In cryptocurrency trading, coping with volatile markets is a skill that traders must master, and it is also one of the easiest market conditions for beginners to profit from. First, the strategy for dealing with volatile markets is crucial. Diversifying investments is an effective way to reduce risk in a single market; it’s like not putting all your eggs in one basket, which balances the overall risk and return of the investment portfolio. Flexibly adjusting positions is also essential, as the market is dynamic. We should timely increase or decrease positions according to market changes to control risk. Setting stop-loss and take-profit levels is crucial; it is an effective means to control risk and lock in profits.
From the perspective of market analysis and operational recommendations, macroeconomic analysis is fundamental. We need to pay attention to the global macroeconomic situation, as factors such as economic growth, inflation, and monetary policy will affect cryptocurrency price trends. Technical analysis is also very practical; by using technical indicators like candlestick charts, moving averages, and MACD to analyze price trends, we can formulate reasonable investment strategies. Fundamental analysis should not be overlooked either; paying attention to the basic supply and demand conditions of the market and related economic indicators can help predict market trends more accurately.
In terms of operational positions, conservatively speaking, one could build positions 2 percentage points above support levels and 2 percentage points below resistance levels. Stop-loss settings should extend 2 percentage points outside of resistance and support levels (here, the term 'points' may not always refer to percentage points, but just a symbol; if the meaning of a certain 'point' differs from the common understanding, I will annotate it). This approach can avoid the embarrassment of false breakouts triggering stop-losses, as well as prevent significant losses from breakthrough trends without stop-losses. If one wants to be more aggressive, one can set plans directly at resistance and support levels or even slightly inward from those levels, but this approach relies more on luck. The entry position must ensure that the profit from taking profits is greater than the loss from stop-losses. Taking ETH as an example, if there is moderate volatility within 50 points (u) in a day, following the aforementioned entry positions conservatively should allow one to exit with a profit of about 10-20 points per trade. If you want to earn more, that's fine, but absolutely do not make the mistake of shorting from the resistance point and only closing at the support point, as the risk is much greater, and when something goes wrong, it is not just a profit drawdown. In volatile markets, the key lies in grasping resistance and support positions, which require reference to previous trends.
Additionally, whether in spot trading or contract trading, risk control and rational decision-making are extremely important. I have mentioned similar concepts in my previous courses. For example, in contract trading, analyzing different time frame candlesticks requires comprehensive consideration of various factors, which is similar to operations in spot trading. Avoiding chasing high prices is also an important skill in spot trading; one must establish a correct investment philosophy and not blindly pursue high returns. Many investors impulsively buy in when they see a sharp short-term rise in cryptocurrency prices, which reflects a lack of proper philosophy. Mastering practical skills, such as paying attention to the moving average system, developing reasonable investment plans and strictly executing them, maintaining composure and rationality to overcome greed and fear, and continuously learning to improve one’s abilities are all key points to note in cryptocurrency trading. Operations also vary under different market conditions: in a bull market, one should pay attention to pullback risks and set take-profit points; in a bear market, one should cautiously control positions; and in a volatile market, strictly adhere to stop-losses while utilizing range fluctuations for operations.
Note: The content of this series of courses is original; any similarities are purely coincidental.
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