1. Adhering to the Gold Standard
The first principle is that you should adhere to the gold standard. Short-term trading is definitely not about hoarding coins. The profit based on the gold standard is the first criterion to consider whether to sell. If you earn more than 10% in a short period, you can consider starting to preserve your capital. If you earn 20% in a short period, you should liquidate your position when the profit retracts to 10%. If you earn 30% in the short term, you must sell unconditionally when there is a 15% retraction. This principle is entirely based on profit margins, without considering any technical or news-related factors. What is the second principle?
2. Principle of Capital Preservation
The second principle is the principle of capital preservation. No matter which cryptocurrency you buy, when it gradually loses and drops to 15%, you should cut your losses and exit to ensure safety. Personally, I believe that 15% is a relatively appropriate recovery suggestion. Of course, you can adjust it according to your own situation, such as setting it to 20%, 10%, or 5%. However, remember that when trading in the short term, you must set a stop-loss position; otherwise, you risk losing all your principal in cryptocurrency. Investing is a very high-risk venture, especially in short-term trading. In a market of infinite ups and downs, you are very likely to lose all your principal. So, always invest with an amount you can afford to lose in short-term operations.
3. Build Positions in Batches
The third principle is to build positions in batches, never fully invested. What does building positions in batches mean? Many people will buy all their chips at once, while the correct approach should be to sell while the price is rising and buy while the price is falling. This way, you can choose your chips at lower prices, and during the upward process, you can only take back your profits and principal. Throughout this process, never be fully invested; you should always leave 10% to 20% of your position to prepare for a black swan event. When there is a drastic plunge, you can buy your cost at a lower point. However, remember that you will never buy at the lowest point or sell at the highest point.