People always ask: 'Why do I always lose money trading cryptocurrencies?' In fact, many times it's because they don't understand the trend! Today I share the 'Three-Line Analysis Method', simple and practical, even beginners can quickly grasp it!
Core Tool: Three Key Moving Averages
Open the candlestick chart and set these three lines to accurately determine buying and selling opportunities:
- 5-day moving average (short-term trend): reflects short-term price fluctuations, signals are sensitive;
- 20-day moving average (medium-term trend): filters out short-term interference, captures medium-term direction;
- 60-day moving average (long-term trend): bull-bear dividing line, strong stability.
Four-Step Trading Rules (recommended to bookmark)
1. Currency Selection Principles
Prioritize selecting **currencies with moving averages in a bullish arrangement (5-day > 20-day > 60-day), stay away from moving averages in a bearish arrangement 'downward traps'.
2. Entry Timing
- The coin price stabilizes above the 20-day moving average, try a small position;
- Break above the 60-day moving average and do not break on the pullback, add to the position;
- Short-term sharp rise away from the moving average, be cautious with chasing highs.
3. Exit Signals
- Break below the 5-day moving average, reduce position to avoid short-term risks;
- Effectively break below the 20-day moving average, liquidate for profit/loss;
- Losing the 60-day moving average, trend reversal, decisively exit.
4. Practical Reminders
- No method is 100% accurate, need to combine with trading volume, industry hotspots, and other auxiliary judgments;
- Strictly implement stop-loss to avoid being 'trapped';
- Build positions in batches to diversify risk, don’t put all your eggs in one basket.
Bloody Experience:
Once a friend heavily invested in a certain coin based on news, although it briefly hit a limit, they did not set a stop-loss. When it broke below the 60-day moving average, they held on, ultimately losing more than half. Remember: Trend is king, discipline is the shield, only then can you navigate the crypto world steadily and far!
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