Author:David G
Compiled by: TechFlow
David's Bull Market Money-Making Guide: How to Make Money and Avoid Liquidation
Today, I'll be a bit more serious and share some of the lessons I've learned through painful experiences over the years, hoping you can avoid some of the pitfalls by reading this article.
The key point to emphasize is execution - that is, how to actually pocket the profits of a bull market. I won't discuss research, analysis, or asset selection (which are relatively simple parts).
The three key factors for successful trading in a bull market are:
Portfolio structure
Use of leverage (when and how)
On-chain operations
Portfolio Structure
The way you construct your portfolio largely depends on the size of your capital. Regardless of whether your assets are $100,000, $1 million, or $10 million, the following core principles apply.
First, your portfolio should be based on high-quality collateral assets. For me, this means BTC and SOL. In a volatile or bear market, when I sell assets, I usually convert to stablecoins, but in a bull market, I tend to use profits to acquire more of the mainstream assets I'm bullish on. The advantage of BTC and SOL is that they are not only high-quality assets, but can also be used as collateral to borrow, thereby improving capital efficiency.
Currently, my portfolio is almost entirely composed of BTC and SOL. But as the market cycle progresses, I will gradually shift more of my assets to stablecoins to lock in profits.
Leverage Usage Strategy
(The following suggestions are suitable for new leverage traders. If you are an experienced trader, you can operate according to your own strategy.)
First, forget the advice you've seen on Crypto Twitter (CT) about leverage trading. Leverage is just a tool to improve capital efficiency and seize opportunities when the risk/reward ratio (r/r) is asymmetric.
It's important to note that the strategies for leveraging mainstream assets (like BTC, SOL) and Altcoins (smaller-cap tokens) are completely different. For example, going long on SOL and going long on a $500 million market cap small coin, while both appear to be "going long", the risks and operational methods are completely different. This may seem simple, but many people are not aware of this.
A basic rule is: Never let your Altcoin leverage exposure exceed 1x your portfolio value. This can avoid excessive risk while still leaving enough room for profits.
For example, if you have $100,000 in assets denominated in SOL, and you use it as margin for futures trading (perps), your long position in Altcoins should not exceed $100,000. Because Altcoin prices fluctuate greatly, if you are not a top-tier trader, you are likely to be liquidated. But in this example, you can still achieve a 2x portfolio long exposure ($100,000 in SOL + $100,000 in Altcoins), which is already a very significant return. The key is not to be greedy.
For mainstream assets (like BTC, SOL), at certain times, you can choose a higher leverage exposure, such as 3-5x. But this strategy only applies to scenarios with clear risks and extremely high expected returns.
Key Points for Leverage Trading
The most important thing when using leverage is: The higher the leverage, the earlier you should take profits.
While there is a lot more to discuss about perpetual contract (perp) trading, I can't go into it in detail here due to time constraints. I suggest following these excellent traders:
You can also watch the trading series by @CryptoCred on YouTube to learn more practical trading techniques.
Finally, please remember: Never let yourself be in a position where your trade will be liquidated if it goes against you. This is the most basic rule of survival in trading.
On-Chain Trading: Seize the Potential Coins in the Bull Market
Now for the more interesting part. If your portfolio structure is sound, on-chain trading can potentially bring you extremely high returns, but please note that this only applies if your structure is correct.
Why do I say this? Because many people are doing on-chain trading incorrectly. The core goal of on-chain trading is: Pursue excess returns, not to accumulate capital through small profits. In a bull market environment, the only thing you need to focus on is seizing the opportunities that can bring huge returns. Because these opportunities are the key to significantly changing the scale of your portfolio, and even changing the trajectory of your life.
In on-chain trading, your goal is to find and hold a few "super potential coins" that can far outperform other assets. This may go against the traditional investment principle of "diversification", but as Warren Buffet said, "Diversification is for the weak."
The crypto market is a reflexive market, which means that when an asset starts to perform well, it often attracts more capital inflow, making it even better. You only need one or two of these super potential coins to change your life, and this should be the core goal of your on-chain trading.
How to Manage Positions in Potential Coins
Once you've caught a big potential coin, never clear your position all at once. You should gradually reduce your position as it rises, while retaining a certain position to continue participating in the potential upside.
For example, if you bought a token when it had a $5 million market cap, when it reaches $50 million, you can sell 10%; when it reaches $100 million, sell another 10%; when it reaches $250 million, sell another 10%. Lock in profits in this way, while retaining enough upside exposure.
It's important to note that the upside potential of potential coins may far exceed your imagination, so you must leave a portion of your position to participate in future explosions. Continuing the above example, let's say you've sold 70% of your position when the market cap reached $500 million, but you decide to keep the remaining 30% and wait for it to reach $3 billion to sell. Then, if it really does reach $3 billion, the gains from that remaining 30% may exceed the total profits you've already taken.
This is the meaning of the "gradual sell-off" strategy: by gradually locking in profits, you can reduce risk while retaining a portion of your position to participate in potential larger upside. When facing potential coins, patience and strategy are often more important than short-term gains, because once you catch such an opportunity, it can completely change your investment outcome.
Psychological Preparation: How to Deal with Price Fluctuations
The hardest part of holding a large position, especially when it makes up a large portion of your portfolio, is how to deal with the violent price fluctuations. No matter how excellent the token is, it will definitely experience 50-70% corrections, and may even have multiple such pullbacks during the uptrend. You need to be psychologically prepared for this kind of volatility, accept it, and remain calm without easily panicking and selling.
With the above strategies, you can more effectively utilize the opportunities in on-chain trading, seize the super potential coins in the bull market, and avoid missing out on potential gains due to emotional decision-making.
Remember, in the crypto market, your gains come from your ability to withstand volatility.
Most people cannot withstand the large fluctuations in the market, which is why they cannot achieve great success. Volatility is your friend, and it is the core reason why crypto assets are so attractive and so profitable.
As you experience more and more volatility, you will gradually adapt to these dramatic ups and downs. Eventually, you may become numb to these fluctuations, and your emotional responses to other aspects of life may also diminish. But that's okay, at least you will become wealthy as a result.
Mindset Management: The Real Battlefield of Trading
Trading is ultimately a psychological battle, and your biggest opponent is yourself. If you can learn to execute your trading strategies at a high level, not only will you be successful, but you may also achieve great accomplishments.
Maintaining a clear mind is key. Whether it's prayer, meditation, or taking a walk, find a way that suits you, and make these activities a daily habit to help you stay focused and rational in your trading.
At the same time, maintain humility. Always be prepared to lose everything, but even if you do, believe that you can get back up again.
Conclusion
In the crypto market, volatility is both a challenge and an opportunity. Those who can withstand the volatility can seize the opportunity and achieve great success. May you always remain clear-headed, humble, and confident on this journey.
Good luck, and see you in the bull market!
