I was born in 2008, full-time trading cryptocurrencies, with assets in the tens of millions. I withdraw 100,000 yuan from the cryptocurrency market every month, feeling absolutely no impact, living leisurely and freely, without deception or competition, living the life I want.
Every morning I get up, go to school, and by about 7:00, I open my computer to review yesterday's trades. The trading volume in the cryptocurrency market is quite low in the morning, so I am usually busy at night. I take a simple rest in the morning, then review and consolidate my trading records into my trading system. Reviewing is really important!
Winning strategies for short-term trading in the cryptocurrency market - BOLL and KDJ strategies.
The cryptocurrency market is becoming increasingly popular, evolving from initial spot trading to quarterly contracts and then to perpetual contracts, with perpetual contracts gradually becoming the most favored trading option for cryptocurrency enthusiasts. The attractiveness of perpetual contracts lies in their high leverage and potential for significant gains with minimal investment. As a perennial loser in contract trading, how do you operate?
Do you open long or short based on intuition? Or are you being misled by some big players (scooping) or so-called experts? If you want to make money, remember this: 'One must rely on oneself'!
This article shares my trading experience and discusses how to improve short-term winning probabilities and enhance trading skills!
1. BOLL Indicator
The BOLL indicator, originally used in the stock market, is also one of the important directional reference indicators in the cryptocurrency market. How to use BOLL to judge short-term direction?
1. In a sideways market, the candlesticks move in the middle and upper bands, 'short at highs, long at lows,' commonly known as buying low and selling high!
Candlesticks are traded in the middle and upper band areas, buying low and selling high.
2. In a sideways market, the candlesticks move in the middle and lower bands, 'buying low and selling high.'
Candlesticks in the middle and lower band areas also follow the strategy of 'buying low and selling high.'
2. KDJ Indicator
The KDJ indicator, known as the 'Stochastic Indicator' in the industry, is another important reference indicator suitable for short-term trading. How to use KDJ to judge short-term trends?
1. Golden Cross, representing a short-term upward trend. How to judge if it is a golden cross? When the white K-line intersects with the golden D-line, if the white line is above the golden line, it indicates a clear upward trend!
Golden Cross Illustration
2. Death Cross, representing a short-term downtrend. How to judge? When the white line intersects with the golden line, if the white line runs below the golden line, it indicates a clear short-term downtrend!
Death Cross Illustration
How to maximize the probability of accurately predicting whether the market will rise or fall is clear when combining the trends of BOLL and KDJ indicators!
Beginner's Guide to Reading Candlestick Charts in Cryptocurrency Markets (Mnemonic for Candlestick Charts in Cryptocurrency Markets)
Candlesticks represent yin and yang; prosperity leads to decline, and adversity leads to prosperity. This is a universal principle in nature and human society. The cryptocurrency market is no different; good things reaching their peak will turn negative, and conversely, bad things reaching their peak can also turn positive. This is the essence of all things, the result of the yin-yang struggle, and while candlesticks are not the only indicator, to survive in the cryptocurrency market, investors must combine practical experience, self-improvement, and refinement.
Basics of Candlestick Analysis
Candlestick charts, also known as candle charts, originate from the Edo period in Japan, where they were used by rice merchants to record market trends and price fluctuations. Due to their meticulous and unique drawing method, they were later introduced to capital markets.
Candlesticks are drawn based on the opening price, highest price, lowest price, and closing price for each analysis period. The structure of a candlestick can be divided into three parts: upper shadow, lower shadow, and the body in the middle.
In the cryptocurrency market, green represents bullish sentiment, while red represents bearish sentiment. Through candlestick charts, we can completely record the performance of the cryptocurrency market for each analysis period. After a period of consolidation, the price forms a special area or shape on the chart, with different shapes showing different meanings. We can explore some regular patterns from these changes. Generally speaking, candlestick patterns can be classified into reversal patterns, consolidation patterns, gaps, and trend lines.
The practical significance of candlesticks.
