If Bitcoin continues to experience strong fluctuations, then both the bears and bulls are currently concerned with one question: after such a significant increase, when will there be a major correction? Now, have you noticed a very strange issue? Suppose you went long at 80,000 points. When you just opened the position and the price surged, you would be extremely happy. However, as the price continues to rise, you might not only stop feeling happy but instead become increasingly afraid of holding the position, believing that after such a rally, a correction must be imminent. Many clever traders have already started to short the market. The reason they either can't hold their long positions or have begun to short is that they all believe the price has risen too much and has been rising for several days, thus it must correct. Is this approach really correct? Next, let's categorize the trends simply, and you will soon know the right answer. As is well known, there are three types of trends: The first type is a continuous decline with little rebound; the second type is a continuous rise with little correction; the third type is a trend where after rising for a few days, it declines for a few days, which is a fluctuating trend. In the trading market, there are quite a number of traders whose trading logic is to short after a significant rise because they believe a correction is due, and to go long after a significant drop because they expect a rebound. For example, in the past few days, the only reason for the bears to short has been that the price has risen for several days and must correct. This trading logic has a very high success rate in a fluctuating market. For instance, during Bitcoin's recent fluctuating trend, using the strategy of shorting after a rise and going long after a drop has an almost 100% success rate. However, please note that no trend can last forever. These three types of trends alternate in real trading. What is the ultimate purpose of a fluctuation? It is to change direction. Once the direction is clear and the price has risen significantly, the correction will not be very strong. Continuing with the previous trading logic of shorting after a rise, you will find that the probability of being liquidated increases dramatically. The same reasoning applies to a fluctuation turning into a decline; once the trend reverses, you will find that all rebounds are very weak, making counter-trend longs a liquidation trap. So, what specific situation are we in now? It is simple: a trend turning to an upward fluctuation. In the future, there will likely be three scenarios: the first being a slight correction followed by a continued rise; the second being a significant correction; and the third being a continued rise without correction. According to a wealth of historical experience, once a prolonged fluctuation turns into a rise and generates a strong trend, the probability of a significant correction in a short period is the lowest, while the probabilities of the other two scenarios are relatively high. But please note, a low probability does not mean it won't happen. The key issue in trading is to focus on events with higher probabilities of occurring. Using the simplest probability statistics, the probability of a significant drop and correction right now is about 20%, meaning that your chance of profiting significantly from a short is only 20%. The chance of making a small profit from shorting is about 40%, while the chance of going long after a correction is 60%. The chance of going long without a correction is only 30%. Given this situation, how should you choose?
