There is a rather foolish but incredibly effective method for trading cryptocurrencies. Although you can't become wealthy overnight by following it, it can help you steadily grasp the profits while learning along the way.
First, let's talk about three things you absolutely should not do when trading cryptocurrencies.
First, don't buy in when the price is rising rapidly. Remember the saying: be bold when others are fearful, and be cautious when others are greedy. You should develop the habit of buying when the price is falling; at that time, everyone else is panicking, and that's when you need to seize the opportunity.
Second, absolutely do not place large orders. Placing large orders is like gambling on odds; the risk is too great. We trade cryptocurrencies to make money, not to gamble with our lives, so definitely avoid this.
Third, never go all in. If you go all in, you become passive. There are plenty of opportunities in the market, and there's no need to stake all your money on one trade. The opportunity cost of going all in is too high; if the market turns against you, you may not even have a chance to recover.
Now, let’s discuss six key principles for short-term trading. Remembering these will help you avoid a lot of pitfalls.
First, after the price consolidates at a high level, it often pushes higher to create a new high. Conversely, after consolidating at a low level, it is likely to drop again, creating a new low. So we need to wait for the direction of the market to become clear before acting; don’t rush to place bets.
Second, don’t trade randomly during sideways movement. Many people lose money in trading because they can’t control themselves and make random moves during sideways markets. We need to stay steady and wait for clarity before taking action.
Third, when selecting candlestick patterns, buy when a bearish candle closes and sell when a bullish candle closes. This tactic is simple but effective and can help us seize many opportunities.
Fourth, if the speed of the decline slows down, the rebound will also be gradual; if the speed of the decline accelerates, the rebound will be strong. We need to adjust our trading strategies according to this pattern.
Fifth, when building positions, use the pyramid method. This is a fundamental rule in value investing, and following it is guaranteed to be effective.
Sixth, after a cryptocurrency price rises or falls continuously, it will definitely enter a consolidation phase. At this time, don’t rush to sell everything or buy everything. After consolidation, there will definitely be a change in trend. If it changes from high to low, we need to clear our positions quickly; if it changes from low to high, we should gradually increase our positions. In any case, we need to respond flexibly and not be overly rigid.
