A violent rolling guide from 500U to 50,000U: 3 steps to break down the 'small funds leverage fission technique' (with position management formula)
I have practiced this method in over ten thousand trades, achieving a win rate of 98%! Last month in March, I earned 120,000 U in just one month!
1. Initiation period (500U→2000U): Use '10% position + 10x leverage' to nibble on new coins.
Core logic: Each time only take 50U (10% of principal) for trial and error, locking single losses within 5U (10% stop-loss).
50U × 10x leverage = 500U position, target 20% increase (earn 100U).
By August 2025, HTX will launch BOT. 50U leverage 10x, drop 15% for bargain hunting, rise 30% in 3 hours, earn 150U, roll to 650U, repeat 8 times to reach 2100U.
Avoid emotional trading.
2. Explosive period (2000U→10,000U): Switch to '20% position + 5x leverage' to chase whale hotspots.
In September 2025, launch DeFi 2.0 leader FLX with 400U principal and 5x leverage (2000U position), stop-loss 5% (loss 20U), target 15% (earn 60U), increase 40% in 3 days, directly earn 1600U, roll to 3700U.
Immediately move the stop-loss to the cost line after a 10% profit to ensure no loss of principal.
3. Ultimate period (10,000U→50,000U): 'Hedge + ladder rolling' to guard against black swan events.
After each profit, withdraw 30% to hold BTC as spot, and 70% to re-open positions using the 'halving position method'.
Operational steps:
1. After 10,000U arrives, buy 3000U of BTC (anti-fall anchor).
2. Split 7000U into 7 orders, each 1000U to open ETH perpetual (2x leverage = 2000U position).
3. Each order has a stop-loss of 3% (loss of 30U), and a take-profit of 5% (earn 50U); 4 out of 7 orders must be profitable to break 20,000U.
Critical detail: When total assets drop more than 15% (e.g., from 30,000 to 25,500), immediately close 60% of positions, triggering the '20% profit protection line' to restart.
Trap 1: Going all-in on new coins (someone once went all-in with 300U on MEME coins, liquidating within an hour and losing 200U).
Trap 2: (Not stopping losses after a 15% drop, instead adding positions, ultimately losing the principal).
Trap 3: Running away with small profits (with 1000U earning 1500U and withdrawing 1200U, missing the subsequent 10x explosion).
Three iron rules:
1. Treat 500U like 50U: Do not open a position exceeding 10% of the principal, keeping the 'zero risk' below 0.5%.
2. Only act when BTC stabilizes at 68,000U: When the overall market is stable, the probability of explosive growth for hot coins increases threefold.
3. Profit = Position × Odds × Discipline: The first two determine the ceiling; the last one determines whether you can survive to '50,000U'.
In the cryptocurrency world, 500U is not the principal but a 'ticket to leverage with discipline.'
Super Cryptocurrency Trading Method: Rolling for 3 months to increase by 300 times, easily earning 30 million
Since the Federal Reserve lowered interest rates, many newcomers wanting to enter the cryptocurrency space have flooded in. The crypto world is a place where the survival of the fittest prevails. The barriers to entry are low, allowing anyone to enter the crypto space, but not everyone can make money in it. If you plan to enter the crypto world, please remember that it is not a place for overnight wealth, but a field that requires long-term accumulation and continuous learning.
Many people come to the crypto space with dreams of getting rich overnight, fantasizing about turning a few thousand into a million in principal. Of course, some have succeeded, but in most cases, it can only be achieved through 'rolling'. Although rolling is theoretically feasible, it is by no means an easy path.
Rolling is a strategy that should only be used when significant opportunities arise and does not require frequent operations. If you grasp a few such opportunities in your lifetime, you can accumulate from zero to tens of millions. And with tens of millions in assets, an ordinary person can join the ranks of the wealthy and achieve financial freedom.
When you truly want to make money, don’t think about how much you want to earn or how to earn that much. Don't think about goals of tens of millions or even hundreds of millions. Instead, start from your actual situation and spend more time consolidating. Simply boasting won't bring about substantial change; the key to trading is recognizing the size of opportunities. You can't always be in light positions or heavy positions. You can practice with small amounts of money, and when real big opportunities come, go all out. When you truly grow your capital from tens of thousands to one million, you will have unconsciously learned some big money-making ideas and logic. At this point, your mindset will become more stable, and future operations will resemble a repetition of past successes.
If you want to learn rolling, or if you want to learn how to grow from a few thousand to millions, then you must pay close attention to the following content.
1. Judging the Timing for Rolling
Rolling is not something you can just decide to do; it requires certain backgrounds and conditions for a higher chance of success. The following four situations are most suitable for rolling:
(1) Breakthrough after a long period of consolidation: When the market has been in a consolidation state for a long time and volatility drops to a new low, once the market chooses a breakout direction, rolling can be considered.
