Answer:
Large levels are prone to stop-loss sweeps:
Larger trends (such as daily or weekly) typically require larger stop-loss spaces, as market volatility may lead to frequent stop-loss triggers.
There may be multiple false breakouts before a trend forms, increasing the risk of stop-loss sweeps.
Small level judgments are inaccurate:
Small levels (e.g., 1-hour, 15-minute) have a lot of signal noise, poor trend continuity, and are prone to oscillation or false signals.
Lack of clear entry and exit logic, relying on subjective judgments leads to mistakes.
Optimize strategy
1. Optimize large-level trading
Dynamic stop-loss settings:
Use ATR (Average True Range) or key support/resistance levels to set stop-losses, avoiding fixed point stop-losses being swept out by market noise.
For example, set stop-loss at 2 times ATR, combined with daily key levels (such as previous highs/lows).
Incremental position building:
Avoid deploying the entire position at once; use incremental position building to reduce risk. For example, after confirming a larger trend, enter in 3-5 increments to average costs.
Filter out false breakouts:
Combine trading volume, candlestick patterns (such as Pin Bar, engulfing patterns), or indicators (such as RSI divergence) to filter out false breakouts.
Wait for price to break and then confirm with a pullback before entering the market to reduce the risk of getting caught in a high chase.
Trend confirmation tools:
Use a moving average system (such as 20-day, 50-day moving average golden/death crosses) or ADX indicators to confirm trend strength, avoiding trading in choppy markets.
2. Optimize small-level trading
Multi-timeframe combination:
Determine trend direction at a larger level (e.g., daily) and find entry points at smaller levels (e.g., 1-hour, 15-minutes). For instance, if the daily is bullish, only buy when the 1-hour level pulls back to support.
High win rate signal filtering:
Focus on high-probability patterns, such as double bottoms/ double tops, trendline breakouts, or confirm signals with Bollinger Bands, MACD, etc.
Avoid frequent trading in oscillation zones (e.g., narrowing Bollinger Bands).
Strict risk management:
Set smaller stop-losses for small-level trading (e.g., 1% of account funds) and strictly enforce them.
Control the position of a single trade (e.g., 0.5%-1%) to avoid significant withdrawals from the account due to frequent losses.
3. Combine spot CAT, grid, or Martingale strategies
Based on the judgment of the larger trend and combining spot market CAT (Cost Averaging), grid trading, or Martingale strategies, this is a feasible approach, but attention must be paid to the following details:
CAT (Cost Averaging):
Applicable scenarios: Clear larger trends (such as daily moving averages in a bullish arrangement), but with significant short-term fluctuations.
Operation method:
After confirming the trend, set a price range for incremental buying (e.g., increase positions when the price drops by 5%, 10%, 15%, respectively).
Control total position (e.g., each incremental position should occupy 20% of total funds) to avoid excessive dilution of costs.
Advantages: Reduces entry point risks, suitable for long-term holding.
Disadvantages: If the trend reverses, losses may be significant, so hard stop-losses must be set.
Optimization suggestions: Combine incremental position building with large-level support, and liquidate when trend reversal signals appear.
Grid trading:
Applicable scenarios: Clear large-level trends, but prices are oscillating within a certain range.
Operation method:
Within the direction of the larger trend, set price grids (e.g., buy every 2% drop, sell every 2% rise).
Ensure the grid range is within the support/resistance area of the larger trend.
Advantages: Earn oscillation profits through high selling and low buying, suitable for low leverage in spot trading.
Disadvantages: If the trend suddenly reverses or breaks out of the grid range, it may lead to unrealized losses.
Optimization suggestions:
Dynamically adjust grid ranges, referring to the ATR or key levels of the larger trend.
Set trend reversal conditions (such as moving average death crosses) to exit the grid.
Martingale strategy:
Applicable scenarios: Clear larger trends with frequent short-term pullbacks.
Operation method:
Within the trend direction, double the buying when the price drops (e.g., buy 1 unit first, then buy 2 units after a drop).
Liquidate for profit after the price rebounds.
Advantages: Can quickly recover costs during short-term pullbacks.
Disadvantages: Extremely high risk; if the trend reverses or retraces too deeply, it may lead to liquidation.
Optimization suggestions:
Strictly limit the number of incremental positions (e.g., 3 times) and set a total fund limit (e.g., 10%).
Only use in strong trends (e.g., ADX > 30) to avoid choppy markets.
4. Automation and execution
Automation tools:
Use trading bots or exchange features for grid or Martingale strategies (such as Binance, OKX support) to reduce emotional interference from manual operations.
Set clear trend confirmation conditions (such as moving average golden crosses) and exit conditions (such as moving average death crosses).
Backtesting and optimization:
Backtest the strategies combining larger trends with CAT/grid/Martingale on historical data to evaluate win rates, maximum drawdowns, and return-risk ratios.
For example, use TradingView's Pine Script to write strategies or simulate trading via the exchange API.
5. Core risk management
Fund management:
Control each trade's risk to 1%-2% of the account, with a total position not exceeding 50%.
Avoid high leverage in spot trading; prioritize low-risk assets (such as BTC, ETH).
Psychological management:
Establish a clear trading plan, record the entry and exit logic for each trade to reduce subjective interference.
Regularly review, analyze the reasons for stop-loss sweeps and inaccuracies, and optimize strategies.
Specific operation process
Determine the larger trend:
Use daily or weekly charts, combined with moving averages (20/50 days), ADX (>25 for strong trends), or key levels to confirm trend direction.
For example, when the daily 20-day moving average crosses above the 50-day moving average and the price stands above key support, it confirms a bullish trend.
Select strategy:
If the trend is clear but short-term fluctuations are large, activate CAT and build positions incrementally.
If the price oscillates within the trend, activate grid trading and set reasonable ranges.
If the trend is strong and pullbacks are frequent, use Martingale cautiously and strictly control the number of incremental positions.
Monitor trend changes:
Set trend reversal conditions (such as moving average death crosses, RSI overbought/oversold, key levels breaking).
Once a new direction appears (e.g., daily bearish signal), stop the spot strategy, liquidate or reverse the operation.
Dynamic adjustment:
Adjust grid ranges, CAT incremental points, or Martingale increment multiples based on market volatility.
Regularly check strategy performance and optimize parameters.
Considerations
Market environment: The cryptocurrency market is highly volatile, be wary of black swan events (such as policy risks, whale dumping). Although spot strategies have lower risks, hard stop-losses still need to be set.
Strategy selection: Martingale has the highest risk; it is recommended to prioritize CAT or grid, suitable for low-risk preferences in spot trading.
Technical support: If unfamiliar with programming or automation, you can use the built-in grid/Martingale tools from the exchange, but you need to understand parameter settings in depth.
Emotional control: Avoid frequent strategy adjustments due to short-term losses, maintain discipline.
Answer user questions
Can we start the spot CAT, grid, or Martingale by judging the larger level until a new direction appears?
Yes, but the following steps are required:
Determine larger trend direction through daily/weekly moving averages, ADX, or key levels.
Select CAT (strong trend), grid (oscillation), or Martingale (frequent pullbacks) based on trend strength and volatility characteristics.
Set trend reversal conditions (such as moving average death crosses, key levels breaking), and stop strategies when a new direction appears.
Strict risk management, controlling positions and stop-losses, to avoid large losses from trend reversals.
It is recommended to prioritize using CAT or grid, and to use Martingale cautiously, verifying the effectiveness of strategies through backtesting.
