CoinWorld reports:
Author: Duo Nine Source: yourcrypto Translation: Shanooba
Profiting in the cryptocurrency realm is a wonderful thing that everyone loves discussing. It’s enticing and boosts engagement. However, losses are seldom discussed.
Nevertheless, everyone experiences such moments in the cryptocurrency realm. How you overcome them determines whether you’ll ultimately emerge a winner. Next, I’ll share with you my top tips:
### How to Protect Profits
**Buy during market panics, sell during excitement**
**Do not trust altcoins**
**Do not do cryptocurrency full-time**
**Avoid quick profits, as they may lead to destruction**
**Accept failure and losses**
1. **How to Protect Profits**
Realizing profits and selling isn’t enough. You must also protect those profits! Without a clear system in place, the cryptocurrency market can swiftly snatch them away from you.
A recent example involves an individual who lost $400,000 in one trade. Initially, he didn’t invest $400,000; he started with just $500. He lost all his profits in a single trade.
Aside from impulse trading driven by greed, anyone relying on luck for profits will sooner or later encounter misfortune, often resulting in significant losses.
To avoid this situation, follow these steps:
If you’ve been fortunate like the example above, turning $500 into $400,000,
your primary task is to protect those profits.
This means:
Do not trade with profits,
instead move them out. You can convert them into fiat currency (more on that later), or use them to buy gold or Bitcoin. That’s it!
Once you’ve ensured the safety of your profits, you can continue trading with your principal.
In this example, the person above could resume trading with $500 or a bit more, as he can afford it now. Regardless, those profits
should not be re-invested into the market
again.
The benefit here is even if the market turns against you, and you lose your principal ($500), you still have $400,000 in profits as a cushion. This allows you to become a better trader/investor over time and refocus quickly after losses.
Only when you consistently adhere to your strategy and see positive results over the long term can you increase your principal, trading funds, or portfolio. Only then can you consider using a small portion of your profits to increase your trading funds or investments. That’s it.
2. **Buy During Market Panics, Sell During Excitement**
You should only invest your profits during a bear market (a 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 finding asymmetric trades!
Continuing the example above, in the current weak Bitcoin market conditions, I would deposit this $400,000 into USDC (a stablecoin pegged to the US dollar) and earn passive income, just as mentioned in Alpha Post #29’s guide.
Currently yielding 29% annually, this $400,000 could earn that person about $10,000 per month without them doing anything. This is actual income from trading fees and closing positions. If the market continues to decline, they will earn even more.
Right now, I wouldn’t buy Bitcoin or any other token. I would wait for discounts when the market continues to decline. Remember, not buying doesn’t mean losing; you still retain your $400,000 in profits! Protect them at all costs.
Once the market signals a bottom, such as signs that the bear market is ending, you can use Dollar-Cost Averaging (DCA) to gradually buy Bitcoin, using your profits for investment. This way, even if Bitcoin prices fall or consolidate, you can reduce risk and have the opportunity for prices to ultimately recover and reach new highs. With patience, a good entry point can easily double your $400,000 or whatever amount you invest.
Look at the current cycle. If you bought Bitcoin during the previous bear market (when Bitcoin was below $20,000), you beat most of the market. The larger your investment portfolio, the more Bitcoin you should hold. Refer to my guide for more information.
For instance, during the previous bear market, I bought Bitcoin when it was below $20,000. I didn’t perfectly time the bottom at $15,500, but in hindsight, any purchase below $20,000 was a good time. If you need help timing the market better, join our sponsor group. You can also read more about the sponsor group here.
Sure, you can dabble in some altcoins (cryptocurrencies other than Bitcoin), but if your investment portfolio is substantial, they should only constitute a small portion of it. Any practice exceeding this ratio is irresponsible and will eventually lead to losses. Refer to the following for more details. Either way, start selling when you find the market sentiment is euphoric and do not buy back. Protect your profits!
