is 29%, and this $400,000 can allow that person to earn about $10,000 per month without doing anything. This is the actual profit from trading fees and closing positions. If the market further declines, he will earn more.
I am not buying Bitcoin or any other tokens now. I will wait for discounts when the market continues to decline. Remember, you don’t lose if you don’t buy, and you still retain your $400,000 profit! Protect them at all costs.
Once the market gives a signal of a bottom, such as signs that the bear market is about to end, you can gradually buy Bitcoin through dollar-cost averaging (DCA) using your profits for investment. In this way, even if the price of Bitcoin falls or consolidates, you can reduce risks and have the opportunity for the price to eventually recover and reach new highs. If you have patience, a good entry point can easily double your $400,000 or any amount you invest.
Look at the current cycle. If you bought Bitcoin during the previous bear market (when the price of Bitcoin was below $20,000), you beat most people in the market. The larger your investment portfolio, the more Bitcoin you should hold. Refer to my guide for more information.
For example, in the previous bear market, I bought Bitcoin when it was below $20,000 with my profits. I didn’t perfectly catch the bottom at $15,500, but in hindsight, any purchase below $20,000 was a good opportunity. If you need help timing the market better, join our supporter group. You can also read more about the supporter group here.
You can certainly play with some altcoins (cryptocurrencies other than Bitcoin), but if your investment portfolio is large, they should only account for a small portion of your overall investment portfolio. Any practice that exceeds this proportion is irresponsible and will eventually lead to losses. See below for the reasons. In any case, when you find the market sentiment is excited, start selling and don’t buy back. Protect your profits!
3. Do not trust altcoins
Altcoins are not reliable stores of value! At best, they are just some nice technologies. Most altcoins don’t even need tokens and have very poor utility as a store of value in the long run. Would you buy tomatoes for $10,000 as a wealth storage? Altcoins, like tomatoes, will depreciate quickly.
One common way to lose money in the cryptocurrency market is to buy newly released altcoins and hold them for the long term. Please don’t do this. It’s like buying tulip flowers and expecting to get rich overnight.
This is not a feasible strategy.
Altcoins are suitable for short to medium-term speculation. That’s it. Holding them for more than a year, you are likely to suffer losses. Although there are some exceptions, in general, altcoins are not the panacea for long-term success.
They can make you rich overnight, but if you don’t follow the first point of this article, this wealth will not last. During a bear market, as buyers disappear, the prices of most altcoins will plummet by 90% to 99%. The reason for the rapid rise and fall of altcoin prices is their lack of liquidity.
This means that insiders can easily drive up prices. Once they make a profit, no one can stop the price from plummeting. Bitcoin, as the most liquid cryptocurrency, does not have this problem.
Fundamentally, only Bitcoin is a reliable store of value and is similar to gold in some ways. Even though Ethereum likes to call itself “ultrasound money,” it does not qualify as such. In fact, Ethereum is more like oil. Its price fluctuates based on the usage of its network.
4. Do not quit your job for cryptocurrency trading
95% of traders will eventually lose money. Only 5% are winners. Cryptocurrency trading is harder than your daily job and is full-time. This may not be a profitable exchange. Instead, you should continue with your job or find a job you like and invest in cryptocurrency (primarily Bitcoin).
A good way to avoid large losses is not to trade cryptocurrencies. Instead, you can invest in this emerging field.
Buy the casino instead of playing the game like trading
. This means you should invest in the infrastructure of cryptocurrencies from a long-term perspective.
In this sense, Ethereum and its derivative decentralized finance (DeFi) are good examples. The rise of DeFi has achieved Ethereum’s current position (the oil of DeFi). Similarly, Bitcoin is now and will always be a reliable store of value.
If you want to protect your wealth, buying Bitcoin at a discount will never be a bad bet. When you buy it, you don’t intend to sell it the next day. No, you buy it to hold it for the long term and enjoy retirement.
How to do it?
You can mortgage Bitcoin for a loan or, as I did before, earn income with your Bitcoin. When Bitcoin reaches $1 million in the next 10 years, you can retire.
As for altcoins, strive to invest in the infrastructure of cryptocurrencies rather than their meme coins. The real opportunities are there. Don’t invest too much in altcoins, but a good investment can bring a return of 10x to 100x.
I cannot tell you which coin will become the next Ethereum, but you can take some risks based on your age. As you age and accumulate wealth, reduce your exposure to altcoins and focus on Bitcoin for inner peace. It’s worth it.
5. Stay away from quick gains, they lead to disasters
Gaining 10x returns quickly through meme coins can immerse you in excitement and greed, and quickly lead to bad trades. Do not invest all your funds in such speculation. Never go all-in on a certain altcoin. You can try a small amount of speculation, but keep it within a small portion of your total investment portfolio.
Earning your annual salary in one trade can change your life, but losing all your funds can also do the same. Meme coins are attractive because they have the potential to make you quickly rich (or poor). They are highly risky and are only worth trying when your investment portfolio is small.
In this case, it is reasonable to take greater risks. If you already have a substantial cryptocurrency asset package (of which most should be Bitcoin), then only use a few percent of your total investment portfolio to speculate on meme coins or similar high-risk currencies. That’s it.
If you succeed big, then sell and never look back, and follow the first point of this article. Never sell Bitcoin to buy altcoins. If you find yourself doing this, there is only one reason: greed. And greed never leads to good results.
6. Accept failure and losses
In the cryptocurrency field, failure and losses are inevitable. But you can definitely mitigate their impact and reduce the scale of losses. This is what you need to do. The market will do what it wants to do. Your role is to manage risk.
Making money should not be your ultimate goal. Instead, you should strive to maximize your time and freedom.
Bitcoin is part of the answer. Most people need to lose a large amount of money playing meme coins before they realize this.
By accepting your losses, you will refocus on important things faster and improve your risk management. The top 5% of winning traders in this game succeed because they manage risk correctly. This means they often lose, but the amount of their losses is small, and they win big a few times every year.
That’s what you really need. Accepting losses is part of this process, but make them small enough not to throw you off balance. It takes time and discipline.
Be patient with yourself and find your
comfort zone
. It may even have nothing to do with cryptocurrencies!
