I have always felt that the most foolish way to trade cryptocurrencies is often the most effective.
But this path is too slow and tedious; the vast majority cannot persist. Because they always fall into these three common 'ailments':
⚠️ First, chasing highs and cutting lows. As soon as you see a coin rising, you rush in, fantasizing that it will continue to soar, only to buy at a high point, panic when it drops, and miss the rebound. Only those who can buy during declines and sell during peaks truly reap the benefits of the cycle.
⚠️ Secondly, heavily betting on direction. The direction may be correct, but getting washed out by the main force means it’s not a wrong judgment but a lack of endurance.
⚠️ Thirdly, emotional over-leveraging. Getting overly excited and going all in, losing the flexibility to adjust positions. Even if you guessed right, you can't move your funds, and when you see an opportunity, you can only feel anxious.
Ultimately, in the cryptocurrency space, it is never the market that loses, but the habits.
I have summarized a set of six-character principles for short-term trading; the reasoning is simple, but often overlooked:
1⃣️ The high-level consolidation is not over, new highs are often still to come; low-level fluctuations are hard to stop and may easily test the bottom again. Do not act before the trend changes.
2⃣️ Do not move during sideways trading; most people die in the fluctuations.
3⃣️ Buy when the daily line closes in the red, sell when it closes in the green. Following market sentiment is better than subjective judgment.
4⃣️ Slow declines are hard to bounce back from, while sharp declines are easy to reverse. Only by seeing the rhythm can you seize the opportunity.
5⃣️ Build positions in a pyramid structure, enter the market in batches, and always leave some bullets.
6⃣️ After a big rise and fall, there will definitely be fluctuations, and after fluctuations, there will definitely be a trend change. Do not bet at extreme positions; wait for the signal before acting.
The market is not short of opportunities, but lacks those who can endure, wait, and survive. You think experts rely on luck, but in fact, they take the 'foolish method' to the extreme.
In the cryptocurrency space, using candlestick charts to determine entry timing is an important method of technical analysis. Here are some methods based on candlestick charts to determine entry timing:
1. Identify trends
• Uptrend: If multiple bullish candles appear continuously in the candlestick chart (green), and each bullish candle's closing price is higher than the previous one, it indicates that the market is in an uptrend.
• Downtrend: If multiple bearish candles appear continuously (red), and each bearish candle's closing price is lower than the previous one, it indicates that the market is in a downtrend.
• Trend reversal signals: Certain specific candlestick patterns such as hammer, inverted hammer, morning star, engulfing pattern, etc., usually appear during trend reversals and can serve as signals to enter the market.
2. Pay attention to support and resistance levels.
• Support level: When the price falls to a certain range and repeatedly stops falling and rebounds, that range is the support level. If the price approaches the support level and shows a bullish candlestick pattern (e.g., hammer), consider entering long positions.
• Resistance level: When the price rises to a certain range and repeatedly stops rising and falls back, that range is the resistance level. If the price approaches the resistance level and shows a bearish candlestick pattern (e.g., hanging man), consider entering short positions.
3. Volume-price coordination
• Volume-price coordination in an uptrend: If the price rises while the trading volume also increases, it indicates strong buying power in the market, and at this time, you can consider entering long positions.
• Volume-price coordination in a downtrend: If the price falls while the trading volume increases, it indicates strong selling power in the market, and at this time, you can consider entering short positions.
4. Special candlestick patterns
• Hammer pattern: Appears at the bottom of a downtrend, with a longer lower shadow that is at least twice the body, indicating that the market may reverse upwards, signaling to enter long positions.
• Inverted hammer pattern: The shape resembles a hammer pattern, but the shadow is above, indicating that the market may reverse upwards, suitable for entering long positions.
• Three white soldiers: Composed of three consecutive bullish candles, each closing price is higher than the previous candle's highest price, indicating a strong upward trend in the market, suitable for entering long positions.
• Bullish engulfing pattern: A longer bearish candle is followed by a shorter bullish candle, and the bullish candle is completely within the bearish candle's body, indicating that the downtrend may end, suitable for entering long positions.
5. Combine with technical indicators
• Moving average crossover: When the short-term moving average (e.g., 5-day moving average) crosses above the long-term moving average (e.g., 10-day moving average), forming a golden cross, it indicates that the market may enter an upward trend, signaling to enter long positions.
• MACD indicator: When the MACD's short-term moving average crosses above the long-term moving average, forming a golden cross, it indicates that the bullish trend in the market is strengthening, suitable for entering long positions.
6. Risk management
• Set stop-loss: When entering the market, it is recommended to set a stop-loss point to control risks. The stop-loss point can be set outside the key support or resistance levels.
My years in the cryptocurrency space have accumulated about a million in profits, with an initial capital of 80,000, fully dedicated to trading coins for 10 years. During this period, I have experienced quite a few ups and downs, but I truly made significant money by seizing opportunities in two bull markets. Here are some of my lessons learned:
1. Control the risk of each trade within 10% of the principal; it is not recommended for beginners to take risks, and it is better to keep the risk at 2%-5%.
2. Once you enter the market, do not close positions due to short-term fluctuations or impatience; the market needs time to prove itself, and you must have patience.
3. Execute according to the plan during trading to avoid over-trading; otherwise, it is easy to make mistakes.
4. After making a profit, gradually adjust your take-profit and stop-loss levels, boldly follow the market trend, and strive for maximum profit.
5. Never cancel your stop-loss points, as this can effectively control risks.
6. It is not recommended to add positions when the market is going well; greed often leads to significant risks.
7. Switching positions from long to short requires a very high level of technical skill; not everyone is suitable for casually changing positions.
8. Even when trading feels effortless, do not easily increase your positions; overconfidence can lead to significant mistakes. The above insights are experiences I have summarized from years of struggle in the cryptocurrency space, and I hope they are helpful to you.
Many people liken cryptocurrency trading to gambling, believing that once involved, it is hard to quit. What they do not realize is that these people have harbored a deeply rooted gambler's mentality from the beginning. Cryptocurrency investment is not gambling, just as exploring does not equate to taking risks.
It is precisely because of this high risk that you cannot focus solely on getting rich overnight; such low-probability events will only disrupt your mindset. Rigor, caution, and discipline are the qualities you need to possess.
Treat cryptocurrency investment as a job, regulate your trading with the discipline of daily commuting, discard the gambler's greed, and add a bit of the pilgrim's devotion. Only then can you walk this path of cryptocurrency investment for a long time and far!
I have traversed the market for many years, well aware of the opportunities and traps within. If your investment is not going well and you feel regretful about losses, leave a 999 in the comments! I shall share my insights.