Article source: Deep Tide TechFlow
Author: David G
Translation: Deep Tide TechFlow
David's Guide to Making Money in a Bull Market: How to Make Money and Avoid Liquidation
Today, let's be a little serious and share some experiences I've summarized over the years through painful lessons, hoping you can avoid stepping on some pits by reading this article.
It is important to emphasize that the focus of this article is on execution—how to truly pocket the profits of a bull market. I will not discuss research, analysis, or asset selection (which are relatively simple parts).
The three key elements to successfully trading in a bull market are:
Portfolio Structure
Use of Leverage (When to Use, How to Use)
On-chain Operations
Portfolio Structure
The way you structure your portfolio largely depends on your capital size. 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 choppy market or bear market, when I sell assets, I typically choose to convert them into stablecoins (stables), but in a bull market, I prefer to exchange profits for more mainstream assets I believe in. The advantage of BTC and SOL is that they are not only quality assets but can also be used as collateral for lending, thus enhancing capital efficiency.
Currently, my portfolio is almost entirely composed of BTC and SOL. However, as the market cycle progresses, I will gradually convert a larger proportion of my assets into stablecoins to lock in profits.
Leverage Usage Strategy
(The following advice is suitable for beginners in leveraged trading. If you are already an experienced trader, you can operate according to your own strategy.)
First, forget the advice you see on Crypto Twitter (CT) about leveraged trading. Leverage is just a tool to enhance capital efficiency and seize opportunities when the risk/reward ratio (r/r) is asymmetric.
It is important to note that the strategies for leveraged trading of mainstream assets (like BTC, SOL) and altcoins (tokens with smaller market caps) are completely different. For example, going long on SOL and going long on a $500 million market cap small coin may seem like 'going long' on the surface, but the risks and operational methods are completely different. This may seem simple, but many people are unaware of it.
A basic rule is: never let your altcoin leveraged exposure exceed 1x the market value of your portfolio. This can help avoid excessive risk while also retaining enough profit space.
For example: Suppose you have $100,000 in assets, priced in SOL, and you use it as margin for futures trading (perps). In this case, your long position on altcoins should not exceed $100,000. Because altcoin prices are highly volatile, if you're not a top trader, there's a high chance of liquidation. However, in this example, you can still achieve a 2x long exposure (100,000 in SOL + 100,000 in altcoins), which is already a considerable profit. The key is not to be greedy.
For mainstream assets (like BTC, SOL), at certain specific times, you can opt for higher leverage exposure, such as 3-5 times. However, be aware that this strategy is only suitable for scenarios where the risk is clear and the expected returns are extremely high.
Key Points of Leveraged Trading
When using leverage, the most important point is: the higher the leverage, the earlier you should take profits.
While there is still much to discuss about perpetual contract (perp) trading, I cannot elaborate here due to time constraints. I recommend following a few excellent traders:
@Awawat_Trades
@Tradermayne
@LomahCrypto
Additionally, you can watch @CryptoCred's YouTube trading series to learn more practical trading tips.
Finally, always remember: never put yourself in a position where a reversal in trading can lead to liquidation. This is the most fundamental survival rule in trading.
On-chain trading: Seize potential coins in a bull market
Now comes the more interesting part. If your portfolio is structured reasonably, on-chain trading could bring you extremely high returns, but be aware that this is only the case if your structure is correct.
Why do I say this? Because many people are incorrectly engaging in 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, the only thing you need to focus on is seizing those opportunities that can bring enormous returns. Because these opportunities are the keys that can truly change the scale of your portfolio and even alter 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 contradict the traditional investment idea of 'diversification', but as Warren Buffet said, 'Diversification is the behavior of the weak.'
The crypto market is a reflexive market, which means that when an asset starts to perform exceptionally well, it often attracts more funds, making it even better. You only need one or two of these super potential coins to change your life, and this should become your core goal in on-chain trading.
How to Handle Positions in Potential Coins
Once you grasp a major potential coin, never liquidate your position all at once. You should gradually reduce your holdings during the uptrend while retaining a certain position to continue participating in potential upside.
For example, if you buy a token when its market cap is 5 million, you can sell 10% when it rises to 50 million; sell another 10% when it reaches 100 million; and sell another 10% when it hits 250 million. This way, you gradually lock in profits while retaining enough upside exposure.
It is particularly important to remind you that the upside potential of potential coins may far exceed your imagination, so be sure to leave a portion of your position to gain greater profits in future surges. Continuing from the previous example, suppose you sold 70% of your position when the market cap reached 500 million, but decided to keep the remaining 30% and wait until the market cap reaches 3 billion to sell. Then, if it really rises to 3 billion, the profit from the remaining 30% may exceed all the profits you made from the previous staggered sales.
This is exactly the meaning of the 'staggered selling' strategy: to reduce risk by gradually locking in profits while retaining a portion of your position to participate in potential larger gains. When facing potential coins, patience and strategy are often more important than short-term gains because once you seize such an opportunity, it may completely change your investment outcome.
Mental Preparation: How to Handle Price Fluctuations
The hardest part of holding a large position, especially when it constitutes a large proportion of your portfolio, is dealing with severe price fluctuations. No matter how excellent the token is, it will certainly experience 50-70% corrections during its upward journey, and this may happen multiple times. You need to mentally prepare yourself in advance to accept such fluctuations and remain calm when they occur, avoiding panic selling.
Through the above strategies, you can more effectively utilize the opportunities of on-chain trading, seize super potential coins in a bull market, while avoiding potential profits lost due to emotional decision-making.
Remember, in the crypto market, your profits come from your ability to withstand volatility.
Most people cannot withstand significant market fluctuations, which is also why they cannot achieve great success. Volatility is your friend; it is the core reason why crypto assets are so attractive and profitable.
As you experience more fluctuations, you will gradually adapt to these severe ups and downs. Ultimately, 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'll become rich because of it.
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 trading strategies at a high level, not only can you succeed, but you may also achieve great accomplishments.
Staying clear-headed is key. Whether it's praying, meditating, or walking, find a method that works for you and make these activities part of your daily routine to help you stay focused and rational while trading.
At the same time, stay humble. Always be prepared to lose everything, but even if you do lose, believe that you can rise again.
Summary
In the crypto market, volatility is both a challenge and an opportunity. Those who can withstand volatility are the ones who can seize opportunities and achieve great success. May you always remain clear-headed, humble, and confident on this path.
Good luck, and see you in the bull market!
