Don't get confused by complex indicators; the tools that can truly help you make money are simple to the point of being unbelievable.
When I first entered the crypto space, facing a screen full of K lines and indicators, I was completely overwhelmed. MACD, RSI, Bollinger Bands... the more I learned, the more confused I became, and I lost all my savings in just three years. It wasn't until the fourth year that I stumbled upon a 'counterintuitive' truth: in the crypto space, the tools that make the most money are often the simplest ones.
Now, I can buy an 1800 square meter villa in Shenzhen, not because of some profound theory, but because of 4 'foolproof indicators' and practical skills that anyone can learn. Today, I will break down and explain these to you, and even if you are a complete beginner, you can apply them immediately after reading. These methods helped me avoid three liquidation crises and seize five doubling opportunities.
1. SAR Indicator: A 'lifesaver' for beginners, with buy and sell points so simple that they don't require any brainpower.
Many people believe that the more complicated the indicator, the more powerful it is; in fact, the SAR indicator is 'the hidden expert among the masses'. Its appearance is very intuitive: small dots follow the price movement; if the price is above the dots, it indicates an upward trend, and if below, it indicates a downward trend, simple enough to learn in 5 minutes.
Using SAR to determine 'bull and bear' is 10 times more reliable than MACD.
When the price is above the SAR point (meaning the dots are below the K line), it indicates a 'bull market', so don't rush to sell. Even if there is a pullback along the way, as long as it doesn't break the SAR point, continue to hold. During the process of Ethereum rising from 2,000 to 4,000 in 2021, the SAR point always trailed below, and adhering to the principle of 'not selling below the point', I earned an extra 1 million.
When the price falls below the SAR point (the dots move above the K line), it signals a 'bear market', and you must sell decisively. Last year, when Bitcoin dropped from 69,000 to 30,000, the SAR point moved 'above' at 50,000, and I made the decision to liquidate, successfully avoiding the subsequent halving market.
Remember these 2 'angle' signals to avoid 80% of pitfalls.
If the angle of the SAR point moving up is greater than 45 degrees, it indicates a strong upward momentum, so don't rush to sell (for example, when SOL rose from 20 to 100 in 2023, the SAR point was almost vertical; selling at that point would be throwing money away);
If the angle of the SAR point moving down is greater than 45 degrees, it indicates a strong downward momentum, so absolutely avoid bottom fishing (for example, during the LUNA crash in 2022, the SAR point was nearly at a 90-degree angle, and those who tried to bottom out all faced liquidation).
Key reminder: SAR may fail in 'volatile markets' (the dots change repeatedly); in this case, avoid trading until the trend is clear. Its strength lies in 'capturing trends', not 'guessing volatility'.
2. Support and Resistance Levels: Understanding these two points can increase your profits by 30%.
Many people buy coins but don't know when to sell, and when they sell, they don't know when to buy. The key is to understand 'two points': support level (where it can't drop) and resistance level (where it can't rise).
If the support level is broken, it becomes a resistance level; if the resistance level is broken, it becomes a support level.
For example, if a coin repeatedly fails to rise above 6,800 (3 failed attempts), this is a 'resistance level'; later, when it breaks below 6,000 (support level) with a large volume, that 6,000 becomes a new resistance level. When it rises back to 6,000, there will be many trapped positions selling, making it hard to break through.
When I traded FIL last year, I relied on this rule: it had 3 supports at 40 dollars (it bounced back when it fell to this level), and I bought each time at 40 dollars, selling at 50 dollars (resistance level), making a 60% profit over 3 trades.
To determine 'true or false breakouts', just look at 'trading volume'.
When a resistance level is broken, the trading volume must increase significantly (more than twice the usual) for it to be a 'true breakout'; if there is no volume increase, it’s a 'false breakout', sell quickly. For example, when BTC broke 40,000 this year, the volume was three times the usual, and I decisively increased my position, later selling for over 50,000, earning an additional 200,000.
