In the cryptocurrency circle, 3,000 yuan is about 400u!
Optimal Strategy Recommendation: Contracts +
Every time use 100u, gamble on hot coins +, and ensure to set take-profit and stop-loss.
100 hits 200, 200 flips to 400, 400 flips to 800.
Remember at most three times! Because there is a bit of luck needed in the cryptocurrency circle, every time you take a big gamble like this, it’s easy to win 9 times and explode once!
If 100 passes three levels, then the capital will reach 1100u!
At this time, it is recommended to use a triple strategy to play.
Make two types of trades in a day: short-term trades and strategy trades; if an opportunity arises, then take on trend trades.
Ultra-short trades are used for quick strikes, operating at the 15-minute level.
Advantages: High returns.
Disadvantages: High risk.
Only trade at the level of Bitcoin and similar assets.
The second type of trade is strategy trading, which uses small positions.
For example, trading contracts around the 4-hour level with 15u at 10x leverage.
Save the profits and invest in Bitcoin weekly.
The third type is trend trading.
For medium to long-term trading, directly take action when you have a clear target.
Advantages: High reward.
Identify the right price levels and set a relatively high risk-reward ratio.
In trading practice within the cryptocurrency circle, the Bollinger Bands are commonly used to determine the timing for entering and exiting trades. By incorporating the concepts of average and standard deviation, traders can identify price breakout points and reversal points in the market. Bollinger Bands can also be used to assess overbought and oversold conditions in market prices.
Application of Bollinger Bands Indicator.
1/Support and Resistance Indicators: The upper and middle lines of the Bollinger Bands exert pressure on the cryptocurrency price, while the middle and lower lines provide support. When the price breaks out of the upper line, a pullback may occur. Recently, the upper and middle lines of the Bollinger Bands apply pressure on the price, while the middle and lower lines provide support. When the price breaks out of the upper line, a pullback may happen, and a drop below the lower line may lead to a rebound, indicating overbought and oversold states. In cryptocurrency trading, for example, BTC experiences significant price fluctuations. When it touches the upper line of the Bollinger Bands upward, it often results in a pullback pressure due to short-term profit-taking; conversely, when Bitcoin's price drops significantly to near the lower line of the Bollinger Bands, some bottom-fishing funds may enter the market, pushing the price to rebound.
2/Trend Judgment: Strong cryptocurrencies often operate between the middle and upper lines, while weak cryptocurrencies frequently run below the middle line. When the price line is above the midline of the Bollinger Bands, it is often a bullish market, allowing holding positions or buying; when it is below the midline, it is mostly a bearish market, requiring caution in buying. The upper and lower lines of the Bollinger Bands represent extremely strong and weak conditions, respectively. Taking Ethereum as an example during its bull market, the price generally remains between the middle and upper lines of the Bollinger Bands, showing strong upward momentum; while during a bear market, the price stays below the midline for an extended period, reflecting a strong bearish atmosphere.
3/Track Change Signals: The narrowing of the upper and lower tracks of the Bollinger Bands may indicate potential abrupt changes; do not rush to enter trades. If the price K line breaks upwards through the upper line and the channel opens upwards, it signals that the price will enter an upward channel, and one should buy. If the K line breaks down through the lower line and the channel opens downwards, it means the price will enter a downward channel, requiring selling. For emerging popular coins, when the initial volatility is small, the Bollinger Bands contract, and once volume breaks out, it often leads to significant price fluctuations. Investors should make timely decisions based on the breakout direction.
4/K Line Breakthrough Situation: The price K line breaks upwards from below the middle line of the Bollinger Bands, indicating that the price is strong and can be bought. A breakout upwards from above the middle line to the upper line indicates that the price is extremely strong, and a short-term surge may occur, leading to holding positions for a rise or short-term buying. Certain niche but highly potential cryptocurrencies, under the influence of significant project news, can see the K line strongly break through the upper line of the Bollinger Bands, causing the price to soar in a short time. If investors can seize the moment, the returns can be substantial.
5/Price Movement Above the Bollinger Bands: After the price K line runs above the Bollinger Bands for a period, if it turns down and breaks through the upper line, it indicates that the short-term bullish trend will end, and it is necessary to sell in a timely manner, especially for those cryptocurrencies that have risen significantly in the short term; if it breaks down through the midline, selling should also be the primary action. Taking Polkadot as an example, after a rapid rise, the K line oscillates at a high position above the Bollinger Bands. Once it turns down and breaks through the critical track, it often signals a trend reversal. If investors do not exit in time, profits will quickly shrink.
