How patient are the top cryptocurrency traders? My mentor when I first entered the cryptocurrency circle spent 80% of his time waiting and 20% of his time trading. Now he lives a very comfortable life, fishing, playing golf, and catching a few waves of market trends a year.
I still clearly remember his sigh that day: Life is so wonderful sometimes. You can’t get what you want when you try your best, but you get results after you really let go.
My mentor was also an old investor. He was familiar with the ups and downs. After his account was hit hard, he temporarily withdrew from the cryptocurrency circle. When he was old and free, he picked it up again. Unexpectedly, he made a great comeback. I have summarized some of the 16 key factors and share them with you. [See the comments section
1. Choose altcoins in a bull market and buy BTC in a bear market. This is my secret!
2. Pay special attention to the coins with large volume at the bottom. This is a start signal, don’t miss it!
3. For coins in an upward trend, when they pull back to an important moving average, it is the best time to buy. Remember to seize the opportunity!
4. Don’t trade frequently. It is enough to get the big trends right a few times a year. Greed will lead to big losses!
5. You must control your position well. Never fully invest and leave yourself room so that you can cope with market changes!
6. Don’t cover your positions for losing junk coins. It is wise to stop losses in time and don’t let yourself get deeper and deeper!
7. The news can only be used as a reference. Don’t blindly follow the trend, otherwise you will bear the consequences at your own risk!
8. Never touch coins that you are not familiar with. Focus on the track that you are familiar with, so that you can be sure of winning!
9. Don’t be swayed by market sentiment, stay calm and rational, so that you can make the right decisions!
10. If altcoins rise too much, they will definitely fall; if they fall too much, they may not necessarily rise. The choice is very important, so you must keep your eyes open!
11. When most people are optimistic, that is often when risks come. Remember this and don’t let yourself become the one taking the blame!
12. Learn to hold empty positions and wait for the market to give clear signals before entering the market. This is the only way to avoid unnecessary losses!
13. Don’t follow the hype about hot topics. Hot topics tend to come and go quickly. Don’t let yourself get trapped!
14. When trading, you must have your own trading system and strictly implement it to maintain stable returns!
15. Investing is a long-distance race. Only by maintaining a good attitude can you have the last laugh. Don’t let yourself give up halfway!
16. You may not necessarily make money from investing, and you may lose money with a high probability, so try to invest with your spare money. If you invest with spare money, you will have a good mentality and the probability of winning will increase. Remember this and don't let yourself get into trouble because of investing!
Only buy this kind of trend in your whole life, and go from huge losses to huge profits!
I have practiced this method in tens of thousands of transactions, with a winning rate of up to 98%! Last month in March, I also earned 120,000 U in just one month!
There are two types of engulfing patterns: bullish and bearish.
The engulfing candlestick pattern consists of two candlesticks, so it falls under the category of double K patterns.
The structure of this pattern is very easy to recognize. On the chart, the first candlestick is completely engulfed by the next candlestick. Remember, for a valid engulfing pattern to form, the body of the first candlestick should be completely contained within the body of the next candlestick. Take a look at an example of an engulfing pattern below:
This is how the Engulfing pattern looks on a chart. As mentioned above, the first bearish candlestick (red) is completely engulfed by the body of the next bullish candlestick (green). Likewise, the opposite scenario is possible. The engulfed candlestick can be bullish, while the engulfing candlestick can be bearish.
The Potential of the Engulfing Candlestick Pattern
The Engulfing candlestick pattern has strong reversal signals. If the price forms an engulfing pattern on the way up, it gives us a signal that a top may be forming.
On the other hand, if the price forms an engulfing pattern during a decline, this indicates that the price action may be forming a bottom.
Types of Engulfing Patterns
As mentioned earlier, there are two types of engulfing patterns, namely the first is the bullish engulfing pattern and the other is the bearish engulfing pattern. Now let’s understand these two engulfing patterns separately:
Bullish Engulfing
The Bullish Engulfing pattern usually appears during a bearish trend. It starts with a bearish candlestick on the chart, and then this candlestick is completely engulfed by the body of the next bullish candlestick. This pattern creates bullish potential on the chart that could reverse the current bearish trend. Take a look at the Bullish Engulfing Candlestick pattern below:
Note that the first candlestick in the pattern is bearish and it is completely contained by the body of the next bullish candlestick. This forms a bullish engulfing pattern, which suggests a reversal in trend. A valid bullish engulfing pattern means that after the recent decline, a bullish move may begin.
