In the cryptocurrency market, filled with opportunities and risks, many people dive in with dreams of wealth. However, very few can continue to profit. One of my mentors entered the cryptocurrency market with a capital of 100,000 yuan and now has a market value of 42 million. His successful experience is astonishing. He once told me: 'The cryptocurrency market is filled with a crowd; you just need to control your emotions, and this market is an ATM!' This statement inspired me deeply and made me realize the importance of maintaining calm and rationality in cryptocurrency investments.
There are many ways to trade cryptocurrencies, but not all methods are easy to master. We all desire to achieve good returns using the simplest methods, but in reality, friends in the cryptocurrency space often complicate problems too much. Today, I will introduce you to a trading strategy that is both simple and very effective - trend trading strategy.
10 top mindsets that can survive in the cryptocurrency market and make big money
Before delving into trend trading strategies, let’s first understand the 10 top mindsets that can continuously profit in the cryptocurrency market. These mindsets are the crystallization of years of practical experience and have significant guiding significance for our investments.
The standard for judging investment experts lies in their duration of holding cash: True investment experts can not only profit when the market is rising but, more importantly, they understand when to decisively hold cash during unclear or risky market conditions. This patience and discipline are key factors for success. Holding cash is not passive waiting but is an active risk management strategy that allows us to avoid losses during market turbulence, preserve strength, and wait for better investment opportunities.
In a bear market, all purchases may be errors: During a bear market, the overall market trend is downward, and any buying actions are likely to encounter larger declines. Therefore, maintaining a cautious attitude during a bear market, minimizing trading, or even refraining from trading until the market stabilizes significantly or a bull market arrives, is wise. Every purchase in a bear market is like groping in the dark, with high risks that we must treat with caution.
In a bull market, all sell-offs may be mistakes: When the market is in a bull market, prices continue to rise, and selling too early may cause us to miss out on more substantial gains. In a bull market, we should hold on and act according to the trend until the market trend shows a clear reversal before considering selling. The bull market is a golden period for wealth growth, and we should take full advantage of this trend to let profits run.
The fundamental of investment is to buy low and sell high: This may sound like a simple principle, but it is challenging to implement in practice. The core point of buying low and selling high is to have enough patience to wait for the right entry and exit moments, and not to be swayed by short-term market fluctuations. In the cryptocurrency market, prices fluctuate frequently, and we must overcome the psychology of greed and fear and strictly follow our investment plan.
The direction of the market is determined by the main capital: The main direction of the market is driven by large-scale capital. Understanding the dynamics of the main capital can help us act accordingly and avoid falling into the trap of counter-trend operations. The inflow and outflow of main capital often trigger significant market fluctuations, so we must closely monitor the movements of main capital and invest according to the mainstream trends of the market.
Technical analysis and fundamental analysis are both insignificant against the overall trend: Whether it is technical analysis or fundamental analysis, they seem trivial in the face of the overall market trend. Following the trend is the key to achieving long-term profitability. Market trends are formed by a combination of various factors, and technical and fundamental analysis can only serve as references. We should not rely solely on these analytical methods to predict market trends but should use market trends as a guide for investment decisions.
Bearish news at the top indicates a bottom; decisive selling is required: When the market is at a high level, bearish news often signifies an imminent market reversal, making it an excellent signal for exiting. At the market top, investors are often in an overly optimistic state, and the emergence of bearish news can shatter this optimistic sentiment, triggering a market decline. We must be keen to capture these signals, sell decisively, and avoid losses.
Bottom bearish news actually indicates a bottom, bold buying is necessary: In the market bottom area, bearish news usually reflects extreme panic, and this is precisely the best buying opportunity. When the market is at the bottom, investors generally feel fear and despair, and bearish news further intensifies this sentiment. However, it is precisely at this time of extremely low market sentiment that huge investment opportunities often arise. We must be bold in buying at the bottom and wait for the market to rebound.
Having wealth once in a lifetime is enough; be sure to protect the wealth you have gained: In cryptocurrency investments, do not be greedy, understand when to take profits, and firmly guard the money you have already earned, as this is a key point for achieving long-term success. Wealth accumulation does not happen overnight; we should cherish every opportunity to profit and learn to protect the fruits of our labor. When the market is favorable, we need to keep a clear mind to avoid excessive greed leading to the loss of wealth.
It is essential to allocate Bitcoin; otherwise, you may not earn money in a bull market: As the leader of the cryptocurrency market, Bitcoin often has the most considerable gains in a bull market. Allocating Bitcoin wisely can help us achieve stable returns in a bull market. Bitcoin has a high market recognition and liquidity, and its price trend significantly influences the entire cryptocurrency market. Allocating a certain proportion of Bitcoin in the investment portfolio can effectively improve the stability and profitability of the portfolio.
What is a trend
A trend is the direction of market movement, which can be divided into an upward trend, a downward trend, and a sideways trend. In financial trading markets such as stocks, futures, forex, and cryptocurrency, trends are regular conclusions drawn from observing the market. The changes in investors' buying and selling decisions shape different forms of trends. Trends always run in the direction of the least resistance in the market, so finding a trend means finding the path of least resistance. Financial trading masters generally advocate that traders follow trends because in a market with clear trends, acting in accordance with the trend can significantly increase the probability of investment success.
