Short-term cryptocurrency trading is an art that emphasizes discipline and execution. Here are five crucial rules and their logical explanations to help you improve your trading success rate:



1. Strictly control risks, set stop-loss and take-profit.

Principle: In short-term trading, defense is more important than offense.

  • The core function of stop-loss and take-profit:

    • Stop-loss: Limit losses, protect capital. Generally set at 2%-5% of the invested amount.

    • Take-profit: Lock in profits, prevent drawdowns from market reversals. Usually set in the 10%-15% profit range.

  • Operational techniques:

    • Set stop-loss and take-profit points based on key support and resistance levels or volatility ranges.

  • Important reminder: Once stop-loss or take-profit conditions are met, act decisively. The market often does not develop according to your emotions; hesitation only increases losses.

2. Go with the trend, do not operate against the market.

Principle: The market trend is the biggest guiding indicator for short-term trading.

  • Methods to judge trends:

    • Moving average system: Short-term moving averages (such as 5-day, 10-day) and medium-term moving averages (such as 30-day) showing a bullish arrangement indicate a positive market trend.

    • Volume changes: Increasing volume along with price indicates a strong trend, while price increase with declining volume may signal a reversal.

    • Relative Strength Index (RSI): RSI above 50 indicates a strong market trend; below 50 indicates market weakness.

  • Trend-following operation techniques:

    • When the market is in an upward trend, try to choose buying opportunities near support during pullbacks.

    • In a downward trend, try to avoid blindly bottom-fishing and patiently wait for stabilization signals.

3. Light position operation, avoid heavy positions or all-in.

Principle: Leave room for error to avoid total losses.

  • The importance of position management:

    • Benefits of light positions: Even if the judgment is wrong, losses remain within a controllable range, reducing psychological pressure.

    • Diversify risks: Allocate funds across different varieties or strategies to avoid singular trading risks.

  • Position allocation suggestions:

    • Control the capital invested in each trade to be between 10%-20% of the total funds.

    • For highly volatile assets (such as small-cap cryptocurrencies), positions should be lighter, with capital allocation controlled within 5%-10%.

  • Avoid an all-in mentality:

    • Even the most confident trades come with uncertainty; heavy positions or all-in can lead to a loss of flexibility in adjusting strategies.

4. Stay calm, avoid emotional operations.

Principle: Rationality survives longer than emotionality.

  • Common emotional fallacies:

    • Chasing highs and cutting losses: Buying after seeing a price surge or panicking and selling during a price drop.

    • Regret psychology: feeling frustrated due to missing market opportunities, leading to hasty replenishment or blind entry.

  • How to stay calm:

    • Trading plan: establish buy, sell, and stop-loss rules in advance, and do not be disturbed by market emotions.

    • Interval operation: set fixed time intervals (such as 1 hour, 4 hours) to reassess market changes, avoiding decision-making influenced by short-term fluctuations.

  • Ways to enhance discipline:

    • Use a trading journal to record the logic, results, and improvement points of each trade, continuously optimizing decision-making.

5. Observe more, act less, focus on high win-rate opportunities.

Principle: Frequent trading may lead to losses; selective strikes are key.

  • Avoid overtrading:

    • Transaction fees and slippage can erode profits, especially in highly volatile markets.

    • Frequent trading without a plan can easily lead to emotional operations.

  • Focus on high win-rate opportunities:

    • Prioritize market hot sectors and leading cryptocurrencies (such as BTC, ETH) as they have strong liquidity and more effective technical analysis.

    • Utilize technical patterns, such as breakout patterns (flag breakout, wedge breakout) or rebound opportunities after testing key support.

  • Patiently wait for signals:

    • Technical indicators like the Bollinger Bands narrowing followed by a breakout may serve as initiation signals.

    • Avoid blindly following news hype, especially unverified rumors.

Although short-term trading emphasizes quick entries and exits, the core of success lies in risk management and execution. Opportunities arise every day in the market, but those who can seize and retain profits are always the disciplined investors.



Continuous learning and practice are essential to keep you undefeated in the battlefield of cryptocurrency short-term trading!