Bearish Engulfing
The bearish engulfing pattern does the exact opposite of the bullish engulfing pattern. The bearish engulfing pattern usually appears during a bullish trend. The pattern starts with a bullish candlestick, which then gets completely engulfed by the body of the next bearish candlestick. This pattern creates a strong price reversal potential on the chart, and the current bullish trend could turn into a new bearish move. Now take a look at the bearish engulfing pattern below:
In the above image, the engulfed candlestick is bullish (green), while the engulfing candlestick is bearish (red). The body of the second candlestick completely contains the first candlestick, completing the bearish engulfing pattern on the chart. The bearish engulfing pattern may signal the start of a new downtrend on the chart.
Engulfing pattern confirmation
The confirmation of the engulfing pattern occurs on the candlestick following the pattern. It needs to break above the real body of the engulfing candlestick to confirm the validity of the pattern.
A valid bullish engulfing pattern will then have a third candlestick (bullish) that breaks above the body of the engulfing candlestick. A valid bearish engulfing pattern will then have a third candlestick (bearish) that breaks below the body of the engulfing candlestick. This is how engulfing confirmation looks on a chart, as shown below:
Notice that this time we see a confirmation candlestick after the pattern. When you see this kind of candlestick behavior after an engulfing pattern, this confirms the validity of the pattern.
Engulfing pattern trading strategy
We have discussed the structure of the Engulfing pattern in detail. Now let’s discuss the trading strategies associated with this chart pattern.
Engulfing pattern trade entry
The entry point for a trade is usually when the engulfing pattern is confirmed. This is the third candlestick (the one after the engulfing candlestick) that should break through the body of the engulfing candlestick and move in the expected direction. When the candlestick closes outside this level, we have confirmed the pattern and can open a corresponding trade.
If the engulfing pattern is bearish, the price should breakout through the lower side of the body of the engulfing candlestick. In this case, we should be ready to enter a short trade. If the engulfing pattern is bullish, the price should breakout through the upper side of the body of the engulfing candlestick. This means we should enter a long trade.
Stop loss setting for the engulfing pattern
Without a doubt, risk control should be your primary consideration when trading. Therefore, you must set a stop loss on your engulfing trades.
The best stop loss placement in an engulfing trade is outside the limits of the engulfing pattern. If the engulfing pattern is bullish, the stop loss should be placed below the lower shadow of the engulfing candlestick. If the engulfing pattern is bearish, the stop loss should be placed above the upper shadow of the engulfing candlestick.
The above chart shows how you should set your stop loss when trading the Bullish and Bearish Engulfing Patterns. If the price fails to move in the expected direction and triggers your stop loss, this will prove the trade assumption wrong while protecting your capital from minimal losses.
Take Profit Setting for Engulfing Pattern
A rule of thumb is that engulfing trades should be held for at least a move in price equal to the size of the pattern. This means that the minimum take profit target pursued from an engulfing pattern should be equal to the distance between the upper and lower shadows of the engulfing candlestick.
When the price action reaches this distance, you can choose to close all or part of your position. If you choose to continue to hold a part of your position, you need to carefully watch the price action for potential exit opportunities. This includes support/resistance breakouts and trend or channel breakouts. Chart and candlestick patterns are also very important here. If you find a chart/candlestick pattern that goes against your current trade, you may need to close your position.
Engulfing Pattern and Price Action Strategies
Now let’s illustrate a price action based trading strategy in conjunction with the Engulfing pattern. See the chart below:
The above chart is an hourly chart of GBP/USD (British Pound/US Dollar) from January 1 to January 5, 2016. The chart depicts a Bearish Engulfing Pattern and its trading rules.
The chart starts with the price rising, which is marked by the green arrow. You will notice that the price action has only formed bullish candlesticks. Suddenly, we see a relatively large bearish candlestick that completely engulfs the previous candlestick. This confirms the presence of a Bearish Engulfing pattern on the chart.
However, in this case, we need a confirmation candlestick to appear before we can even consider opening a position. The next candlestick on the chart is bearish again, closing below the body of the engulfing candlestick. This is the confirmation needed to take a trade based on the Bearish Engulfing pattern. The stop loss for this trade should be placed above the upper shadow of the engulfing candlestick, as shown in the above chart.
The yellow arrow in the image shows the size of the pattern and how the minimum take profit target is applied on the chart. This target is completed in the next candlestick that appears after the engulfing confirmation.
This trade can be extended for more profits. You can use price action rules to determine the final exit signal. You will notice that the GBP/USD price has formed two more large bearish candlesticks on the chart, which would double the profits on the trade. However, the next candlestick on the chart is a hammer reversal pattern, also known as a Pin Bar, which has strong bullish potential. The trade should be closed when the hammer pattern is confirmed. As you can see, the next candlestick is bullish and breaks above the upper level of the hammer pattern. This confirms the validity of the hammer reversal, generating an exit signal to close the short position. The Bearish Engulfing trade should be closed on the close of the bullish candlestick following the hammer pattern, as shown by the second red arrow in the above image.
