The following are the core points and short-term trading tips of this strategy, which are worth in-depth study by every investor.
Three No's Principles for Cryptocurrency Trading
Avoid buying high and selling low, and reverse operation: Market sentiment often amplifies price fluctuations. Buying high when prices are rising can easily make you a high-priced buyer; on the contrary, panic selling when prices are falling may miss the opportunity to rebound. Real investment masters know how to practice "be greedy when others are fearful, and be fearful when others are greedy", and cultivate buying on dips into an investment habit, so as to take the initiative in market fluctuations.
Do not place orders blindly: Randomly placing orders may not only miss the best trading opportunities, but also cause the transaction price to deviate from expectations due to instant market fluctuations. You should pay close attention to real-time market dynamics, combine technical analysis with fundamental judgment, and place orders prudently.
Refuse to operate with a full position: A full position means betting all chips on a single market. Once the market trend is not as expected, you will fall into a passive situation. Moreover, the cryptocurrency market operates 24 hours a day, and opportunities are emerging all the time. The high opportunity cost brought by a full position often makes investors miss more high-quality investment opportunities.
Six tips for short-term cryptocurrency trading
High and low breakthroughs: When the price of a currency is consolidating at a high level, the market is in a short-term balance between long and short positions, but a certain factor often breaks the deadlock and creates a new high point; and after consolidating at a low level, it is also easy to break down and create a new low. Therefore, investors should wait patiently for the price trend to become clear before decisively entering the market, and avoid blindly operating when the direction is unclear.
Be cautious when trading sideways: During the sideways period, the market lacks a clear direction, price fluctuations are small, trading risks are high and profit margins are limited. Most investors trade frequently during the sideways period, which not only makes it difficult to make a profit, but also increases trading costs. At this time, it is wise to wait and see and wait for the trend to form.
Buy on Yin line and sell on Yang line: When closing with Yin line, the market selling pressure is released. If the currency price stabilizes at this time, it is often a good time to buy; when closing with Yang line, the market bullish force is vented. If the price rises weakly, you can choose to sell on highs, thereby realizing the profit model of buying low and selling high.
Pay attention to the rhythm of the decline: When the price of the currency slows down, it means that the power of the short side is gradually exhausted, and the subsequent rebound may be weak; on the contrary, if the decline accelerates, it may trigger panic selling. Once the market sentiment reverses, the rebound will be more rapid. By observing the rhythm of the decline, you can better grasp the entry time and predict the strength of the rebound.
Pyramid-style position building: This is a time-tested strategy in the field of value investing. When building a position, first try with a smaller position. If the price trend is in line with expectations, then gradually increase the position, and the proportion of each increase gradually decreases, forming a pyramid shape. This method can control risks and expand profits when the market is good.
Don't be impulsive during the consolidation phase: After a continuous rise or fall, a currency usually enters a sideways consolidation phase. At this time, no matter whether the price is high or low, you should not blindly buy or sell all positions. Because after the consolidation, the market will inevitably change. If the price breaks down, you should stop loss and leave the market in time; if it breaks up, you can follow the trend to avoid missing opportunities or suffering unnecessary losses due to premature operations.
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