3. **Do Not Trust Altcoins**
Altcoins are not reliable stores of value! At best, they’re decent technologies. Most altcoins don’t even need tokens and their utility as stores of value is very poor in the long run. You wouldn’t use $10,000 to buy tomatoes as a wealth store, would you? Altcoins are like tomatoes, they quickly depreciate.
A common way to lose money in the cryptocurrency market is to buy newly released altcoins and hold onto them long-term. Please don’t do this. It’s akin to buying tulip bulbs and expecting overnight wealth.
This is not a viable strategy.
Altcoins are suitable for short to medium-term speculation. That’s it. Holding them for more than a year will likely result in losses. While there are some exceptions, overall, altcoins are not a magic bullet for long-term success.
They can make you rich overnight, but without following the first point in this article, that wealth won’t last. During bear markets, as buyers disappear, most altcoin prices plummet 90% to 99%. The rapid rise and fall of altcoin prices are due to their lack of liquidity.
This means insiders can easily drive up prices. Once they profit, there’s nothing to stop prices from crashing. Bitcoin, as the most liquid cryptocurrency, doesn’t have this problem.
Fundamentally, only Bitcoin is a reliable store of value and is akin to gold in some respects. Even though Ethereum likes to call itself “ultrasound money,” it doesn’t qualify for such status. In fact, Ethereum is more like oil. Its price fluctuates based on the usage of its network.
4. **Do Not Quit Your Job for Crypto Trading**
95% of traders eventually lose money. Only 5% are winners. Cryptocurrency trading is harder and more relentless than your regular job. It may not be a worthwhile trade-off. Instead, continue your job or find one you enjoy and invest in cryptocurrencies (mainly Bitcoin).
A good way to avoid significant losses is to refrain from trading cryptocurrencies. Instead, invest in this emerging field. When you invest,
buy the casino, not just play the game like trading
. This means you should invest in cryptocurrency infrastructure from a long-term perspective.
In this sense, Ethereum and its derivative Decentralized Finance (DeFi) is a good example. The rise of DeFi has cemented 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 price is never a bad bet. When you buy it, it’s not with the intention to sell it the next day. No, you buy it to hold it long-term and enjoy retirement.
How do you do it?
You can take out Bitcoin loans, or like I did before, earn income from your Bitcoin. When Bitcoin reaches $1 million in the next 10 years, you can retire.
As for altcoins, strive to invest in cryptocurrency infrastructure rather than meme coins. The real opportunities lie there. Don’t allocate too much to altcoins, but a good investment can bring returns of 10 to 100 times.
I can’t tell you which coin will be the next Ethereum, but you can take some risks based on your age. As you grow older and accumulate wealth, reduce exposure to altcoins and focus on Bitcoin for peace of mind. It’s worth it.
5. **Stay Away From Quick Gains, They Lead to Disasters**
Gaining a quick 10x return with meme coins can lead you into emotions of excitement and greed, quickly resulting in poor trades. Don’t put all your funds into such speculation. Never bet everything on a single 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 may change your life, but losing all your funds will too. Meme coins attract because of their potential for quick wealth (or poverty). They are high-risk and only worth trying if your investment portfolio is small.
In this case, taking bigger risks is reasonable. If you already have a substantial cryptocurrency asset package (most of which should be Bitcoin), only speculate with a few percent of your total investment portfolio on meme coins or similar high-risk currencies. That’s it.
If you succeed greatly, sell off and never look back, following the first point of this article. Never sell Bitcoin to buy altcoins. If you find yourself doing this, there’s only one reason: greed. And greed never leads to good outcomes.
6. **Accept Failure and Losses**
In the cryptocurrency realm, failure and losses are inevitable. However, you can absolutely mitigate their impact and reduce the scale of losses. This is what you need to do. The market will do what it wants. Your role is to manage risk.
Making money shouldn’t be your ultimate goal. Instead, strive to maximize your time and freedom.
Bitcoin is
