Many people have been messing around in the cryptocurrency market for years, and in the end, all end up ruined by one problem—treating all principal as a gamble. My investment logic is actually very simple, but the simplest things are often the easiest to overlook.

**Step 1: Make your principal come alive**

Instead of going all-in on a single coin, it’s better to allocate your funds with different rhythms. My standard allocation is: 30% for flexible positions to catch short-term fluctuations, 30% for trending swing opportunities, and the remaining 40% always kept as cash reserves as ammunition.

Why this split? Because when the market is good, you can see clearly which positions are at risk and adjust flexibly, while other positions can continue to work. Some time ago, I met a new market entrant holding $4,000 wanting to go all-in on a certain coin. I simply redistributed his funds according to this ratio. Now, three months later, his account’s profit curve is much more stable than those who chase every rise and fall every day.

**Step 2: Learn to have a cold war with the market**

In the daily fluctuations of the market, effective signals may account for less than 20%. The real opportunities to make money usually require three conditions to occur simultaneously: a clear trendline break, a sudden increase in volume, and related sectors moving strongly together.

During the last year’s $3000 fluctuation in BTC, my team and I stuck to staying on the sidelines. Many people were frantically adding to positions at lows, only to get trapped. The big winners are not those who watch the charts most diligently, but those who can endure loneliness. Last week, the DeFi sector suddenly surged, but we didn’t follow the trend—because we saw no real evidence of capital moving. As a result, the next day, the trend reversed downward, and many who chased the high got caught.

**Step 3: Discipline is more valuable than judgment**

I’ve seen too many traders who get cocky after earning 30%, and become impatient and desperately add to losing positions after a 5% loss, ultimately going all-in and wiping out. Now, I have strict rules for myself: if a single trade loses more than 4%, I must cut loss immediately; if I gain 6%, I take half of the profits off the table.

It’s like an experienced driver’s habit—buckle up when it’s time, slow down when risk appears, relying on rules rather than luck. Last month, a brother who just entered the market saw a certain coin crash and wanted to buy the dip, but I locked his account to stop him. The next day, it dropped another 30%. Now he has a new understanding of discipline.

The outcome in crypto markets is often not about choosing the right coin at the moment, but about whether you can stick to these basic risk management rules.