(2) Bargain hunting during a significant drop in a bull market: In a bull market, if the market suddenly experiences a significant drop after a round of substantial gains, rolling can be considered for bargain hunting.
(3) Breakthrough at the weekly level: When the market breaks through significant resistance or support at the weekly level, rolling can be considered to seize the breakout opportunity.
(4) Market sentiment and news events: When market sentiment is generally optimistic or pessimistic, and there are significant news events or policy changes that could affect the market, rolling can be considered.
Only in the above four situations does the chance of rolling operations tend to be higher; at other times, operations should be cautious or opportunities should be abandoned. However, even when the market appears suitable for rolling, strict risk control is still necessary. Set stop-loss points to prevent potential losses.
2. Technical Analysis
Once you confirm that the market meets the conditions for rolling, the next step is to conduct technical analysis. First, confirm the trend, using technical indicators to determine the direction, such as moving averages, MACD, RSI, etc. If possible, combine multiple technical indicators to confirm the trend direction together; after all, doing more preparation is never a bad thing. Next, identify key support and resistance levels to assess the validity of breakouts. Finally, use divergence signals to capture reversal opportunities. (Divergence signals: When the price of a coin reaches a new high, but the MACD does not reach a new high, forming a top divergence, indicating that the price will rebound; you can reduce your position or short; similarly, when the price reaches a new low, but the MACD does not reach a new low, forming a bottom divergence, indicating that the price will rebound; you can increase your position or go long.)
3. Position Management
After completing this step, the next step is position management. Reasonable position management includes three key steps: determining the initial position, setting additional position rules, and formulating reduction strategies. Let me give an example to help everyone understand the specific operations of these three steps:
Initial position: If my total capital is 1 million, then the initial position should not exceed 10%, which is 100,000.
Additional position rules: You must wait for the price to break through key resistance levels before adding to your position. Each additional position should not exceed 50% of the original position, meaning at most an additional 50,000.
Reduction strategy: Gradually reduce your position after the price reaches the expected profit target. When it’s time to let go, don’t get entangled. Each reduction should not exceed 30% of the current position, to gradually lock in profits.
As ordinary people, we can just increase our investment when there are many opportunities and invest less when opportunities are scarce. If luck is on our side, we can make a few million; if not, we can only accept it. But I still want to remind you that when you make money, you should withdraw your invested principal and play with the profits you’ve earned. You can afford not to make money but cannot lose money.
4. Adjusting Positions
After completing position management, the most critical step is how to realize rolling operations through position adjustments.
The operational steps are undoubtedly the following:
1. Choose the timing: Enter the market when it meets the conditions for rolling.
2. Open positions: Open positions based on technical analysis signals, selecting suitable entry points.
3. Add positions: Gradually add to your positions as the market continues to develop favorably.
4. Reduce positions: Gradually reduce your positions when you reach your predetermined profit target or when the market shows reverse signals.
5. Close positions: Completely close your positions when you reach your profit target or when the market shows clear reversal signals.
Here, I will share my specific rolling operations:
(1) Adding positions with floating profits: When the invested assets appreciate, you can consider adding to your positions, but the premise is to ensure that the holding cost has been lowered to reduce the risk of loss. This does not mean you should add to your positions every time you make a profit, but rather at suitable times, such as during a converging breakout in a trend, adding to your position after a breakout and quickly reducing it, or adding to your position during a trend pullback.
(2) Base position + Trading: Divide the assets into two parts: one part remains unchanged as the base position, and the other part is used for buying and selling during market price fluctuations to reduce costs and increase profits. The ratio can refer to the following three types:
1. Half position rolling: Half of the funds are used for long-term holding, while the other half is used for trading during price fluctuations.
2. 30% base position: 30% of the funds are held long-term, while the remaining 70% are used for trading during price fluctuations.
3. 70% base position: 70% of the funds are held long-term, while the remaining 30% are used for trading during price fluctuations.
The purpose of doing this is to maintain a certain holding while using the market's short-term fluctuations to optimize holding costs.
5. Risk Management
Risk management mainly consists of two parts: controlling total positions and allocating funds. You must ensure that the overall position does not exceed the acceptable risk range, and when allocating funds, it should be reasonable. Do not invest all your funds in a single operation. Of course, you should also monitor in real-time, closely watching market dynamics and changes in technical indicators, flexibly adjusting according to market changes, and promptly stopping losses or adjusting positions when necessary.
Many people hear about rolling and feel both fearful and eager; they want to try but are afraid of the risks. In fact, the risk of rolling itself is not high; the risk lies in leverage, but when used reasonably, the risk is also manageable.
