Old followers know that three years ago, I lost 70% of my capital within two months—not because my skills were lacking, but because I fell into too many 'assumed' traps. It took me a whole year to review over 200 trades to develop a practical short-term framework. Today, I will thoroughly break down the three most critical practical insights, each accompanied by lessons learned the hard way; after reading, you will at least be able to avoid 80% of the loss traps.
1. Practical short-term iron rules: 3 'counterintuitive' but super effective operational logic
The core of making money in short-term trading is not 'guessing accurately', but 'being able to take losses and earn steadily'. These three strategies are what I distilled from continuous losses; if executed properly, the win rate can directly increase to over 65%.
1. Use 'volatility + trading volume' dual screening to accurately lock in 'real market conditions'
Before opening a position, I must look at two numbers: 24-hour volatility > 12%, and daily trading volume increased by more than 50% compared to the average of the previous 3 days.
Why? Looking only at volatility can easily lead to 'false breakouts'—some cryptocurrencies suddenly rise by 15%, but if the trading volume does not keep up, it's often a trap set by the major players; entering at that point can lead to losses. Only volatility that meets the volume criteria is driven by real capital, and such opportunities can last at least twice as long as ordinary market conditions.
Just like the SOL market last month, on April 18th, volatility was 14%, and trading volume increased by 1.2 times compared to the previous 3 days; entering at that time, even if buying at a relatively high point, there was still enough room to exit later.
2. Position management using the 'one-third rule', always leave 'margin for error' in the market.
Beginners often struggle with 'how much to buy for a single asset'; I now consistently use the 'one-third rule': allocate 30% of total capital into 3 purchases, with a price difference of 2% between each purchase.
For example, with a capital of 10,000 USDT, the first purchase of 3,000 USDT is made at the support level; if it drops by 2%, I add another 3,000 USDT, and if it drops another 2%, I add the final 3,000 USDT—this way, I can average down the cost, while avoiding being unable to bear volatility after a single large investment.
Last November, when I was trading ETH, I first opened a position at 1,800 USD, added at 1,764 USD after a 2% drop, and finally increased my average cost to 1,782 USD; when it rebounded to 1,820 USD, I broke even, while those who went all in might still be waiting to recover.
3. 'Double insurance' for stop-loss and take-profit: let profits run, lock in risks.
Short-term trading is most afraid of 'rollercoaster rides'. My stop-loss and take-profit method has helped me avoid countless pullbacks over the past three years:
Stop-loss must be 'pre-set': set a fixed stop-loss of 3% when opening a position (extended to 5% in extreme market conditions); for example, if entering at 100 USDT, cut losses at 97 USDT, never fantasize about 'it might rebound'—this step is crucial to avoid small losses turning into big ones.
Take-profit is executed in 'two steps': when profit reaches 8%, first close 60% of the position to secure gains; for the remaining 40%, use 'break-even take-profit' (raise the stop-loss to the opening price) to let profits seek larger opportunities.
Just like in May for BTC, when it rose from 30,000 USD to 32,500 USD, I first closed 60% of the position and made 1,500 USDT; for the remaining 40%, I set a stop-loss at 30,000 USD; it eventually rose to 34,000 USD, yielding another 800 USDT—this preserved most of the profit without missing the trend.
2. The root cause of 90% of retail investors' failures: these two pitfalls, I have fallen into three times.
Reviewing my own and my students' losing trades, I found that 80% of losses can be attributed to these two issues. See if you have fallen into them:
Pitfall 1: Chasing 'hot coins' blindly while ignoring 'margin of safety'.
Many people rush in when they see the community shouting 'XX coin is going to skyrocket', without looking at basic support levels or trading volumes. I once chased SHIB in 2021 when it rose from 0.000015 to 0.00002; after following the trend, it directly retraced 30%, cutting my capital in half—I later understood: a rise without a support level is like a 'castle in the air', it's untouchable.
Correction plan: add a 'support level filter' to only enter when the coin price retraces to previous highs, the 20-day moving average, or the 61.8% Fibonacci retracement level; these three positions have natural buying support, which can at least reduce the risk of being trapped by 50%.
Pitfall 2: Being 'soft-hearted' on stop-losses turns 'short-term trades' into 'long-term traps'.
'Just wait a bit, it might come back'—how many retail investors have been harmed by this phrase? I once held a altcoin that fell below the stop-loss line while fantasizing about a rebound, resulting in a drop from 1.2 USD to 0.3 USD, losing 75% of my capital. Later, I understood: a stop-loss in short-term trading is like a seatbelt in a car; it seems annoying at times, but it saves lives in emergencies.
Correction plan: use 'mechanical stop-loss'; set the stop-loss order directly on the exchange after opening a position, and close the monitoring software—out of sight, out of mind; this can actually avoid hesitation when manually stopping losses.
3. Practical breakdown: the XRP surge of 35% had a method to every step.
It's easy to talk without practice; let's take the XRP market on May 15 as an example to see how this logic is applied:
Entry signal: 24-hour volatility at 13% (meets the criteria), trading volume increased by 60% compared to the previous 3 days (volume is enough), price retraced to 0.62 USD (previous high support level); all three conditions met, entered decisively.
Position management: 800 USDT capital, divided into 3 purchases—buy 300 USDT at 0.62 USD, add 200 USDT when it drops to 0.61 USD, and add 300 USDT when it drops to 0.60 USD; average cost is 0.608 USD.
Take-profit execution: when it rises to 0.69 USD (profit of 13.5%), close 60% of the position (480 USDT in corresponding position), locking in 57 USDT; for the remaining 40% of the position, move the stop-loss to 0.62 USD (break-even line), and finally take profit at 0.82 USD, earning another 143 USDT.
The entire process was done without monitoring the market, relying on preset rules for automatic execution; ultimately, an 800 USDT capital earned 200 USDT, a return of 25%—the key is not how much you earn, but that there is no panic at every step; that is the backbone of short-term trading.
Finally, let me say something heartfelt: short-term trading profits do not come from 'predicting market trends', but rather from 'managing risks'. I have seen too many technically skilled people lose everything, and I have also seen those with average skills but strong discipline consistently profit—the difference lies in whether one can stick to the rules.
Want to know how to accurately judge the effectiveness of support levels? Or where the critical point for increased volume lies? Follow me, tomorrow I will break down 'the traps set by major players behind trading volume'; on this trading journey, having someone to guide you can save you 3 years of detours. Give me a thumbs up, and let's make profit a norm together.
