Historically, there have been many big players, but those who make it to the end are few and far between.
Having navigated the crypto world for years, I have experienced the despair of liquidation and the joy of doubling profits. Today, I'm sharing the experiences of losses incurred in live trading without holding back.
Leave this share for everyone; hope it can help even a little! It’s recommended to like and save it first, to avoid not finding it later~
1. Choose the right trading time, avoid daytime 'minefields'
The daytime crypto world is like a 'battle of information'! Fake good and bad news flood in, causing price fluctuations; a moment of inattention can lead to being trapped.
More or induce shorts.
Suggestion: Avoid the 'chaos' of the daytime; only act after 9 PM. By this time, market news has settled, and K-line patterns are clearer, making it easier to judge direction.
This is also more accurate, equivalent to adding a 'safety lock' for yourself.
2. Lock in profits; don't let profits 'fly away'
"Wanting to earn more after making a profit" is the root cause of many people's losses! Don’t always fantasize about doubling; locking in profits in time is the true way.
Operational method: For example, if you earn 1000U in a day, immediately withdraw 300U to your bank card and continue trading with the rest. I've seen too many people earn 3
Want to double your investment? Once there's a pullback, you could lose everything; money in the wallet is the real money!
3. Speak with indicators, reject 'knee-jerk' decisions
Trading based on feelings? That’s no different from gambling!
Tool recommendation: Download TradingView, focus on these 3 indicators
MACD: Golden cross is bullish, death cross is bearish
RSI: Overbought (>70) watch for pullbacks, oversold (<30) watch for rebounds
Bollinger Bands: Squeeze for power; break above the upper band to be bullish, drop below the lower band to be bearish
Principle: At least 2 indicator signals must be consistent before considering entry, to reduce the probability of errors!
4. Stop-loss should be 'alive'; protecting the principal is the bottom line
When monitoring the market: flexibly adjust stop-loss prices. For example, if you buy at 1000U and it rises to 1100U, immediately raise the stop loss to 1050U to lock in 50U profit;
When unable to monitor the market: set a hard stop loss at 3%! Prevent being wiped out in case of sudden crashes; as long as the principal is there, there is a chance to recover.
5. Withdraw profits weekly, reject the game of numbers
The money in the account, if not withdrawn, is just a string of numbers!
My habit: Every Friday, I transfer 30% of my profits to my bank card, and continue rolling over the rest. With long-term persistence, both my wallet and account can grow steadily.
Growth, and the psychological pressure will be much smaller~
6. K-line usage guide, find the right entry time
Short-term operations: closely monitor the 1-hour chart; if there are two consecutive bullish candles, try to go long;
In a choppy market: switch to a 4-hour chart; enter near the support level for safer bottom-fishing!
7. Avoid these pitfalls!
▲ Leverage: Don't exceed 50x; the higher the risk, the greater the danger;
Cryptocurrencies: Stay away from Dogecoin, Shitcoin, and other altcoins; the big players will harvest without discussion;
▲ Frequency: A maximum of 3 trades per day; frequent trading can easily lead to impulsive decisions;
▲ Funds: Absolutely do not borrow money to trade cryptocurrencies; avoid money you can't afford to lose!
In price action trading, trend line channels are a common core tool in technical analysis that help traders identify potential trading opportunities through chart-drawn trend ranges. These channels can provide insights into market trends, offering traders strategic entry and exit points. In this article, we will explore how to identify, trade, and optimize trend line channel patterns to improve your trading strategy and increase profitability.
Represents support and resistance levels, indicating the high and low points that prices follow over a given time period.
◎ The lower trend line acts as support, indicating that buying pressure usually prevents prices from falling further.
◎ The upper trend line acts as a resistance level, indicating that selling pressure usually prevents prices from rising further.
For a channel to be effective, prices must touch each trend line at least twice, forming a clearly visible pattern. Parallel trend lines help traders predict future price movements and identify potential trading opportunities.
(2) Types of channels
Trend line channels can be divided into three main types:
Ascending Channel (Bullish Pattern)
In an ascending channel, prices move upward within the channel, indicating a bullish trend. Both support and resistance lines slope upwards. Traders typically look for buying opportunities at the lower boundary (support) and take profits near the upper boundary (resistance).
Descending Channel (Bearish Pattern)
The downward channel reflects a bearish trend, with prices moving downward. Both support and resistance lines slope downwards. Traders can profit by selling near the upper boundary (resistance) and buying back near the lower boundary (support).
Horizontal Channel (Neutral Pattern)
In a horizontal channel, prices fluctuate sideways, with no clear upward or downward trend. Both support and resistance lines are horizontal, indicating a neutral market. Traders typically buy at the lower boundary and sell at the upper boundary, profiting from fluctuations within the range.
You can also refer to a horizontal channel as a double top or triple top pattern.
