After a long time navigating the cryptocurrency market, I've accumulated quite a bit of experience. Today, I want to share these 5 trading rules with everyone, hoping to help new friends avoid detours and pitfalls.
Rule One: Fast Rises, Slow Falls - Accumulation by Whales
When you observe that the market is experiencing a rapid rise but the subsequent decline is relatively slow, this is likely a sign that whales are quietly accumulating. To successfully raise prices later, whales will discreetly gather chips during this phase. At this point, as an investor, do not be panicked by small price fluctuations. This could very well be a prelude to a significant market rise; leaving too early might mean missing out on substantial profits later.
Rule Two: Fast Falls, Slow Rises - Whales Selling
Conversely, if the market experiences a rapid decline, but the subsequent rise appears very weak, this can generally be determined as the whales cashing out. After the whales have completed selling, the market often lacks sufficient funds to push prices higher, and it is very likely to enter a downward trend. Therefore, once this signal is detected, do not hold onto false hopes; make timely decisions to avoid further asset depreciation.
Rule Three: Don't Rush to Sell with Increased Volume at the Top; Exit Quickly with Decreased Volume
When the price reaches a high point and trading volume significantly increases, do not rush to sell your coins. An increase in trading volume indicates active market trading, and there may still be room for further increases. However, if at the top the increase in trading volume is not significant, it is time to exit quickly. This indicates that the upward momentum of the market has gradually exhausted, and prices could drop significantly at any time, with danger approaching step by step.
Rule Four: Be Cautious with Increased Volume at the Bottom; Sustained Increase Allows Entry
When the market is at a bottom area, if there is an increase in trading volume, do not rush to buy. This may just be a brief pause in the downward process and not a true reversal signal. Only when there is a sustained increase in volume at the bottom does it indicate that substantial funds are continuously entering the market, suggesting that the bottom may have formed. At this point, considering entry has a relatively higher success probability.
Rule Five: Trading Cryptocurrencies is About Sentiment; Trading Volume Reveals Consensus
The cryptocurrency market is largely a sentiment-driven market, and trading volume is the most direct reflection of market sentiment. When market sentiment is high, trading volume usually increases; conversely, when market sentiment is low, trading volume tends to shrink. Therefore, investors should pay close attention to changes in trading volume to better grasp market trends. Only by keeping up with market consensus can one minimize the negative impact of emotional fluctuations on investment decisions in this uncertain market.
The cryptocurrency market is unpredictable and full of uncertainties, but it also contains many opportunities. To move forward steadily in this market, one must not only master certain technical analysis methods but also deeply understand changes in market sentiment. Always remain calm and rational, and do not let short-term price fluctuations cloud your judgment; this can increase the chances of success in cryptocurrency investment.