A student account, starting with 50,000 rolling positions, with stable daily compound interest! 】
I am in a very good mood today and decided to share some of the essence of cryptocurrency trading with everyone!
Suppose you have 60,000 yuan of pure profit funds on hand and are ready to use it as starting capital in the cryptocurrency circle, what should you do?
Taking Bitcoin investment as an example, a position is opened when the Bitcoin price is 10,000.
Use the position-by-position mode and set a 10x leverage
But only 10% of the total funds is used as a margin, which is 6,000 yuan.
At this point, the actual effect is equivalent to 1x leverage, and a 2% stop loss line is set at the same time.
If the stop loss is triggered, the loss will only be 2%, or 1,200 yuan.
Those who have their positions liquidated in the cryptocurrency circle often fail to set their positions and stop losses reasonably.
Even if a margin call occurs in extreme cases, the maximum loss will be the 6,000 yuan deposit invested, and it is absolutely impossible to lose all the 60,000 yuan of funds.
If the price of Bitcoin rises to 11,000, you can invest another 10% of the total funds to open a position and set a 2% stop loss.
If you unfortunately stop loss, you can still reap 8% profit. Who says that cryptocurrency investment is risky?
As long as the operation is done properly, the risks can be controlled.
The "rolling positions" mentioned here can be called "adding positions with floating profits" in a more acceptable way.
When operating, you do not have to maintain a high leverage of 5-10 times all the time, just two or three times leverage is enough.
The key is to increase positions with floating profits and always keep the total position at two or three times the level.
Investing in Bitcoin in this way greatly improves security.
As long as you have enough patience, time will become your wealth cash machine. The profit brought by adding floating profits is very considerable. If the operation is successful several times, earning millions is not an unattainable dream.
Of course, rolling positions cannot be done at will, and you must look for opportunities with high certainty.
The so-called high-certainty opportunities usually appear when the Bitcoin price plummets and enters a sideways fluctuation phase, and then breaks upward after multiple bottoming out.
At this time, the probability of Bitcoin moving out of an upward trend is very high.
If the goal is to earn 1 million, it is actually possible to achieve it with an initial investment of 100,000, and this 100,000 can be relatively risk-free.
The specific approach is to first invest 100,000 yuan, and patiently wait for the opportunity to kill retail investors in the currency circle. At this time, buy spot goods. If operated properly, you can earn 100,000 yuan in profit.
Then, take out 50,000 from the 100,000 profit for venture capital.
If you want to get high returns, you need to have the courage to take risks.
When an excellent opportunity arises, decisively adopt a rolling strategy and operate with two or three times leverage. One or two successful rolling operations may achieve the goal.
If the investment fails and you lose the 50,000 yuan in profit, then take out another 50,000 yuan from the remaining profit and try again.
If all profits are lost, stop immediately and continue to accumulate profits with the original capital of 100,000.
The whole process seems simple, but it requires extraordinary patience.
Only by patiently waiting for the right opportunity and patiently executing each step can you achieve steady growth of wealth in the complex and ever-changing market of the cryptocurrency circle.
For example, the demigod of the cryptocurrency world, “Ban Mu Xia”, quickly earned 4 million yuan with a 10,000 yuan capital using a low-risk trading strategy. “Fat House Bitcoin”, quickly earned 200 million yuan from 1 million yuan using a trading strategy that made him 200 million yuan in 3 years. Their success all involves a trading strategy - rolling positions.
The steps of rolling warehouse:
1. Choose a target: Choose a cryptocurrency that you think will rise in the future
2. First Buy: Use all your funds to buy the cryptocurrency
3. Set a stop loss: Set a stop loss below the buy price to limit your losses
4. Monitor the market: Continuously monitor market trends
5. When the price rises: If the price rises to the preset target, use part of the profit to increase the position and buy more
6. Repeat steps 4 and 5: Continue to monitor the market and add to your position as the price rises
Many people think that rolling positions are risky, but compared to opening futures orders, the risks are actually more controllable
The following will be taught from a practical perspective:
Bitcoin 2020-2021 bull market review. From October 2020 to March 2021, Bitcoin rose from $10,000 to $60,000. Let's take this period as an example to review how rolling operations can help funds grow rapidly.