In cryptocurrency trading, candlestick charts are the most intuitive analytical tool. A single falling leaf can indicate the arrival of autumn; this is the mindset that candlestick charts bring us. Simple candlesticks remind us that regardless of how the cryptocurrency market operates, we can find clues in the details. Those who can grasp the clues revealed by candlesticks faster and more accurately can avoid greater losses and thus obtain larger profits.
In fact, different people viewing candlesticks can lead to different 'opinions.' Thus, the same candlestick chart can yield numerous different analyses among many investors. It is precisely this outcome that intensifies the competition in the cryptocurrency market. Sometimes, after doing quantitative analysis or trading too much, you gradually discover that many candlesticks can be misleading, exhibiting atypical behavior. Thus, you may struggle daily, questioning why things happen this way when theoretically they should move in a certain direction. Gradually, you start to doubt candlesticks, analyzing the market makers and fake breakouts, and so on. Conspiracy theories abound in the accumulation phase. Sometimes, perhaps it’s luck; a few times of going against the trend or acting on intuition yield some wins, making you feel as if you have truly grasped the essence behind candlesticks and have mastered the market's pulse. However, more often than not, just like in the previous phase, you still can't achieve good results after quantifying. Many people stumble at this stage, remaining static and hesitant. However, once you truly overcome this phase, you will find that whether you believe it or not, candlesticks operate that way. Whether you act or not, they are there. They are neither divine nor worthless. They are merely witnesses to the market's trajectory, and there is no need to mythologize them or to belittle them.
The interpretation of candlesticks has become increasingly complex. As the investment community progresses and capital increases, short-term candlesticks in the market are often manipulated, creating 'traps.' Therefore, we need to use principles of relativity and technical analysis to filter. The principles of relativity include quantitative measurement standards and analytical work, which can enhance the probability of successful analysis and trading. Without candlestick charts, investment is still investment, and the journey remains tortuous; other methods can still be used. However, when facing the current investment reality, the insights from candlestick analysis cannot be overlooked, as they are, to some extent, one of the starting points for real-world investment.
Many people firmly believe that the premise of candlesticks is that the market is always right. Therefore, when observing a particular candlestick pattern, because the market is always right, the candlestick reflects the future trend of the market. In fact, I believe many novice traders have a question: why does it often go against expectations when the market shows a perfect technical pattern? This is not due to a flaw in the technique itself, nor is it the fault of the person using it; it is just that we often only see the 'perfect' technical patterns, and we only recognize what we think is correct.
Analysis of various basic patterns for individual candlesticks.
Looking at the bullish and bearish candlesticks indicates the direction. Taking bullish candlesticks as an example, after a period of struggle between bulls and bears, if the closing price is higher than the opening price, it indicates that the bulls are gaining the upper hand. According to Newton's laws of motion, in the absence of external forces, the price will continue to move in its original direction and speed. Therefore, bullish candlesticks often indicate that the price will continue to rise, at least ensuring initial momentum in the next stage. Hence, bullish candlesticks often signal further upward movement, which also aligns with one of the three major assumptions of technical analysis: stock prices fluctuate along trends, and following the trend is the core idea of technical analysis. Similarly, bearish candlesticks indicate continued downward movement.
Look at the size of the body.
The size of the body represents intrinsic momentum. The larger the body, the more obvious the trend of rising or falling. Conversely, a smaller body indicates a less obvious trend. Taking a bullish candle as an example, its body is the portion where the closing price is higher than the opening price. A larger bullish body indicates stronger upward momentum, similar to the physics principle where larger mass and faster speed yield greater inertia. Therefore, a larger bullish body indicates greater intrinsic upward momentum compared to a smaller bullish body. Similarly, a larger bearish body indicates stronger downward momentum.
Look at the length of the shadow lines.