The formula for the Bollinger Bands is explained here using the most common standard parameters, which are:
Midline: 20 MA
Upper Line: 20 MA + 2 Standard Deviations.
Lower Line: 20 MA - 2 Standard Deviations
Bandwidth (channel space): (Upper line - Lower line) / Midline
10 Basic Patterns of Bollinger Bands
1/Contraction of the Bollinger Bands: The upper and lower lines of the Bollinger Bands come closer together, indicating reduced market volatility and signaling that significant price fluctuations are imminent. The red box in the chart indicates that after the bands contract, price fluctuations often occur, which investors should pay attention to.
2/Expansion of the Bollinger Bands: The upper and lower lines quickly separate, leading to increased market volatility. Recently, the upper and lower lines have separated quickly, resulting in heightened market volatility and strong price fluctuations. The red box in the chart shows that after expansion, there are significant price movements, requiring investors to make decisive decisions and manage risks effectively.
3/Touching or Breaking the Upper Line: If the candlestick touches or exceeds the upper line of the Bollinger Bands, the market may be overheated or overbought, but the price does not necessarily drop. High price levels signal strength, while low price levels may have upward breakout potential, requiring investors to combine regional analysis.
4/Touching or Breaking the Lower Line: If the candlestick touches or falls below the lower line, the market is too cold or oversold, which does not necessarily mean the price will immediately rise. Investors should observe the area and combine indicators to judge the trend, making cautious decisions.
5/W Type Bottom: Double bottom near the lower line of the Bollinger Bands, with the second bottom slightly higher, indicating a bullish pattern, suggesting a rise. Buying when the price crosses the midline can reduce risks, as shown in the chart with a typical example marked in blue.
6/M Type Top: A double top at the upper line of the Bollinger Bands, where the second top is lower than the first, indicates a bearish pattern, and the potential decline may be significant. Investors should be cautious when buying in such situations, and consider shorting as shown in the typical example of the chart.
7/Channel Operation: The candlestick moves along the upper or lower line of the Bollinger Bands, showing a strong trend but may reverse at any time. As marked by the black box, investors should not be careless and set appropriate stop-loss and take-profit levels.
8/Bollinger Reversal: The candlestick touches the track multiple times with no trend, moving horizontally within the channel. The market is flat, and investors can trade in waves, buying low and selling high, adjusting strategies when the market shows a direction, with examples in the chart.
9/Fake Breakthroughs in Bollinger Bands: If the candlestick breaks above the upper line and quickly falls back, it creates a misleading illusion for retail investors, indicating a false trend. Traders should analyze multiple indicators to discern between "traps," "miracles," and "opportunities."
10/Constrictive Breakthrough: The Bollinger Bands contract, and the market is consolidating, which is a prelude to significant price movements. The black box in the chart shows consolidation, while the red box indicates breakthrough, expansion, and price increases. Investors should seize the right moment to enter.
3. How to use the Bollinger Bands to capture reversal and trend initiation opportunities.
The Bollinger Bands signal trend changes through their contraction. So, when a trend starts, if the Bollinger Bands are already in a contracted state, how do we track the trend's emergence? This requires utilizing the opening function of the Bollinger Bands combined with the relationship between the candlestick and the Bollinger Bands for two-way judgment. Judging the initiation of a trend is slightly more complicated than determining its end and transformation.
Let's first learn the first condition: the opening of the Bollinger Bands.
The current market situation is oscillating. Whether the market subsequently enters a bull market or a bear market, as long as it ends the current oscillating nature, the opening of the Bollinger Bands will inevitably appear. The opening characteristics of the Bollinger Bands are very evident: the upper line inclines upwards, the lower line inclines downwards, and both lines expand. This obvious feature is consistent in bullish and bearish markets.
When the Bollinger Bands show an opening, we know that a one-sided trend is likely to come. So, how do we judge the direction of the trend? This requires using the second skill: the relationship between the Bollinger Bands and the candlesticks. This can be divided into two points:
Firstly, when there is an opening, if the candlestick is moving upwards along the upper line, it indicates the arrival of an upward trend; if the candlestick is moving downwards along the lower line, it signals the emergence of a downward trend.
Secondly, if the closing price of the candlestick is above the upper line and that candlestick is a bullish one, it indicates an upward trend is ongoing; if the candlestick is bearish and the closing price is below the lower line, it indicates a downward trend is happening.