This is a unilateral upward trend in a bull market. We will review the rolling operations during this period and focus on how to effectively roll positions to achieve rapid compound growth of funds.
First entry (Figure 1)
Coming to the K-line at the arrow position in the figure below, we can see that after a period of medium- and long-term fluctuations, Bitcoin has formed a converging triangle structure. At this position, a large positive line broke through the upper downward trend line, giving us a bullish signal
The big positive line on the right side of the converging triangle breaks through, sending a bullish signal
Therefore, at the position indicated by arrow 1, when BTC sends out a bullish signal on the right, we can track the breakthrough on the right side. Suppose we open a long order for BTC at this time.
Second entry (Figure 2)
The market then entered a very strong upward trend. At the position where the mouse is pointing, you can see that Bitcoin has formed a convergent ascending triangle.
(Figure 3) At this position, it is the right time as defined by the fat house, that is, the time to roll the position, which is located at the point indicated by arrow 2. If we pursue the right breakthrough at this position and open a long order for BTC, we can see that Bitcoin has broken through the previous high through a big positive line after several medium- and long-term fluctuations. This position meets the three axe of fat house trading: right-side trading, pursuing breakthroughs, and adding floating profits
In addition, at the convergent triangle formed at the position indicated by arrow 2, there is also a position to increase the position, which is where arrow 3 points.
We can regard it as the support point of the rising trend line. At this position, according to the strategy defined by the fat house, it is feasible to increase the position in the callback market. When the price falls near the rising trend line and closes the small real body K line, a big positive line appears, which is also an opportunity to increase the position, and it is also a process of rolling the position.
(Figure 4) It should be noted that the position of arrow 3 belongs to the relatively left side transaction. The risk of left side transaction is greater, but the profit and loss ratio of entry is better. Compared with the first position, the second position is a floating profit increase (also known as a rolling position). It can be seen that the market then experienced a strong upward trend. By January 2021, the price of Bitcoin reached about 40,000 US dollars, and then there was a large retracement, and once again formed a converging triangle structure.
(Figure 1) Let's review our first two entries. Assume that our K-line has evolved to the position before the big pullback, and the price is about 40518. At this point, we can see that the increase in the floating profit at point 2 is 101%.
(Figure 2) If the long position at point 1 is held until this point, the increase is 261%.
After the rollover operation is completed, the long position at point 2 has already benefited from the subsequent main uptrend. When the price reaches a staged resistance position, this part of the position can be quickly reduced. In other words, the BTC long position at point 2 can be directly closed at the retracement position of 40518.
The third opportunity to increase your position
If we look at the price of 40518, we will find that there are also opportunities for rolling positions. As shown in the figure below, point 4 is a position for chasing the breakthrough on the right side, which is suitable for rolling positions. Similarly, point 5 is a position for adding positions on the left side (similar to the previous point 3, adding positions on the left side has a better profit and loss ratio)
The rolling operation of the left-side trading strategy at points 3 and 5 will test the trader's technical level. When buying at the low point or moving average, more indicators or strategy signals must be combined to serve as the basis for trading.
For example: We can open a daily medium-term moving average, namely MA30. At the position of arrow 3, we can see that it is at the support level of the first shock triangle, and at the same time, a positive line is closed and it stands above the daily MA30. Therefore, this position can be used as a basis for judgment.
For example, at the position of arrow 5, if we open the Fibonacci retracement of the previous upward trend, we can see that the low point of the candlestick chart at position 5 basically retraced to the 0.5 level of the previous upward trend. This means that once the upward trend is established, the secondary retracement to 0.5 or even the extreme 0.618 is a very important position. After the positive line is closed here, the position of arrow 5 can also be used as a suitable position for rolling positions
Next, at position 6, we can see a big positive line breaking through the previous high, which is a suitable position for rolling positions.
Then, the market came to position 7
On this day, first a big positive line broke through the previous high. Therefore, at position 7, we can use it as the basis for the right side transaction to roll the position.
When the big Yang line is closed, chasing the breakthrough is a reasonable choice. However, we will see later that the breakthrough at position 7 is actually a false breakthrough. If the position is rolled at position 7, the subsequent signals show that this operation is a failure. Even if a high point is formed again after position 7 and a breakthrough occurs, but then it falls again, this is also a false breakthrough.
