Robust Cryptocurrency Trading: Mastering Contrarian Thinking and Capital Allocation, Unveiling Short-Term Secrets
In the tumultuous waves of cryptocurrency trading, there exists a strategy that may seem clumsy yet holds immense power, capable of helping you firmly lock in most of your profits. But before that, there are three iron rules you must keep in mind to avoid stepping into danger zones.
First, never blindly follow the crowd when the coin price skyrockets. Instead, you should learn to think contrarily. When the market is filled with fear, you should bravely take action; conversely, when everyone is euphoric, you need to remain calm. It is during the decline of the coin price that you should seek out buying opportunities.
Secondly, never put all your chips on a single trade. Doing so is undoubtedly dancing on the edge of a cliff, with extremely high risks. Reasonable capital allocation is the key to long-term success.
Furthermore, always avoid being fully invested. Being fully invested will put you in a passive position, causing you to miss out on other potential opportunities. The market is vast, with many opportunities; being fully invested is undoubtedly a great waste of capital.
Next, let us delve into the essence of short-term cryptocurrency trading:
When the coin price rises to a high point, it often still has the power to surge; conversely, when it falls to a low point, it may test the bottom again. Therefore, before the situation becomes clear, do not rush to conclusions; patience and waiting are the best strategies.
When the coin price fluctuates gently, trading recklessly often leads to losses. Many traders incur losses because they cannot endure the silence. When observing the candlestick chart, if the daily line closes in the red, it may be an excellent buying opportunity; if it closes in the green, consider selling at the right time.
The speed of the coin price decline is often proportional to the strength of its rebound. When building positions, one should proceed step by step like constructing a pyramid; this is the golden rule of value investing.
If a particular cryptocurrency continues to rise or fall, it will eventually face a consolidation period. At this time, do not rush to buy or sell with your entire capital, as the direction after consolidation can change rapidly. If the direction is downward, decisively withdraw; if the direction is upward, quickly follow up.
On the journey of cryptocurrency trading, stability and wisdom are your most valuable assets.
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