I have traded cryptocurrencies for fourteen years, suffered for four years, and laughed for ten years. Throughout this journey, there really are no secrets that cannot be shared; the four years of suffering were all about...
Form a set of your own patterns; once established, the next steps involve continuous refinement and replicating successful models.
1. Spot investment: In-depth analysis of the 'Three Low Principles'
(1) Undervalued: Explore value vacuums
Looking for investment opportunities among cryptocurrencies ranked 50-100 by market capitalization is based on profound logic. These cryptocurrencies have usually passed the high-risk phase of project inception, possess a certain degree of market recognition and technical foundation, but have not yet been fully explored by the market. From a quantitative perspective, by analyzing the alignment of their market cap with project fundamentals, such as technological innovation, application scenarios, community activity, etc., potential undervalued cryptocurrencies can be identified. For example, certain projects focused on emerging fields (like blockchain privacy protection and decentralized storage) may currently not rank highly in market cap, but as the industry develops, their technological advantages are expected to drive market cap growth.
(2) Low price: Seize price reversal opportunities
Cryptocurrencies that have fallen more than 40% in the last 30 days are often in a state of overselling. According to the mean reversion theory in technical analysis, when prices stray too far from their intrinsic value, they are likely to revert to the mean. Based on historical data, during the 2022 cryptocurrency bear market, many mainstream cryptocurrencies rebounded to varying degrees after significant declines. By analyzing candlestick charts, Bollinger Bands, and other technical indicators, when the coin price touches the lower Bollinger Band and continues to close with lower shadows for several days, it often signals a price bottom. For instance, when SOL was at $20, a 'volume shooting star' occurred, and combined with volume analysis, this indicated intense competition between buyers and sellers at this price level, while the shooting star pattern suggested that the market was about to choose a direction. At this point, if combined with favorable fundamentals from the revival of the Layer 2 concept, it constitutes a textbook-level bottoming pattern, providing investors with an excellent low-buy opportunity.
(3) Low buy signal: Insight into capital flow
A sudden increase of 15% in exchange positions is an important signal of capital inflow. In the cryptocurrency market, capital flow is the core factor driving price changes. When a large amount of capital flows into a particular cryptocurrency, it usually indicates that the price of that cryptocurrency is about to rise. Using tools like blockchain explorers, we can track capital flow in real-time and analyze the position changes of large holders and institutions. For example, when multiple large wallet addresses are observed to simultaneously increase their holdings of a particular cryptocurrency, and exchange positions rise in tandem, this is likely a precursor to market activation. This method of analysis based on capital flow can help investors position themselves in advance and seize opportunities.
2. Contract trading: Efficient use of the 'Two-Step Method'
(1) Trend judgment: Based on multi-cycle technical analysis
Identifying trends at the daily level is an important prerequisite for entering contract trades. Taking the weekly MACD golden cross as an example, the MACD (Moving Average Convergence Divergence) indicator is an important tool in technical analysis, and its golden cross indicates that the short-term moving average has crossed above the long-term moving average, suggesting that bullish momentum is gaining strength. In the cryptocurrency market, a weekly MACD golden cross often signals the beginning of a mid-term uptrend. At the same time, when combined with other technical indicators, such as the Relative Strength Index (RSI) being above 50 and in an upward trend, it further confirms that the market is in a strong bullish pattern. At this point, opening a position at the mid-line of the 4-hour Bollinger Band can effectively leverage market trends and reduce trading risk. The mid-line of the Bollinger Band serves as a dynamic support level for price, and in trending markets, prices often move upward along this mid-line.
(2) Position management and risk control
A fixed leverage of 3 times is a proven rational choice. In the highly volatile cryptocurrency environment, excessive leverage can easily lead to liquidation during minor market pullbacks. Taking 3x leverage as an example, it can amplify profits in trending markets while keeping risks within a relatively controllable range. Setting a stop-loss 2% below the lower bound is a strict risk control measure. When the price hits the stop-loss level, decisively close the position to avoid further losses. For example, last Friday when ETH broke $1800, according to the above strategy, students took a 3x long position with a stop-loss set at $1750. In the subsequent market, ETH's price rose to $1980, achieving a 23% profit in 48 hours. This is not a coincidence, but a certainty based on accurate market trend judgment and strict risk control.