Therefore, if we roll over at position 7 and the following signals, the rollover operation will fail.
How to avoid risks when rolling positions:
The previous increase in positions was very smooth, but in reality it may not be so smooth. Let’s look back at the first two transactions.
1. Initial entry: At position 1, we chased the right side and opened a BTC long order. 2. Adding positions: At position 2, we also added positions and rolled positions when the right side broke through, and opened another BTC long order.
After completing the transactions at position 1 and position 2, our average cost has moved up and is roughly between position 1 and position 2. It can be seen that the market did go out of an upward trend after breaking through position 2. However, after adding positions at position 2, the market may not continue to go up, but instead form a reversal pattern. This is completely reasonable. We cannot accurately predict the market trend.
When this happens, we will experience a profit drawdown. The original transaction at position 1 was profitable, but after adding positions at position 2, the risk increased, resulting in a profit drawdown when the price fell. Once the price falls below the average cost of our two transactions, the profit drawdown will turn into a loss-making trailing stop loss.
Through the rolling operation, while letting go of profits, our risks also increase. In order to control the risk after the rolling operation, it is necessary to move the stop loss to control the risk. Newbies can refer to volatility indicators such as ATR (average true range), while veterans can use technical indicators, price behavior, etc. to find favorable stop loss points.
For example, after rolling over at position 2, we can set the stop loss of the new position below the trailing stop loss curve associated with the ATR volatility indicator.
The specific operation is: open a BTC long order at position 2. If this is a false breakthrough, that is, a fall back after the breakthrough, we can reduce this part of the newly added position according to the price given by the tracking stop-profit and stop-loss curve. In this way, even if the rollover fails, we can at least reduce this part of the newly added position first to reduce losses.
If you are interested in rolling positions, you must also understand pyramiding.
Pyramiding and rolling are both common strategies in trading.
You can think of it as "pyramiding is a conservative form of rolling". They have many similarities:
> Trend following: Both increase positions when the market trend is obvious, and take advantage of the profit opportunities brought by the trend > Gradual increase in positions: Neither of them fills up the position all at once, but gradually increases the position according to the market trend > Floating profit basis: The basis for increasing positions is on top of the existing floating profit, rather than covering the position when there is a loss
The pyramid method is a technique that can increase profits exponentially. Its essence is to increase positions on the premise of profitability and use existing profits to gain future returns. It is an advanced trading technique.
Both he and rolling positions are only suitable for strong one-sided market conditions, which can be a rapid upward trend or a rapid downward trend. As shown in the figure below, you can clearly see the steps of pyramiding (Figure 1)
The pyramid method of increasing positions is a gradual and orderly way of increasing positions, but it is definitely not the "diluted cost method" used by many stock investors. The most direct difference is:
> We will not increase our positions when we are losing money. Increasing positions against the trend is the cause of serious losses for many people, and even causes many people to "explode their positions"
> Pyramid addition and rolling position (floating profit addition) are very similar. The main difference is the increased position. The later the addition, the smaller the proportion.
As the trend runs longer, it is more likely to encounter an unfavorable reversal trend and the psychological pressure will gradually increase. It is more conservative to use the pyramid increase rule. Pyramid increase is compared with rolling position:
> Gradually reduce the amount of positions added: the total position grows slowly, even if the market reverses, the total loss is controlled within a small range > Add the same position each time: the total position grows rapidly, and the slightest adverse fluctuation in the market may lead to large losses, which is a high risk
Suggestions on the practical operation of rolling strategy
The rolling technique is not complicated, but its high risk and high return determine that it is a strategy for professional veterans, especially suitable for one-sided trend markets. The core of rolling is position management and trend judgment, so it needs to be combined with scientific fund management and moving stop loss strategy. The following framework will explain the practical steps of the rolling strategy in detail to help you catch the trend in the market and steadily increase your position
Basic knowledge and preparation
Basic understanding of leverage trading
In rolling positions, the use of leverage can magnify profits, but it also comes with huge risks. Therefore, it is recommended that you use leverage in the position-by-position mode to avoid the risk of liquidation in full-position operations. Full-position operations are extremely risky and are especially unsuitable in rolling positions. Set trading goals
The goal of rolling positions is to achieve compound growth by adding positions, but this only applies to one-sided markets. In most markets (90% of volatile markets), the rolling strategy is not applicable, so we need to be patient enough to wait for the market with a clear trend. Setting a goal of doubling a small amount of funds can help you stay focused, but more importantly, waiting for the opportunity after the trend is confirmed
Technical indicator selection: In order to accurately determine the trend, the following indicators can help you find the best time to roll over your position> MA (moving average): The main tool for determining major trends and pullbacks.
