Crypto world six-year memoir: 12 lessons learned from buying millions of dollars

From millions of dollars of blood, sweat, and tears, I extracted 12 core lessons in cryptocurrency trading to help you become a better trader and avoid significant capital drawdowns. This article is based on a piece by Miles Deutscher, organized, translated, and written by Foresight News. (Background: From James Wynn to Brother Ma Ji, a record of the rise and fall of the kings of leverage) (Background information: Why are there always high-leverage “gamblers”? Understanding trading psychology and market dynamics under the PVP model) I have been crawling and rolling in the cryptocurrency market for over 6 years. I have made millions and lost millions, founded crypto projects, and frankly, I have been through every imaginable emotional rollercoaster in this field. My goal in writing this article is simple: to break down the 12 hard-earned lessons I learned at the cost of millions of dollars. By reading this article and applying these lessons to your own crypto journey, I hope you can become a better trader, protect yourself from significant capital drawdowns, and increase your chances of changing your life through cryptocurrency. Part One: Basics Lesson One: The Power of Focused Niches There are many ways to make money in the cryptocurrency market; your task is to find the one that suits you best and become an expert in that niche. In 2020 and 2021, I delved deep into DeFi. I mined across multiple chains, explored various DeFi ecosystems, and ran cyclical/governance strategies. This gave me a lot of insights into this field: from risk management and position size control to game theory and flywheel effects. If I were simultaneously engaging in futures trading, on-chain sniping, airdrop farming, etc., I doubt I would accumulate the existing knowledge. In the crypto space, being an expert in one area is better than being a jack of all trades. Lesson Two: Advantage is Everything The best cryptocurrency traders I know clearly define their advantages and focus 99% of their energy on extracting the best results from them. Your advantage could be speed, precision, patience, risk management, networking, or a combination of these, but you need a differentiating factor. Your market advantage largely depends on your personality, existing skill set, time in the field, and other variables. Define your advantage, master it, and then execute. Lesson Three: Only Engage with What You Understand If you do not understand something, do not buy it until you do. Many people buy tokens due to hype or FOMO without truly understanding the project or its business model. Never invest in something you do not truly understand. In the cryptocurrency market, without a solid logic/strong underlying belief, it will be hard to withstand its fluctuations. Lesson Four: Narrative > Fundamentals Capital flow determines everything. Narratives always run ahead of fundamentals. You may have studied a project with the best team, the best business model, etc., but if there is no community, no narrative, and no capital flowing into the space, these factors are irrelevant. Conversely, many fundamentally “bad” tokens and sectors explode in price due to attention. Study the hype, study the community, study the narrative; this is an attention economy. Part Two: Execution Lesson Five: The Market Punishes Unplanned Traders Always trade with a plan; do not enter blindly. Define whether this is long-term holding or short-term trading. Before entering a trade, define your profit-taking area and invalidation points (technical and fundamental). Trading without a plan is a plan to get liquidated. In cryptocurrency, managing capital drawdowns is key to long-term survival. Lesson Six: Position Size Control This may be the primary issue retail traders mess up. You may have chosen the right coin at the right time, but if you do not control your entry position size properly, it means nothing. Conversely, you may have chosen the wrong coin at the wrong time; if you are over-leveraged, this could have devastating effects on your overall portfolio. Depending on your risk tolerance and portfolio size, you should set the proportion of risk capital for each trade (and this proportion should be determined by preset standards: e.g., belief level, market conditions, market capitalization, liquidity, etc.). Lesson Seven: Let Winners Run, Cut Losers I have continually seen this mistake. People sell strong coins to switch to less mature ones, trying to catch up on trades. You should let winners run as long as possible and cut losers as quickly as possible. Cryptocurrency trading is all about momentum; ride the wave for as long as possible, and avoid being knocked off by the wave. Part Three: Mastering Portfolio Management Lesson Eight: Tool Selection Depending on which stage you are in your journey, you will use different tools to achieve your goals. The tools I used to earn my first $10,000 in cryptocurrency are entirely different from those I use now to manage millions of dollars in funds. A smaller capital amount can actually be an advantage, as it allows trading low liquidity tokens. There are too many misaligned opportunities to take advantage of. For large whales, playing these games is simply not worth it, but you can. Some examples include: airdrop farming, arbitrage, on-chain low market cap tokens, etc. Lesson Nine: Concentrate, Don’t Diversify To protect wealth, diversification makes sense. But to achieve success, over-diversification can be detrimental. I strongly recommend that most people hold only 5-10 positions as their core portfolio. This will ensure you have enough time to manage these positions, stay updated, and adjust regularly. An inflated portfolio will slow your response time. During market bubbles, you can exceed this range to seize opportunities, but what you really need is a core portfolio made up of 5-10 high-belief assets. I broke this rule with my “degraded” portfolio, but it only accounted for 10-20% of my total portfolio. If you want to cast a wide net and hope for luck, do so in an isolated environment, concentrating most of your funds on high-belief plays. Lesson Ten: From Alts to Bitcoin Remember: Your goal is to accumulate Bitcoin. Use alts as a source of profit and then accumulate Bitcoin. Then you will start to treat your trading differently (e.g., charting against Bitcoin, analyzing risk factors relative to Bitcoin, analyzing macro trends affecting Bitcoin, which in turn affects alts). This is a very powerful mindset that, by itself, can significantly improve your risk management. Lesson Eleven: Sell on the Way Up, Then Lock in Profits. In the last cycle, I recklessly re-invested a lot of profits just because I had stablecoins on the exchange, and I would keep gambling with them. My framework should have been: Step 1: Always take profits in a bull market when alts are pumping. Step 2: Convert stablecoins back to fiat to “lock in” gains. Alternatively, another method is to withdraw to a hard-to-access cold wallet, which will prevent over-trading. Part Four: Modern Secrets Lesson Twelve: Let AI Do the Heavy Lifting You should document your entire crypto journey to gather data about yourself and improve. You can do this by posting on X, integrating MCP with Notion databases, using personal Google Docs, or any method that works for you. After documenting and collecting data, share it with AI to help uncover blind spots in your strengths. Not using recording + AI systems will put you at a significant disadvantage, and since cryptocurrency is a zero-sum game, you really need to fight for every…