The shadow lines represent reversal signals; the longer the shadow line pointing in one direction, the less favorable it is for the stock price to move in that direction. That is to say, the longer the upper shadow, the less favorable it is for the price to rise, and the longer the lower shadow, the less favorable it is for the price to fall. Taking the upper shadow as an example, after a period of struggle between bulls and bears, the bulls eventually lose ground, and the upper shadow becomes the resistance for the next phase. The probability of price adjusting downwards is high. Similarly, the lower shadow indicates a higher probability of upward price movement.
What is the ongoing battle of bulls and bears in the cryptocurrency market?
Longs and shorts are two factions; the bulls represent the green army, and the bears represent the red army. They hold different views: bulls believe prices will rise, while bears think prices will fall, leading to frequent battles. The green army consists of people who are bullish on prices; they buy to push prices up. The red army consists of people who are bearish; they sell to drive prices down.
In each time period, battles will occur; if the bearish red army wins, the price will drop, and the candlestick chart will show red. If the bullish side gains a significant advantage, their strength will be greater, resulting in larger candlestick bodies on the chart. If the green side is weak in resisting, it indicates that the resistance posed to the red side is minimal, resulting in very short shadow lines on the chart.
Analysis of various basic patterns of combination candlesticks.
Cloud Cover Combination
After a bullish candlestick appears, if a bearish candlestick follows that brings the price below half of the previous bullish body's range, this combination often occurs after a significant price increase or even setting a record high, indicating a reversal in market trend, followed by a bearish trend.
Island Combination
After a period of upward movement, a bearish gap candlestick appears, resembling an island. This combination indicates that although the closing price of the bearish candlestick is still higher than yesterday's, it reveals the weakness of market sentiment and the trading strategies of previous profit-takers, indicating that the market outlook is bleak.
Central Pillar Combination
This combination is in contrast to the 'Cloud Cover' combination. After a bearish candlestick drops, a bullish candlestick appears, and this bullish candlestick brings the price up to above half of the previous bearish body. This combination often appears after the market has declined significantly or even set a record low, indicating a trend reversal followed by a bullish trend.
Engulfing Combination
The space between the bodies represents both bullish and bearish forces, but today's long body completely engulfs yesterday's small body, indicating that the market will develop in the direction of the long body.
Pregnancy Combination
The space between the bodies represents both bullish and bearish forces but, in contrast to the engulfing combination form, it is the small body from today that is engulfed by the large body from yesterday, resembling a fetus in the womb, hence it is called the Pregnancy Combination. Whether or not this relates to genetics is unknown, but this Pregnancy Combination often indicates the future market direction aligned with the mother's direction, that is, bullish leads to bearish and bearish leads to bullish.
Morning Star Combination
This combination occurs after a bearish candlestick, followed by a small bullish candlestick or a small bullish doji, and then a large bullish candlestick that gaps up. This combination often appears after a prolonged decline or consolidation; the small bullish candle below resembles the long-awaited morning star in the minds of market participants, followed by a strong bullish candle indicating that the long night is over and the market welcomes the dawn. Thus, the Morning Star combination becomes a turning point for an upward market reversal.
Evening Star Combination
This combination is exactly the opposite of the Morning Star combination, becoming a turning point for market reversal and decline. The gap candlestick at the top, followed by a gap down of a large bearish candlestick, eventually forms a Evening Star. If the top is a T-shaped candlestick with an upper shadow, this combination is also vividly referred to as a 'Shooting Star.'
Three Red Soldiers Combination
When this combination of three small bullish candlesticks appears in a low price range, it indicates that the market has emerged from a long-term bearish shadow and is on the path to rebound.
Three Black Crows Combination
When this three black crows combination occurs in a high price range, it indicates that the upward market has ended and the downward market has begun.
Using candlesticks to describe the market has a strong visual effect and is one of the most effective charts to represent market behavior. However, some common candlestick patterns are only based on experiential summaries of typical shapes, lacking strict scientific logic. When applying candlestick analysis, keep the following points in mind.
1. Candlestick pattern analysis will have a certain error rate. Market fluctuations are complex, and actual market conditions may differ from our judgments. Experience shows that the success rate of using candlestick combinations to predict future markets is not very high.