> MACD: confirms trend strength and potential reversal signals > Converging triangle: a common oscillating pattern, when it breaks, it may be a signal of trend initiation
This is some experience of a friend of mine who has been in the cryptocurrency circle for ten years and has made tens of millions! My friend is free, full of useful information! !
1. When the market crashes, if your coin only drops slightly, it means that there are dealers protecting the market and preventing it from falling. You can hold such coins with confidence, and you will definitely gain in the future.
2. There is a simple and direct method for beginners to buy and sell coins: short-term look at the 5-day line, as long as the coin price is above the 5-day line, hold it, once it falls below it, sell it; mid-term look at the 20-day line, the coin price is above the 20-day line, hold it, and sell it if it falls below it. The method that suits you is the best, and the key is to stick to it.
3. If the main upward trend of the currency price has been formed and there is no obvious increase in volume, then buy decisively. Continue to hold when the volume increases, and hold when the volume decreases but the trend is not broken; if the volume decreases and breaks the trend, then quickly reduce the position.
4. After buying short-term, if the price of the currency does not move within three days, sell it if you can. If the price of the currency falls after buying, stop loss unconditionally when the loss reaches 5%.
5. If a coin falls 50% from its high and continues to fall for 8 consecutive days, it means that it has entered an oversold state and a rebound may occur at any time. You can consider following up.
6. Choose the leading coins when trading, because they are the most aggressive when they rise and the most resistant when they fall. Don't buy just because the price drops a lot, and don't stop buying just because it rises a lot. The most important thing to trade the leading coins is to buy at a high price and sell at a higher price.
7. Trade in line with the trend. The buying price is not the lower the better, but the more appropriate the better. Don't easily say the bottom is falling, and give up those coins that perform poorly. The trend is the most important.
8. Don’t get carried away by a temporary profit. You should know that continuous profit is the most difficult. You should carefully review the market to see whether your profit is due to luck or strength. Establishing a stable trading system that suits you is the key to continuous profit.
9. Don't force a trade without sufficient confidence. Short positions are also a strategy, and it is important to learn short positions. The first thing to consider when trading is to protect your capital, not to make a profit. The competition in trading is not frequency, but success rate.
[4 killer skills you must know when trading cryptocurrencies] Once you learn and master them, the crypto market will become your "cash machine"
My cryptocurrency trading method is very simple and practical. It took me only one year to make an 8-digit number. I only enter the market when I see the right opportunity, and I don’t make a trade without a pattern. I have maintained a winning rate of over 90% for five years!
We have talked about "breakout trading" many times before. It is an effective way to quickly follow a new trend when it emerges. The best breakouts usually occur when the price breaks through a very obvious resistance level that is watched by many market participants. At this time, the market momentum tends to increase sharply, attracting more buyers to enter the market, which drives the price further up.
However, catching these breakouts is not as easy as it seems. In this article, we will discuss four different ways to enter breakout trades, each with its own pros and cons.
Remember, choose the method that best suits your trading style to increase your chances of success!
How to enter a breakout trade?
Determining Breakout Levels
Traders first need to identify a key price level or technical indicator to break through. This could be a trendline, moving average, or resistance level.
Option 1: Buy before the breakout
It is entirely possible to buy before a breakout actually occurs, also known as "pre-testing the breakout." However, this approach is undoubtedly riskier than the other options discussed below.
If you decide to go with this approach, make sure to only select stocks or symbols that are showing strong momentum and have increased volume before the breakout.
The main advantage of this approach is that if a breakout does occur, you will profit quickly because you anticipated the breakout in advance. However, the breakout may not ultimately occur, or the breakout may fail.
