Trading Tips When the Market is in Downtrend.
The market downtrend, as we see now, requires us to have a special strategy because the old strategies will yield poor results if we continue to force them. So, what trading strategies should we use when the market is in a downtrend like this?
1 Focus on Shorting.
When the market is down like this, we can hedge by opening a short position in the derivatives market, which serves as a protective instrument for our investments in the spot market. By using the derivatives market, we can gain profits when the price of Bitcoin declines.
2 For Spot Trading, Use Aggressive Take Profits.
We can still trade in the spot market if some of you are true spot traders. However, always understand that upward trends are very short in downtrends and are a secondary reaction to every bounce that occurs.
3 Use the Long the Anomaly Strategy.
A trader with a long-only bias can also use the "long only the anomaly" strategy when the market is experiencing a downtrend by focusing on coins: new listings, coins with hot narratives, coins with specific events. Because these coins tend to experience increases.
4 Size Down.
In difficult situations like this, the main focus should be on not losing money. We can trade with a smaller size, such as 50% of what we usually do. There are phases where we can make significant profits and phases where we endure to avoid losses.
