During this period, I have made money and lost money, and tried everything from dog trading, ICO, to mining. I have experienced countless pitfalls. It can be said to be a game between long and short positions, but it is more like the management of my mentality. There are surprises and disappointments. It is a magical circle, a place full of charm. I have summed up countless operating methods and strategies to make money, which is simple and rough. Buy in a bear market and sell in a bull market, and you will make money steadily.
Master's Realm: Technology + Mindset + Market = Trading Highlights
Looking back at the highlights of all top traders, they are all a perfect combination of the following three:
The technology just matches the market rhythm, and the mentality is in a "super natural" state.
Sometimes the technology hasn’t actually changed, but your mindset suddenly becomes clear and the market happens to enter a rhythm that you are familiar with, then it is possible to generate legendary returns.
on the contrary--
No matter how good your strategy is or how impressive your indicators are, if the market is not suitable for you at this moment and you are restless and panicky, then your technology is just waste metal.
This is the truth of the deal.
Reverse thinking experiment: What if you were asked to lose 1 million in a week?
If I give you 1 million and ask you to lose it all within a week, or I will shoot you if you fail to do so, what will you do?
Some people would say: Bet big on the non-farm payrolls. But what if you bet right? You doubled your money, which makes it harder to lose it all.
A smarter person would say: trade back and forth frequently and lose all the commissions. Yes, this is one of the feasible solutions.
But this is just an appearance. The key is: you will find that losing money also requires methods and discipline.
You cannot hesitate. Once you make a profit, cut it immediately to avoid "making too much money" and reverse all the logic that you think is right.
If there is a floating loss, you will "hope to lose more" and let it lose to the end.
This is the negative discipline system. Whether you lose money "rationally" or make money "emotionally", it is the same pattern logic.
After understanding the rules of the game, you will begin to reflect on——
In the past, you “had discipline but suffered frequent losses”. Could it be that you have actually been using the “discipline of losing money to make money”?
Inner Demon: The most important thing to let go of is how much money you have lost
The reason why many people cannot turn things around is not because they don’t know how to trade, but because they keep holding on to past losses and thinking “I want to make it back”.
This is just like the down-and-out master in martial arts novels, who is bent on avenging his humiliation but ends up going astray.
You are not making a deal, you are just digging up old grudges.
The real turning point often starts with one sentence:
"I acknowledged that those losses were a reflection of my current abilities, and I let them go."
Only by letting go of the obsession with the past can we use our “present self” to build a new system and get out of the quagmire.
Building your trading system: Don’t be a jack of all trades, specialize in one
I am not a genius. I don’t know how to capture trends, nor am I an on-chain Alpha hunter. I don’t understand macro interest rates, and I don’t know how to do quantitative grids.
I'm just a swing player.
Every day is like a bodyguard in the underworld, choosing a route, transporting a load of goods, running back and forth, relying on a sense of rhythm and a "sense of smell" for opportunity.
I don’t preach big principles, and I don’t predict whether “BTC can rise to $150,000”.
These "mythical narratives" are useless to me. My trading is to find the current opportunity one by one and then complete it cleanly and neatly.
Just like the Eighteen Bronze Men Formation of Shaolin Temple, it does not require you to know a thousand martial arts, it only requires you to practice one move to perfection.
The road to trading: focus on polishing and integrate
My strategy is not isolated. I focus on my own swing speculation and also learn from the ideas of my senior brothers and sisters.
I took their experience and fed it back into my own strategy system to make it smoother and more powerful.
This is a process of integration and convergence. It is not about greed, but about selection.
Just like Zhang Sanfeng transformed the moves of Shaolin, Wudang, Emei and Kunlun into Tai Chi - the great way is simple and unique.
Don't use your faith to pressure others. I'm just a short-term trader.
You believe that BTC will rise to a million, that is your belief. But don't try to force your belief on others.
I am just an ordinary person who makes a living by short-term trading. I work hard in the market every day with diligence and sense of rhythm.
You eat the long-term fruits, and I will just nibble on the short-term meat.
Just like some masters in the martial arts world establish their own schools, while others rely on their "Dragon Slaying Sword" to travel around the country - each one accepts his fate and does not disturb each other.
