There is a rather dubious way of trading cryptocurrencies that may seem attractive at first glance, but can actually wipe out all your profits. Therefore, don't rush to dive into it unprepared. First of all, remember three key prohibitions:
1. Don't buy when the market is rising. Stick to the principle: 'Be greedy when others are fearful, and fear when others are greedy.' Get used to buying during price declines.
2. Don't make large bets. Preserving capital is your main priority.
3. Don't invest everything in one position. Full commitment makes you vulnerable. The market always offers new opportunities, and the cost of missed chances with full investment is very high.
For short-term cryptocurrency trading, adhere to six basic rules:
1. Wait for trend confirmation. After consolidation at a high level, a new maximum often follows, and after consolidation at a low level, a new minimum. Don't rush—act only when the direction becomes clear.
2. Avoid trading during sideways movement. Most losses in cryptocurrencies are associated with neglecting this simple rule.
3. Focus on candlestick analysis. Buy after the close of a bearish candle, sell after the close of a bullish one.
4. Analyze the movement dynamics. A slow decline leads to a slow rebound, while a sharp drop leads to a rapid rise.
5. Build positions gradually. Use a pyramid-building strategy—it's one of the most reliable principles of value investing.
6. Prepare for sideways movement. After a strong rise or fall, the market inevitably enters a consolidation phase. Don't try to guess the maximum or minimum—it's better to react promptly to changes in trend. If the price starts to decline from high levels, you should immediately reduce your position.
The key to successful trading is to act thoughtfully and in a timely manner.
