Six Survival Rules for Short-Term Trading

1. Wait for Clear Trends Before Acting

- After a high-level consolidation, it is easy to reach new highs; after a low-level consolidation, there is a high probability of reaching new lows.

- Do not rush to trade blindly during a consolidation period; wait for prices to break through key levels before taking action.

2. Don't Force Trades in Choppy Markets

Most people lose money because they always want to find opportunities during sideways markets. Remember: sideways movement means the market is “holding back its big move.” Rather than being the fodder in this phase, it's better to wait for a clear trend.

3. Interpret Candlestick Patterns Contrarily

- See a large bearish candle closing (bear market candlestick)? It might be a buying signal.

- See a large bullish candle closing (bull market candlestick)? Consider taking profits first.

(To put it simply: don’t panic at bearish close; don’t be greedy at bullish close)

4. Avoid Touching Rebounds in Downtrends

When the market is in a downtrend, rebounds are often just a “flash in the pan” and can accelerate the decline. Instead of buying at high levels, it's better to wait for the trend to deteriorate completely before acting.

5. Build Positions in Batches, Pyramid Strategy

Don’t buy everything at once; buy more when prices are lower and less when prices rise. For example:

- Buy 10% initially, buy 20% if it drops 5%, and add more if it drops again…

This way, you can lower your average cost and avoid making a big wrong bet all at once.

6. Liquidate Timely When Trends Peak

Whether rising or falling, when prices reach extremes, they will inevitably enter a consolidation phase. At this time:

- Don’t cling to high positions: sell if it rises too much; don’t wait for a pullback and then regret.

- Don’t rush at low positions: wait for confirmation of a trend reversal before buying; don’t be fooled by short-term fluctuations.

If prices start to decline wave by wave from a high point, quickly liquidate—trends may be about to change!

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