1. Don’t fall in love with hot coins. When the profit of altcoins reaches a certain point, you need to change them. If you want to make money from beginning to end, it will be a waste of time. The reason is simple. Altcoins cannot rise forever. If you have speculated too much, you need to change them. Otherwise, they will fall back to the starting point, and you will have worked in vain. For example, FIL LUNA
2. When the price of a currency goes sideways at a high level and then hits a new high, seize the opportunity to sell; when the price of a currency goes sideways at a low level and then hits a new low, there is a high probability that a good opportunity will appear. When the price of a currency goes sideways at a high level and then hits a new high, be alert to the main force's inducement to buy more, and do not hesitate to reduce your position or leave the market; and when the price of a currency goes sideways at a low level and then hits a new low, and then quickly recovers, it is likely that the main force is the last wash, and at this time you should be firm and unshakable.
3. When the market environment is bad, the coin price will rise against the trend, and a small rise against the trend will lead to a big rise. When the market environment is good, the coin price will fall slightly against the trend, and a small fall against the trend will lead to a big fall.
4. Only increase your investment when you make money, and do not spread the losses evenly. This may break the cognition of many old friends. Our positions should be increased when the currency price breaks through the previous high, rather than covering the position when it keeps falling. The more you cover, the more you lose, and finally you can't move. You must cut losses and let profits run.
5. As long as you identify the bottom price, it will generally rise by two steps forward and one step back. Don't doubt it at this time. Generally, there will be a big surprise later. Especially when the trend is rising, it will be pulled up and washed out at the same time. Don't get off the train lightly.
6. First-rate players look at sectors first, second-rate players only look at single coins, third-rate players look at indicators, and last-rate players only gamble. This means that when we want to buy a certain coin, we must first look at the sector. Only by doing hot sectors will the popularity and winning rate be high. Then look at the tokens. Those who only look at indicators are novices, and those who look at everything are gamblers.
7. The indicator changes with the volume and price, so the volume and price are the root of the indicator. If you don't look at the volume and price indicators, you will frown at speculating in the currency. The batches are calculated based on the currency price and trading volume, so the real technical analysis needs to look at the volume and price. The rise in prices requires a lot of funds to promote it.
8. For an upward trend, look at support; for a downward trend, look at resistance. When the price of the currency is rising, the success rate of operations based on the support line is very high, and there is an opportunity to buy low when the price falls back. In a downward trend, the chance of successful operations based on the resistance line is very high, and you can open a short position or leave the market.
The 15 "must sell" iron rules I share today are the essence of my years of practical experience. No bragging, no empty promises, as long as ordinary people strictly follow them, they can avoid 90% of the loss traps.
1. Eat only the middle of the fish, leaving the head and tail for others
Don't dream of buying at the lowest point, and don't expect to sell at the highest point. The main rising wave is your profit zone, and greed will only make you trapped.
2. Not stopping losses = chronic suicide
No matter how good a coin is, if it falls below the key support, you must decisively sell it. If the principal is gone, everything is gone.
3. Newbies look at prices, veterans look at volume, and experts look at trends
K-line can deceive people, but trading volume and general trends cannot deceive people.
4. Only play with familiar coins, unfamiliar projects = high risk
You don’t even know who the project owner is, so why do you believe it will rise? Investing in old friends is more stable than betting on new hot spots.
5. Buy fast, hold steady, sell hard
Hesitant buying = missed opportunity, reckless selling = lost profit, execution determines profit.
6. Opportunities come from falling, cash comes from waiting
If you don’t have any bullets, no matter how good the market is, it has nothing to do with you. Patiently waiting is the most advanced strategy.
7. Technology is a tool, but attitude is king
No matter how powerful the technical indicators are, they cannot defeat a brain dominated by FOMO.
8. Markets always start in despair and end in madness
When others are panicking, you are greedy; when others are greedy, you retreat. Only those who go against human nature can win.
9. Greed destroys profits, fear destroys opportunities
You made 10 times the profit and want 20 times more? You don’t dare to cover your position after the stock price drops by 30%? If you don’t control your emotions, you will be harvested sooner or later.
10. Make small money in the short term, big money in the long term, and quick money in the swing trade
Find a rhythm that suits you and don't blindly follow the trend of day trading.
11. Buy when others are panicking, sell when others are crazy
When the market is at its busiest, it is often the most dangerous time. Only by thinking independently can you outperform the crowd.
12. Do you want to make money by luck? Why not buy lottery tickets?
Investing is not gambling, relying on luck = self-destruction.
13. Don’t hold all your positions during a downtrend. Keep cash = keep opportunities
Don’t be afraid of missing out, just be afraid of being stuck. Position management is more important than choosing coins.
14. Frequent trading = chronic bleeding
Do 10 operations a day? The exchange will wake up laughing, but your capital will faint. Experts wait for opportunities, not look for them.
If you are also a technology geek and are also devoted to studying the technical operations in the cryptocurrency circle, you might as well follow the official account (Yuanyuan Jucai), where you will get the latest cryptocurrency information and trading skills!
It is not easy to build your own trading strategy from scratch. In contrast, it is much easier to find a trading strategy that others have successfully used and adjust it to suit your personality.
