Cryptocurrency trading can be a lucrative venture, but it requires a deep understanding of the market and a well-thought-out strategy. To succeed in this volatile market, it's essential to follow a set of rules that can help you make informed decisions and minimize risks. Here are 10 rules to help you navigate the world of cryptocurrency trading:
Rule 1: Monitor Continuous Drops
If a strong cryptocurrency drops continuously for 9 days at a high level, it's crucial to follow up promptly. This could be a sign of a potential reversal or a buying opportunity.
Rule 2: Reduce Positions After Consecutive Gains
If any cryptocurrency rises for two consecutive days, consider reducing your position in a timely manner. This can help you lock in profits and avoid potential losses.
Rule 3: Watch for Pullbacks After Significant Gains
If any cryptocurrency rises more than 7%, consider the opportunity for a pullback the next day. This can be a good time to observe the market and make informed decisions.
Rule 4: Enter the Market After a Bull Run Ends
Always enter the market only after a previous bull run ends. This can help you avoid buying into a market that's already overheated.
Rule 5: Monitor Low Volatility
If any cryptocurrency has three consecutive days of low volatility, observe for another three days. If there's no change, consider changing your holdings.
Rule 6: Exit Promptly After Failure to Recover
If any cryptocurrency fails to recover the previous day's cost the next day, it's essential to exit promptly. This can help you minimize losses and avoid further decline.
Rule 7: Follow the Pattern of Gainers
On the gainers list, if there are three, there will be five; if there are five, there will be seven. For cryptocurrencies that rise for two consecutive days, consider entering at a dip, as the fifth day is usually a good selling point.
Rule 8: Pay Attention to Volume and Price Indicators
Volume and price indicators are crucial in cryptocurrency trading. Trading volume is considered the soul of the cryptocurrency market. When the price breaks out at a low level during consolidation, it needs attention. When a high level experiences a volume increase but stagnates, exit decisively.
Rule 9: Choose Cryptocurrencies in an Upward Trend
Only choose cryptocurrencies that are in an upward trend for trading. This maximizes gains and avoids wastage. Use moving averages to determine the trend, such as the 3-day, 30-day, 80-day, and 120-day moving averages.
Rule 10: Maintain a Rational Mindset and Execute Strategies
In the cryptocurrency market, small capital does not mean no opportunities. As long as you grasp the correct methods, maintain a rational mindset, and strictly execute strategies while waiting for opportunities to arise. Avoid trading cryptocurrencies full-time, and especially avoid trading on borrowed funds.
By following these 10 rules, you can develop a solid strategy for cryptocurrency trading and increase your chances of success in this volatile market.
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