What does it mean to cover positions in the currency circle?

Current position covering refers to purchasing the same currency through additional investment to reduce the average holding cost when the currency price drops. Reasons for covering positions include reducing costs, increasing chips, and enhancing confidence. The best time to cover a position is when the currency price drops sharply and technical indicators show signs of rebound, such as MACD golden cross, RSI oversold rebound, and bottom reversal pattern. When covering positions, you should pay attention to: avoid blindly covering positions, control the proportion of covering positions, choose high-quality currencies, and set stop losses.

The concept of currency circle cover-up

Cryptocurrency circle cover-up means that when the currency price falls, investors invest a certain amount to purchase the same currency, thereby reducing the average holding cost.

Reasons for covering positions

• Reducing costs: By covering positions, investors can dilute the average holding cost, thereby increasing the overall investment return rate.
• Increase the chips: Covering positions can increase the number of currencies held by investors, providing more room for profit from subsequent currency price increases.
• Enhance confidence: Covering positions shows that investors are still optimistic about the currency, which can enhance others' confidence in the market, thus driving up currency prices.

Time to cover positions

The best time to cover positions is usually when the currency price drops significantly and technical indicators show signs of rebound. Specifically, you can refer to the following indicators:

• MACD indicator: DIFF and DEA lines form a golden cross near the 0 axis, indicating that the market is about to rebound.
• RSI indicator: The indicator value fell to the oversold range (below 30) and then rebounded, indicating that the market has been oversold.
• K line pattern: The emergence of bottom reversal patterns, such as hammer line, morning star, etc., indicates that the market is about to rebound.

Notes on covering positions

• Don’t blindly cover positions: It is necessary to fully analyze the market and confirm that the decline is just a correction, not a trend reversal.
• Control the proportion of position replenishment: The amount of position replenishment should not be too large, generally not exceeding 50% of the original position cost.
• Choose high-quality currencies: Choose currencies with good fundamentals, technical support, and community support to cover positions, and avoid high-risk or unstable currencies.
• Set stop loss: Set a stop loss order after covering the position to prevent the currency price from continuing to fall and causing greater losses.

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