My take on crypto volatility – Sabrina 'Princessa' Wang

The mindset behind trading.

This week marks the kickoff of our very first 7-Day Crypto to Freedom Challenge! Chloe and I have been buzzing with excitement as we prepare for the bootcamp this weekend. Earlier today (Monday, when I wrote this), we met up to map out the flow and fine-tune the agenda, and guess what? As we were knee-deep in planning, the market decided to throw us a curveball.

On January 17, 2025, the $TRUMP coin was officially listed. And wow, did that throw technical analysis right out the window! If you’ve been trading the last few days (I didn’t, not really; I was house shopping), you’d know exactly what I mean. Volatility skyrocketed, the charts became a chaotic mess, and the market was dancing to a tune no one could predict.

As we sat there watching the market go haywire, it hit me – this is what makes trading so exciting. Volatility, as terrifying as it can be, is also where the real opportunities lie. Yes, you can lose everything in an instant, but with the right mindset and strategy, you can also come out ahead.

Analysing the BTC/USDT chart

Looking at the BTC/USDT 4-hour chart, we can clearly see the aftermath of this volatility. The massive wick, especially on the latest candle, signals high market activity – prices spiked rapidly, only to retrace just as quickly. This level of volatility suggests an influx of both buyers and sellers, with neither side maintaining dominance for long.

Key observations:

Resistance at 105,786 USDT

The price attempted to break above this level but faced strong resistance, leading to a retracement. A clean break above this resistance could open the door for further bullish movement, but for now, this level remains a challenge.

Support at 102,221 USDT

On the flip side, the 102,221 support level has proven to be a reliable zone during this high-volatility period. A break below this could trigger a sharper decline, but so far, buyers seem to be defending it.

EMA alignment

The exponential moving averages (EMAs) are fanned out in a bullish alignment, further supporting an upward trend. However, any consolidation below the EMAs could signal a potential trend reversal or extended sideways movement.

Stochastic RSI warning

The Stochastic RSI is nearing overbought territory, which means the price might face some pressure to consolidate or retrace. Combined with the resistance zone, this is a signal to tread carefully.

The mental game of trading

Trading in a volatile market is not just about numbers and charts; it’s a mental game. Your mindset can make or break you. Detachment is key. Here’s the thing: You must trade only what you’re willing to lose.

I often think of it like shopping.

For instance, when you purchase a laptop, you’re committing a set amount of money. If you use the laptop effectively, it’ll pay for itself many times over. If you don’t, it becomes an expense. Either way, at the moment of purchase, you’ve already locked in the risk.

It’s the same with trading. Once you put your capital into a trade, accept the risk as if the money has already been spent. That detachment frees you from emotional decision-making and allows you to focus on strategy.

Yes, my trades are usually in the green, but I’ve had my fair share of red days (unrealised PNL), too. Nothing in life is absolute. Even something as simple as crossing the road carries risk, which is why we look both ways before stepping out. Trading is no different – precaution is essential.

Precautionary measures: Safety in volatility

Let’s be honest: Volatility makes the market unpredictable. But that doesn’t mean you can’t prepare for it. Here’s how I manage risk in volatile conditions:

Increase margin without increasing lot size

High volatility can liquidate your trade faster than you can react. By increasing your margin while keeping your lot size consistent, you give yourself more breathing room. It’s not about being overly aggressive; it’s about creating a safety net to survive the swings.

Lower leverage

While higher leverage might seem tempting, it’s a double-edged sword. In volatile markets, it’s better to reduce your leverage to minimise risk. Remember, leverage amplifies both gains and losses, and you don’t want to get wiped out by a single bad move.

Trade with less than 50 percent of your capital

This is a rule I live by. I never put more than 50 percent of my capital into a trade. Why? Because it gives me the buffer to hold during unexpected dips. Volatility means opportunity, but only if you have the resources to stay in the game when the market moves against you.

HODL with a plan

Sometimes, the best strategy is to hold your position and wait for the market to correct itself. But this only works if you’ve managed your margin and kept your exposure within reason.

Volatility means opportunity

As Chloe and I watched the market swing wildly today, it was a reminder that volatility is a double-edged sword. On one hand, it can wreak havoc on your trades. On the other, it presents a unique opportunity to capitalise on massive moves.

Take the $TRUMP coin, for example. Its listing last week sent shockwaves through the market, creating ripples that affected even major assets like Bitcoin. Patterns and technical analysis? Toss them out the window. When the market reaches all-time highs (ATH), the charts often feel “broken“. There’s no historical basis for predicting what happens next, so you have to rely on a combination of instinct, preparation, and mental fortitude.

And let’s not forget the $MELANIA coin, which is adding its own layer of chaos. The rise of these altcoins demonstrates just how unpredictable the market can be. It’s a rollercoaster, and if you’re not strapped in, you risk being thrown off.

Trade within your means

At the end of the day, trading is about confidence and discipline. But it’s also about knowing your limits. Trade only what you can afford to lose. Take precautions. Increase your buffer. Lower your leverage. Most importantly, you should detach yourself emotionally from the outcome.

The market will always be unpredictable, but with the right mindset, you can navigate even the wildest volatility. As I always say: “Trade with confidence, but always trade within your means.“