Six Survival Rules for Short-term Cryptocurrency Trading:
1. Wait for a clear trend before taking action
After a high-level consolidation, it is likely to reach a new high, while after a low-level consolidation, it is likely to reach a new low.
Do not rush to trade blindly during a consolidation period; wait for the price to break through key levels before acting.
2. Don’t force trades in a choppy market
Most people lose money because they always want to find opportunities during sideways movement. Remember: sideways movement is the market 'holding back', and rather than being a victim in it, wait for the trend to clarify.
3. Interpret candlestick patterns contrarily
Seeing a large bearish candlestick close (bear market candlestick)? It might be a buying signal.
Seeing a large bullish candlestick close (bull market candlestick)? You might consider cashing out.
(In simple terms: don’t panic at the close of a bearish candlestick, and don’t be greedy at the close of a bullish candlestick.)
4. Avoid rebounds in a downtrend
When the market is in a downtrend, a rebound is often just a 'flash in the pan' and can accelerate the decline. At this time, rather than buying at a high price, it’s better to wait until the trend deteriorates completely before acting.
5. Build positions in batches, pyramid strategy
Don’t buy all at once; buy more when the price is lower and less when the price rises. For example:
Buy 10% the first time, buy 20% after a 5% drop, and keep adding as it drops...
This way, you can lower your average cost and avoid making a wrong directional bet all at once.
6. Clear positions promptly when the trend is at an end
Whether it is a rise or fall, when the price continues to extremes, it will inevitably enter a consolidation phase. At this time:
- Don’t cling to high positions: sell when it has risen too much, don’t wait for a pullback and regret it later.
- Don’t rush at low positions: wait for confirmation of a trend reversal before buying, don’t be fooled by short-term fluctuations.
If the price starts to decline wave by wave from a high point, hurry to clear your positions— the trend may be about to change!
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Summary: Trading is a game of patience
Remember: Trading is not gambling; it’s a game of probabilities.
- First, avoid those three 'pits'; preserving your capital is the most important.
- Short-term trading requires discipline: once the rules are set, stick to them, don’t get carried away by emotions.
- Don’t think about 'making all the money'; being able to seize a few certain opportunities is enough.
Lastly, let’s be frank: the market is never short of opportunities; what it lacks are people who can calmly seize them.