David G, an overseas KOL and advisor to the meme trading platform Moonshot, shared a bull market profit guide today on X, hoping that readers can avoid repeating mistakes after reading it.
Original text: (David’s short guide to making money in bull markets)
Author: David G
Translated by: Zombit
Below is the original text translation:
Please note that this article is mainly about "execution capability," which is how to exit with a lot of money. I will not cover research, analysis, or asset selection (that part is relatively simple).
In bull market trading, you need to focus on the following three core elements:
Portfolio Structure
Use of Leverage (How and When to Use)
On-chain Operations
Portfolio Structure
This largely depends on your capital scale; if you have $100,000, $1 million, or $10 million, the advice will differ, but the following core concepts generally apply.
You should value your portfolio with high-quality collateral, for me, it is BTC and SOL. In a sideways or bear market, I will hold stablecoins after selling; but in a bull market, I will use profits to increase my holdings in my favorite mainstream assets. BTC and SOL are good choices because I can use them as collateral to trade perpetual contracts, which improves my capital efficiency.
Currently, my portfolio is close to 100% BTC and SOL, but as the market cycle progresses, I will convert a larger proportion of my funds into stablecoins.
Use of Leverage
(The following suggestions are suitable for beginners who are new to perpetual contracts; more experienced traders can feel free to adapt.)
Forget all the advice about leveraged trading on Crypto Twitter (CT). Leverage is just a tool to increase capital efficiency and take advantage of moments when the risk/reward ratio is highly asymmetric.
First, you need to separate mainstream assets (like SOL) from leveraged trading on small coins; these are two completely different types of trading. Although this may sound obvious, most people do not realize it.
A basic rule is: on small coins, never let your total leveraged position exceed your portfolio capital. This will help you avoid a lot of pain while still retaining ample upside potential.
For example: Suppose you have $100,000 in funds, priced in SOL, and use this as margin for perpetual contracts. In this case, your leveraged position in small coins should not exceed $100,000. Being exposed to highly volatile assets poses too much risk and can lead to significant losses. If you are not a top trader, you are basically destined to lose. However, in this example, you can still achieve 2x leverage ($100,000 SOL + $100,000 small coin position), which already provides sufficient exposure. Do not be too greedy.
For mainstream coins, at certain times, you can achieve higher leverage ratios, but generally, do not exceed 3-5 times.
The key to using leverage is: "The higher the leverage, the earlier you should take profits."
More content on perpetual contract trading will not be elaborated here.
Furthermore, for your safety and the safety of others, "never allow any trade to exist that could potentially liquidate you."
On-chain Operations
Alright, now comes the interesting part. If your portfolio structure is correct, on-chain trading can become extremely profitable, but "the premise is that you have the right structure."
Why? Because most people use the wrong approach to on-chain trading. The goal of on-chain trading is to achieve excess returns, that’s all. In a bull market, it’s okay to gradually take profits, but the only thing you should care about is catching huge winners. These winners will completely change your portfolio and your life.
Your goal is to find a few positions that grow far beyond your other assets. This goes against the traditional diversification investment philosophy, but as Buffett said, "Diversification is for the weak."
The crypto market is a "reflexive market"; big winners will win very, very big. You only need one or two big victories to change your life, and this should be your obsession.
How to Deal with Huge Profits
Once you catch a big winner, never sell all at once; instead, slowly reduce your position along the way. For example:
Buy when the market cap is $5 million, and sell 10% when the market cap rises to $50 million.
Sell another 10% when the market cap reaches $100 million, then another 10% at $250 million, and so on.
Again, it is emphasized that big winners will win very, very big, so always leave room for upside. If your remaining 30% position rises to a $3 billion market cap, the profit from this 30% will exceed all the gains you made when you reduced your position earlier.
The hardest part of holding a large position is that you need to endure massive volatility. No matter how good the coin, there will be pullbacks of 50%-70% during the uptrend, even multiple times. You need to be mentally prepared not to panic when this happens.
Mindset Management
Remember, in the cryptocurrency market, your rewards come from your ability to withstand volatility. Most people cannot handle this volatility, which is why they are unable to achieve substantial returns. Volatility is your friend, and it is the reason why this asset class is so profitable.
As you gain experience, you will become more accustomed to these fluctuations. Eventually, you may become numb, losing not only emotions in trading but also in other aspects of life; but at least you will become wealthy.
Summary
The core of trading lies in psychology; your biggest opponent is yourself. But if you can learn high-level execution, you can succeed and come out on top.
Pray, meditate, walk, do anything that keeps you awake, and make it a daily habit.
Stay humble and always be prepared to lose everything. If you do fail, also trust that you will be okay.
Good luck, see you in the bull market!
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