Author: David G
Compiled by: TechFlow
David's Bull Market Profit 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.
It's important to emphasize that the focus of this article is on execution - that is, how to actually put the profits of the bull market in your pocket. 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 to use it)
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 choose to 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 (such as BTC, SOL) and Altcoins (smaller market cap tokens) are completely different. For example, going long on SOL and going long on a $500 million market cap altcoin, although both are "going long", the risks and operational methods are completely different. This may seem simple, but many people are unaware of this.
A basic rule is: Never let your Altcoin leverage exposure exceed 1x of your portfolio value. This can avoid excessive risk while still retaining sufficient profit potential.
For example, suppose you have $100,000 in assets, denominated in SOL, and you use it as margin for futures trading (perps). In this case, 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 considerable return. The key is not to be greedy.
For mainstream assets (such as BTC, SOL), at certain times, you can choose a higher leverage exposure, such as 3-5x. But this strategy is only suitable for 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.
Although 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 recommend following these excellent traders:
You can also watch the trading series by @CryptoCred on YouTube to learn more practical trading techniques.
Finally, remember: Never put yourself in a position where you will be liquidated if the trade 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 is only the case if your structure is correct.
Why is that? 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 a behavior of 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%. In this way, you can gradually lock in profits while retaining sufficient upside exposure.
It's important to note that the upside potential of potential coins may far exceed your imagination, so you must keep a portion of your position to benefit from future explosions. Continuing the above example, suppose you have already 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 remaining 30% of your gains may exceed the total of all the profits you took earlier.
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 potentially 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 results.
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 a 50-70% correction during the uptrend, and may even experience multiple such corrections. You need to be psychologically prepared for this kind of volatility, accept it, and remain calm when it happens, without easily panicking and selling.
Through 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 the ability to withstand volatility.
Most people cannot withstand the large fluctuations of 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 fluctuations, you will gradually adapt to these violent ups and downs. Eventually, you may become numb to these fluctuations, and your emotional responses to other aspects of life may also be reduced. But that's okay, at least you will become wealthy as a result. Mental 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 strategy at a high level, not only will you be successful, but you may also achieve great success. 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, remain humble. Always be prepared to lose everything, but even if you do, believe that you can get back up. Summary In the cryptocurrency 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-minded, humble, and confident on this path. Good luck, and see you in the bull market!