For example, if I have a capital of 10,000 and open a position when a coin is priced at 1,000, I use 10x leverage and only use 10% of my total capital (i.e., 1,000) as margin, which is equivalent to 1x leverage. Set a 2% stop-loss; if triggered, I will only lose 2% of that 1,000, which is 200. Even if the liquidation conditions are ultimately triggered, you will only lose that 1,000, not all your funds. Those who get liquidated often do so because they used higher leverage or larger positions, causing them to be triggered by slight market fluctuations. But using this method, even if the market is unfavorable, your losses will still be limited. Therefore, 20x can roll, 30x can roll, and 3x can also roll; even using 0.5x is fine. Any leverage can roll; the key is to use it reasonably and control positions properly.
This is the basic process of using rolling. Friends who want to learn can watch a few more times and think carefully. Of course, there will be different opinions, but I only share experiences and do not persuade others.
So how should small funds grow large?
Here, we must mention the effect of compound interest. Imagine if you have a coin and its value doubles every day, then after a month, its value will become extremely impressive. The first day it doubles, the second day it doubles again, and so on, leading to an astronomical result. This is the power of compound interest. Although starting with a small amount, after long-term continuous doubling, it can also rise to tens of millions.
For those who want to enter with small funds, I suggest focusing on big goals. Many people think that small funds should frequently engage in short-term trading to achieve quick appreciation, but it is actually more suitable for medium to long-term trading. Instead of making small profits every day, it is better to focus on achieving multiple growths with each trade, with a focus on multiples and exponential growth.
As for positions, first understand how to diversify risks; do not concentrate all funds on a single trade. You can divide the funds into three to four parts, using only one part for each trade. If you have 40,000, divide it into four parts and use 10,000 for trading. Secondly, use leverage moderately; I personally suggest not to use more than 10x for major coins and not more than 4x for altcoins. Additionally, dynamically adjust: if you incur a loss, supplement an equivalent amount of funds from external sources; if you make a profit, extract some appropriately. Whatever happens, do not let yourself incur losses. Finally, also add to your positions, but this is only on the condition that you are already in profit. When your capital grows to a certain extent, you can slowly increase the amount of each trade, but do not suddenly increase too much; transition gradually.
I believe that through reasonable position management and sound trading strategies, small funds can gradually achieve significant appreciation. The key lies in patiently waiting for the right timing and focusing on the big goals of each trade rather than small daily profits. Of course, I have experienced liquidation before, but at that time, I still had gains from spot trading to cover my losses. I also don’t believe that you have not earned a dime from your spot holdings. My futures only accounted for 2% of my total capital, so no matter how much I lost, I wouldn’t lose everything, and my losses have always remained within my controllable range. I hope each of us can accumulate steadily and earn several hundred or even tens of millions.
The most stable strategies in crypto contract trading.
Choose the right coins and be a good person. As a leveraged trader, volatility can be magnified through leverage multiples. In the trading process, the primary consideration is not volatility but certainty. Go long on strong coins in a rising market, and conversely, short the weakest coins in a falling market. For example, at the beginning of a new quarter, the strongest performers are EOS and ETH, while the preferred choices for pullbacks are these two coins. During downturns, the primary choice for shorting is Bitcoin, even if the final result shows that the mainstream coins fall more than Bitcoin. However, by only shorting or chasing Bitcoin, the risk of violent rebounds can be significantly reduced. Most of the trading in the crypto world is done by short-term traders, making it challenging to hold out until ideal exit points and also lacking in position control. Additionally, they cannot rely on oscillations to average down. Given this situation, for most traders, a good entry price surpasses everything else. Once there’s profit, take some off the table; secure a portion and set the stop-loss at the cost price. This is also what I emphasize in my own community.
(3) Going with the trend will bring you substantial profits; never exit early. (4) If your entry aligns with the larger trend and your profits confirm your correctness, you can use pyramid-style technical averaging. (Reference to 2) (5) Keep your positions steady until a trend reversal prompts you to close. (6) If the market trend contradicts your entry, cut losses and exit quickly. Besides adhering to these strategies, also remember three qualities: Discipline, discipline, and discipline! The way of trading is to accumulate small profits, and compound interest is king. If you deviate from costs, you must not revert to losses. If you are profitable, ensure to secure a portion to prevent going back to square one. In summary: If you earn, act boldly; if left with the original price, take losses.
I am the Chief Instructor, having experienced multiple bull and bear markets with rich market experience in various financial fields. Follow the public account (Chief Instructor of Bitcoin) to see through the fog of information and discover the real market. More opportunities to grasp wealth codes await you; do not miss out and regret later!