2. The candlestick analysis method must be combined with other methods. Only after using other analysis methods to decide whether to buy or sell, should you use candlestick combinations to choose specific times and prices to take action.
3. Continuously 'modify, create, and adjust' the combination patterns based on actual situations. Combination patterns are merely products of summarized experience; in the actual market, it is rare to encounter a situation that perfectly fits the candlestick combination patterns we describe. Rigidly copying combination patterns can lead to missing opportunities for a long time. Patterns should be adapted according to circumstances. You should understand the intrinsic and extrinsic principles of each combination pattern. It is not a perfect technique, similar to other technical analysis methods. Candlestick analysis is built on subjective human impressions and is one of the analytical methods based on historical pattern combinations.
In the trading realm, what causes most traders to incur losses? (With illustrations)
Simplifying complex problems.
Today, let's talk about those headache-inducing events in trading, which everyone has definitely experienced.
For example:
1. After multiple stop losses on trades, the price then rises or falls in the predicted direction.
2. Often takes counter-trend positions.
3. Often stuck in the middle, neither cutting losses nor holding on.
Let's discuss some of these issues; today we will only pick a few simple ones to talk about.
First, the first question.
After multiple stop losses on trades, the price then falls in the predicted direction.
This typically occurs for those just entering the field, always thinking about picking bottoms and reaching tops, continuously eroding their capital. Eventually, when their capital is gone, the price still rises or falls as they predicted, but they have no capital left. Now let's illustrate this with actual cases.
Enter the market when you see a double bottom; it also signals entry. You think to yourself, 'I might have caught the bottom.'
Then the price did indeed rise.
But as time goes on, if you’re not paying attention, it will drop, and you’ll stop out.
Subsequently, the price was supported at a low point and entered again.
Not long after, it stopped out again.
At this point, the mindset also collapses; the money is gone, and the market trends upwards.
Isn't that right, brothers?
The second type often involves taking counter-trend positions.
These are things everyone will definitely do, but people are often unaware of it at the time.
For example, here at the resistance level, it also gives a signal to sell, thinking, 'This time I can finally take a big position.'
Stopped out right after entering.
Regardless of the signals, you entered a short position again, thinking this time you could finally make a big profit.
Then the bullish candlestick stops, and after repeated stop losses, it only gets worse.
Brothers, isn't it like this? When you first started trading, wasn't it always like this?
The third type often finds you stuck in the middle, neither cutting losses nor holding on.
I placed a short order at this position but did not set a take-profit or stop-loss.
First profit, then continuous losses.
It's very uncomfortable to be stuck; can't eat or sleep well, holding it is uncomfortable, and getting rid of it is also uncomfortable—it's just all uncomfortable.
These three types are experiences every trader goes through. If you are still experiencing them now, you need to pay close attention to the following content.
After multiple stop losses on the first type of trades, the price rises or falls again in the predicted direction.
In fact, it is about not understanding what the market is doing; in simple terms, making money or losing money is just gambling. If you bet right, you make money; if you bet wrong, you lose money. It's either picking the bottom or reaching for the top.
In this situation, most people do not understand technical analysis; they simply enter the market upon seeing signals at support and resistance levels.
Regardless of the current price, enter when you see a double bottom.
Although we are trading on probabilities, not certainties, learning technical analysis will help you avoid this issue, such as with the previous trade.
In fact, it has not yet adjusted in the large cycle and has not reached a critical position; that bottom position is not where a price reversal will occur.
The second type often involves taking counter-trend positions.
Can't distinguish trends; just looking for signals at support and resistance levels to enter the market.
In fact, the price has already reversed to bullish, yet you still have a bearish mindset, leading you to continuously take counter-trend positions.
The third type often finds you stuck in the middle, neither cutting losses nor holding on.
This is essentially greed, which can also be understood as a lack of clear understanding of the current market. You don’t know what level of trade you are making, what stage that trade is in at this level, and the worst part is not setting take-profit and stop-loss levels. Always wanting to take a big bite, but in the end, you miss out and get bitten back.
