The most important rule is to strictly adhere to stop-loss and take-profit levels, and never chase a sharp rally in overbought territory.
In the world of cryptocurrencies, especially when trading on short timeframes, falling into the “overbought” trap (when the RSI reaches critical levels above 80 or 85) and trying to chase a skyrocketing price often ends in a violent correction that wipes out profits. Therefore, the rules that saved the portfolio were:
Take profits at the right time: Don’t get greedy; lock in gains as soon as prices reach resistance or overbought levels.
Rely on limit orders: to ensure precise entries and exits without getting swept up in random market fluctuations.
Protect your capital first: Use clear portfolio risk limits and set stop-loss levels. This is far more important than chasing illusory profits that could evaporate in moments.
What’s the most important rule you rely on in your daily trading?