How to Identify Trend Line Channels
(1) Drawing trend lines
To successfully trade trend line channel patterns, the first step is to accurately draw the trend lines that define the channel. Here’s a step-by-step guide:
1. Identify high and low volatility points: First, find and mark key volatility high points (peaks) and low points (troughs) on the chart. These are key points for price reversals.
2. Connect the lows and highs: Draw a line connecting at least two consecutive lows to form a support line, and another line connecting at least two highs to form a resistance line. Ensure both lines are parallel, forming a channel.
When drawing trend lines, allow the trend lines to pass through the wicks of the candlesticks (K lines), even part of the candlestick bodies. However, if prices stay outside the trend line for an extended period, the channel is no longer valid. When prices quickly reverse back into the channel, the channel can be considered a valid trend line. We will discuss situations of false breakouts of trend lines later.
Prompt for effective touchpoints
To confirm the validity of a trend line channel, look for multiple touchpoints—prices should touch the support and resistance lines at least twice, forming a consistent pattern. The more touchpoints, the stronger the reliability of the channel.
(1) Identify valid channels
To avoid trading in the wrong channel, follow these confirmation rules:
1. Minimum touchpoint count: An effective trend line channel should have at least two touchpoints on both support and resistance lines.
2. Consistent price movements: Prices should continuously move between the two lines, adhering to the boundaries and minimizing false breakouts.
3. Time frames: Channels can form across different time frames, from intraday charts to weekly charts. Short-term traders may prefer daily or 4-hour charts, while long-term traders might lean more towards weekly or monthly charts to confirm broader trends.
How to trade trend line channels
(1) Entry strategies for trend line channels
Once an effective channel is identified, the next step is to plan entry points. Here are two common strategies:
Buy at support and sell at resistance
The simplest method is to buy when the price touches the lower trend line (support) and sell at the upper trend line (resistance). You can also choose to trade bullish signals only at the support level of an ascending channel, filtering out bearish signals that oppose the current trend, and vice versa.
Midline Trading
The midline of the trend line channel also holds certain importance, especially in wider high time frame channels. Prices often bounce at the midline, providing further support and resistance levels. These levels can form strong convergence points on lower time frames.
Breakout strategies for trend line channels
Trend line channels do not exist forever; prices may eventually break through the channel. Here are ways to deal with these situations:
Trade Breakouts
When prices break through support or resistance lines, it indicates that a new trend may be starting. Traders can enter the market after confirming the breakout or wait for a retest of the breakout position before entering.
Trading false breakouts in channels
As mentioned earlier, false breakouts of channels are common, so many traders choose to use false breakout strategies. In this case, traders ignore breakout signals and wait for prices to return to the channel. Ideally, the movement back into the channel should be accompanied by high momentum (large candlesticks) to signal strong false breakout power.
Stop-loss and take-profit settings
Effective risk management is crucial when trading trend line channels. Here are methods for setting stop-loss and take-profit:
Stop-loss positions
Set stop-loss slightly outside the trend line— for long trades, set the stop loss below the lower boundary (support), and for short trades, above the upper boundary (resistance). This helps reduce stop-loss risks due to market noise or false breakouts.
Take-profit levels
Calculate profit targets based on channel width. If the channel width is 100 points, the take-profit position should be close to that level from the entry point. Using channel width helps ensure the risk-reward ratio remains at a favorable level. Other profit methods include fixed return to risk ratios. For example, if the stop loss is 50 points from the entry point, then set the profit target to 100 points, providing a 2:1 return to risk ratio.
Final tips for successfully trading trend line channels
1. Practice in a demo account
Before starting live trading, it's very important to test the channel trading strategy in a demo account. A demo account is also a good way to improve pattern recognition skills without the pressure of trading real money.
2. Continuously optimize strategies
Trading is a dynamic process; strategies that are effective today may need adjustments in the future. Keeping a trading journal can help you track trades, evaluate performance, and continuously optimize strategies. Regularly reviewing trading data aids in discovering areas for improvement and helps you move forward on the path to success.
3. The best time frames for trading trend line channels
The ideal time frame depends on your trading style. Day traders may prefer 15-minute to 1-hour charts, while swing traders often use 4-hour or daily charts. Long-term traders may choose weekly or monthly charts to capture broader trends.
4. Can trend line channels be combined with other patterns?
Trend line channels can be combined with other chart patterns, such as triangles, flags, or head and shoulders, to create more robust trading setups.
5. Can channels be traded in volatile markets?
Although it is more challenging, channel trading can still be done in volatile markets. However, be wary of false breakouts and larger price fluctuations, as these can make risk management more difficult.
Conclusion
Mastering trend line channel patterns can significantly improve your trading strategy. Whether trading in bullish, bearish, or neutral markets, these channels can provide clear entry and exit points, helping you profit from price fluctuations. Remember to practice in a demo account, continually optimize your strategy, and adopt good risk management techniques to increase your chances of success.
Continuously monitor: $BTC
I am a root, fans wanting to follow along or harvest together can contact me at Ding Ding Hao: zhangran72111.