This example shows how price action rules can help find the most appropriate exit points on the chart.
Engulfing Pattern and Support and Resistance
Another effective way to trade the Engulfing pattern with price action is to spot the pattern at key support and resistance levels.
If the price is approaching a resistance area and a bearish engulfing pattern appears on the chart, this will create a very strong bearish potential on the chart. Conversely, if the price is approaching a support level and a bullish engulfing pattern appears on the chart, this will create a very strong bullish potential on the chart.
These situations offer a high probability of success in trading. Many times, when you enter a trade at the right time with technical confluence, you can get in early on an emerging trend reversal. Now let's look at how to combine the Engulfing Pattern with support and resistance levels:
The above chart is an hourly chart of USD/CHF (US Dollar/Swiss Franc) from February 19 to February 24, 2016. The chart shows another bearish engulfing trade, which occurred after the price crossed the psychological resistance level.
The black horizontal line in the chart is the very strong psychological resistance level of 1.0000 parity ratio for USD/CHF. After a strong price increase, USD/CHF encountered this resistance level and subsequently tested it twice. On the third test of this resistance level, the price formed a relatively large bearish candlestick that engulfed the previous bullish candlestick. This formed a bearish engulfing pattern on the chart.
The confirmation of the bearish engulfing occurs on the next candlestick, which turns bearish and breaks below the real body of the engulfing candlestick. The close of the confirming candlestick provides a short entry signal.
The stop loss should be placed above the upper shadow of the engulfing candlestick, which is slightly above 1.0000.
After that, the price starts to fall. Then the minimum take profit target of the pattern is reached (indicated by the yellow arrow). You can close part of your position here and keep part of your position in the hope that the price will fall further.
Notice that USD/CHF continues to make lower highs and lower lows on its way down, which lends confidence to the downtrend. Suddenly, price action starts to move sideways, and we have marked the upper limit of the range with the thin black horizontal line. Once the price breaks through this resistance and closes above it, the trade should be closed immediately. As you can see, this forms a higher top on the chart, which means the bearish trend may be interrupted.
Combining support and resistance levels with the engulfing pattern is an excellent price action based trading method.
Let’s look at another example of a Bullish Engulfing pattern on EUR/USD: As you can see, a Bullish Engulfing candlestick pattern exists, indicating a possible buying opportunity.
The above transaction is executed through the following steps:
1. A Bullish Engulfing Pattern was confirmed.
2. After confirming the pattern, execute a buy at 1.1301.
3. Based on a 1:2 risk-reward ratio, the profit target is set at 1.1347.
4. Stop loss is placed below the lower shadow of the second bullish candlestick at 1.1278.
Engulfing candlestick pattern: advantages and disadvantages
The bullish and bearish engulfing candlestick patterns each have their own advantages and disadvantages, as shown below:
Summarize
The Engulfing candlestick pattern is a double candlestick pattern. It consists of two candlesticks where the second candlestick completely engulfs the previous candlestick, including the shadows. The Engulfing candlestick pattern has a strong reversal potential on the chart. We identify two types of Engulfing candlestick patterns:
◎ Bearish Engulfing: Can be found at the end of an uptrend. It starts with a bullish candlestick followed by a larger bearish candlestick whose body completely engulfs the first candlestick in the pattern. This creates bearish (reversal) potential on the chart.
◎ Bullish Engulfing: Can be found at the end of a downtrend. It starts with a bearish candlestick followed by a larger bullish candlestick whose body completely engulfs the first candlestick in the pattern. This creates a bullish (reversal) potential on the chart.
The confirmation of the engulfing pattern appears on the next candlestick on the chart:
If the engulfing pattern is bullish, the next candlestick should be bullish and its close should be above the body of the engulfing candlestick.
If the engulfing pattern is bearish, the next candlestick should be bearish and its close should be below the body of the engulfing candlestick.
Here are three basic engulfing trade rules:
◎ Open a trade when the price closes the confirmation candlestick.
◎ Place a stop order outside the opposite side of the engulfing pattern.
Keep the minimum price move in the trade equal to the size of the engulfing pattern, or use price action rules to extend the trade.
A high probability price action method for trading both bullish and bearish engulfing patterns is to look for the pattern to appear at significant support and resistance levels.
