Today, I'll be a bit more serious and share some of the experiences I've gained through painful lessons over the years, hoping you can avoid some of the pitfalls through reading this article.
The key point of this article is execution - that is, how to truly pocket the profits of the bull market. I won't discuss research, analysis, or asset selection (these are actually relatively simple parts).
The three key factors for successful trading in a bull market are:
- The structure of the investment portfolio
- The use of leverage (when and how to use it)
- On-chain operations
Investment Portfolio Structure
The way the investment portfolio is constructed 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 investment 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 for borrowing, 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 leveraged 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 leveraged trading. Leverage is just a tool to improve capital efficiency and seize opportunities when the risk/reward ratio is asymmetric.
It's important to note that the strategies for leveraged trading of mainstream assets (such as 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, although both are "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 leveraged position 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. 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 get liquidated. But in this example, you can still achieve a 2x portfolio long position ($100,000 in SOL + $100,000 in Altcoins), which is already a very impressive return. The key is not to be greedy.
For mainstream assets (such as BTC, SOL), at certain times, you can choose a higher leveraged position, such as 3-5x. But note that this strategy is only suitable for scenarios with clear risks and extremely high expected returns.
Further Reading: Is the Altseason Coming? In Addition to BTC.D, These Three Indicators Can Help You Determine
Key Points of Leveraged Trading
The most important point 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 suggest following these excellent traders:
You can also watch the trading series of @CryptoCred on YouTube to learn more practical trading techniques.
Finally, remember: never put yourself in a position where a trade going against you will result in a liquidation. This is the most fundamental rule of survival in trading.
On-Chain Trading: Capturing the Potential Coins in a Bull Market
The next part is more interesting. If your portfolio structure is reasonable, 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 making mistakes in their on-chain trading. The core goal of on-chain trading is: to pursue excess returns, not to accumulate capital through small profits. In a bull market environment, the only thing you need to focus on is to capture those opportunities that can bring you huge returns. Because these opportunities are the key to truly changing the scale of your investment 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 be at odds with the traditional investment concept of "diversification," but as Warren Buffet said, "Diversification is a behavior for the weak."
The cryptocurrency market is a reflexive market, which means that when an asset starts to perform well, it often attracts more capital inflows, 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.
Further Reading: Is Ethereum Doomed? 21Shares Refutes: ETH Has Huge Potential! Just Like Amazon in the 1990s
How to Handle the Positions of Potential Coins
Once you have captured a high-potential coin, never clear the position all at once. You should gradually reduce the position as it rises, while retaining a certain portion to continue participating in the potential upside.
For example, if you bought a token when its market cap was 5 million, 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 enough upside position.
It is particularly important to note that the upside potential of potential coins may far exceed your imagination, so you must leave a portion of the position to capture even greater gains in the future. Continuing the above example, let's say you have already sold 70% of the 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 had previously taken in batches.
This is the essence of the "batch selling" strategy: to reduce risk by gradually locking in profits, while retaining a portion of the position to participate in the potential for even greater gains. When facing potential coins, patience and strategy are often more important than short-term gains, because once you have captured such an opportunity, it can fundamentally change your investment results.
Psychological Preparation: How to Deal with Price Volatility
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% pullbacks during the uptrend, and may even experience multiple such occurrences. You need to be psychologically prepared in advance, accept such volatility, and remain calm when it happens, without easily panicking and selling.
Through the above strategies, you can more effectively utilize the opportunities of on-chain trading, capture super potential coins in the bull market, and avoid missing out on potential gains due to emotional decision-making.
Remember, in the cryptocurrency 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, it is the core reason why cryptocurrency assets are so attractive and so profitable.
As you experience more and more volatility, you will gradually adapt to these violent ups and downs. Eventually, you may become numb to these fluctuations, and even your emotional responses to other aspects of life may diminish. But that's okay, at least you will become wealthy as a result.
Mindset Management: The Real Battlefield of Trading
Trading ultimately is a psychological battle, and your biggest opponent is yourself. If you can learn to execute your trading strategies at a high level, then not only will you succeed, but you may also achieve great accomplishments.
Maintaining a clear mind is key. Whether it's praying, meditating, or taking a walk, find a way that suits you and make it 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 cryptocurrency market, volatility is both a challenge and an opportunity. Those who can withstand the volatility are the ones who can seize the opportunities 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!
