In cryptocurrency investment, recovery refers to the process in which investors use a series of strategies and operations to return their investments to profitability or reduce losses when the price of cryptocurrencies falls and positions are losing. The following are common recovery rules:
Recover based on holding situation
Slightly trapped
- Rebound recovery: Use the market's short-term rebound to sell part or all of the holdings when prices rise, thus recovering or reducing losses.
- Reduce positions at highs: When the price rebounds to a certain height, gradually reduce holdings to lock in some profits and lower average costs.
High-level trapped
- Reduce positions at highs: When prices rebound, sell parts of your holdings in batches to lower holding costs and risks.
- Phased recovery: Set multiple recovery target price levels, gradually reduce positions to avoid larger losses from one-time selling.
Recover based on cryptocurrency trends
Upward trend
- Patiently hold: If the cryptocurrency has good fundamentals and is in an upward trend, you can choose to continue holding, waiting for the price to rise above the cost price.
- Add positions to lower costs: When the price retraces to important support levels, appropriately add positions to lower the average holding cost and accelerate recovery.
- Fluctuating trend
- Sell high and buy low: Utilize price fluctuation ranges to buy at low points and sell at high points, reducing holding costs through swing trading.
- Range trading: Set clear trading ranges and buy and sell based on price fluctuations within the range to accumulate profits.
- Downward trend
- Timely stop-loss: When confirming that a cryptocurrency has entered a downtrend, decisively stop-loss and exit to avoid further losses.
- Wait and see: Temporarily hold no positions and wait for clear reversal signals from the market before taking action.
Recover based on technical analysis
- Support and resistance level operations
- Add positions: When the price retraces to important support levels, add positions to lower costs.
- Reduce positions: When the price rebounds to important resistance levels, reduce positions to lock in profits.
- Technical indicators assistance
Utilizing indicator signals: Combine technical indicators such as moving averages, MACD, and RSI to determine buying and selling opportunities, assisting in position recovery.
Other recovery strategies
Hedging operations
- Reverse opening positions: Based on existing holdings, open positions in the opposite direction to hedge some risks. When the market trend is clear, close the hedging positions.
- Hedging with related cryptocurrencies: Choose other cryptocurrencies that are highly correlated with the holding cryptocurrency for hedging, thus reducing overall risk.
- Switch investment varieties
- Change positions: Convert poorly performing cryptocurrencies into market hotspots or those with greater potential, compensating for losses through the rise of new cryptocurrencies.
Precautions
- Stay rational: Avoid emotional trading, do not blindly chase highs or cut losses, and make decisions based on market conditions and your own strategy.
- Control position: Reasonably control positions to avoid excessive concentration of investments in a single cryptocurrency, thereby diversifying risk.
- Set stop-loss and take-profit: Develop a clear stop-loss and take-profit strategy, strictly execute it to avoid expanding losses or profit withdrawal.
- Continuous learning: Pay attention to market dynamics and industry news to continuously improve your investment capabilities and risk awareness.
Through the above rules, investors can choose suitable recovery strategies based on their own circumstances and market environment to reduce losses and achieve investment goals.
