In the crypto market, the true "iron law" is not predicting rises and falls, but survival discipline. Here are 5 bottom lines verified through blood and tears, must be engraved on your screen:

1. 2% Single-Trade Stop-Loss Rule

This is the safety line for professional traders to prevent liquidation. The maximum loss on any single trade must be controlled within 2% of the total funds.

How to calculate: Total funds × 2% ÷ Stop-loss range = Maximum position size.

Why: Crypto markets are highly volatile. If you lose only 2% on five consecutive wrong judgments, you still have 90% of your principal and can turn things around. A heavy position on one trade could wipe you out.

2. Never Averaging Down on Losses

Never add to a losing position. This is a lesson Jesse Livermore learned through bankruptcy.

Logic: Averaging down is not "lowering the cost," but "doubling down on a wrong bet." If your direction is wrong, you'll go from a "small loss" to a "huge loss." Cut losses and let profits run.

3. Plan Your Trade

Before opening a position, three things must be clear, and none can be missing:

Entry Point: Based on technical analysis or logic, not "feelings that it will go up."

Stop-Loss Point: The price level that proves you're wrong, and you must exit.

Take-Profit/Target: Expect a risk-reward ratio of at least 1:2 (lose 1 dollar, expect to earn 2 dollars).

Execution: Follow the plan during trading; avoid impulsive decisions.

4. Respect Leverage (Leverage Kills)

High leverage on volatile assets like BTC/ETH is essentially suicide.

Suggestion: For most traders, leverage should not exceed 3-5x. Over 10x leverage, a 10% adverse move is enough to liquidate you, even if you are long-term bullish.

5. Protect Your Capital (Survive First)

Don’t try to catch every market wave. When the market is in intense volatility you can't understand (like repeated US-Iran news), staying out is also a valid strategy.

Mindset: The market never lacks opportunities; what’s lacking is your principal to survive until tomorrow. Trying to "recoup losses" immediately after a loss is the main reason for further losses.

Special Reminder for the Current Scenario (US-Iran Tensions)

No guessing tops or bottoms in news-driven markets: If a deal breaks and causes a flash crash, don’t try to catch the falling knife (guessing the bottom to go long). Wait until volatility subsides and candlestick structures stabilize before entering.

Always include a stop-loss: In such event-driven markets, a stop-loss order is your "life jacket." Don’t rely on the hope of "waiting and watching."

Final advice: In the crypto market, surviving longer is more important than making quick profits. Discipline is the only weapon to combat market randomness.
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