There is a dumbest way to trade cryptocurrencies, which is almost 100% profitable. I made more than 4000w using this method!
1. Survival rules for small funds: catch one wave a day, never fill up the capital <10W, and it is enough to make a big profit from one big market a day!
• Refuse high-frequency operations (>3 times a day will lead to loss of control)
•Position ≤ 50% (leave room for margin calls to prevent being caught)
• Case: ETH waterfall market in 2024, 5% short position, 30 times profit in 3 hours
2. Good news turns into bad news: major good news for the art of running fast = warning of escaping the top!
• If you didn’t ship on the day of favorable policy/project, you must sell if the next day opens high!
• Beware of “news turning into a sickle”
3 News + Holidays: For a bird’s eye view of cryptocurrency trading that allows for early planning, check the calendar first!
• Must reduce positions on the 10th of each month (US CPI data day)
•Clear contracts 48 hours before Chinese New Year/American Thanksgiving! Extreme case: FTX crash day in 2023, 90% of full positions were liquidated
4. Medium and long term: light warehouse guerrilla warfare
“5% position to conquer the world”
• Stop loss set 5% below the support level (to prevent false breakouts)
• Take profit in batches at 50% of floating profit (avoid greed)
My holdings: BTC fixed investment accounts for only 3%, but the annualized performance is better than 90% of heavy investors
5. The core of short-term trading: fast, accurate and ruthless + short position philosophy
Today "15-minute K-line + KDJ golden cross = best hitting area"
• Trend indicator: RSI＞70 to short, ＜30 to long (harvest against human nature)
• Short positions during the sideways period are a sign of top self-discipline (turn off the phone to ensure safety when the daily average fluctuation is less than 2%)
Fluctuation law: the time and space code of slow rise and fast fall
"It rises like a snail, and falls like an avalanche!"
• Slow-rising market: A correction must break the previous low (short signal)
• Sharp decline: rebound is not as high as the previous high
7. Stop loss: Dignity is more important than money
• "If the direction is wrong, sell immediately. If you hesitate for a second, you will lose 10%."
• Fixed stop loss method: 3% of the principal is the red line
• Dynamic stop loss method: after the floating profit reaches 50%, if the price falls back by 20%, you must sell.
8 Technical Bible: 15-minute line + KDJ
•KDJ golden cross + large volume breakthrough: go all in!
• MACD top divergence + shrinking volume: run
Without further ado, let’s get straight to the point!
8 minutes of explanation (MACD indicator): Teach you to use MACD to find the best buying and selling points!
MACD indicator is a relatively common technical indicator. The more common the technical analysis is, the more people use it as a reference, and it is more worthwhile for us to spend time to familiarize ourselves with it. However, most people do not know how to accurately apply MACD indicator.
Through this article, we will get to know this most familiar technical indicator from scratch, and learn how to use the MACD indicator to find appropriate buying and selling points and trend turning points to discover more and better quality trading opportunities.
What is the MACD indicator?
The MACD indicator, also known as the Moving Average Convergence Divergence, is an indicator derived from the moving average. The Moving Average Convergence Divergence (MACD) observes changes in market trends by analyzing and comparing the relationship between the "short-term" and "long-term" moving averages, so as to know what trend the market is in, where there are trading signals, and how to discover market turning points in advance.
If beginners want to understand the MACD indicator more carefully, they need to have a basic understanding of the moving average first. This is because MACD is evolved from two moving averages.
How to read the MACD indicator?
The MACD indicator consists of four parts, including the DIF line, the DEA line, the MACD column and the zero line. Each part represents different data, which are obtained from the original chart, just to allow us to interpret and present it in a more in-depth but intuitive way, so the MACD indicator was born.
Here are some introductions to these four parts:
DIF Line, Express Line
DEA line, slow line
MACD Histogram
Neutral
1. MACD line (DIF line/fast line)
MACD line is also called DIF line (Differential Line), which is the difference between the short-term moving average (16EMA) and the long-term moving average (26EMA). MACD line exists to analyze short-term price changes. MACD line or DIF line can be positive or negative.