3. Trading iron rules: The cornerstone of ensuring investment safety
(1) Strict position regulations: Diversify risks and allocate reasonably
No more than 20% for each spot position and never touch 10% of the principal for contract margin; this position management principle is crucial. In the cryptocurrency market, the volatility is severe, and investing too heavily in a single cryptocurrency or contract trading can easily expose investors to significant risks. There have been cases where investors, due to greed, increased their BTC position to 50%, and as a result, suffered heavy losses during a major market pullback. Reasonable position allocation acts like a strong defense, effectively diversifying risks and ensuring asset stability amid market fluctuations.
(2) Fully automated take-profit and stop-loss: Strictly adhere to discipline and eliminate emotional trading
Setting take-profit and stop-loss immediately after opening a position is an essential skill for survival in the cryptocurrency market. Market conditions change rapidly, and if take-profit and stop-loss are not set in time, one can easily be swayed by emotions, turning potential profits into losses or even incurring losses. For example, last week when DOT fell from $8 to $7.6, the system automatically triggered a stop-loss, helping investors avoid further losses. Those who gamble with hope and attempt to hold their positions often suffer significant losses during continuous market declines. Automated take-profit and stop-loss settings allow investors to detach from emotional disturbances and strictly execute their trading plans.
(3) Strictly select trading targets: Focus on quality opportunities
Every day, three targets are carefully selected, along with precise entry prices, stop-loss prices, and target prices; this is a strict selection of trading opportunities. In the cryptocurrency market, with numerous projects of varying quality, blindly following trends can often trap investors. Last month, a friend lost 150,000 due to privately purchasing altcoins. Only by focusing on high-quality targets that have undergone in-depth research and selection can one improve the success rate of investments. By comprehensively analyzing the fundamentals of projects, technical capabilities, market trends, and other aspects, one can accurately grasp every trading opportunity to achieve long-term stable profits in the cryptocurrency market.
Even with thorough preparation, it is inevitable to encounter consecutive losses in cryptocurrency trading. At this point, whether one can maintain a stable mindset, not doubt oneself, and even summarize experiences from losses is a key factor in determining whether an investor can thrive in the cryptocurrency market. Some people completely collapse after one loss, either doubling down in an attempt to recover only to fall into a deeper predicament or completely giving up and missing subsequent investment opportunities. However, those suited for trading will view losses as a necessary part of the trading process, calmly analyze the reasons for the losses, adjust their trading strategies, and start anew.
In this challenging and opportunity-filled cryptocurrency market, there are no naturally born 'trading geniuses.' But as long as one possesses the above traits and provides reasonable time and financial planning, investors can gradually find their rhythm in the market. If you temporarily lack certain traits, there's no need to be discouraged; these abilities can be gradually cultivated through continuous learning and practice. Just like learning to drive, at first, it may be chaotic, but as practice deepens, you will naturally become proficient in handling various road conditions.
Ask yourself, if you can truly operate strictly according to the operational discipline, what is the maximum loss you can accept in a month? The market will ruthlessly screen out those who can truly execute discipline. Remember: The cryptocurrency market is never short of opportunities; what is lacking is the discipline to seize those opportunities. Looking back three months later, the decisions made today may completely change your life.
I am the Master Brother, follow me to share valuable content for retail investors in the cryptocurrency market every day! With a soulful approach and skilled in cryptocurrency, the above content is based on my experience over more than a decade in the market. It has been the result of constant summarization and reflection, leading to today's achievements. It may seem simple, but achieving the unity of knowledge and action is not easy. Today, I share this with everyone in the hope that it will help many cryptocurrency friends avoid detours! Let's get rich together!