Perpetual contract money-making tips.
1. Eliminate the habit of going all-in. How should funds be allocated? Fund allocation should be understood from two levels: First, from the risk aspect, clarify how much loss your account can or is prepared to endure. This is the thinking basis for fund allocation. Once this total is determined, consider how many times you can lose to the market if you continuously make mistakes, so you can willingly accept your loss. I personally believe that the most risky method should also be divided into three parts. That is, you should at least give yourself three chances. For example, if the total account funds amount to 200,000, and the client allows you to lose up to 20% or 40,000, then I suggest the most risky loss plan would be: 10,000 for the first time, 10,000 for the second time, and 20,000 for the third time. This loss scheme is reasonable because if you get it right once out of three tries, you can profit or continue to survive in the market. Not being kicked out by the market itself is a success, and it provides an opportunity to win.
2. Grasp the overall market trend: Trends are much harder than oscillations to navigate because trends require buying high and selling low, requiring patience in holding positions, while buying low and selling high aligns well with human nature. Trading is less profitable when it aligns with human nature; it’s difficult to navigate, hence it is profitable. In an upward trend, any violent pullback should be an opportunity to go long. Do you remember what I mentioned about probabilities? Therefore, if you are not on board or have exited, wait patiently for a 10-20% drop to enter boldly.
3. Set profit and stop-loss targets. Stop-loss and take-profit strategies can be said to be the key to whether one can profit. In several trades, we need to ensure that total profits exceed total losses. Achieving this is not difficult; just do the following: ① Each stop-loss ≤ 5% of total capital; ② Each profit > 5% of total capital; ③ Overall trading win rate > 50%. Meeting the above requirements (with a profit-loss ratio greater than 1 and a win rate greater than 50%) allows for profitability. Of course, one can also have a high profit-loss ratio with a low win rate or a low profit-loss ratio with a high win rate. Anyway, just ensure that total profit is positive: Total profit = initial principal × (average profit × win rate - average loss × failure rate).
4. Remember not to trade too frequently. Since BTC perpetual contracts trade 24/7, many beginners operate daily, and in a month with 22 trading days, they might trade almost every day. As the saying goes: How can one avoid getting wet when walking by the river? The more you operate, the more likely you are to make mistakes. After a mistake, the mindset can deteriorate, and once the mindset deteriorates, you may act impulsively, choosing 'revenge' trading: possibly going against the trend or over-leveraging. This can lead to a series of wrong steps, easily causing huge losses on the books, losses that may take years to recover.
5. Timing for entering contracts: Many respondents open positions 24 hours a day, which is almost like giving away money. The purpose of contracts is to develop stable profit strategies within controllable risks and relatively stable indicators, not to buy in at 100x leverage and become rich! Therefore, the timing for entering contracts is particularly important!
(1): Do not open positions during periods of substantial good or bad news, as the market is very chaotic during this time. Spot prices can fluctuate rapidly between 1-3%, and choosing to gamble during this time can easily lead to being caught in a spike.
(2): I generally choose to enter after a significant fluctuation during the second dip or after a high point, as the fluctuations will gradually stabilize after the second wave. The risk factor in subsequent intervals is the lowest. The purpose of contracts is to implement the most suitable strategies within the smallest risk range.
(3): Enter the market within the indicator range; never open a position unless the indicator parameters meet your expectations. This can be understood as entering the market within your strategy's range, ignoring the market until it reaches your psychological price point. Since contracts magnify leverage, the risk factor also increases, so discipline is crucial. To summarize simply, when the market stabilizes and indicators are in place, the risk rate decreases by 50%, making it suitable to trade. Disadvantages and Risks of Perpetual Contracts: Liquidation risk: Liquidation occurs when losses in a position reach a certain level, causing the margin to be insufficient to support the position. The exchange will automatically conduct forced liquidation to protect its interests and those of other traders. The underlying logic of contract trading is essentially leverage borrowing. For example, if Xiao Yu has 100 USDT in investment capital, uses 10x leverage to open a 1000 USDT long position in BTC, and if the price of Bitcoin is 100 USDT at that time, this means borrowing 900 USDT and buying 10 BTC along with the principal, intending to sell for profit after the price of Bitcoin rises. However, if the price of Bitcoin falls to 90 USDT, the 10 BTC held is valued at only 900 USDT, which is exactly the amount borrowed. If the price continues to drop, the value of these 10 BTC will fall below the borrowed amount. The exchange will not allow itself to incur losses, so it will liquidate Xiao Yu's position if the price drops by 10%, falling to 90 USDT. After liquidation, the user not only fails to gain but also loses the margin (the principal). The higher the leverage used, the more likely liquidation occurs. In this example, using 10x leverage means that a 10% price movement in the opposite direction will lead to liquidation; if using 100x leverage, a 1% movement in the opposite direction will lead to liquidation. This example calculates liquidation at a 100% loss, but in actual trading, each exchange calculates liquidation loss percentages differently, with some calculating at 90%. Therefore, in actual trading, directly referring to the forced liquidation price provided by the exchange is more accurate.
