There is a saying in the currency circle called "Be greedy when others are fearful." After experiencing the plunge on Monday (5), is now the right time to enter the market? The following are 6 suggestions from Lao Liek:
The formula for buy the dips in this round of bull market: mainstream currency + mainstream Meme
When the market falls sharply or undergoes a major adjustment, it usually brings the best opportunity to "go beyond the bottom", but it is recommended to buy the buy the dips in batches and not to go all-in. In addition, it is recommended to buy the dips mainstream coins + mainstream Meme at the bottom.
Meme coin buy the dips strategy: Meme coins that have large trading volumes and continue to remain popular will usually follow a relatively predictable pattern.
Whenever such a token reaches a new all-time high (ATH), the retracement will most likely not exceed 60%. This means that you can consider making strategic purchases at the following times:
- When the coin retraces 40% to 60% from ATH
- Trading volume remains at high levels
- The market’s discussion of the token remains unabated
Taking WIF as an example, the current maximum retracement after ATH is almost 59%. This strategy takes advantage of the volatile nature of the MEME coin and market sentiment. However, there are still risks. Meme rises violently and falls violently, so you need to operate with caution and combine it with other technical analysis and market research to make decisions.
Don’t touch leverage, especially contracts
The reason is simple, liquidating your position will leave you with nothing.
Secondly, everyone is happy to be able to carry the order, but the funding rate is often a cost that is ignored. Finally, contracts have a negative impact on emotions and psychology, which further affects trading operations.
Stop losses in time, here are several stop loss strategies
If a position falls below a key support level or no longer fits your investment logic, don't be afraid to sell to protect your principal.
It is better to accept a small loss than to risk a big loss. When market conditions improve, you can re-enter the trade. It is important to control risk when the market starts to decline, rather than waiting until the decline deepens.
Especially when trading those "shit coin" with large fluctuations, if you choose improper timing and strategies, it will often lead to serious losses, or even zero.
Specifically:
- Cut your losses quickly: If the market moves against you, act quickly and accept a small loss. For example, it is not terrible to accept a 5% loss.
- Set partial stop loss points: It is not necessary to clear all positions at a certain price point. Instead, you can set multiple price points and reduce a certain proportion of the position at each point. For example, if Bitcoin falls below $60,000, you can choose to sell 10% of your position.
- Be flexible in finding 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 at a lower price to get a better buying price. Although doing so 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.
Buy the dips step by step
Buy the dips all in at the bottom may cause you to break your thigh. 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 hits these preset points, start buying in batches and gradually reduce the buying amount in a "pyramid" format. At the same time, set a stop loss point for each purchase to control risks. Then adjust the strategy in time as the market changes.
Avoid over-diversification of positions
Focus on investing in 10 (no more than 20) tokens that you recognize, rather than spreading your portfolio across too many tokens, making it easier to proactively manage your investments when the market fluctuates.
The more tokens you trade, the greater the risk of loss. Over-diversification can reduce the overall performance of a portfolio because it is difficult to effectively manage too many positions during a market crash, especially not to hold too many Altcoin positions.
Get enough stablecoins
Keeping at least 20% of your portfolio in stablecoins can serve as a “bullet” to seize opportunities during dips without having to sell existing positions at inopportune times.
Even if the market goes up, holding a percentage of stablecoins gives you enough liquidity to operate when the market pulls back.
If you can’t remember the above investment rules, remember to preserve your principal and survive first. This is the most important thing!
