Don't take stability as an unattainable myth. I have been in the trading field for ten years, full-time for six or seven years now, and I live a carefree life, almost insulated from stress. The income from this stability far exceeds that of an ordinary office worker, but to be honest, it has its limits and is not the endless wealth that some people fantasize about.
For six whole years, under the guidance of a wise person, I slowly explored a trading path suitable for myself. Although I can't say I've joined the ranks of the wealthy, stable profits have become the norm, enough to easily surpass over 90% of my peers.
The market is always changing, but the rules remain the same. Your only goal is to stand firm in this wave of淘沙 and not be eliminated. If you feel confused, consider saving this article as the starting point of your trading journey. It's not about getting rich quickly but about staying in the game.
Without further ado, here are five rules; understanding them is a profit!
Rule 1: Invest small amounts to avoid going all in
The low-quality market is different from the mainstream market; high volatility means you cannot 'go all in.' The zero-risk of projects here is extremely high, and investing small amounts is the rational choice. The significance of investing small amounts is that even if a project has problems, the losses can be controlled within an acceptable range. In the low-quality market, retaining enough 'backhand' is particularly important. This is both key to protecting capital and a sign of alertness and respect for market risk.
Rule 2: Take action promptly and make decisive decisions
Opportunities in the low-quality market often pass quickly; excessive hesitation can often lead to missing potential high-yield projects. Decisive action is not blind following but based on project assessment and keen market dynamics. Each choice must be accountable for your judgment, and after making a choice, act quickly to seize the opportunity in an uncertain market.
Rule 3: Double profits, withdraw the principal, and gradually cash out the remaining part
In the low-quality market, setting exit strategies and profit targets is crucial. My operating principle is to withdraw the principal immediately when the project doubles, so even if the market fluctuates later, the profit portion is locked in, avoiding capital loss.
If a project continues to rise, you can gradually cash out in batches. This method can secure certain profits and adapt to market uncertainty. In the low-quality market, projects can experience wild fluctuations; once a pullback occurs, both capital and profits may be affected. Therefore, withdrawing the principal in a timely manner after reaching the profit target is key to controlling risk. It is important to note that unless specifically indicated, long holding is not recommended; exit according to target profits to ensure that profits are secured.
Rule 4: Diversify investments to reduce overall risk
In the high-risk low-quality market, diversifying investments is an effective strategy to avoid concentrated risks. For example, if you plan to invest 500 USDT/10 SOL/1 ETH, you can spread it across 10 projects, investing 50 dollars in each. This way, even if one project fails, the overall impact on your funds is minimal, and the loss can be easily absorbed.
In the low-quality market, many projects have zero risk; diversifying investments can control overall risk. If you can choose projects from different industries and diversify into different types of cryptocurrencies, you can further reduce the risk of failure of a single project. Regardless of market conditions, diversification is a wise way to cope with volatility.
Rule 5: Maintain patience and do not rush for success
In the low-quality market, not rushing for success is an important psychological quality. There are many opportunities in the cryptocurrency circle, but not every day has suitable opportunities. Learning to wait and filter, making prepared choices, is far more prudent than blindly following. Many investors end up losing everything due to unstable mindsets and a desire for quick profits.
Opportunities in the low-quality market may be hard to capture, but patiently waiting will always yield suitable projects. Avoiding haste helps maintain a clear investment mindset and avoids the 'greed trap.' Always remind yourself: many 'myths' in the cryptocurrency circle are often illusions created by speculation. Maintaining patience and calmness is the path to success.
Dear friends, next I will share the K-line pattern trading method of the Three White Soldiers. Mastering them will give you more confidence in trading.
In Japanese candlestick patterns, the Three White Soldiers (Three White Soldiers Pattern) is a bullish reversal candlestick pattern that typically occurs at the bottom after a price decline, indicating that the price may soon reverse.
Since the Three White Soldiers is a bullish reversal pattern, before it appears, the price often shows a decline, and it is also a common signal for the end of a trend.
How to identify the Three White Soldiers pattern?
The Three White Soldiers is a three-candlestick pattern consisting of three consecutive bullish candlesticks located at the bottom of a downtrend; it is the mirror version of the 'Three Black Crows' pattern.
Methods to identify the 'Three White Soldiers' pattern:
- Three consecutive bullish candlesticks
- The body is relatively large
- Small or non-existent shadows
Additionally, each candlestick should have a relatively long body, and the opening price must be higher than the closing price of the previous candlestick, ultimately forming a 'V' shape.
Variants of the Three White Soldiers candlestick pattern
In daily trading charts, the Three White Soldiers pattern may vary. Sometimes you may see a significant gap between the closing price of one candlestick and the opening price of the next, causing them to start from within each other; you can also often see the candlesticks gradually shrinking during formation.
