In the cryptocurrency world, mastering 8 rules is like having a cheat code.
First: The more you lose in trading, the more cautious you should be about averaging down. The cryptocurrency market has many traps; many people become anxious after being stuck in a trade and instead of thinking about exiting, they keep averaging down to lower their holding costs, hoping for a sudden surge to break even. This actually goes against common sense.
Second: Avoid continuously adding to your position while trading. If you haven't developed the ability to make a profit, don't keep adding to your account. Losses indicate that your trading system has flaws; at this time, you shouldn't try to fill the gaps by averaging down. Instead, reflect on your strategy, and after calmly exploring an effective method, it's okay to increase your investment.
Third: Trade in the direction of the trend. There are only three types of trends: upward trends, downward trends, and consolidation trends. Undoubtedly, during a downward trend, holding light or even no positions while participating in an upward trend can significantly increase your chances of success.
Fourth: Maintain simple trading rules and easy confluence points. When a candlestick pattern that fits your system appears on the chart, you can start trading. Be sure to set stop-loss orders and control your position size.
Fifth: Don't add to your position lightly, especially when you are losing. The more you average down, the greater your risk becomes.
Sixth: Learn trend analysis; add to your position after breaking resistance and short after breaking the main distribution zone. After prolonged upward movement (with significant gains approaching a sensitive period), there will be short-term fluctuations at high levels.
Seventh: The mentality of being eager to make money is a major taboo in trading. If you can't control your own heart, greed, and desires, you won't be able to succeed in the market for the long term.
Eighth: Allocate assets reasonably; don't put all your eggs in one basket. "Don't put all your eggs in one basket" is the golden rule of investing, especially in the high-risk cryptocurrency market. Asset allocation and diversification are extremely important.