Traders using this strategy will often test the market with a small position and then buy again during or after the breakout to establish multiple positions.
Entry and Stop Loss
Buy while the price is still in a sideways phase. The initial stop loss is usually set below the sideways trading channel.
Option 2: Buy on the breakout
Buying on a breakout ensures that a valid breakout has actually occurred. For this option, it is also important to keep a close eye on momentum and volume. Stronger momentum and higher volume are early signs of increased buyer interest. This has a much higher probability of success than predicting a breakout.
Similar to option 1, buying on a strong breakout offers the opportunity for quick profits.
However, there is still the possibility of a false breakout. On a daily chart, a false breakout usually occurs when price breaks out during the trading session but ends up closing below the breakout level.
In this situation, the trader needs to decide whether to continue holding (assuming the breakout will eventually occur) or exit the position immediately and wait for price to attempt another breakout.
Entry and Stop Loss
Buy as soon as the price breaks out of the identified breakout level. The stop loss can be set below the last candlestick (aggressive) or below the sideways range (conservative).
Option 3: Buy after the breakout
Option 3 is a more conservative strategy, but has the advantage of providing a higher level of certainty. Not only has the breakout occurred, but it has been confirmed by a close above the breakout level at the end of the trading day. This therefore eliminates the possibility of an intraday false breakout.
A major disadvantage of waiting for a confirmed breakout is that you could miss out on a portion of a large price move. Breakouts of 10%, 15% or even higher occur quite often. Not all traders are willing to enter a trade after the price has already moved significantly higher.
Furthermore, there is still a chance that the price will fall back below the breakout level again in the next trading day. Therefore, the possibility of a breakout failure still exists, just not on the day of the breakout.
Entry and Stop Loss
Buy once the price closes above the identified resistance level. The closing price depends on the selected time frame. In this case, the stop loss can be set directly below the breakout candlestick (aggressive), or slightly lower to give the price more room to move and avoid being stopped out too early (conservative).
Option 4: Buy the backtest after the breakout
The last method is the most conservative. First, as with option 3, you need to wait for a confirmed breakout to occur. Then, wait for the price to retrace the breakout level before entering the trade.
A successful backtest is an additional confirmation signal after a breakout. This trading style requires traders to have great patience and must be able to resist the temptation to enter the market prematurely. People who use this method need to accept that many breakout opportunities will be missed if a backtest does not occur after a breakout and the price immediately continues to rise.
Some traders use the backtesting method to expand their initial (light testing) position to a full position. In this case, the way of backtesting is very important. The decline that leads to the price returning to the initial breakout level again should be controlled, and the selling volume should be lower than the previous buying volume.
Entry and Stop Loss
Buy after the price retests the initial breakout level. Buy when the price retests the initial breakout level and a reversal signal appears. The stop loss is usually set just below the breakout level. However, you can choose to be more conservative and use the previous swing low as the stop loss.
How to exit a successful breakout trade?
Properly managing the long positions opened after a successful breakout is extremely important to achieving structural profits in the long term. There are several ways to achieve this, depending on your trading style.
1. Set a price target
Price targets are set simultaneously with entries and stop losses. Make sure your target is at least 1.5 times your initial stop loss.
For example, if you buy a stock at $12.92 and set your stop loss at $12.49, your risk per share is $0.43. Therefore, if we want our price target to be at least 1.5 times our risk, we need to realize a profit of at least $0.65 ($0.43 * 1.5). In this case, the minimum price target should be set at $13.56.
Assuming half of your trades are stopped out and the other half reach your take-profit targets, this exit strategy can still result in a profit.
2. Use a trailing stop
This type of stop loss ensures that part of the accumulated profits are protected if the price falls. However, as long as the price rises, the trailing stop loss will also rise, thus protecting a larger proportion of the profits.
3. Use technical indicators
Many technical indicators can provide insight into price action and help you determine whether an existing trend is gaining or losing momentum. Below we discuss several common indicators that can help in this regard.
RS indicator
This is a momentum oscillator that measures the speed and change of price movements. The default upper limit value of this indicator is 70. Above this value is considered an overbought condition.
Traders should be aware of possible trend changes (short-term or long-term). In particular, divergences between the RSI indicator and price should be closely watched in order to spot price changes at an early stage.
