Risk Management

5 Core Strategies for Risk Control in Cryptocurrency Investment

Why Risk Control is Necessary
Cryptocurrencies are known for their high volatility, with extreme fluctuations within 24 hours, the risk of projects going to zero, and a high technical threshold, making unprotected investments akin to "running naked." Strictly adhering to risk control strategies is the lifeline for navigating through bull and bear markets.

5 Tips to Protect Your Bottom Line
1️⃣ 1% Rule
The risk of a single investment should not exceed 1% of the total funds. With a principal of 100,000, the maximum loss is 1,000 yuan, which can be achieved using stop-loss orders or small positions, and all-in betting is not allowed.

2️⃣ Automated Stop Loss and Take Profit
Set trigger points in advance: automatically cut losses if the stop-loss price is breached to prevent deep losses, and automatically take profits if the take-profit price is reached to prevent greed. Machine execution > emotional decision-making.

3️⃣ Diversified + Hedged Combination
▸ Cross-currency/track allocation (e.g., BTC+ETH+DeFi tokens)
▸ Hedge against downside risk with futures contracts: For example, short BTC futures to offset spot losses with contract gains.

4️⃣ Iron Law Exit Strategy
Set profit-taking in batches during sharp rises (for example, sell 20% of your position for every 10% increase), and strictly enforce stop-loss during sharp declines. Remember: profits that haven't been realized are just paper wealth.

5️⃣ DYOR Pitfall Prevention Guide
Personally verify the project white paper, team background, and on-chain data, and be wary of social media hype. Check three key points:
✓ Actual use of the token ✓ Lock-up period for the liquidity pool ✓ Real community activity level

Reminder: No matter how good the strategy is, discipline is needed for protection; the market always punishes the lucky ones.

Simplified logic: Anchor risks with data (1% rule) → Use tools to combat human nature (automatic profit and loss taking) → Diversify risks with a portfolio (multi-assets + hedging) → Lock in results with a plan (exit strategy) → Arm decisions with knowledge (DYOR)