It took me 5 years to make over 36 million from 50,000 yuan. After thousands of days and nights of reviewing and drawing over 800 pictures, I summarized the secret of making money in the cryptocurrency circle: (Trend Trading)
I will share it with you selflessly today. The method is very simple and practical. Even a novice can get started immediately. I suggest you follow it and collect it.
Trend trading is the process of taking advantage of a strong upward or downward price movement. Different traders may define a trend differently.
For example, a trader who prefers high volatility instruments may consider the instrument to be in an uptrend only when the price rises by 20% or more.
A low volatility trader, on the other hand, may only need a small price movement to believe that a trend has formed.
Regardless of the time frame or strategy, the goal of trend trading is to identify the trend and find ways to join it with the least risk. To this end, this article will discuss several trend trading strategies and reveal how to find stocks that are trending upwards.
First, let’s talk about how to spot trends.
Trend Trading Indicators
When trading, the less subjective your view of the market is, the better. Therefore, you can use technical indicators to determine market trends.
Trend Lines
Trendlines are a great way to clearly define the direction of a market. While it is still somewhat subjective because you need to identify where the trendline starts and ends, with some practice you should be able to identify key points of support and resistance, and thus the trend.
For a bullish trend, you need to connect the lows and highs to form an ascending channel. After all, an uptrend is only confirmed when you have a series of higher lows (HL) and higher highs (HH).
When the market is on an upward trajectory, prices should not fall below previous lows.
Likewise, for a bearish trend, you simply reverse the lows and highs.
Note that the two charts above are actually of the same stock, just in opposite directions during the day. Trends can help you reveal the direction of the trade you are in. The beauty of trend lines is that as you continue to draw trend lines, your eye will gradually become more trained to predict the direction of the stock's movement.
This helps in setting targets and reversal points during your trading.
Trend Channel
Going a step further, you can use trend channel drawing tools. These channels will create a parallel clean line. However, these channels will not allow you to create wedge patterns or diamond patterns.
Typically, trend channels work best with large-cap stocks: these are companies with larger market capitalizations and greater liquidity.
Slope of the line
Another point to note is that you need to identify the minimum slope of the line, which will trigger the formation of a trend.
Strong trends usually have a slope of more than 50 degrees, creating strong upward momentum.
This is completely subjective. Nonetheless, if you are trend trading, the move should be strong enough for you to pay attention.
Moving Average
Moving averages are another excellent indicator you can use to gauge trend strength.
On larger time frames, you can take the simple approach of looking at whether the price is above or below the 200-day moving average. However, another approach is to look for strong trends where the moving averages do not cross over on the way up. The spacing between the moving averages indicates that the stock is rising strongly on all cycles (short-term and long-term).
To further illustrate this point, we can filter for stocks that have an overlap of their 20, 50, and 200-day moving averages on their daily charts. In other words, the 20-day moving average is above the 50-day moving average, which is above the 200-day moving average.
This tells us that the short-term moving average is above the long-term moving average, indicating an uptrend. Of course, the opposite is true for a downtrend.
Uptrend Example
From the chart above, you can see that the purple 20-day moving average is significantly above the red 50-day moving average. And, underneath, the 200-day moving average is also sloping up.
The three moving averages are aligned neatly, giving a strong signal that the trend is very strong.
Non-trending example
Now that you know what a strong uptrend looks like, notice the difference between the GOOGL and XNCR trends.
Look, there's a lot of volatility in the market, right?
There are two moving averages in the above chart, the 10-day and 20-day exponential moving averages (EMA). You can see that the 10-day EMA has back-tested the 20-day EMA, which clearly shows that the stock price is not in a strong trend.
Downtrend Example
ABIO saw a notable sell-off after reaching an extreme high of about $18. Since then, the stock price has never recovered.
The above chart clearly shows the strong decline in the stock price. Notice that the moving averages did not cross at all during the decline. To enhance the validity of the trend, the moving averages remained widely spaced throughout the decline.
To be clear, this trend is hard to find. You certainly don’t want to be on the wrong side of it. Unfortunately, some sell-offs don’t retrace to provide an opportunity for a low-risk entry.
Awesome Oscillator
Another indicator you can use to analyze the market is the momentum oscillator. These indicators have no upper or lower limits, allowing the oscillator to fluctuate with stock price movements.
The TRIX indicator (Triple Exponential Smoothing) is a momentum oscillator that fluctuates above and below the zero line. In the next chart, we will discuss a stock that is in a strong downtrend.
As this stock continues to move lower, notice that TRIX remains almost entirely below the zero line.
It is worth noting that TRIX does not react quickly because it smooths three exponential moving averages, so it is a good indicator of trend.
