To achieve steady profits in trading, the key lies in avoiding traps and mastering strategies. These 'three don'ts and six key principles' may seem simple but contain the core logic for avoiding pitfalls and making money.
Three major taboos: Safeguard your capital to have the potential for profit.
- Don't chase highs or panic sell: 90% of losses stem from following the crowd—blindly entering when the price skyrockets and getting trapped at high levels; panic selling during a sharp drop often means selling at the bottom. The real opportunities are often hidden when the market is quiet and most people are too afraid to enter.
- Don't go all in on a single coin: Putting all your funds into one coin is like a gambler betting on a 'lucky number'; if you lose, it's an all-out loss. Always keep 30% of your cash on hand to deal with sudden risks and seize bottom-buying opportunities when quality coins drop sharply.
- Don't fully leverage your position: The cryptocurrency market is never short of opportunities, but those who are fully invested are like having their hands and feet bound; when a good opportunity arises, they can only watch helplessly, and during a drop, they have no buffer space. Position management is the 'lifeline' for long-term survival.
Six key principles: Operate rationally to achieve steady profit growth.
1. Control your hands during consolidation: When prices are consolidating at high levels, market makers often create 'false breakouts' to lure in buyers; when prices are consolidating at low levels, there may also be sudden drops in despair. Until the direction of change is clear, staying put is the best strategy; blindly entering will only make you a 'bag holder.'
2. Beware of the sideways trap: Data shows that 80% of liquidations occur during sideways periods. It may seem like low volatility and low risk, but in reality, it hides deadly traps. Those who cannot resist the urge to enter often become targets for the market makers.
3. Layout with bearish candles, take profit with bullish candles: Reverse thinking is important. When a large bearish candle appears and the market is in panic, it is often an opportunity to buy at low prices; when bullish candles surge and the market is euphoric, taking profits in time ensures you secure your gains, instead of waiting for a correction to erode your profits.
4. Use sharp declines to find opportunities: The sharper and more intense the price drop, the stronger the rebound is often; conversely, rebounds after a slow decline are relatively mild. There's no need to panic during a sharp drop; after judging the trend, a significant drop in quality coins is the perfect time to buy at a discount.
5. Pyramid building method: In the bottom area, increase your position by 10% for every 10% drop, which not only reduces the average cost but also avoids being heavily trapped in a single position. This method can lower your cost significantly, making it hard for even market makers to shake your confidence.
6. Be decisive in liquidating before a trend change: Once a coin that has surged enters a consolidation phase, don't be greedy—first pull out your capital and let the profit 'fly' for a while; if a coin drops sharply and consolidates, don't take chances—be quick to cut losses; hesitation will only exacerbate losses.
There is no 'sure-win' secret in trading, but avoiding fatal mistakes and adhering to rational strategies can significantly increase your chances of being on the profitable side during volatility. Remember: Preserve your capital, control risks, and profit is just a matter of time.