Three Major Principles of Short-term Trading in Cryptocurrency

Profit Drawdown Principle:

When you buy a cryptocurrency and it gains more than 10%, you should start implementing the capital protection principle (if it drops back to the buying price, sell unconditionally). If it gains around 20%, then the rule is that this trade must earn at least 10% before selling, in order to maximize profits. When it gains 20%, you set a rule that you won't sell unless the profit drops back to only 10%, unless you have very strong technical indicators of a significant peak; otherwise, do not sell. Similarly, if you gain 30%, you must sell unconditionally if it drops back to a 15% gain. This principle operates on the idea that without technical indicators to determine the peak, allowing profit drawdown can help your profits roll over.

Capital Protection Principle:

When you buy a particular cryptocurrency, if you start to see a gradual loss of 15% (this number varies by individual; 15% is generally recommended), you should cut your losses and exit. This is to stop the loss in a timely manner. If it later rises again, that’s fine; after all, it was just an incorrect entry point, a wrong trade. Mistakes have consequences, and that consequence is loss, which helps you remember to avoid chasing after losses. We must ensure that we do not let mistakes turn into pain. Therefore, setting a stop-loss at the time of opening a position is a very necessary condition in futures trading.

Original Price Buyback Principle:

The principle for buying back at the original price works like this: if you sell and then it drops, and you are still optimistic about it, you should buy back the same quantity of cryptocurrency. Remember, it must be the same quantity, because you sold at a high price, so you will have the same amount of coins but some extra funds. If you sold the coins and did not buy back after the drop, and it later rises back to your selling price, you must buy it back unconditionally; doing this only wastes transaction fees and can avoid many missed opportunities. This principle can be repeatedly applied with the capital protection principle: buy back at the original price when it rises, and protect your capital when it drops again. If you do this continuously over multiple operations.