In the cryptocurrency market, which is full of temptations and traps, short-term trading is like dancing on a tightrope; a slight misstep can lead to disastrous losses. Countless investors become addicted to short-term profits, often losing everything in the chase for quick gains. In fact, to sustain profits in short-term operations, one only needs to strictly adhere to three core principles: profit retracement, capital protection, and original price recovery. These three rules are the survival codes I have summarized from years of practical experience and are the lifelines to climb out of the pit of losses.
1. Profit Retracement Principle: Let profits grow like a snowball.
Many people in the cryptocurrency market have experienced this regret: watching their unrealized gains drop from 20% back to zero, and ultimately losing money when exiting. The profit retracement principle is the effective remedy for this 'cooked duck flying away'.
The specific operation is very simple: when the cryptocurrency you bought exceeds a 10% profit, immediately activate the capital protection mechanism — if the price drops back to the buying price, sell everything without hesitation. This is like putting a safety lock on your capital, ensuring you won't leave empty-handed. When profits reach 20%, lock the minimum profit target at 10%; unless you are completely sure of identifying a peak, do not sell unless the price drops to the 10% profit line. Similarly, if profits exceed 30%, allow retracement to 15% before exiting.
For example, if you buy a cryptocurrency for 100U and it rises to 120U, you set your stop-loss at 110U; if it rises to 130U, you adjust your stop-loss to 115U. This 'staggered profit-taking' strategy allows profits to continue rolling amidst fluctuations, ensuring that even if you sell early, you can still lock in considerable gains.
2. Capital Protection Principle: Stop-loss is the lifeline of trading.
In short-term trading, what is more frightening than missing an opportunity is allowing a single erroneous trade to ruin your entire account. The core of the capital protection principle is to set a 'circuit breaker' for each trade.
It is recommended to control the maximum loss of a single trade at 15% (which can be adjusted based on risk tolerance). Once the price drops and hits the stop-loss line after buying, you must decisively cut your losses, just like severing a burning rope. Remember, a stop-loss is not admitting defeat, but rather a way to avoid falling into a greater disaster. Just as firefighters extinguish a small flame, it may seem like a loss of some 'property', but it actually prevents the collapse of the entire building.
Some may regret, 'What if the coin price rises again after I set a stop-loss?' The answer is simple: that trade itself was a misjudgment, and the loss is paying for the wrong decision. Only by learning to cut losses in a timely manner for mistakes can you avoid getting deeper into the trap of chasing highs and cutting losses. In futures trading, setting a stop-loss immediately upon opening a position should become an instinct ingrained in you.
3. Original Price Recovery Principle: Special treatment for 'missing out anxiety'.
Watching the price soar after selling or hesitating and missing the opportunity to re-enter — this is the most common psychological struggle for short-term traders. The original price recovery principle is the effective remedy for this anxiety.
There are two scenarios for operation: if you sell at a high price and the price drops, as long as you still believe in that cryptocurrency, buy it back in the original quantity. This way, not only does the quantity of coins remain unchanged, but you also gain from the price difference; if the price first drops and then rises back to your selling price after selling, you must decisively buy back even if it means a loss in transaction fees. Though it seems like you are spending more, it effectively avoids the risk of missing out.
This principle can be flexibly combined with the capital protection principle: buy back when the price returns to the original price, and trigger capital protection if it falls again. Through repeated operations, you can lock in profits and continuously gain amidst trends.
There is no holy grail in short-term trading in the cryptocurrency market, but these three principles are the most reliable compass. Profit retracement helps you amplify returns, capital protection safeguards your bottom line, and original price recovery ensures you don't miss trends. Remember, in this tempting market, surviving is more important than making quick money. Adhere strictly to discipline and respect the market, and you will eventually navigate through bull and bear markets, becoming the ultimate winner.
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