Many people may make incorrect judgments in short-term trading that lead to liquidation. Today, Luo Long will explain the three major principles of short-term trading to help you avoid liquidation.
1. Principle of Profit Withdrawal:
When buying a cryptocurrency, if it gains more than 10% after purchase, we should start applying the principle of principal protection (if it later drops back to the purchase price, sell unconditionally). If it gains around 20%, then we stipulate that this trade must earn at least 10% before selling, in order to maximize profits. At a 20% gain, we stipulate not to sell unless the profit drops to just 10%, unless we are very sure of a technical peak; otherwise, we do not sell. Similarly, if we gain 30%, we must sell unconditionally if it drops to a 15% gain. This principle is for those without the technical ability to determine a peak, allowing profit withdrawals to help roll profits.
2. Principle of Principal Protection:
When buying a certain cryptocurrency, if it gradually loses 15% after purchase (this number varies by individual, but 15% is recommended for redemption), then sell to cut losses. This stops losses in a timely manner; if it rises again later, it doesn’t matter, as that was just an incorrect entry point, a mistake in trading. Mistakes come with a cost, which is the loss, and losses lead to remembering the lesson, so one won’t keep chasing after losses. We must ensure that our mistakes do not lead to pain. Therefore, setting a stop-loss as soon as a position is opened is a crucial condition in futures trading.
3. Principle of Repurchasing at Original Price:
The principle of repurchasing at original price is as follows: If you sell and it subsequently drops, but you are still optimistic about it, you should buy back the same amount of cryptocurrency. Remember, it must be the same amount because you sold at a high price, so now you have the same amount of coins but with extra capital; if you sell a coin and it drops but you do not buy back, and it later rises back to your selling price, you must buy back unconditionally. Doing this merely wastes transaction fees but can prevent many missed opportunities. This principle can be repeatedly applied with the principle of principal protection: buy back at the original price when it rises, and apply principal protection when it drops again. If you continue to do this multiple times, you won’t need to focus on the current price of that coin, which shows your chosen price is not a support or resistance level and is easily broken through. Choose another price point. In summary, short-term trading must follow some basic principles, particularly: quick entry and exit does not equal frequent trading; chasing hot trends does not equal blind selection; taking profits does not equal being timid; holding cash and observing does not equal avoiding the cryptocurrency market; and one should not insist on buying at the lowest price or selling at the highest price.
