Today we are going to discuss a core issue in trading: what prompts us to buy or sell a token? Usually, people would answer "because I want to make money" or "because I am bullish". However, both of these answers are not precise enough. If you buy simply because you are bullish, then when the market does not meet your expectations, you may feel disappointed, which could even affect your trading mentality.
Therefore, the real reason we buy a token should be because it triggers our trading signal.
The trading signal is the direct reason for our buying or selling. For example, when the appearance of a candlestick triggers our trading system, we take action. The same logic applies to stop-loss. Stop-loss is not because we have a preconceived expectation of market trends, but because our stop-loss signal has been triggered. When we focus on the signals of the trading system rather than the market's ups and downs or the expectation of making money, our emotional fluctuations will be greatly reduced. In this way, the impact of market trends and market conditions on our mentality will also be minimal.
Taking Bitcoin as an example, let's see how to apply this logic.
From the weekly chart perspective, Bitcoin has achieved a reversal of the market. At the position of the 30-week moving average, Bitcoin has produced a medium to long bullish candlestick, indicating a bullish trend. This indicates that Bitcoin has completed the transition from a downtrend to an uptrend.
If Bitcoin retraces to the corresponding support level next, we can consider entering the market. Where should our target be after entering? We will discuss this question later.
From the daily chart perspective, the price of Bitcoin has broken above the 200-day moving average, which is an important entry signal. The breakthrough of the 200-day moving average was an important sign for us to judge the early stage of the bull market last year, and it is also our cost line.
At the $58,000 position, we consider reducing positions or exiting to prevent further losses. However, when the price of Bitcoin once again breaks above the 200-day moving average, this is a positive signal, prompting us to enter again. Our buying logic is not because we expect the market to rise, but because the 200-day moving average has triggered our medium to long-term entry point. Therefore, the entry point for Bitcoin can be set near $60,000, which is the position of the 200-day moving average. If there is a retracement in the next few days, do not forget that the positions reduced after falling below $38,000 can be added back.
Finally, I have a homework assignment for everyone: What will be the target price for Bitcoin in this round? Feel free to leave comments for discussion.
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