Contract risks are significant; trading requires caution! Coupled with the MACD indicator, when used together, the win rate can reach 70%, avoiding liquidation!
In the crypto world, playing around is essentially a contest between retail investors and market makers. If you lack cutting-edge information and first-hand data, you can only get cut! If you want to layout together and harvest from the market makers, come (Public Account: Crypto Chief Instructor). Like-minded people in the crypto space are welcome to discuss together~ The MACD practical mantra in contracts:
1. When the MACD is above the zero line, every golden cross indicates that the coin price is about to create a new high.
2. When the MACD is below the zero line, every time a death cross occurs, the coin price is likely to create a new low.
3. MACD golden cross below the zero line indicates a rebound in a declining trend; participate only when it reaches above the zero line.
4. When the MACD is above the zero line and a golden cross occurs, it indicates a bullish trend; you can buy at high and sell at low until a top divergence occurs. MACD buys small; if the coin price rises, and a subsequent wave of red bars does not exceed the previous high, it will drop.
5. MACD buys small: If the coin price drops or remains flat, and a subsequent wave of green bars does not reach the previous low, it will rise.
6. MACD high position shrinkage: If the coin price rises sharply, and the MACD moves far from the zero line with red bars shrinking, it’s time to exit quickly.
7. MACD low position golden cross: After a significant drop in the coin price, if the MACD moves away from the zero line, it must rise, and a second golden cross will result in a more vigorous rise.
8. MACD Golden Pit: After the price of the coin rises and then adjusts, if the MACD death cross occurs within 7 days and the green bars are shorter than the previous wave, then it will rise.
The MACD indicator plays a very special role in technical analysis and can be said to be an essential part of learning technical analysis. Its importance has at least the following points.
1. The MACD indicator is one of the most effective technical indicators tested by historical trends and is also widely used.
2. The MACD indicator is derived from the EMA moving average indicator and has a good application effect in grasping trending markets. Trend investors generally refer to this indicator in practical operations.
3. The top and bottom divergences of the MACD indicator are recognized as the best methods for 'bargain hunting and peak selling'. This method is an important tool for concretizing trend theory and wave theory.
4. Many veterans have had the experience of starting with learning the MACD indicator when they first entered the field, only to gradually discard it. After a long period of learning and comparison, especially after practical verification, they eventually return to the MACD indicator. This shows the special nature of this indicator.
5. The application of the MACD indicator in quantitative trading is also extremely widespread. Because of these advantages, the MACD indicator has become the most commonly used technical indicator by professional traders. Concept and Algorithm of MACD Indicator: The MACD indicator, or the Exponential Moving Average Convergence Divergence, was created by Gerald Appel to track price trends and analyze K-line buying and selling timing. This indicator is commonly used in trading software and is known as the 'King of Indicators'. As shown in [Figure 1].
The MACD indicator in the cryptocurrency space consists of the DIF fast line, DEA slow line, MACD histogram, and zero line, known as the 'three lines and one axis.' Investors assess prices through the crossing, divergence, breakout, support, and resistance of these 'three lines and one axis.' The MACD indicator has become a preferred indicator in many trading software, indicating its widespread application, which also indirectly shows that this indicator is one of the most effective and practical indicators tested by history. MACD's golden cross and death cross: The 'golden cross' pattern and the 'death cross' pattern are extremely important shapes in technical indicator analysis. The golden cross pattern, also known as the golden crossover, occurs when a shorter-period indicator line crosses upward and surpasses a longer-period indicator line (of the same type), often indicating the emergence of short-term buying opportunities. If the golden cross pattern appears in the following scenarios: 1. After a short-term rapid decline during a downtrend; 2. After a wave of pullback during an uptrend; 3. After a consolidation pattern during an uptrend, when the golden cross occurs at a phase low, it becomes a more reliable buying signal. The death cross pattern, also known as the death crossover, occurs when a shorter-period indicator line crosses downward and surpasses a longer-period indicator line (of the same type), often indicating short-term selling opportunities. If the death cross pattern appears in the following scenarios: 1. After a consolidation pattern during a downtrend; 2. After a wave of rebound during an uptrend; 3. After a short-term rapid rise during an uptrend, when the death cross appears at a phase high, it becomes a more reliable selling signal. After understanding the golden cross and death cross patterns, we can look at the MACD indicator lines' golden cross and death cross patterns in detail. Their appearance at different positions reflects different market meanings.
