Lesson 3 on Trading Principles
1. Selecting promising investment targets is crucial. Firstly, we must understand the project's fundamentals, token economics, and its current level of popularity.
Some targets have significant growth potential, whether they are new projects or have a relatively low token supply and market capitalization due to a low coin price. Projects with smaller market capitalization have a higher probability of experiencing explosive growth.
Take TRB as an example, with a circulating supply of 2,548,138 tokens, significantly less than other projects. Its smaller market cap was evident when its coin price increased from the tens to the hundreds, showing substantial potential.
However, it's essential to note that such projects come with a dual-edged sword; potential for significant gains but also susceptibility to sharp downturns, as illustrated in the chart.
2. For beginners, accumulating coins slowly during the tail end of a bear market by purchasing at each dip can lead to favorable long-term returns in a bull market.
3. Those new to contract trading can start by practicing with Bitcoin. Due to its larger market capitalization, it is less prone to market manipulation, making it more aligned with technical analysis. The accuracy of technical analysis in Bitcoin trading improves as more traders employ this approach.
4. Advanced traders may explore contract trading with altcoins, benefiting from their higher volatility. While this comes with increased risk, entering the market at the right position, accurately predicting market direction, and effectively managing risks and positions can lead to substantial profits—a potential opportunity to strike gold.
5. Before engaging in trades, conduct thorough research on the CoinMarketCap website. It provides insights into token economics, whitepapers, ongoing cryptocurrency events, and serves as a platform for discussions with fellow traders.