With this in mind, I am always on the lookout for new trading strategies and testing them out to see if they actually work.
I found a strategy in a Kindle book that looked like it would work, so I put it to the test. In this post, I’ll show you how it worked, the testing plan I developed, and my results.
Trading method analysis
This trading strategy comes from the book Trading Forex with Divergence on MT4/MT5 & TradingView by Jim Brown. I do not know Jim and was not paid to review this book.
I bought this book with my own money.
In fact, this book had been in my Kindle e-book library for more than a year before I started reading it. I don't know why it attracted me, but the title that sounded a bit like a spam advertisement made me a little repulsive at first.
When I finally opened the book, I found that this trading method made perfect sense, so I read the whole book in one go.
The book is an easy read with nice pictures to illustrate the concepts.
Jim is the inventor of this trading strategy and he uses this method to trade professionally. Since this is Jim's method, I will not reveal all the details here.
If you want all of his trading tips, insider advice, and bonus custom indicators, you'll need to buy the book yourself, but I'll show you enough to give you an idea of what I do.
If you like my test results, consider buying this book; if not, you can continue to look for other methods.
On the bright side, the basics of this strategy are pretty simple.
It consists of 3 moving averages and 2 momentum indicators. This method observes the changes in momentum and marks potential turning points on the chart, allowing you to consider entering the market at these points.
As you look at the example charts, you may notice that these signals can be used in several different ways. You can choose to trade with the trend or against the trend.
In my testing, I decided to only trade with the trend.
Test Plan
The best thing about this book is that it shows some very good entry methods. However, the downside is that it does not provide much information on exit strategies.
In fact, there is no clear exit strategy in the book.
Jim gives some possible exit suggestions, but none of them are concrete methods.
This is one of the biggest shortcomings of many otherwise very useful trading books: they do not provide complete trading strategies.
As to why the author did not do this, there may be many reasons. Perhaps he decided to exit based on his judgment of the market, rather than relying on fixed rules.
There's actually nothing wrong with this.
But from a reader's perspective, if you want to learn how to trade through this book, you will indeed feel a little confused.
That's why I'm sharing my test results here.
However, the book does provide a good starting point for creating your own strategy.
Another shortcoming is that the book does not provide statistics on the trading method.
Again, I understand why authors do this. They don't want to set their readers' expectations too high, or get a bunch of emails complaining about not being able to achieve the same results, when those differences might take hours to figure out.
So, I need to develop my own exit strategy.
But where to start?
I have found that the easiest way to test a trading system without an exit rule is to use a profit target of 1x risk. That is, if the stop loss is 100 pips, then the take profit should also be set to 100 pips.
This won’t work in every situation, but it’s a quick and easy way to get an initial feel for whether an approach has potential.
Here is the trading plan I created for my first backtest of the trading ideas in this book:
◒ Trading instruments: EUR/USD
◒ Time period: daily
◒ Risk per trade: 1%
◒ Entry rules: Only trade with the trend. Wait for the moving averages to be in order: in an uptrend, from short to long (top to bottom); in a downtrend, from long to short. This is very similar to other trend trading methods that use multiple moving averages. Once the moving averages are in the correct order, I wait for a "dot" to appear on the chart, with the price bouncing off one of the moving averages. A red dot indicates a short, a green dot indicates a long. Open a position immediately after the signal candle closes.
◒ Stop Loss Setting: Stop loss is set on the other side of the most recent move.
◒ Take Profit Setting: Take Profit is 1 times risk (i.e. 1:1 risk-reward ratio).
◒ Trade Management: No manual intervention required, “set it and forget it”.
Long Trade Example
In this long example, I entered the trade at the green dot marked by the arrow. This is a trade that easily hits the profit target.
As you can see, the trade continued to generate a nice profit even after the take profit was reached. Later in this article, I will go into more detail on how to use these "extra" market moves to improve the performance of this basic strategy.
Short Trading Example
The idea is basically similar. When the moving averages are correctly aligned and the price rebounds from the short-term, medium-term or long-term moving average, go short after the close of the candlestick with the red dot signal.
Test Method
Normally, I would use Forex Tester to backtest strategies like this, but the custom indicators used in this book are only available for MT4, MT5, and TradingView.
So I fired up the charts on TradingView and started backtesting manually using a spreadsheet. This method was a bit slower than using Forex Tester, but it got the job done.
TradingView provides data going back to 2003, which is enough to do a solid round of testing.
Test Results
◔ Trading instrument: EURUSD (Daily)
◔ Total number of transactions: 84
◔ Win rate: 75.0%
◔ Total revenue: 42%
◔ Maximum number of consecutive losses: 2 times
◔ Maximum drawdown: -3%
◔ Testing period: May 7, 2003 to January 19, 2022 (approximately 224.5 months)
◔ Average monthly return: 0.18%
Summarize
I think this is a good test. The strategy works. The maximum drawdown is only 3%, which is very good. But it is just a starting point. There may be ways to improve the performance of this strategy.
To put it bluntly, playing in the cryptocurrency circle is a contest between retail investors and bankers. If you don’t have super professional skills, you can only be cut! If you want to make a layout together and harvest the bankers together, you can follow me
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