Having struggled in the crypto space for many years, I've seen too many retail investors treat this as a casino, diving in with dreams of wealth only to be harshly taught by the market. Today, I share my hard-earned lessons to provide retail investors with true survival insights in the crypto space, helping them to avoid gambling mentalities and find ways to break through.
Once, I also thought of myself as the fearless captain of the crypto sea until the '312 Black Swan' hit, wiping out a 12 million position in half an hour. The cold touch of the phone screen is still engraved in my memory. But despair is the catalyst for wisdom. I realized that contracts are essentially a probability game. With the remaining 800,000 capital, I developed a 'dynamic hedging model.' In February this year, in just 60 days, my assets soared from 800,000 to 2.18 million. This exploration made me deeply understand that learning to dance with risk is the true logic of survival in the crypto space.
First, trend is king, see through market direction.
The crypto market changes rapidly; trends are our 'compass.'
- Uptrend: Multiple consecutive green bullish candles, with closing prices continuously reaching new highs, indicating strong buying pressure. At this point, going long with the trend has a higher win rate.
- Downtrend: Multiple consecutive red bearish candles, with closing prices continuously declining, indicating that the bears dominate the market, making shorting the wise choice.
- Reversal Signals: Hammer lines, inverted hammer lines, morning stars, engulfing patterns, etc. are classic K-lines. Once they appear, they often serve as 'signal lights' for trend reversals, catching them can seize new opportunities.
Second, key points for precise entry.
Support and resistance levels are the 'anchor points' of cryptocurrency price fluctuations.
- Support Level: The 'lifeline' where the price repeatedly drops and rebounds. If the price approaches the support level, combined with a hammer line or other bullish patterns, decisively bottom fish!
- Resistance Level: The 'ceiling' where the price repeatedly rises and falls. If a hanging man line or other bearish patterns appear, immediately short and exit; don’t hesitate.
Third, observe both volume and price to uncover market intentions.
The relationship between trading volume and price hides the market's 'true intentions.'
- Upward Surge: Price rises, and trading volume increases simultaneously, indicating strong buying pressure and a strong signal to go long; follow boldly.
- Downward Surge: Price drops, trading volume surges, indicating a frenzy of selling. At this point, decisively short to hedge, don't get trapped.
Fourth, classic K-line patterns lock in buy and sell points.
Thoroughly understand these K-line patterns to accurately capture buy and sell signals:
- Hammer Line: Appears at the bottom of a downtrend, with a long lower shadow (≥ 2 times the body), indicating it's time to bottom fish and go long.
- Inverted Hammer: The shadow is on top, resembling an upside-down 'hammer,' indicating a trend reversal; it’s time to go long.
- Three White Soldiers: Three consecutive bullish candles, with closing prices reaching new highs each time, decisively chase the rise and go long.
- Bullish Engulfing: A long bearish candle followed by a small bullish candle (completely engulfing), indicating a potential bottom in the downtrend and a good opportunity to go long.
Fifth, indicator resonance doubles the win rate.
Utilize the indicator 'Cohesion' to make decisions more reliable:
- Moving Average Golden Cross: The 5-day moving average crosses above the 10-day moving average, indicating a strengthening trend, enter to go long.
- MACD Golden Cross: A short-term line crossing above a long-term line, bullish breakout, follow up to profit.
Sixth, the Life-Saving Rule: Risk control is paramount.
The crypto space is perilous; risk control is fundamental to survival.
- Always set stop-loss: Set a stop-loss point simultaneously upon entry (usually outside support/resistance levels), to avoid crashing and protect your capital.
- Position Management: Do not exceed 10% of total capital in a single trade, diversify investments; survive to wait for opportunities.
Final reminder: K-line analysis is not a 'universal formula.' It needs to be flexibly judged in conjunction with news. The cryptocurrency market is not a casino; retail investors should avoid gambling mentalities, arm themselves with knowledge, and learn to dance with risks in order to truly stand firm and reap long-term value in the ever-changing market. Remember, survival is the first step to potential profits. Like and save this useful guide, and let us move forward rationally in the crypto space!