MACD fast line = short-term average line - long-term average line
Positive MACD Line:
It means that the short-term moving average value is greater than the long-term moving average value, which is equivalent to the short-term average price of the product being higher than the long-term average price, indicating that the financial product is on the rise.
Negative MACD Line:
It means that the short-term moving average value is smaller than the long-term moving average value, that is, the short-term average price is lower than the long-term average price, which means that the financial products in the market are in a decline.
The reason why the MACD line is also called the fast line is that it is most sensitive to changes in market prices.
2. Signal line (DEA line/slow line)
Simply put, the signal line (slow line) is the average value of the MACD line over the past period of time (usually 9 days). Since it is based on past MACD data for analysis, it is also called the slow line. The signal line exists to capture longer-term trends.
Signal line/slow line = ∑ (n MACD fast lines)/n
n = the time period we want to select
The purpose of the slow line is to allow us as traders to discover trading opportunities more quickly.
3. MACD Histogram
The MACD bar was created to understand the difference between the DIF line and the DEA line. With the bar chart, we can see the difference more clearly.
MACD histogram = DIF line - DEA line
The bar graphs are also divided into positive or negative numbers. From these bar graphs, we can know:
The histogram is positive:
The fast line (DIF line) is above the slow line (DEA line)
The bar graph is 0:
The fast line (DIF line) is level with the slow line (DEA line), which is an intersection point
The histogram is negative:
The fast line (DIF line) is below the slow line (DEA line)
4. Neutral line
The zero line serves as a reference level, distinguishing the fast line and the slow line from positive and negative numbers, and acts as a boundary line, allowing us to more clearly know in which area the current MACD data is.
How to use the MACD indicator
The MACD indicator has many uses. The three most common uses are to find the following information through MACD:
1. How to use the MACD indicator to observe price trends?
The simplest way to use the MACD indicator is to observe trends in financial product transactions, the most common of which include foreign exchange trading and stock trading. There are two types of trends in transactions: uptrend and downtrend.
Uptrend: When both the fast line and the slow line are above the zero line, the product is generally in an upward trend.
Downtrend: When both the fast line and the slow line are below the zero line, the product is generally in a downtrend.
2. How to use MACD golden cross and death cross to find buying and selling points?
Using the MACD indicator to find buy and sell points is the most common analysis method. By finding the golden cross or death cross, we can find the long and short points. The following figure is an example of EUR/USD:
When the fast line (blue line) breaks through the slow line (orange line) from below to above, it is called a golden cross, which is a good buy or long signal reference.
When the fast line (blue line) falls below the slow line (orange line) from above, it is called a death cross, which is a good reference for selling or shorting signals.
MACD Golden Cross
MACD Death Cross
3. How to find trend turning points through MACD indicator divergence?
This is an advanced use of the MACD indicator. When the trend between the price trend and the MACD indicator is inconsistent, there is a chance of MACD divergence. Simply put, investors' emotions and opinions on price trends have changed, and they believe that the price of the financial product does not match its actual value.
The appearance of MACD divergence is a warning and can be divided into two types, providing investors with a potential buy and sell signal:
When the price is higher than the previous wave, but the MACD line is lower than the previous wave, a top divergence will be formed. This means that the upward momentum of the price is weakening, which means that the market is actually skeptical about the price increase in the next wave, so the death cross after the top divergence can also be regarded as a sell/short signal.
When the price is lower than the previous wave, but the MACD line is higher than the previous wave, a bottom divergence will be formed. This means that the downward trend of prices has slowed down, and the market now believes that the subsequent decline may be repurchased, so the golden cross after the bottom divergence is considered a buy/long signal.
Top divergence (high-end divergence)
Bottom divergence (resistance divergence)
Parameter adjustment of MACD indicator
MACD parameter adjustment is an advanced way to use MACD. By fine-tuning MACD parameters, we can make MACD more compatible with specific financial products.
If you want to adjust the parameters, you can click MACD settings to enter the settings pop-up window and start adjusting the parameters.