In Chart 14, it is clear to see that after a downward trend occurs, the candlestick closes below the lower line of the Bollinger Bands, and subsequently continues to fall closely along the lower line.
Therefore, using the Bollinger Bands to timely identify the initiation point of a trend involves two factors: firstly, the Bollinger Bands must open; secondly, if it’s an upward trend, the closing price of the candlestick will break through the upper line; if it’s a downward trend, the closing price will break through the lower line.
Once these two points confirm the initiation of a trend, traders can immediately enter trades in the direction of the price. If it’s a downward trend, the stop-loss should be set above the midline; if it’s an upward trend, the stop-loss should be set below the midline.
If a downward trend occurs, and the price runs closely along the lower line of the Bollinger Bands (refer to the chart), then traders can hold their short positions until the Bollinger Bands transition from an opening state to a closing state. Of course, there is a more timely exit method: when the price breaks above the midline of the Bollinger Bands, immediately close the short position. According to this exit strategy, we can see in the chart that it almost consumed an entire wave of bullish trends. When the price breaks through the midline, it also signifies a reversal of the trend.
While the Bollinger Bands are useful, they can vary due to individual subjective perceptions, much like a double-edged sword. Therefore, one should never rely solely on a single indicator. It is better to reference multiple indicators for a combination to avoid being misled by a single indicator. However, the old adage holds: technical indicators are ultimately a matter of "probability"; there are no absolutes, only whether you understand the indicators, whether you can find your own application methods, and whether you can consistently use them. Over time, you will appreciate the benefits that indicators bring us, let's encourage each other!
If you are determined to stay in the cryptocurrency circle for life and hope to one day trade cryptocurrencies to support your family! Then, please remember the following 10 iron laws; the content is not much, but every sentence is practical advice to share with those destined to receive it.
1. Never chase high prices to buy cryptocurrencies; always maintain the mindset that it can rise as much as it wants, effectively treating this coin as if it doesn't exist.
2. There are only two types of cryptocurrencies: those bought at good points are good coins; otherwise, they are junk coins. The best-performing coins are those bought at large-level points, patiently waiting for them to become truly high-performing coins; this reflects a proper mindset.
3. In fact, the most important aspect of trading cryptocurrencies is mindset. Many people know it's not the right buying point, yet they can't resist the urge, which is a mindset issue. If this isn't resolved, any theory is useless.
4. Maintain a stable mindset, do not have feelings for any cryptocurrency or price level, only focus on market signals. Feelings should be reserved for the buying and selling points. If you have strong technical skills and sufficient capital, such as operating on a weekly or monthly basis, you can build positions in batches and diversify your investments. Thus, there is no issue of timing being too late.
5. The reasons for mistakes are never related to the market; to find the reason, one can only look for their own reasons. Every mistake must be summarized immediately.
6. The psychological urge to make quick profits is a major taboo for participants in cryptocurrency trading. If one cannot control their own greed and desires, they cannot achieve long-term success in the market. In two forms: when holding cryptocurrencies, one's mindset becomes controlled by bulls; conversely, it becomes the slave of bears. Market sentiment accumulates and is guided by this. Those who cannot escape this state will forever remain false market participants.
7. Trading cryptocurrencies tests long-term profitability rather than the ability to make a quick profit. The key is having a long-term effective trading strategy. When buying, consider all possible situations; hold firmly, and be even more decisive when selling; this will gradually improve your performance. You trade cryptocurrencies, not the other way around; start with yourself.
8. The virtual currency market only rewards those who are patient; any good cryptocurrency needs to be nurtured. Constantly switching to new coins will always lead to small investments and minor gains. Focus more; running around every day will not lead to significant profits.
9. Dance to the rhythm of the market; as long as you follow the market's rhythm, you can gracefully navigate even on the edge. Rhythm is always the market's rhythm; a market participant without a sense of rhythm will always face torment. Shed your greed and fear and listen to the market's rhythm. As long as you can act according to the rhythm, no one can stop you. The market has rhythm; grasp the current rhythm, and no one can defeat you.
10. For capital players, remember that the power of patience is the greatest. As long as you have a good attitude and skills, being patient in waiting, holding, and observing is essential. This will allow you to overcome everything.
In the investment process of all die-hard fans, Kuige not only provides investors with analytical insights on market trends, fundamental knowledge of market observation, and usage methods for various investment tools, but also brings exciting fundamental interpretations, sorting out the aftermath of international chaos, and distinguishing various investment impacts.
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