As shown in the image: On August 27, 2019, the BTC 10-minute K-line chart showed that a low-position golden cross appeared with the price retracing, followed by a rebound of 200 US dollars, allowing short-term investors to seize the opportunity to enter the market. Situation 2: Buying point near the zero line golden cross. If an upward trend has formed, a golden cross between the DIF line and DEA line occurring near the zero line often represents an excellent buying opportunity for investors. This is because after the upward trend forms, the golden cross near the zero line indicates that the adjustment has completely ended and a new round of upward movement has begun. If this is also accompanied by a golden cross of the volume line, it indicates that the price rise is supported by volume, making the buying signal even more reliable. Once this buying point appears, investors should definitely not miss it; otherwise, they will miss a major rally.
As shown in the image: On August 19, 2019, at 09:30, the BTC 5-minute K-line chart showed that Bitcoin broke above the 30-day moving average, indicating that an upward trend has initially formed. For a period afterwards, the price remained above the 30-day moving average. At 14:00 on August 19, the MACD indicator formed a golden cross near the zero line, indicating that the market is about to experience a significant upward movement. Investors can decisively buy in. Situation 3: Buying point at high-position golden cross. If the golden cross between the DIF line and DEA line occurs above the zero line and is far from it, this golden cross is termed a high-position golden cross. High-position golden crosses generally appear during the consolidation phase in an upward price movement, indicating that the consolidation is over and the K-line is about to continue the previous upward trend. Therefore, once a high-position golden cross appears, it serves as a favorable signal for additional buying. In practice, when an upward trend has formed, if the K-line gradually rises and sustains for a long time, once the MACD indicator forms a high-position golden cross, it often indicates that the K-line will accelerate its upward movement.
As shown in the image: On June 25, 2019, the BTC 3-hour K-line chart showed that the price of Bitcoin was in an upward trend. After consolidating, it rose again, and at the same time, the MACD indicator showed a high position golden cross. This indicates that the adjustment has ended and the price will continue the previous upward trend. Investors should pay attention to seize this additional buying point. Situation 4: Low-position death cross selling point: A low-position death cross refers to a death cross that occurs far below the zero line. This type of low-position death cross often appears at the end of a rebound during a downward trend, thus indicating that the rebound has ended and serves as a selling signal. Investors who are not in the market should observe, while those who are deeply trapped can sell first, then repurchase after the price drops to lower costs.
As shown in the image: On July 14, 2019, the LTC 3-hour K-line chart showed that the MACD indicator presented a low-position golden cross, leading to a slight price rebound, followed by a rapid decline. Soon after, the MACD indicator formed a death cross below the zero line, initiating a new downward trend for the K-line. Spot investors can sell at the death cross position, later repurchasing to lower their holding costs. Situation 5: Selling point near the zero line death cross. If the previous market direction has been a downward trend, now when the DIF line breaks below the DEA line near the zero line, it indicates that the market has accumulated considerable downward momentum, and the appearance of a death cross signifies the release of downward momentum, suggesting that the K-line will continue the original downward trend, serving as a selling signal.
As shown in the image: On August 12, 2019, the BTC 1-hour K-line chart showed that Bitcoin's DIF line broke below the DEA line, forming a death cross near the zero line. This indicates that downward momentum in the market is beginning to be released, serving as a selling signal. Investors should decisively sell their positions; otherwise, they risk being deeply trapped. Situation 6: High-position death cross selling point. The high-position death cross occurs when the DIF line breaks below the DEA line at a distance far above the zero line. This type of death cross pattern sometimes accompanies a MACD top divergence. It manifests as: during a continuous price surge, new highs are consistently reached, but the MACD's DIF line and DEA line cease to continue climbing or surging, instead creating divergence from the price action, gradually descending. Above the zero line, if the DIF line crosses below the DEA line, forming a downward cross, this constitutes a death cross and serves as a relatively reliable selling signal.
As shown in the image: On August 23, 2019, the TRX 1-hour K-line chart showed that after a previous upward phase, the price continued to hit new highs, but the DIF line and DEA line did not keep climbing. It then formed a death cross, signaling a sell.
The divergence between MACD and K-line: Divergence is a term in physics describing momentum; in technical analysis, it is a highly effective and widely used analysis method. During a downward trend, when prices hit new lows, but the indicator lines do not reach new lows, it is called bottom divergence, indicating that upward momentum is building up and serves as a buy signal. During an upward trend, when prices hit new highs, but the indicator lines do not reach new highs, it is called top divergence, indicating that downward momentum is building and serves as a sell signal.