According to Dow Theory, any trend will eventually complete, meaning a bull market must be accompanied by a bear market, and vice versa. Market prices do not rise straight up in one direction; the trajectory of trend movements resembles waves coming in succession, with clear peaks and troughs. Peaks and troughs are the basic elements that constitute different trends. Based on the positions of peaks and troughs, we can classify trends into upward trends, downward trends, and sideways trends.
In an upward trend, each subsequent peak is higher than the previous peak, and each subsequent trough is also higher than the previous trough, indicating that bullish forces dominate the market, and prices exhibit an upward trend. Conversely, in a downward trend, each subsequent peak is lower than the previous peak, and each subsequent trough is lower than the previous trough, indicating that bearish forces are strong, and prices continue to fall. In a sideways trend, the positions of peaks and troughs are relatively close, with the market forces of bulls and bears being relatively balanced, and prices fluctuate within a certain range.
Understanding the basic concepts and characteristics of trends is the foundation for us to use trend trading strategies for investing. Only by accurately judging the market trend can we formulate reasonable investment strategies, seize investment opportunities, and achieve profit targets.
Application of trend strategies in the cryptocurrency market
Identifying trends
In the cryptocurrency market, identifying trends is the first step in utilizing trend trading strategies. We can use various methods to judge market trends, with the most common method being to observe price movements and moving averages to identify trends.
Price trends: By observing the price charts of Bitcoin or other digital currencies, we can intuitively see the price fluctuations. If the price shows a constant upward trend, with each subsequent peak higher than the previous one and each subsequent trough also higher, then the market is likely in an upward trend. Conversely, if the price continues to fall, with each subsequent peak lower than the previous one and each subsequent trough also lower, the market is in a downward trend. If the price fluctuates within a certain range with no clear upward or downward direction, then the market is in a sideways trend.
Moving averages: Moving averages are a commonly used technical analysis tool that helps us smooth price fluctuations and more clearly display market trends. Common moving averages include the 5-day average, 10-day average, 20-day average, 50-day average, and 200-day average. When a short-term moving average (such as the 5-day or 10-day average) crosses above a long-term moving average (such as the 50-day or 200-day average), it forms a golden cross, which is often a signal that the market is entering an upward trend. Conversely, when a short-term moving average crosses below a long-term moving average, it forms a death cross, which is a signal that the market is entering a downward trend.
Grasping buying and selling opportunities
After identifying the market trend, we need to grasp buying and selling opportunities based on the changes in the trend.
Buying and selling opportunities in an upward trend: In an upward trend, we should adopt a buy low strategy. When the price pulls back near the moving average, it is often a good buying opportunity. This is because, in an upward trend, the moving average acts as support for the price, and when the price pulls back near the moving average, it usually meets support and continues to rise. At the same time, we should pay attention to setting stop-loss levels to prevent sudden price drops from causing excessive losses. The stop-loss level can be set below the moving average by a certain margin, such as 3% - 5%. When the price falls below the stop-loss level, we should sell decisively to avoid further losses. In an upward trend, we can also appropriately increase our position depending on market conditions to enhance returns. The timing for increasing positions is generally chosen when the price breaks through previous highs or after a pullback ends and rises again.
Buying and selling opportunities in a downtrend: In a downtrend, we should adopt a strategy of selling on rallies. When the price rebounds near the moving average, it is often a good selling opportunity. This is because, in a downtrend, the moving average acts as resistance to the price, and when the price rebounds near the moving average, it is usually met with resistance and continues to fall. Similarly, we should also set stop-loss levels, which can be set above the moving average by a certain margin. In a downtrend, we should try to avoid bottom fishing, because once the trend of the market declines, it often lasts for a while, and bottom fishing can easily be done at a mid-point. If we want to look for investment opportunities in a downtrend, we can wait for clear reversal signals in the market, such as price breaking through the downward trend line or a golden cross in the moving average, before buying.
Buying and selling opportunities in a sideways trend: In a sideways trend, market prices fluctuate frequently, making it relatively difficult to grasp buying and selling opportunities. We can adopt a high sell-low buy strategy, that is, sell when the price approaches the upper boundary of the range and buy when it approaches the lower boundary. At the same time, we must pay attention to controlling our position to avoid excessive losses due to market fluctuations. In a sideways trend, due to the unclear market direction, we should not over-leverage, lest the market suddenly turn and cause significant losses.
No need to stay up all night watching the trends or obsessing over whether buying and selling points are accurate. Only take opportunities with clear trends; hold back in bear markets and hold positions in bull markets. In the next wave of the market, I will say, let’s step in rhythm together and let profits outperform 90% of retail investors!
Remember, the cryptocurrency market is not short of opportunities, but rather lacks the execution power to seize them. Your hesitation could be someone else's doubling point. Join now and let professionals help you avoid pitfalls and catch the right momentum!
