Recently, the cryptocurrency market's volatility is so intense that calling it a thrill is an understatement — in the morning, you’re thinking about 'taking off' when prices rise, but by the afternoon, a sharp drop has you panicking about cutting losses, and by evening, there's a sudden rebound that catches you off guard. How many people have been left dizzy by this back-and-forth market: either chasing high prices and getting stuck at the peak or cutting losses at the bottom, only to end up with no profits and a lot of frustration?
As someone who has been battered by the market many times, I won’t hold back today — I'll share all the practical 'volatility resistance techniques' and 'mental stabilization methods' I know. Even complete beginners can follow along to avoid pitfalls and not crash! First, let’s understand: why does the cryptocurrency market always perform 'roller coaster行情'?
Not understanding the root causes of fluctuations is like walking with your eyes closed; stumbling is inevitable. In fact, these extreme market conditions usually escape for 3 reasons:
News can 'set the tone': A certain country suddenly introducing cryptocurrency regulations, large institutions throwing in hundreds of millions to the market, or a casual comment from industry leaders can instantly turn the market into a 'roller coaster' — for example, when a certain regulatory news broke, mainstream coins plummeted 15% within half an hour, leaving no time to react.
The main players are 'harvesting leveraged positions': many main players deliberately create extreme volatility to blow up retail investors’ leveraged positions (both long and short). For example, they might first slightly push prices up to entice retail investors to open long positions, and then suddenly crash the market to force liquidation; conversely, they might first drop prices to entice short positions and then rebound to blast those shorts, leaving retail investors in a 'harvestable' situation.
Emotional amplification of volatility: There are many retail investors in the cryptocurrency market, and emotions can easily sway — during panic, everyone frantically sells, even if there’s no bad news; during greed, they rush to buy high, fearing they’ll miss the opportunity. The more followers there are, the more exaggerated the market fluctuations become, creating a cycle of 'rising crazily, falling fiercely.'
3 practical skills: No matter how large the fluctuations, you won't crash; beginners can also get started.
Understanding the reasons behind the market's wild fluctuations is crucial, but it’s even more important to master 'response methods.' These 3 strategies are summarized from countless pitfalls I’ve encountered, simple to execute, and crucial for preserving your capital and stabilizing your earnings.
1. Position size like 'slicing a cake': don’t gulp it all down, leave room for 'turnaround bullets.'
Core principle: Never go all in! No matter how optimistic you are about a particular coin, divide your funds into 3-5 portions. For example, if you have 1000U, split it into 4 portions of 250U each.
Never increase your position when prices rise: many people can’t help but chase the market when they see prices going up, resulting in getting stuck (this is the 'chasing high will get stuck theorem'), which forces them into a corner with no way out.
Buy in small batches when prices drop: only add to your position when it falls within your pre-determined 'safe range' (for instance, 10%-15% below your entry price); even if you get stuck short-term, you still have remaining funds for future opportunities, and you won’t be forced to cut losses due to 'running out of ammo.'
2. Draw a 'safety line' in advance: stop-loss and take-profit should be decisive; use 'conditional orders' to lock in profits.
Set stop-loss and take-profit levels before opening a position; this is more important than anything else! Don’t wait until the market turns bad to panic; by then, it’s already too late.
Stop-loss: Set it based on your risk tolerance, generally recommended at 5%-8%. For example, if you enter at 100U, exit automatically when it drops to 92-95U; don’t hold on stubbornly (I once stubbornly held on, going from a 5% loss to a 30% loss — a painful lesson!).
Take-profit: Don’t be greedy, generally set it at 10%-20%, for example, if you enter at 100U, cash out when it rises to 110-120U.
Tip: Use the 'conditional order' feature on exchanges to set your stop-loss and take-profit prices, and the system will execute them automatically. This way, even if market fluctuations are rapid, you won’t miss operations due to 'panic' and won’t let profits slip away or losses expand due to 'reluctance.'
Remember: stop-loss is not admitting defeat; it’s preserving your capital for the next opportunity. Taking profits is not a loss; it’s turning 'floating earnings' into 'hard cash.'
3. Don’t guess 'tops and bottoms': only earn from 'the middle segment'; greed will lead to losses.
Many beginners always think about 'buying at the lowest, selling at the highest,' but they either catch the bottom halfway up the hill or miss the top before it takes off. In fact, no one in the cryptocurrency market can accurately predict tops and bottoms; instead of betting on luck, it’s better to grab the 'certain middle segment.'
Use moving averages to judge trends: Use long-term moving averages like the 120-day or 250-day to determine the general direction — if prices are above the moving average, it’s an upward trend; if below, it’s a downward trend.
Trade along with the trend: In an uptrend, wait for prices to pull back near the moving average before buying; you don’t have to wait for the 'absolute low point.' In a downtrend, wait for prices to bounce back near the moving average before selling; you don’t have to wait for the 'absolute high point.'
