This article is about "How to Avoid Risks and Earn Considerable Returns in a Bull Market." It will detail the risk control system in investment from three aspects: position management, investment allocation, and risk avoidance, enabling you to earn substantial returns in a bull market.

1. Position management is crucial, yet 99% of people overlook it

First, it is essential to fully identify which stage the current market is in, as we pursue different goals at different stages. "Having grain in hand, one is not anxious" is the first principle.

1. Never go all in. Regardless of the stage, the first principle to follow is to never go all in, which means always having a certain proportion of cash available for allocation.

2. Upward cycle: 80% position, with 50% allocated for long-term investments, 30% for short-term trading, and the remaining 20% as cash flow that can be deployed at any time.

3. Volatile period: 50% position, with the remaining 50% used to adjust strategies in a rapidly changing market.

4. Downward cycle: 10% position or completely in cash, leaving a small position to observe market changes. Staying connected to the market means having real money invested, which helps continuously develop one’s market perception and insight.

In reality, very few people can strictly adhere to different position management strategies for different periods, leading many to lose money even in a bull market. I have noticed many friends who often go all in, or cut losses entirely at the slightest downturn, unable to hold on even when prices rise slightly. Ultimately, this is due to a lack of strict real-time position management strategies and ignoring market signals, failing to execute strategies rigorously. The noise in the market is overwhelming, and almost no one can ignore it and focus solely on their strategies.

What are the benefits of implementing the above position management?

Having spare cash at all times to deal with unexpected situations allows for operational space in extreme downturns and the courage to buy at the bottom; it also ensures financial stability, preventing a negative mindset that leads to poor decision-making.

2. Investment allocation: The principal is not the most important; what you invest in and how you allocate it is.

First, do not get caught up in the debate between value investing and speculation; do not blindly believe in value investing, as many are forced into it. We should explore the essence behind the surface of trading. I believe, rather simplistically, that as long as one earns money in the investment market without breaking the law or doing harm, it is a good investment.

The ranking of timing, price, and value, in my opinion, is timing > price > value. The core of investing is to buy low and sell high.

Investment targets in spot trading are divided into long-term and short-term.

Long-term means a battle team, indicating a long-term positive outlook on a sector, such as the AI sector.

Short-term means a consensus for a phase, such as the rotation of sector blocks, for example, GameFi this month, followed by inscriptions, public chains, Layer 1, and Layer 2 in alternating blocks next month.

It is advisable to combine long-term and short-term allocations, integrating mainstream and altcoins. Allocate 70% of the position to high-quality assets like BTC, ETH, BNB, SOL, XRP, ADA, which have strong market caps and can withstand bull and bear cycles; 30% should be used for capturing and allocating altcoins and on-chain assets, keeping in mind the high risk and high reward.

In summary, adopting a dynamic strategy based on the actual market situation can yield considerable returns in a bull market while effectively controlling risks.

3. How to avoid risks and ensure stable profits in a bull market

1. The most important thing in investing is the safety of the principal and longevity.

Buffett has shared many investment philosophies, with two being the most important. The first is to preserve the principal, and the second is to always remember the first. Opportunities are always present; do not attempt to make enough in one go. For ordinary investors, the most important thing is to ensure they last long enough to stay at the table.

2. Avoid getting high and falling for FOMO.

FOMO: Fear of Missing Out, or the extreme fear of losing an opportunity. Emotional loss of control can cause the system to malfunction; emotions are our underlying operating system, and these methodologies are like apps. When the system crashes, the apps cannot function. Regulating emotions is the most crucial aspect of trading, bar none.

3. Avoid going all in.

Avoid going all in, where one enters the market and buys everything at once, or worse, spends all their money immediately. Avoid going all in in terms of time and energy spent researching the industry and following trends, rather than spending all funds in the trading market at once. (The saying "going all in is a form of wisdom" can mislead beginners or those who have not experienced intense bull and bear cycles.)

4. Avoid chasing highs and maintain rationality.

Typically, a significant price increase in an asset will attract widespread market attention, often after it has already risen 2-3 times from the bottom. Most investors, lured by the prospect of wealth, rush in, only to find themselves stuck at high prices when the hype fades, leading to a prolonged decline in asset value, severe shrinkage, and a painful struggle. After being deeply trapped, they no longer hope to make a profit but only wish to break even. The underlying message is that they will exit once they recover their investment.

In summary, avoid trading with a full position; adopt a tiered reduction strategy for volatility management, preparing psychologically for a 50-70% pullback; view volatility as an opportunity rather than a threat, as volatility is a significant source of profit in the cryptocurrency market; learning to coexist with it is key to success; and maintain emotional stability to avoid panic-driven decisions.

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