Author: David G

Compiled by: TechFlow

David's Bull Market Money Making Guide: How to Make Money and Avoid Getting Blown Up

Today I want to be a little more serious and share some of the experiences I have learned through painful lessons over the years. I hope that by reading this article, you can avoid some pitfalls.

It is important to emphasize that this article is about execution - how to actually pocket the profits of a bull market. I will not discuss research, analysis, or asset selection (which are relatively easy parts).

The three keys to successful trading in a bull market are:

  • Portfolio Structure

  • Use of leverage (when and how to use it)

  • On-chain operations

Portfolio Structure

How you construct your portfolio depends largely on the size of your bankroll. Whether you have $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 prefer to use profits in exchange for more mainstream assets that I am optimistic about. 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 consists almost entirely of BTC and SOL. But as the market cycle progresses, I will gradually convert a larger proportion of my assets into stablecoins to lock in profits.

Leverage Use Strategy

(The following suggestions are for beginners of leveraged trading. If you are already an experienced trader, you can follow your own strategy.)

First, forget the advice you see on Crypto Twitter (CT) about leveraged trading. Leverage is simply a tool to improve capital efficiency and take advantage of opportunities when the risk/reward ratio (r/r) is asymmetric.

It is important to note that leveraged trading of mainstream assets (such as BTC, SOL) and altcoins (tokens with smaller market capitalization) are completely different strategies. For example, long SOL and long a small currency with a market capitalization of $500 million, although both appear to be "long", the risks and operation methods are completely different. This seems simple, but many people do not realize it.

A basic rule is: never let your altcoin leverage exposure exceed 1 times the market value of your portfolio . This will avoid excessive risk while leaving enough room for profit.

For example: suppose you have $100,000 worth of 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 trader, you are likely to get blown up. But in this example, you can still achieve 2x portfolio long exposure ($100,000 SOL + $100,000 altcoins), which is already a very considerable gain. The key is not to be greedy.

For mainstream assets (such as BTC, SOL), you can choose a higher leverage exposure, such as 3-5 times, at certain times. However, it should be noted that this strategy is only suitable for scenarios with clear risks and extremely high return expectations.

Key points of leverage trading

The most important thing to remember when using leverage is that the higher the leverage, the sooner you should take profit .

Although there is a lot more to discuss about perpetual swaps (perp) trading, I cannot go into it here due to time constraints. I recommend following a few excellent traders:

Additionally, watch @CryptoCred ’s YouTube trading series to learn more practical trading tips.

Finally, please remember: never put yourself in a position where you will be blown up if the trade goes against you. This is the most basic rule of survival in trading.

On-chain transactions: Seize the potential coins in the bull market

Now comes the more interesting part. If your portfolio is structured properly, then on-chain trading may bring you extremely high returns, but please note that this is only true if you structure it correctly .

Why do I say that? Because many people are doing on-chain transactions incorrectly. The core goal of on-chain transactions is to pursue excess returns rather than accumulate principal through small profits. In a bull market environment, the only thing you need to focus on is to seize opportunities that can bring huge returns. Because these opportunities are the key to truly changing the size of your investment portfolio and even changing the trajectory of your life.

In on-chain transactions, your goal is to find and hold a few "super potential coins" that can far surpass other assets. This may be contrary to the concept of "diversified investment" emphasized in traditional investment, but as Warren Buffet said, "diversified investment is the behavior of the weak."

The crypto market is a reflexive market, which means that when an asset starts to perform well, it tends to attract more money to flow in, making it even better. You only need one or two such super potential coins to change your life, which should be the core goal of your on-chain transactions.

How to deal with the potential coin position

Once you catch 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 to participate in the potential upside.

For example, if you buy a token at a market value of 5 million, you can sell 10% when it rises to 50 million, sell another 10% when it rises to 100 million, and sell another 10% when it rises to 250 million. In this way, you can gradually lock in gains while retaining sufficient upside exposure.

It is important to note that the potential for a coin to rise may be far beyond your imagination, so be sure to keep a portion of your position in order to gain greater returns in future outbreaks. Continuing with the above example, suppose you have sold 70% of your position when the market value reaches 500 million, but decide to keep the remaining 30% and wait for the market value to reach 3 billion before selling. Then, if it really rises to 3 billion, the remaining 30% of the profit may exceed the total profit of all the previous batches you sold.

This is exactly the significance of the "sell in batches" strategy: reduce risk by gradually locking in gains, while retaining a portion of the position to participate in potential larger gains. When facing potential coins, patience and strategy are often more important than short-term gains, because once such an opportunity is seized, it may completely change your investment results.

Mental preparation: How to deal with price fluctuations

The hardest part of holding a large position, especially when it accounts for a large percentage of your portfolio, is how to deal with the violent price fluctuations. No matter how good the token is, it will definitely experience a 50-70% pullback during its rise , and it may even occur multiple times . You need to be mentally prepared in advance to accept such fluctuations, and stay calm when it happens, and don't panic sell easily.

By using the above strategies, you can more effectively utilize on-chain trading opportunities, seize super potential coins in the bull market, and avoid missing out on potential gains due to emotional decisions.

Remember, in the crypto markets, your returns come from your ability to withstand volatility.

Most people can’t handle the large swings in the market, which is why they can’t achieve massive success. Volatility is your friend , and it’s at the heart of what makes crypto assets so attractive and so profitable.

As you experience more and more fluctuations, you will gradually get used to the ups and downs. Eventually, you may become numb to them and even less emotionally reactive to other aspects of your life. But that's okay, at least you will be richer for it.

Mentality 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, you will not only be successful, but you may achieve great success.

Keeping a clear mind is key. Whether it is prayer, meditation, or taking a walk, find a way that works for you and make these activities your daily habits to help you stay focused and rational in your trading.

At the same time, stay humble . Always be prepared to lose everything, but even if you do lose it, believe that you can stand up again.

Summarize

In the crypto market, volatility is both a challenge and an opportunity. Only those who can withstand volatility can seize opportunities and achieve great success. May you always remain sober, humble, and confident on this journey.

Good luck, and see you in the bull market!