Observe how TRIX has consistently stayed below the zero line as the stock price fell. It is important to remember that this does not mean that TRIX will not occasionally slightly breach the zero line.
Remember, in the markets, price action rarely fits perfectly into the framework prescribed by technical analysis books.
More Trend Trading Examples
In our first example, we see a stock that is clearly in a downtrend. You can see that the stock is forming lower lows and lower highs.
Next, we have a strong bullish uptrend forming higher highs and higher lows.
Hopefully these examples help you see the different trends. Here’s one more:
Can you see how the chart above lacks any trend? This is what we call a range bound market, or securities that lack a clear trend. Most of these stocks are range bound.
Reasons why trend trading fails
Trend trading is like any other strategy in the market. There will never be a 100% success rate. Usually, bullish trends fail when the price reaches a climax, breaks out of its channel, or when supply becomes too heavy.
Conversely, when prices plummet or demand becomes supportive, the downtrend will end.
The key is to study the trend and find the consistency between volume and price action.
Not following stop loss
When you trade a stock that is trending, you feel really good. You don't have to do much and the money keeps pouring into your account. However, if you buy a trending stock at the moment when the stock reverses, you could get stuck.
This is because a late entry could result in a horrible reversal, with the stock price eventually falling back to where it started.
Therefore, you must use stop losses, otherwise the trending market will turn into your worst nightmare.
If you find yourself buying at the top of a strong trend, don't add to your position because it violates the lows of each decline. This practice is called averaging down and can have devastating consequences.
In the above chart example, we pointed out what happens if you buy support in a channel during a strong uptrend and the trend fails.
As you can see, if you don’t have a stop placed just below the low that was tested, things can go very wrong very quickly.
Strategies to join the trend
Now that you know what to avoid, let’s look at a few strategies to help you successfully join the trend.
1. Moving Average Pullback
During a strong trend, prices will often pull back to an important moving average, such as the 20 or 50 day moving average. These pullbacks usually provide a good opportunity to join the trend while keeping risk low if prices continue to rise.
Because institutions like to buy at lower prices, the price tends to find support at these levels.
Let’s use the GOOGL example above to see how buying near the 50-day moving average was an excellent decision.
We see three good pullback buying opportunities on the GOOGL chart, all near the 50-day moving average, marked by the arrows. Each of these buying opportunities is a good profit opportunity.
If the trade does not succeed, you can set the stop loss below each consolidation range to control the risk.
2. Mean reversion trend trading
If you don’t like using moving averages, sometimes channels work better. Let’s remove the moving averages from the GOOGL chart and this time add a channel.
Note that the buy point corresponds to the low of the channel, and the sell point corresponds to the breakout of the high of the channel.
This can be a very simple and effective way to manage a short term position. Basically, you are buying the pullback at support and selling at the highs.
Trend trading is all about your entry point, stop loss, and chosen trading method. Whether using moving averages, channels, or oscillators, you need to be proficient in each method to develop your edge.
The biggest difficulty in trading is not the fear of losing money!
So how do you overcome your fear of losing money?
The great philosopher Bertrand Russell once said: The fastest way to overcome your fear is to do what you fear. Are you afraid of losing money? Then practice deliberately losing money.
Step 1: Prepare 100U
Step 2: Lose all the 100U within one week. But this does not mean you can do it blindly, you cannot open it blindly, you cannot blindly increase the leverage, you cannot blow up your position, you must strictly set stop loss, and you must strictly execute according to the opportunities in your trading system.
Aren’t you afraid of losing money? Don’t you trust your trading system?
Come on! The best way to eliminate fear is to face it, so lose as much as you can! This 100U is for you to lose. If 100U is not enough, you can get another 100U. When you feel numb to losses, you will succeed. At that time, you will understand what I often say, "Losing money is the norm, and missing out is also the norm. Only when you accept this, making money is possible for you."
Only by losing again and again, and playing games with yourself again and again, can you be reborn and overcome the fear of loss. Then from now on, whether it is holding a position or entering the market, you will not hesitate.
I’ll tell you a secret: if you really do as I said above, it is highly likely that you will not lose all your money, and you may even double your capital.
So at that time, you will involuntarily want to increase your capital investment, but when you use 1000U or 10000U to go all in
You will find that your old habit comes back again: What should you do if you are still afraid of losing money?
Question 1: What should I do if I’m still afraid of losing money?
Sizing your positions appropriately
Question 2: What is the right size?
A position that allows you to sleep well
Question 3: When can I increase my position?
When you can still sleep well after enlarging
But please note! The deliberate practice method I just taught you requires you to have your own trading system. If you don’t even have a trading system, then you have no right to be afraid of losing money!
【See the comments section