Ⅰ. Bottom divergence
(1) Bottom divergence between the MACD histogram and the DIF line: Bottom divergence between the DIF line and the price indicates that during a downward trend, when the price makes a new low, the DIF line does not make a new low as well. This suggests that the decline in the DIF line is less than that of the price, indicating that upward momentum is accumulating, and the price is likely to stop falling and rise in the coming period. The MACD histogram is hidden behind the DIF line, divided into red and green; its divergence from the price is an important application of the MACD indicator, widely used in practice. The bottom divergence between the MACD histogram and the price indicates that when the price makes successive new lows, the MACD histogram does not follow suit. This suggests that upward momentum is accumulating, and the price is likely to stop falling and rise in the coming period. When a bottom divergence occurs, investors can use two ways to capture specific buying points.
(2) Specific buying timing: The bottom divergence between the DIF line, MACD histogram, and price is not a specific moment but a pattern that occurs over a period. Investors, however, can pinpoint specific buying moments, indicating that the price is about to stop falling. Therefore, to capture specific buying timing, when the DIF line, MACD histogram, and K-line show a bottom divergence, investors must combine the bottom divergence with other technical analysis tools to specify the buying signals. First: Color change of the histogram or MACD's golden cross. A change in histogram color indicates that upward momentum has begun to dominate. This typically follows the 'histogram shortening' phase and appears slightly late, but is more reliable. When a bottom divergence occurs, if the histogram changes color or forms a golden cross, investors can buy in.
As shown in the image: On August 26, 2019, the Ethereum (ETH) 15-minute K-line chart showed that Ethereum's price hit a new low during a decline, but the MACD histogram did not create a new low, forming a bottom divergence pattern. This indicates that upward momentum in the market is beginning to accumulate, and the price is likely to rise significantly. Following this, the histogram color changes; these two signals occurring consecutively enhance the reliability of the upward signal, allowing investors to enter when the histogram changes color. Second: Combine with other technical analysis tools and K-line reversal patterns. The bottom divergence can be combined with K-line reversal patterns, such as 'single needle bottoming' and 'three soldiers at the bottom,' which is the specific application of the 'multi-indicator combination' principle.
As shown in the image: On August 26, 2016, the BTC 30-minute K-line chart showed that the price of Bitcoin hit a new low, but the MACD histogram did not create a new low, forming a bottom divergence pattern, indicating that the market's upward momentum was continuously strengthening. As the price dipped and stopped falling, a buying signal of 'MACD histogram and price bottom divergence + K-line single needle bottoming' was formed. Subsequently, the price experienced a wave of upward movement.
Ⅱ. Top Divergence
(1) The MACD histogram and DIF line top divergence: The top divergence between the MACD histogram and the K-line indicates that during an upward trend, when the price makes a new high, the MACD histogram does not reach a new high. This suggests that downward momentum is accumulating, and the price may drop at any moment. The top divergence between the DIF line and the K-line indicates that during an upward trend, when the price reaches a new high, the DIF line does not reach a new high either. This indicates that downward momentum is continuously building up, and the price is likely to experience a wave of downward movement.
(2) Specific selling timing. Similar to bottom divergence, in practice, based on the principle of multi-indicator combination, investors can utilize several methods to make selling signals more specific. First: Color change of the histogram or MACD's death cross. After the MACD histogram forms a top divergence with the K-line, if the histogram suddenly shortens significantly, it indicates that downward momentum is beginning to be released. Investors should pay attention to sell in a timely manner. The color change of the MACD histogram indicates that downward momentum has gained an advantage, generally appearing after the histogram continues to shrink. If the histogram forms a color change or a MACD death cross after a top divergence with the K-line, investors should be cautious to exit in time.
As shown in the image: On August 9, 2019, the HT 1-hour K-line chart showed that the price of Huobi reached a new high, but the MACD histogram did not create a new high, forming a top divergence pattern. This indicates that market downward momentum is continuously accumulating, and the price may drop at any moment. Following this, the MACD histogram changed from red to green, sending a selling signal of 'histogram and price top divergence + histogram color change'. Investors should be cautious to exit in time. Second: Combine with other technical analysis tools and K-line reversal patterns. When the MACD histogram and price form a top divergence, if other technical analysis tools simultaneously send selling signals, the reliability of the market's sell signal increases significantly, prompting investors to exit decisively. Common selling signals include 'histogram and price top divergence + K-line reversal patterns'.