◎ MACD indicator
This is a trend-following momentum indicator that consists of a MACD line and a signal line. A cross below the signal line by the MACD line can be used as an exit signal for existing long positions.
Bollinger Bands
Bollinger Bands are used to monitor the volatility or degree of fluctuation in prices. The upper and lower limits where prices usually fluctuate are defined by the standard deviation of the moving average. If the price exceeds the upper limit (upper Bollinger Band), this may indicate that the price is overreacting and may trigger a price drop. Based on this, the existing long position can be closed.
Be careful when using technical indicators as exit signals. During a strong trending movement, they can generate many false signals, leading to further price increases, causing you to miss out on large profits over the long term.
It is better to use the indicator as a warning signal. Instead of closing the position immediately, you can use the exit signal to manually place the stop loss slightly closer to the current price.
If the exit signal is correct, you will eventually be stopped out (while keeping most of your profits). However, if the price continues to rise, you will continue to profit from the uptrend.
How to exit a failed breakout trade?
Just like with profitable positions, it is also important to properly manage losing positions. The only quick and effective way to do this is to use a hard stop loss.
When using a breakout strategy, traders expect the trend to continue after the breakout. If the breakout fails to continue and the price falls again, the stop loss will ensure that the losses are limited.
Earlier we mentioned the approximate placement of the initial stop loss in each option. In this regard, we would like to emphasize two points:
1. Keep an eye on important support levels and place your stop loss strategically below these support levels. If the previous support level fails to pull the price back up, it is a strong sign that the price may fall further. The stop loss will protect you from a bigger price drop.
2. Don’t set your stop loss too close to the current price. In this case, your stop loss may be triggered too early. In many cases, you will notice that the price moves in the expected direction after a short while. This can lead to a lot of frustration!
Summarize
Key Takeaways
1. Trading based on price breakouts is an excellent way to take advantage of new market trends.
2. After identifying a breakout, you should always keep an eye on momentum and volume before deciding to open a position.
3. The four entry methods for breakout trading include "buy before breakout", "buy on breakout", "buy after breakout" and "buy on retracement of breakout level". Each method has its advantages and disadvantages.
4. Choose the method that best suits your personal trading style and gives you the greatest chance of success.
5. Risk management also plays an important role in long-term success. A sound exit strategy to protect profits or limit losses is crucial in this regard.
Frequently asked questions
1. Can you make money trading breakouts?
Typically, breakout trading can be very profitable. Successfully identifying a breakout and entering at the right time can result in significant profits, but there is always the possibility of a false breakout or price not moving in the expected direction. Remember, there is no strategy that will only generate profits and never experience losses.
Therefore, achieving consistent profitability with a breakout strategy is closely tied to sound risk and position management. To this end, ensuring an exit strategy (for both profitable and losing positions) that maximizes profits and reduces risk is essential.
2. What is the ideal time frame for breakout trading?
Breakout trading can be done on different time frames. A breakout pattern can also appear on a 5-minute chart or a monthly chart.
The ideal time frame for breakout trading depends on several factors:
● Your trading style and strategy
● Current market sentiment and overall market trends
● The volatility of the financial products you trade
Short-term breakouts (entry and follow-up within a few hours to a few days) are mainly used by day traders and swing traders. They mainly use intraday charts (5 minutes, 15 minutes, 1 hour, etc.) to identify areas of price breakout.
Long-term breakouts (where the main goal is to participate early in a long-term trend that lasts for weeks or months) are the preferred area for position traders. They mainly focus on the daily and weekly charts to determine when and where to enter the market.
3. How to avoid false breakouts in trading?
To avoid false breakouts as much as possible, you can take the following measures:
● Wait for the breakout to be confirmed by a price close above the resistance level. This will miss the actual breakout, but it will also avoid many false breakouts.
● Pay attention to additional confirmation factors that support a breakout. A significant increase in volume before and after the breakout is the most important parameter. Breakouts with only moderate volume should be avoided.
● Observe the long-term trend. Focus on the upward breakthrough of the varieties that have shown a clear long-term upward trend.
● Consider overall market trends and sentiment. Breakouts work best when the overall market is bullish.
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