Minimalist Trading Rules
Market cycle switching follows the iron law of 'bull markets focusing on high β assets, bear markets defending BTC + stablecoins'. When BTC's weekly line breaks above EMA21, it is seen as a signal for the start of a bull market, at which point one should focus on allocating to high-volatility assets such as Solana ecosystem MEME coins; if BTC falls below EMA144, it enters a bear market defense period, and 80% of funds need to be transferred into government bond-backed stablecoins to lock in an annualized 4% return. A bottom volume must satisfy the condition of a continuous 3 days of trading volume > 90-day average volume and breaking through the downward trend line, while the top warning signal manifests when over 70% of the top 50 coins by market capitalization show a daily MACD top divergence.
The second candlestick's body completely covers the previous one, and the amplitude > the average volatility of the previous 5 days. If a engulfing pattern appears simultaneously on the 4-hour and daily charts, the win rate can increase from 55% to 82%. In terms of operations, a bullish engulfing pattern should enter when the close of the third candlestick breaks above the pattern's high, with a stop loss set 1.5% below the lowest point; conversely, for a bearish engulfing pattern, the stop loss is set 1.5% above the highest point. Take profit uses a 1:3 risk-reward ratio or the Fibonacci 61.8% retracement level, reducing 50% of the position when profit reaches 1:2, and trailing stop loss for the remaining part.
The three-line strategy focuses on EMA20, EMA55, and EMA144. When the price retraces to EMA20 and the moving averages are in a bullish alignment, one should go long; if it falls below EMA55, then take profit. The mean reversion strategy captures opportunities when the price deviates from EMA55 by more than 2 times the ATR, combined with RSI overbought/oversold signals to open positions in the opposite direction, targeting a return to EMA55.
A hard stop loss of 3% must be set in 10 trades, with the goal not being profit but verifying execution ability. The position control formula is: single trade risk = account net value × 1% / . For example, with a 100,000 USDT account and a stop loss space of 2%, one can open a position of 5,000 USDT. Mechanical execution breaks the inertia of emotional trading.
After a 50% floating profit, activate a trailing stop loss, and close immediately if it falls below EMA55. Historical backtesting shows that the engulfing pattern strategy has an annualized return rate of 217%, with a maximum drawdown of 38%; the three-line moving average strategy has an annualized return rate of 154%, with a drawdown of 29%, both having win rates exceeding 65%.
Just as farmers plant according to the seasons, the essence of trading is to identify cycles, execute rules, and wait for the gifts of time.
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