These are common occurrences during trading, but as long as you learn technical analysis and manage your positions well, these two aspects will resolve about 80% of emotional issues in trading. However, many people know where their problems lie but do not want to change, making it very difficult to succeed.
It's like you're drowning, but the water is only up to your knees. Because you are lying down, it feels like the water is up to your neck. If you struggle a little, you feel like you'll die, which is terrifying, so you just lie flat. But actually, the water is not that deep; you just need to stand up to realize it's only up to your knees.
Many people trap themselves. In the end, they are not only eliminated by the market but also lose a lot of money.
To achieve success in trading, continuous learning is required, changing one's perception, identifying problems, and resolving them will gradually lead to becoming a stable professional trader. I hope everyone can find their own issues and confront them for resolution, thus achieving profitability sooner. Finally, I wish everyone successful trading.
So how do retail investors make money?
Many people might say that short-term trading relies on technology, while long-term trading relies on logic. Essentially, short-term relies on emotion, and long-term relies on value. Value itself also carries emotion. For example, Bitcoin can be hyped up to 70,000 and then drop back to 15,000. The change is not in Bitcoin's value but in market sentiment; Bitcoin remains the same Bitcoin.
Therefore, understanding market sentiment is essential for long-term investment value. As for short-term trading, the so-called candlestick techniques themselves reflect market sentiment. How the main funds draw candlesticks depends entirely on overall market sentiment, whether there is capital following suit, and whether there is market enthusiasm. It can be said that everything visible in candlesticks is what the funds want you to see, not the result of natural trading. The ultimate reflection of sentiment is trading volume.
Thus, any rise or fall in cryptocurrency prices is ultimately reflected in trading volume. Without volume, prices can only decline.
The first step for retail traders to combat emotion is to understand trading volume and only participate when there is volume. The principle is simple: volume indicates that capital is in operation, and lack of volume indicates that capital is abandoning the cryptocurrency in the short term.
Why do short-term traders focus on hot topics? Because the concentration of funds can create a profit effect. Even for long-term bull coins and value investments, they are also accompanied by volume. In times of low trading volume, it is necessary to continue observing. Retail traders must combat emotions; understanding trading volume alone won't solve the problem. They must establish their own trading principles.
The second step for retail traders to combat emotion is to set clear buy and sell conditions. Many cryptocurrency traders impulsively buy and sell as they please.
A buying point typically occurs when cryptocurrencies are about to rise sharply; if you don't buy now, it will take off. A selling point generally occurs when cryptocurrencies are about to fall sharply; if you don't sell now, you'll get caught in a deep loss. The emotional tendency to chase highs and sell lows is inherent and stems from the emotional collapse of retail investors under severe market fluctuations. Retail traders must combat this emotion by ceasing impulsive buying and selling, clearly defining their buy and sell points, and establishing clear principles on when to buy and when to sell—deciding this before entering any position, rather than acting on a whim.
The third step in combating emotion is to understand patience and letting go. In the retail trading mindset, there is another component which is a human weakness: regret.
You will regret not selling at that time, leading to a drop in the price and losses. You will regret not buying at that time, leading to a surge in the price and missing the opportunity. Retail investors need to learn to be patient, enduring the floating losses.
As long as the investment logic remains unchanged, floating losses are something that must be accepted; this is one of the situations that will occur on the path of investment. No one can buy at the absolute lowest point. Retail investors need to learn to let go, and what they must let go of is missing the opportunity.
As long as a cryptocurrency does not align with your investment logic, even if the price keeps rising, you cannot follow the trend and buy; you must understand when to let go. Let go of those rises that do not belong to your understanding.
Cold-blooded individuals find it easier to make money in cryptocurrency trading, as lack of emotion is the only way to survive in the market.
Follow the precise strategic analysis of Wu Ge, utilizing huge AI-generated data selections, positioning yourself in an invulnerable position? The market never lacks opportunities; the question is whether you can seize them. Only by following experienced and right people can we earn more!