In the face of a sharp drop, six tips to help you "keep the green mountains and always have firewood to burn"
The formula for bottom-fishing in this bull market: mainstream coins + mainstream memes.
Original title: "Facing a sharp drop, six tricks will help you "keep the green mountains and always have firewood to burn""
Original author: Viee, Biteye
"Be greedy when others are fearful", after what happened yesterday, is now the right time to enter the market? Here are 6 suggestions from an old leek: · The formula for bottom-fishing in this round of bull market: mainstream coins + mainstream memes · Don’t touch contracts · Stop loss in time, here are several stop-loss strategies · Bottom-fishing in steps · Avoid over-dispersion of positions · Get enough stablecoins 01 The formula for bottom-fishing in this round of bull market: mainstream coins + mainstream memes · When the market falls sharply or adjusts significantly, it usually brings the best "super bottom" opportunity, but it is recommended to bottom-fish in batches, not all in. In addition, it is recommended to bottom-fish mainstream coins + mainstream memes.
Meme coin bottom-fishing strategy: For those meme coins with large trading volume and continued popularity, they usually follow a relatively predictable pattern.
Whenever such tokens reach a new all-time high (ATH), their retracement is likely to be no more than 60%. This means that strategic buying can be considered at the following times:
· When the token has a 40% to 60% retracement from the ATH
· Trading volume remains at a high level
· The market's discussion of the token remains unabated
Take WIF as an example, the current maximum retracement after the ATH is about 59%. This strategy takes advantage of the volatility and market sentiment of MEME coins.
However, there are still risks. Meme rises sharply and falls sharply. You need to operate with caution and make decisions in combination with other technical analysis and market research.
02 Don’t touch leverage, especially contracts
The reason is simple. Liquidation will leave you with nothing. Coincidentally, today Synthetix’s former CFO SynthaMan revealed in a tweet that he had lost all his SNX tokens due to liquidation.
Secondly, everyone is happy if the order can be carried through, but the funding rate is often an overlooked cost. Finally, contracts have a negative impact on emotions and psychology, which further affects trading operations.
03 Stop loss in time, here are several stop loss strategies
If a position falls below the key support level or no longer meets your investment logic, don't be afraid to sell it to protect the principal.
Instead of risking a major loss, it is better to accept a small loss. When the market situation improves, you can re-enter the market. It is important to control risks when the market starts to fall, rather than waiting until the decline deepens.
Especially when trading those "junk coins" with large fluctuations, if the wrong timing and strategy are chosen, it will often lead to serious losses, or even zero.
Specifically:
· Quick stop loss:If the market moves against you, take quick action and accept a small loss. For example, it is not terrible to accept a 5% loss.
· Set partial stop loss points:Instead of clearing all positions at a certain price point, you can set multiple price points and reduce your position by a certain percentage at each point. For example, if Bitcoin falls below $60,000, you can choose to sell 10% of your position.
· Flexible buying points:If the market really reverses, you can buy again when the support level is reconfirmed. If the market continues to fall, re-enter the market at a lower price to get a better buying price. Although this will incur some transaction costs, it can effectively control risks.
In short, it is a smarter approach to pay a small loss of 5% in exchange for protection from a possible 50% plunge.
04 Bottom-picking in steps
Bottom-picking all in may make you slap your thighs. You can combine technical and fundamental analysis to set several possible entry points, such as historical support levels or important moving average positions.
When the price touches these preset points, start buying in batches and gradually reduce the purchase amount in a "pyramid" form. At the same time, set a stop loss point for each purchase to control the risk. Then adjust the strategy in time with market changes.
05 Avoid over-dispersal of positions
Focus on 10 (no more than 20) tokens you recognize, rather than spreading your portfolio to too many tokens, so that it is easier to actively manage investments when the market fluctuates.
The more types of tokens you trade, the greater the risk of loss. Over-diversification will reduce the overall performance of your portfolio because it is difficult to effectively manage too many positions when the market falls sharply, especially not holding too many altcoin positions.
06 Keep enough stablecoins
Keep at least 20% of your portfolio in stablecoins, which can be used as a "bullet" to seize opportunities when the market falls, so that you don't have to be forced to sell existing positions at inappropriate times.
Even if the market rises, holding a certain proportion of stablecoins will allow you to have enough liquidity to operate when the market pulls back.
If you can't remember the above investment rules, remember to keep your principal first and survive, this is the most important thing!
Original link
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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