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Core of Short-Term Trading: Four Key Principles and Nine Iron Rules
The essence of short-term trading is condensed into the four words 'fast, accurate, fierce, and independent' — missing any one of these makes it difficult to stand firm in the short-term market. Among them, 'independent' is particularly crucial, referring to focusing only on the cryptocurrencies that you have tracked long-term and are sufficiently familiar with, without recklessly touching unfamiliar assets. To implement these four key principles, one must strictly adhere to the following nine iron rules:
Point importance, better to miss than to make a mistake: The points required for short-term opening positions must be extremely precise. Once the ideal entry point is missed, it must be resolutely abandoned. 'Better to miss than to make a mistake' is the first line of defense in short-term trading.
Consider retreating before entering; stop loss must be clear: Before opening a position, one must first think of an exit. Each order carries risks, thus a stop-loss level must be clearly defined before opening a position. In principle, if the stop-loss margin exceeds 8%, one should either abandon the operation or patiently wait for a better entry point. In extreme market conditions, even if chasing orders, position size must be strictly controlled.
Light position layout, leave room: There may be 2-3 good short-term opening opportunities every day. To avoid occupying too much capital and missing better opportunities, each opening position should be controlled within 10-20% of available funds.
Decisive stop loss, flexible profit taking: Try to use conditional orders to open positions, and set stop losses immediately after the transaction — do not overestimate your execution ability. Remember: profit taking can be slightly hesitated, but stop loss must be decisive.
Prioritize capital preservation, stepwise profit-taking: If there are profits, first close part of the position at key support or resistance levels to ensure that this trade does not lose. As profits expand, use a stepwise approach to reduce positions.
Strictly control overnight positions, leave positions in line with the trend: Before the market closes, if the remaining position profit is not 15% or has not detached from the cost, in principle, do not hold positions overnight; if profits exceed 15% and the trend is intact, keep 20% of the opened position to seek the maximum profit.
Limit frequency, refuse impulse: If there are two consecutive stop losses in short-term operations on the same day, in principle, pause short-term trading unless a completely stable variety and point that meets all four major conditions appear, then consider a third operation.
Adaptation is key, do not blindly follow the trend: There are countless methods of investment, and the rules of each trading system are different. Someone else's method may not suit you — personality determines investment habits; some are good at short-term trading, while others prefer swing trading. Only what fits oneself is the optimal solution.
Top-level intraday short-term strategies: Ten practical mindsets.
Having mastered the iron laws, one still needs auxiliary techniques. Here are the top ten practical mindsets summarized by intraday short-term experts, which need to be flexibly applied in conjunction with the market situation:
First method: Do not break the low point, enter immediately.
Condition 1: The K-line is in a clear upward trend;
Condition 2: The previous oscillation has ended, short-term profit-taking has escaped, and bearish selling pressure has weakened;
Condition 3: The intraday line gradually flattens to form a gentle point A. When point B appears and does not break point A, buy immediately when the intraday line just rises.
Note: Many short-term traders are waiting for this signal. Once point B appears, the concentrated influx of bearish closure and bullish opening positions will drive a wave of upward movement.
Second method: Dare to buy on a sharp drop, be cautious on a gradual drop.
Condition 1: The 3-minute, 5-minute, and 15-minute K-line charts all show an upward trend;
Condition 2: The K-lines in the above periods often show abrupt sharp drops (sharp drops can be decisively intervened, while gradual drops require observation and waiting).
Third method: Zigzag group shape, wait and see is best.
Condition 1: The intraday line deviates from the previous smooth pattern, showing a clear zigzag shape;
Condition 2: At the same time, it is accompanied by a group-like oscillating trend (at this time, the forces of bulls and bears are in a stalemate, and the signals are confused, making it unsuitable for operation).
Fourth method: Arc line discernment, volume is key.
Condition 1: When the upper arc is rising, if the trading volume shrinks, beware of subsequent declines (the bullish momentum is weak);
Condition 2: When the lower arc is rising, if the trading volume shrinks, be cautious of the continuation of the bullish momentum (insufficient energy).
Fifth method: The channel is intact, do not go against the trend.
Condition 1: On the 3-minute and 5-minute charts, the channel formed by the 5-day and 10-day moving averages remains intact;
Condition 2: The K-line has not yet shown obvious signs of touching the line (the trend is intact, do not rush to make counter-trend moves).
Sixth method: The channel closes, three lines return to red and can be bought.
Condition 1: In the 3-minute chart, the downward channel has closed, and the 5-day, 10-day, and 20-day moving averages are flattening and merging, gradually approaching the red 60-day moving average;
Condition 2: On the 5-minute chart, the red 60-day moving average has flattened or is beginning to flatten (the signal of trend reversal is initially visible).
Seventh method: No top or bottom in consolidation, grasp the opportunity to reverse.
Condition 1: When the high point is consolidating, the upward momentum has weakened, or the K-line opens significantly high and then falls back;
Condition 2: When the low point is consolidating, the downward momentum is nearing its end, or the K-line is oscillating back in an upward trend — at this time, a counter-trend operation can be made (turning from high to short, turning from low to long).
Eighth method: The triple top appears; buy on the fourth attempt.
Condition: A parallel state of a triple top forms on the intraday line, buy when the fourth peak is reached (multiple tests of the high point that have not broken indicate strong bullish power).
Ninth method: The moving average closes and then opens again, follow the trend.
Condition 1: The moving average is in an upward trend;
Condition 2: The 5-day and 10-day moving averages first close the channel downwards, and the K-line receives support near the 20-day moving average to stop falling, then the 5-day moving average rises accordingly, reopening the upward channel.
Note: Emphasizing 'the first time' is because the 10-day or 20-day trend moving averages can provide at least 2-3 effective support levels in a cycle. The signal opened after the first closure is more reliable.
Tenth method: Sharp pattern, exit decisively.
Condition 1: The previous day's K-line closed in the red, and the current day's K-line forms a small upward spike creating a 'sharp top' — long positions should exit immediately;
Condition 2: The previous day's K-line closed in the green, and the current day's K-line forms a small downward spike creating a 'sharp bottom' — short positions should exit immediately (sharp patterns are often reversal signals and require quick reactions).
Ultimate mindset: Discipline is more important than technique.
Short-term trading, the most core principle is to maintain discipline: be decisive when buying and never hesitate when selling. But human nature is inherently fragile, and it is inevitable to breed luck in the face of monetary temptation. If one only understands technical methods without strict rules, it is impossible to survive and profit in this predatory speculative market.
One must understand that the trading system is just a tool. If execution is lacking, even the best rules are just waste paper, and discipline becomes mere talk. Only by balancing technology and discipline can one stand firm amidst short-term fluctuations.
Trading cryptocurrencies is about repeatedly doing simple things, consistently using one method over a long period until it is mastered. Trading cryptocurrencies can be like other industries; practice makes perfect. One should make every decision without hesitation.
This year is also my seventh year trading cryptocurrencies. I entered the market with 10,000, and now I support my family through cryptocurrency trading! I can say that I have used 80% of the methods and techniques in the market. If you want to treat cryptocurrency trading as a second career to support your family, sometimes listening and observing more will uncover some insights beyond your understanding, which can save you at least 5 years of detours!
Follow me @加密大师兄888 There are many lost souls on the road of encryption; I only guide those with fate, recruiting disciples...