The following is a trading strategy with a winning rate of over 80%. I spent 2 years, hundreds of days and nights, and drew thousands of charts to study and summarize these top trend continuation chart patterns. Once you learn and master them, the cryptocurrency world will be your "ATM"
As for moving averages, we generally believe that the short-term moving averages that follow the K-line can better show the current volatility of the market. For convenience, multiple moving averages are usually used in combination. Basically, short-term moving averages rarely appear alone. But there are exceptions. The 5-day moving average (MA5) is a typical short-term moving average. Its application in confirming the short-term trend of the market and exiting the market makes it very unique when used alone.
The functions of moving averages mainly include indicating trends, finding support and resistance levels, or showing short-term fluctuations in the market. Long-term moving averages play the first two functions, while short-term moving averages closely follow the K-line and are more able to show short-term fluctuations in the market. A single short-term moving average is unlikely to provide direct help in trading, but the 5-day moving average is an exception.
The short-term moving averages are commonly used in the 5-day moving average, 10-day moving average, 20-day moving average and 30-day moving average. Today, I would like to take this opportunity to share with you the wonderful use of the 5-day moving average. As the saying goes, "If it is not broken within 5 days, there is no need to operate", the 5 days mentioned here refers to the 5-day moving average.
As we all know, the moving average is actually the abbreviation of the simple moving average (SMA) indicator. The 5-day moving average, as the name suggests, is the average value of the transaction price or index of stocks or other commodities within 5 days, corresponding to the 5-day moving average of the price and the 5-day moving average of the index.
This short-term moving average with a parameter of only 5 is difficult to prompt entry and is unable to provide clear trend direction and price prompts, but it does have certain advantages in confirming short-term trends and exiting the market.
Confirm the short-term (ultra-short-term) trend
When the K-line closes with a continuous negative line (down) or a continuous positive line (up), the 5-day moving average will become the support level of the positive line and the resistance level of the negative line (that is, when the K-line is rising, it closes above the 5-day moving average; when the K-line is falling, it closes below the 5-day moving average. It is not recommended to use the 5-day moving average as a key price prompt). Once the short-term trend of the market is not strong or is consolidating, the 5-day moving average will cross the K-line entity.
The above chart is not only a description, but also a confirmation of the short-term trend of the market: if at least 2 consecutive K-lines are closed above the 5-day moving average (preferably a positive line), it indicates that the market has strong bullish power in a short period of time and the price may rise rapidly; similarly, if at least 2 consecutive K-lines are closed below the 5-day moving average (preferably a negative line), it indicates that the market has strong bearish power in a short period of time and the price may fall rapidly. In this case, even if a reverse K-line is closed occasionally, as long as the 5-day moving average is not broken as a support or resistance level, there is no need to worry about the trend stopping.
The significance of this application is that if there are short-term positions, when the 5-day moving average shows the above performance, it can enhance the confidence in holding positions, and there is no need to exit the market before the 5-day moving average is broken by the reverse K-line entity.
In addition, during the operation, there may be a positive line breaking through the 5-day moving average, or if the 5-day moving average is a resistance level and is broken by a negative line, there is no need to worry for the time being, and the short-term trend will continue.
Tips for exit
Corresponding to the aforementioned 5-day moving average becoming the support and resistance level of the K-line, when the 5-day moving average breaks through the K-line body, it is often a temporary unilateral trend or a weak overall trend. Therefore, when the 5-day moving average changes from a support and resistance level to being suddenly broken by the reverse K-line, this can be treated as a short-term exit signal.
It should be noted that the 5-day moving average can be used as an exit signal only when it is displayed as a K-line support or resistance level.
Whenever the 5-day moving average can be used to prompt an exit, the timing of the prompt is often quite good.
Regarding this exit tip, the 5-day moving average can be used in conjunction with the K-line reversal pattern. When the K-line appears in a piercing pattern, a dark cloud cover pattern, an evening star or a morning star pattern, you can determine whether you need to consider a short-term exit by observing whether the K-line breaks through the 5-day moving average.
For the use of the 5-day moving average, any chart time frame will work.
5X5 Trading Strategy
The 5X5 trading strategy is great for short-term price fluctuations. Using a 5-period Relative Strength Index (RSI) in conjunction with a 5-period Simple Moving Average (SMA) brings momentum together with trend to create a powerful combination.
