3 Golden Principles to Protect Capital When Participating in the Crypto Market

In the crypto world, many investors lose all their capital just by participating in the (contract) trading with high leverage while neglecting risk management. To protect capital and maintain stable profits, it is essential to adhere to the following 3 basic principles: Principle 1: Protect capital first, prioritize 80% in spot trading. Spot trading ( direct trading) is the safest way to accumulate profits without facing liquidation risks. Example illustration: Total capital: 10,000 UAllocated 80% of capital (8,000 U) to buy potential coins like SOL or DOT.In 2 weeks, if the price of SOL increases from 186 to 206 and DOT from 6.8 to 8.2, the profit will be about 1,600 U just from spot trading. The remaining (20% capital) can be used to open short positions with low leverage to hedge risks, earning an additional 5% profit during the price decline. The important thing is that spot trading does not require much operation, only a few times a month but brings stable profits, which can be annualized at about 60% if discipline is maintained. Principle 2: The (contract) is just a "spice", never the "main dish". Many investors fall into the trap when tempted by high leverage: "20x leverage, a 10% fluctuation means doubling the investment" A single misstep can lead to the liquidation of all capital in an instant. The right approach: Only use a maximum of 10% of your total capital to trade contracts with high leverage. For example: if you earn 2,000 U from spot trading, only use 200 U for a 5x contract. Profits will increase, but losses will not affect the original capital. A stable mindset, not chasing the "winner takes all" mentality, is an important factor for survival and long-term development in the crypto world. Principle 3: Focus on long-term stability, not chasing after speculation. Continuous trading, putting all capital into high leverage contracts, or seeking a "big hit" often leads to total loss. Rational strategy: Earn stable profits from spot trading. Use a small portion of capital to experiment with contracts, not affecting the main capital source. Always have a plan for stop-loss, take profit, and smart reinvestment. Smart investors know that protecting capital is the first step; large profits will come from discipline and stability, not from reckless bets.