The default parameters of the MACD indicator of all charting software are 12, 26, and 9, which are considered to be the best parameters of MACD. Their meanings are:
Fast line length: the period of the EMA short-term moving average (generally, the short-term reference moving average of the DIF line is the moving average price of the past 12 K lines)
Slow line length: the period of the EMA long-term moving average (generally, the long-term reference moving average of the DIF line is the moving average price of the past 26 K lines)
Signal length: length of the MACD signal line (generally the signal line is the moving average of the MACD line values of the past 9 K lines)
However, MACD parameter settings can also be optimized according to the nature of different financial products and the needs of traders themselves.
In more volatile markets, consider using shorter time frames
In less volatile markets, longer time periods can be used
Combination of MACD indicator with other indicators
Since MACD is a lagging indicator, most traders will use it in combination with other indicators or support and resistance lines. One of the most common and easy uses is to use MACD together with support and resistance lines.
Next, I will show you how to combine the support and resistance lines with the MACD indicator step by step:
Step 1: Find chart resistance and support
In the chart we choose, finding the resistance and support lines gives us an idea of where the price will have the opportunity to pull back or rebound.
Step 2: Import and observe the MACD indicator to find the entry point
If we are bullish, we can wait for the golden cross to appear in the support line area. Once the golden cross appears, we can go long. After going long, we can set the stop loss point below the support line.
Step 3: Decide on the selling point and stop loss point
After buying, if the fundamentals remain unchanged, wait patiently until the price hits the resistance line and then close the position. If you want to wait until the death cross before closing the position, you may make less money due to the lag effect.
I sincerely recommend everyone to learn about coins⭕️
The value of learning about the cryptocurrency world is far more than simply earning cryptocurrency income. It is also about improving our cognitive abilities. Whether you are directly engaged in cryptocurrency-related work or not, exploring this field can help you broaden your horizons, promote wealth growth, and bring positive impacts to your life.
The cryptocurrency mindset is closely related to daily life, and almost everyone can easily get started.
Learning suggestions for beginners in the cryptocurrency world:
1. Pay attention to the latest developments in the cryptocurrency market every day, at least 3-5 pieces of news.
2. Read an in-depth cryptocurrency industry analysis article every week.
3. Read professional books on the cryptocurrency world every week, at least 30 pages.
4. Watch a cryptocurrency-related documentary every week.
Ways to obtain information about the cryptocurrency world:
- Cryptocurrency information platforms: Feixiaohao, MyToken, CoinWorld
- Community platform: Bihu, Babbitt
- Industry News: CoinDesk, CoinMarketCap, Cointelegraph
- Research reports: Liandede, Huobi Research Report, TokenInsight
- Industry journals: Blockchain Home, Odaily Planet Daily, 8BTC
Recommended books on cryptocurrency:
1. (Bitcoin: a peer-to-peer electronic cash system) — Satoshi Nakamoto
2. (Blockchain Technology Guide)——Guo Yu
3. (A Guide to Cryptocurrency Investment) — Chris Burniske
4. (Digital Currency)——Huang Guangxiao
5. (Blockchain Revolution) — Don Tapscott
6. (Mastering Bitcoin) — Andreas Antonopoulos
7. (Blockchain: From Digital Currency to Credit Society) - Chang Jian
Selected cryptocurrency documentaries:
1. (The Rise of Bitcoin) (Rating: 9.2)
2. (Cryptocurrency) (Rating: 8.9)
3. (New in Blockchain) (Rating: 8.7)
4. (Trust Machine: The Story of Blockchain) (Rating: 8.6)
5. (The Crazy World of Cryptocurrency) (Rating: 8.5)
Regardless of your professional background, mastering the knowledge of the cryptocurrency world will open up new possibilities for your life!
To put it bluntly, playing in the cryptocurrency circle is a contest between retail investors and bankers. If you don’t have cutting-edge news and first-hand information, you can only be harvested! If you want to make plans together and harvest the bankers together, you can come to me! [Gong Zhonghao: Peach Blossom Li in the Coin Circle] Welcome like-minded people in the cryptocurrency circle to discuss
