Today, I will bring you a useful lesson on a trading strategy that can completely change the way you participate in the crypto market! I hope you will follow and share this post to help me increase engagement and learn together!
What is Mean Reversion Strategy?
In trading, what rises quickly often tends to fall back. This is called 'mean reversion' - when the price tends to return to the average after a sharp increase. With this strategy, we will choose coins that are rapidly increasing (top gainers) and prepare to catch the moment when the price will turn around and decrease.
👉 Step 1: Find the Strong Gaining Coin
First, scan the market for coins that have skyrocketed in a short time. You can easily find this in the Binance exchange under the 'Top Gainers' section. Pay attention to coins that have increased by 15% or more in the last 1-2 hours, as this is an indication that the coin may be overbought and will reverse soon.
👉 Step 2: Switch to the 5-Minute Time Frame
To better understand when the price starts to decline, switch to the 5-minute timeframe chart. This small timeframe helps us easily identify resistance levels.
👉 Step 3: Identify Resistance Levels
Resistance levels are points that the price struggles to surpass. Observe the areas where the price has touched many times but has not broken through. These points are like 'invisible walls' where buyers gradually lose strength and sellers begin to take control.
👉 Step 4: Short the Coin
When you have identified the resistance level, it is time to open a short position. This means you expect the price to decrease. However, be careful with your position and always set a stop-loss to protect your account when the market suddenly fluctuates.
Remember to practice this strategy carefully and don't forget to follow me for more useful posts!