3. Bollinger Bands: A magical tool for 'guessing direction' in sideways markets, a must-see before a trend change.
Sideways markets are the most frustrating: when you buy, it doesn't rise, and when you sell, it rises. But Bollinger Bands can help you 'smell' big movements in advance; they act like a 'tightening band', narrowing indicates a potential trend change, and widening signals that a trend is coming.
When the Bollinger Bands narrow to the point of 'almost sticking together', a big move is imminent.
When the price is moving sideways, and the upper, middle, and lower bands of the Bollinger Bands squeeze into a single line, it indicates that both bulls and bears are 'tired' and a resolution is imminent. At this moment, avoid leverage and short-term trading (the fees will eat into your profits); wait for a breakout before acting. The greater the breakout, the more vigorous the subsequent market (for example, Bitcoin consolidated for a month in 2023, and after the Bollinger Bands narrowed, it surged by 30%).
When the bands are widening, determine buy or sell based on position.
When the upper band of the Bollinger Bands starts to narrow after being wide at a high position, it is a 'sell signal' (for example, if the price has tripled, the Bollinger Bands are maximally open, then suddenly narrow, a drop is likely to follow);
A widening low position, and the price running up from the middle band is a 'buy signal' (for instance, if the price has dropped by 50%, and the Bollinger Bands suddenly widen, with the middle band turning up, the win rate for buying is high).
Reminder: Bollinger Bands have strong lag (they only move after the price moves), so don't use them to guess 'reversals', only use them to judge 'whether the trend will continue'.
4. Volume: Trading volume is the 'real signal'; everything else is a 'trap'.
Many people focus on the K line's ups and downs while ignoring 'trading volume' (the red and green bars below). In fact, 90% of 'explosive rises and falls' in the crypto market are dictated by 'volume'; movements without volume are just market makers 'playing by themselves'.
Remember these 4 phrases, which are worth more than 100 indicators:
A surge in volume at a high position usually means a drop: if the price has risen significantly (for instance, five times), and suddenly the volume spikes (the bars are three times higher than usual), regardless of how good the K line looks, sell quickly (the market maker is unloading);
Buying is possible when the price has dropped significantly (for example, by 70%), the volume suddenly increases, and it no longer sets new lows; this indicates 'capital entering the market', so you can buy in batches (when Bitcoin dropped to 15,000 in 2022 and volume surged, I increased my position and made a 300% profit);
A rise without volume is a 'trap': the price rises but the trading volume does not increase (the bars remain short), likely indicating that the market maker is 'pumping and dumping'; it rises quickly and then falls faster, so don't chase;
Be cautious of volume-price divergence: If the price sets a new high but the volume is lower than the last peak (the bars shrink), it indicates that 'buying pressure is lagging', it's time to sell (for example, when Bitcoin rose to 69,000 in 2021, the volume was lower than before, and I liquidated to avoid the crash).
5. Finally, here's a 'foolproof trading method' that beginners can easily follow.
Putting the above tools together creates a trading process that is simple enough not to require any brainpower.
1. Use the SAR indicator to determine direction: If the price is above the SAR, only go long; if below, only go short;
2. Use support/resistance levels to find entry points: Near support + SAR below, buy; near resistance + SAR above, sell;
3. Use Bollinger Bands to time your trades: When the market is sideways and the Bollinger Bands narrow, wait for a breakout; during a trend, follow the direction of the opening bands.
4. Use volume to verify authenticity: Check the trading volume before buying; if there is no significant increase, give up; only move when there is a surge.
I used this method and made 4 trades on SOL last year, earning 15%-30% each time, doubling my investment. Complicated indicators will only make you hesitate; simple rules will allow you to act decisively.
Conclusion: The core of making money in the crypto space is 'simplicity + execution'.
From liquidation to buying a villa, my biggest insight is: the crypto space is not short of opportunities, but lacks 'practical methods'. SAR, support and resistance, Bollinger Bands, volume... these tools may seem simple, but they can help you avoid most pitfalls.
