There is a relatively conservative and stable cryptocurrency trading strategy that may seem clumsy but can help investors profit steadily in a volatile market. As long as one learns patiently and executes strictly, it can achieve relatively ideal returns.
When executing this strategy, there are several important 'do nots': Do not chase prices: Always do the opposite; buy boldly when the market is in panic selling and prices are falling, and remain cautious when everyone blindly chases high prices and the market is greedily euphoric. Cultivate the habit of 'buying on dips'. Do not restrict trading: Restricting trades can limit flexibility, cause missed buying and selling opportunities, and hinder the maximization of profits. Do not invest with full positions: Being fully invested can put investors in a passive position during market fluctuations. The market never lacks opportunities, and being fully invested means giving up other potential profit opportunities, with too high opportunity costs.
In addition to these three principles, there are six practical maxims for short-term cryptocurrency trading:
Judging market strength at high and low points: When the cryptocurrency price is consolidating at high levels, it may still aim for higher points; while after consolidating at low levels, it is likely to continue to explore new lows. Therefore, investors should patiently wait for the market trend direction to become clear before making operational decisions to avoid blind actions.
Observe sideways market without trading: Most investors lose money in cryptocurrency trading due to an inability to restrain the impulse to trade during sideways periods. In the sideways phase, the market lacks a clear trend, and frequent trading will only increase transaction costs and lead to unnecessary risks.
K-line Yin Yang strategy: When choosing K-line as a trading reference, one can buy when the daily line closes as a negative line and sell when it closes as a positive line, using the changes in K-line's Yin and Yang to seize trading opportunities.
Rule of price fluctuation speed: During a downturn, if the decline gradually slows down, then the subsequent rebound will also be relatively weak; conversely, if the decline accelerates, the subsequent rebound is often stronger. Investors can use this rule to reasonably judge market trends and grasp buying and selling points.
Pyramid building method: Following the pyramid model for building positions, that is, buying more when the price is lower, is an effective strategy tested in value investing, which can effectively average down costs and reduce risks.
Responding to sideways market: After a cryptocurrency experiences continuous rises or falls, it will inevitably enter a consolidation phase. At this time, investors should neither rush to liquidate at high positions nor blindly fill positions at low levels. Because after sideways trading, a trend change is inevitable; if the change is downward, one should promptly liquidate to cut losses; if upward, one can increase positions in line with the trend.
Time is not key, peak is the focus: In cryptocurrency trading, one should avoid getting overly obsessed with holding duration. The market is ever-changing, and holding for a long time does not guarantee high returns. It is crucial to keep an eye on whether the market hits a peak; this is the key signal for when to exit. Once it is judged that the market has peaked, act decisively to lock in profits.
Restrain greed, take profits in a timely manner: During the price rise phase, many people fantasize about higher returns and are unwilling to sell at high levels. However, market trends are unpredictable, and excessive greed often leads to missed opportunities for profit, resulting in repeated failures to sell at the best time, ultimately leading to empty results. Knowing when to take profit requires sharp market insight, as well as strong patience and self-control. One must remain calm and make sound judgments to secure the gains.
Public opinion frenzy, decisive selling: When the streets and alleys are buzzing about 'blockchain' and virtual currency becomes a national topic, the market is often already overly euphoric. At this time, the market bubble is severe, and the risk is extremely high. The wise move is to sell quickly to avoid being trapped by subsequent market adjustments.
Beware of major player traps, do not be swayed by greed: Seeing the cryptocurrency price skyrocket, investors inevitably regret having bought too little or not entering in time. Major players exploit this psychology of retail investors to drive prices up for offloading. Investors must remain clear-headed and not be driven by greed to avoid being harvested.
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