Using RSI
The RSI can show overbought and oversold conditions in price. While it does not guarantee any price reversal, it helps to show the extension of price momentum. From this extension, we can expect the price to react in the opposite direction.
When we see the RSI line below the 30 level, we can consider the asset to be oversold. At this point, we will look for signs of a price rebound. The overbought level is indicated by an RSI above the 70 level. The 50 level will serve as an indicator level for "short to long" or "long to short".
How to Use the 5 SMA
The moving average will act as a trend indicator based on the slope and can also be used as an entry signal.
When the overall slope is downward, we will be looking for short trades. An upward slope will provide us with signals to go long.
When the price crosses the SMA and closes strongly, we can consider it as a signal for a buy or sell order in combination with other conditions.
Profit Taking
There are many ways to achieve profit and every trader will have their own preferences. Whether using a trailing stop or a take profit tool, both are effective ways to close a position. In this example, we will consider a profit target of 1R.
A 1R profit target means that the amount of profit you make is equal to the amount you risk.
For example, in this example, the protective stop is set below the candlestick with a stop loss amount of 0.35. The buy stop is set above the high with a take profit target of 0.35.
This method of finding 1R target profit is not only suitable for simulated trading, but also for real trading.
What is a buy signal?
When we look for long trades, we need to see the RSI break above the 50 level and price close strongly above the 5-day Simple Moving Average (SMA). Although the RSI may have broken out a few candlesticks ago, we seek to avoid entering when price is overextended.
If the RSI rebounds from the oversold area and is about to break through the 50 line, we can also enter the market in advance.
When the price rebounded from a downtrend, the RSI was in oversold conditions. The RSI rose sharply and the price subsequently closed strongly above the simple moving average. The buy stop order was set above the candlestick high and the stop loss was set below the low. The day after the setup, the RSI confirmed a breakout above the 50 level.
Here is another example of using day trading time frames:
Both trades hit their 1R target after ending their oversold conditions.
On the weekly chart, nothing else has changed except that traders may use a trailing stop to lock in gains. An understanding of price structure and momentum will greatly help traders using this and any other strategy.
Although there are a few candlesticks closing above the 5-day SMA, we not only want to see the majority of the candlesticks above the moving average, but also want the candlesticks to show strength. Closes at or near highs are a sign of strength and worth noting. Also keep in mind that there may be resistance areas in the path of price movement. Knowing how price behaves near resistance areas will help in the success of this strategy.
Support or resistance
You should not automatically enter a trade when the trigger occurs. Remember, this only shows that momentum was in your favor at that point in time. You still need to have basic chart reading skills.
The chart shows that the price has entered a rebound phase from a decline. The 5-period RSI has been oversold for several days, and a strong momentum candlestick has broken through the 5-day SMA. This setup is located at a level that has served as strong support in the past and may act as resistance in the future.
Chart Patterns
In this example, the price formed a double bottom pattern. Although the double bottom is confirmed after the resistance is broken, it is also a feasible way to break through in advance under the premise of risk control.
It is important to note that small range candlesticks are not always negative, depending on their shape. The candlestick with an arrow has a long lower shadow and closes just 0.01 below the high. The price reached the 1R target and even higher.
Can you use chart patterns to help decide when to take profits? If a double bottom forms, then you can at least expect a challenge to the resistance area, which is feasible when managing the trade. In this chart, the price did break through resistance, forming a trading range, and then reversed down.
Trend line breakout
It is also a good idea to add a short term trend line break as confirmation to the setup. In this example, we will be looking at a short trade after the price has risen for 28 trading days.
The price is in overbought conditions and has broken above the 5-day SMA and the trendline. There is nothing magical about the trendline, but it is really good at showing the change in the tempo of price movement. On the left, you can see another setup being triggered, where again the strong candlestick breaks above resistance.
Combining trend lines with this strategy is a good technical addition, as is looking for significant chart patterns. Each trader can set a profit target based on their preferences. By studying hundreds of examples, you will find certain characteristics that are common in instruments with upside potential.
Using this strategy during a possible trend change will increase your chances of success. A trend change means that the instrument you are focusing on is actually trending rather than sideways.
Similar to when prices fluctuate around a moving average, if the RSI fluctuates between above and below the 50 line, it means the market is choppy and it’s best to turn to other charts that provide more clarity.
Lao Bo only does real trading, the team still has positions to fill in.