How to trade the Three White Soldiers candlestick pattern
When trading the Three White Soldiers pattern, it's not enough to just look at the shape on the chart; the location where it appears is also crucial. The same shape can have different meanings in different positions.
When trading the Three White Soldiers, it is hoped that a bearish trend will form with a price drop first, and the subsequent appearance of the Three White Soldiers pattern may signal a bullish reversal.
Entry timing: When the high of the last candlestick is broken, you can enter; this is the trigger factor for a conservative long strategy.
Stop-loss settings: can be set below the first candlestick of the Three White Soldiers pattern.
Additionally, combining other technical analysis or indicators when trading the Three White Soldiers pattern can improve accuracy.
Trading the Three White Soldiers candlestick pattern strategy
Strategy 1: Use trend reversal indicators - RSI and Stochastic Oscillator
The Relative Strength Index (RSI) and the Stochastic Oscillator are effective tools for confirming trend reversals; they can indicate overbought and oversold areas, helping identify potential reversal zones.
For example, in the AUD/USD 1-hour chart, when the Three White Soldiers pattern appears, the RSI is below 30, and the stochastic indicator is below 20, both are in the oversold area, which validates the candlestick pattern and provides additional signals for a trend reversal.
In this example, the trader can establish a long position after the completion of the third bullish candlestick, setting the stop-loss at the lowest level of the first candlestick or below, and the take-profit at the highest level of the previous bearish trend candlestick.
You can also use RSI divergence to trade the Three White Soldiers pattern, operational steps:
- Find a downtrend
- Mark the lows formed after each price drop
- Compare the lows of the price with the RSI indicator
- When the RSI forms a higher low and the price forms a lower low, find divergence
- Wait for the Three White Soldiers pattern to appear at a lower price low, aligning with a higher low in the RSI
- Go long when the price breaks above the high of the last candlestick in the Three White Soldiers pattern
- Set stop-loss and take-profit targets, expecting the price to rise
Strategy 2: Use Fibonacci to trade the Three White Soldiers
Fibonacci retracement levels can detect potential support or resistance areas to determine if a trend reversal is possible. The effectiveness of different levels in conjunction with the Three White Soldiers pattern varies depending on the strength of the trend.
Steps to Operate:
- The market is in an uptrend
- Wait for the price to drop
- Use Fibonacci tools to draw levels from the low to the high of this wave
- When the price reaches the Fibonacci level and the Three White Soldiers pattern appears, that is the signal
- Go long when the price breaks above the high of the third candlestick in the Three White Soldiers pattern
- Set stop-loss and take-profit targets, expecting the price to rise
To draw Fibonacci retracement levels, one must find the completed trend, dragging from the lowest level of the previous trend to the highest level. Once drawn, you can zoom in to find entry levels, and also use it to determine stop-loss positions and take-profit targets.
For instance, the entry point can be the closing price of the third candlestick (if the market trading price is above the 78.6% Fibonacci level), with the stop-loss set at the lowest level of the first candlestick or the 0.0% Fibonacci level (which is the lowest level of the previous price range), and the take-profit set at the highest level of the previous trend or one of the Fibonacci levels below.
Strategy 3: Use moving averages to trade the Three White Soldiers
Moving averages are excellent indicators for trend trading, applicable when prices are in an uptrend and pull back to the moving average.
Steps to Operate:
- Find an uptrend where the price jumps above the moving average
- Wait for the price to pull back to the moving average
- Check if the Three White Soldiers pattern appears on the moving average
- Go long when the price breaks above the high of the last candlestick in the Three White Soldiers pattern
- Set stop-loss and take-profit targets, expecting the price to rise again
What is the success rate of the Three White Soldiers pattern?
According to internationally renowned trader Thomas N. Bulkowski (Encyclopedia of Candlestick Charts), the success rate of the Three White Soldiers candlestick pattern is as high as 84%.
Advantages and Disadvantages of the Three White Soldiers candlestick pattern
(The original text did not mention specific advantages and disadvantages, so it remains as is)
Summary
The Three White Soldiers is a candlestick pattern of three candles that must appear after a price decline to be effective. It is a bullish reversal pattern, indicating that the price may reverse upward.
Combining RSI, moving averages, and other trading indicators can improve the accuracy of trading the Three White Soldiers pattern, with a win rate of 84%.
It is worth noting that no trading strategy is invincible; using them may encounter significant market changes. Therefore, it is necessary to bear appropriate risks, and when the trend is favorable, lock in profits appropriately.
Remember, before using these strategies or indicators, be sure to test them in simulated trading.
Even the most diligent fisherman would not go out to sea to fish in a storm; instead, they protect their boat carefully. This season will eventually pass, and sunny days will come! Follow Wumu, who will give you fish and teach you how to fish. The door to the cryptocurrency circle is always open; only by following the trend can you lead a life of ease. Save this and keep it in mind!
