1. A big morning drop is often a buying opportunity:
The change in market sentiment is especially pronounced in the morning. If there is a drop at the opening, this usually means that investors can find some undervalued investment opportunities to buy at a lower price. Conversely, if the market shows an upward trend in the morning, it is often a good time to sell, as this rise may just be a temporary phenomenon. Remember, these fluctuations in market sentiment actually provide us with many short-term trading opportunities. The key is to learn to think contrarily and to be bold in being greedy when others are fearful and fearful when others are greedy, so as to effectively seize these fleeting opportunities.
2. Stable mindset:
When there is a significant drop in the market, remember not to panic. Stay calm to avoid making impulsive decisions based on emotional fluctuations, such as blindly selling stocks to stop losses. The correct approach is to remain patient, observe changes, and wait for signs of a market rebound before making decisions. Likewise, when the market is in a sideways consolidation phase, with neither significant upward nor downward movement, do not rush to enter the market. The wisest choice at this time is to patiently wait until the market trend clarifies and forms a clear direction. This can effectively avoid potential risks brought about by blind following.
3. Always leave yourself an exit:
Everyone starts out blinded by greed, often fully invested and under the false confidence that they are making the right decisions. As they gain more experience, they find that there are often many unexpected outcomes. Although the overall direction may be correct, the entry points they envision are often far from reality. When funds are small, position management issues don’t show up as much, but once the funds increase, position management becomes evident. Being fully invested often leads to being stuck in a downward trend with significant unrealized losses, severely affecting trading emotions. Therefore, regardless of the situation, it’s essential to have a medium to long-term position strategy, and even with 200% confidence, never go for 100% of your capital; always leave yourself an exit!
4. Earn the part you should earn:
In the vast sea of options, only take a sip. Most stock traders want to eat all parts of every coin from the beginning, wanting to capture every rise while avoiding every drop.
After years of experience, ultimately gaining nothing, I realized I should focus on one specific pattern. I focus on identifying confirmed bottom patterns, so what I share is centered around the bottom. I only look for acceleration patterns after a bottom has been established. We can open any candlestick pattern, list out the profitable patterns, and choose one common pattern to focus on. Over time, this pattern will become your cash machine because you are well aware of most traps and the opportunities it contains, making it easier to profit and earn the part you should earn. This is also our purpose for entering the cryptocurrency space.
5. Do not forget that technical analysis is a probability game:
Technical analysis does not have absolute correctness; it is essentially a probability game. This means that no matter what technical method you use to formulate a strategy, you cannot guarantee that the market will behave as expected.
Technical analysis is merely a prediction; it should not be treated as a deterministic event in operations.
No matter how rich your experience or how impressive your track record, you cannot assume that the market will follow your technical analysis. If you hold this mindset, it’s easy to overbet on a preset, leading to excessive risk exposure. The market will teach you a lesson in no time.
6. Don’t sell on volume at the top; run quickly when there's no volume at the top:
In cryptocurrency trading, when the price of a coin reaches its peak, the change in trading volume becomes a crucial basis for judgment. Suppose a certain coin has been continuously rising for a period and finally reaches a historical high, at this point, the trading volume surges sharply. This may indicate that the buying power in the market is still strong, with further momentum to push the price up. For example, when a mainstream coin breaks through the previous high, the trading volume can be several times that of normal days, with a large influx of buying orders pushing the price up by more than 10%. However, if the trading volume decreases in the peak price area, this is an extremely dangerous signal. For instance, another coin shows a significant drop in trading volume when it reaches its peak, indicating insufficient upward momentum, and shortly after, it begins a significant downward trend.
7. Take profit immediately when the price returns to the entry level:
In trading, when investors choose the right timing to enter the market and trade according to their trading plan, if it turns out that they have entered a trend market and are trading with the trend, then they should patiently hold their positions and allow their holdings to increase in profit as prices change. They must not hastily sell their positions due to small market adjustments, which would cause them to miss out on significant profit opportunities later. However, there is one situation where it is imperative to close positions: when the market price retraces to the investor's entry point and the profits are about to be reduced to zero, they must take profit and exit.
8. Trend is king; go with the trend:
Once a trend is formed, there’s no need for excessive analysis; you must follow it. Follow the money flow, don’t speculate, don’t predict, and don’t assume. If you can’t determine the trend, watch the moving averages. The moving average essentially divides the market into bullish and bearish trends. A bullish trend is upward; a bearish trend is downward. For short-term trades, look at the daily moving average; when there’s a volume breakout, you follow in. For medium to long-term trends, look at the weekly moving average; when there’s a volume breakout, you enter, and if it breaks, you exit. Going with the trend means not going against it; if the market is unfavorable, decisively stay out of the market. If the trend of a coin is downward, don’t easily try to catch the bottom, and don’t fantasize that you can buy coins that will rise against the trend, as the probability of such situations is too low. The core of cryptocurrency trading is to only engage in high-probability events and to abandon low-probability events.
9. Focus on the essentials, simplify complexity:
In fact, I’ve written a lot about techniques in previous articles, but no amount of techniques can adapt to everyone. This is determined by each person's character, experience, and understanding. Techniques can be learned, but more importantly, it's about honing a method that suits you after learning and practicing. The noisy techniques do not make money; the profitable techniques are not noisy. At a certain stage of trading, what’s most needed is to learn to simplify, to let go, and to return to simplicity. The methods may be rudimentary, but as long as they make money, it’s fine. It’s also okay if the methods are singular; a single method can cycle well. As for how to find this point? Keep trying, keep modifying, keep refining. If it works, then scale it up. Always remember to only earn or lose based on one model, and avoid swinging back and forth. Understand the trade-offs. This message is for those who study techniques every day yet remain confused about cryptocurrency trading. Stop and take a serious moment to reflect.
10. Don’t let small profits lead to big losses:
Just like playing baccarat, today I went in with a stake of one or two hundred and won 500, and I was satisfied and retreated. The next day I won another 500, and I retreated again, feeling pleased. By the third day, it wasn’t as smooth; I went in and lost 500, unwilling to accept it, so I continued gambling, wanting to make it back, putting down 500, and lost 1000 instead. I lost all the profits from the previous two days, and then, unwilling to give up, I kept gambling, throwing down 500 and 1000 chips at will, resulting in a loss of tens of thousands. This is a classic case of winning a little and losing a lot.
Every time you open a position, you take risks to earn a little profit, not even reaching your take profit level or your protective stop loss, and you exit happily. When you incur losses, you stubbornly hold on, even to the point of liquidation. If that's the case, you are not suited for investment trading, let alone gambling. Casinos love people like you because you won't always have good luck. Winning a little every day, a few hundred, but when your luck is bad, a loss makes you bold enough to place heavy bets, losing tens of thousands. This kind of behavior is what the house loves most: the naive.
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