Fourth Strategy: Coping with Fluctuating Markets

The surge in cryptocurrency prices does not happen every day: it is a one-sided trend. It operates between a period of rising and falling prices, or between two periods of rising, or two periods of falling, and there often appears a fluctuating market in between. The so-called fluctuations refer to price levels hovering within a narrow range, retreating when approaching the upper limit and rising again when hitting the lower limit. We call this kind of market consolidation, also known as a 'box' trend.

The reason for the fluctuations is that there are no obvious bullish or bearish news in the market, and the market loses its directional momentum for one-sided development. At this time, only short-term speculation is viable, and both bulls and bears are in a tug-of-war state, causing many people to feel dizzy from being 'hit from the left and struck from the right.' Because the distance between the upper and lower limits is not large, and once it reaches the upper limit, it turns down; once it hits the lower limit, it turns back up, profit opportunities are fleeting, and greed leads to being trapped.

Countermeasures:

1. When the direction of the upper and lower peaks is not particularly clear, if you are making a profit and the price turns positive, and you feel the upper peak is reached, take the profit and reduce your position by 30%. If it continues to rise and you feel it is in a state of stagnation, continue to reduce your position by 20%. If it falls and turns negative, increase your position by 20%. If it continues to fall and you feel it has stopped falling and is in a consolidation state, increase your position by 30%. By repeatedly operating this way, you will find that no matter how long the box consolidation lasts, your cost will keep decreasing, and in the end, you will profit without even realizing it.

2. After determining that it is a fluctuating market, buy when close to the lower limit to go long, sell when it rises to the upper limit to close your position, and then short. When it drops to the lower limit again, close your position and reverse to go long. This tactic emphasizes agility and flexibility. As soon as it reaches the upper or lower limit, you must immediately reverse your trade. In fact, the best approach is to just observe without acting. In a fluctuating market, only observe, and wait to enter when there is an upward or downward breakout. But the key question is, do we really have that patience?

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