As shown in the image: On July 20, 2019, the ETH 3-hour K-line chart showed that Ethereum's price hit a new high, but the MACD histogram did not create a new high, forming a top divergence pattern. This indicates that market downward momentum is continuously increasing, and there may be a wave of downward movement. Subsequently, the MACD histogram gradually shortened, while the K-line formed a bearish evening star pattern. Investors should pay attention to exit in time; afterwards, the K-line showed a significant downward trend. Attached: Evening Star: During the price rise, a long bullish candle appears, followed by a shorter candle (either bullish or bearish), which is likened to a star, forming the main part of the K-line combination. The third candle is a long bearish candle that penetrates the body of the first candle. The evening star signals a price peak and a drop; it is predicted to have an accuracy rate of over 80%. (We will have several dedicated courses to delve into some peak and bottom K-line patterns, so stay tuned.) Modifying MACD parameters: The lag in reacting to price changes leads to sometimes undesirable buying and selling prices, which is a flaw of the MACD indicator. One way to change this situation is by adjusting the indicator parameters, making the MACD indicator more responsive to trends, allowing for better pricing at buying and selling points. In commonly used trading software, the default MACD parameters are 12/26/9. Under such parameter settings, the MACD indicator often reacts significantly with a lag to price changes. The lag of the MACD indicator can be resolved by adjusting parameters. Common parameter combinations include 5/34/5, 5/10/30, etc. Investors can also try and explore more in practice.
Execution is a critical flaw in trading; holding onto positions is a common problem in investing. Without good execution, even the best strategies cannot be realized; however, due to excessive holding, even minor mistakes are magnified, like a disease that multiplies. When it becomes unbearable, leaving this market leads to nobody remembering you after a year. Any entry cannot be based on luck; any speculation cannot be based on going all-in. One mistake means you must pack up and leave, while a hundred successes count as true success.
I am Fanggen, having experienced multiple bull and bear markets, with rich market experience in various financial fields. Follow me, check my profile, and look at the pinned articles. Here, penetrate the fog of information to discover the real market. More wealth codes and opportunities await you; don’t miss out and regret it!
[Crypto World] 10 Profound Summaries from My Investments
1. After studying many books on stock K-lines and economics,
I find that psychology is more suitable for practical applications in the crypto world.
2. In the crypto world, a phenomenon persists: the survivors are kings.
As long as you persist, never give up, there will always be opportunities for a turnaround.
When you believe you are at a loss and close out, the unrealized loss turns into a real loss.
3. Do not use money you cannot afford to lose to participate in high-risk markets.
Do not enter a speculative market without the ability to speculate.
Speculation is about listening to individual stories and then participating before the public catches on.
4. Learn to understand and not easily accept others' viewpoints.
It is essential to first engage in self-independent thinking before starting your investment actions, as money is in your hands.
5. Avoid futures; human nature cannot withstand the test.
Under the high-pressure emotions of futures trading, it is extremely difficult to achieve the integration of knowledge and action. Hence, even with a 51% win rate, or even a 65% win rate, one should not engage.
When encountering predictable unilateral trends, also use the Kelly formula to avoid losing all capital in irrational situations, making it hard to recover; refer to the second point.
6. Focus on reading and investing in yourself.
Reading is a form of self-cultivation that can indeed improve the quality of life.
The improvement of one's cultivation is more important than money.
Investing in oneself is essential; money is merely a basic necessity. It doesn’t mean that spending money equates to investing in oneself, nor does buying books or signing up for courses make you powerful. More importantly—self-control and critical thinking. Without self-control, it becomes wasteful; without critical thinking, it becomes speculation. Frankly, if you lack confidence in your self-control, do not think about how to invest in yourself; first, practice how to persist in doing one thing well.
For example: sticking to regular investments.
For example: learning to identify effective information.
7. Recommended investment books
Cash flow: (Rich Dad Poor Dad) (The Little Money Dog)
Human Nature: (The Weakness of Human Nature) (The Crowd) and Game Theory
Blockchain: (Illustrated Blockchain) (Simple and Easy to Understand)
(Bitcoin) White Paper English Version
8. Understanding the significance of investment.
Investing in the future requires understanding the significance of spending money here versus its meaning in the future.
Moreover, buying investment products is essentially buying opportunities, while selling investment products is essentially selling risks: have a chance then buy, have a risk then sell, and do not let price fluctuations affect you.
9. You must have a mindset of generating passive income.
A monthly income of 20,000, yet losing 29 days of freedom in a month.
With a monthly income of 2000, but all of it is passive income.
The younger you are, the more you should lean towards the latter.
Speculation in the crypto world is a loss of freedom.
Investment in the crypto world is a path to freedom.
10. Disagreements and doubts will be the ultimate driving force behind the start of a bull market.
Using time to create space, and people's unwillingness to board, will mark the beginning of a bull market.
Always maintain curiosity towards new things; do not miss out on the next 'story' to speculate on due to rigidity.
$BTC