1. 9 'life-saving mantras' in the currency circle, wait for the right timing before taking action.
1. Buy horizontally, buy the dips, don’t buy vertically; sell points are where the market is most fervent.
Meaning: During sideways consolidation, you can buy; buy at the 'pit' formed after a decline (low point); but don't chase rapid vertical rises; sell points are at the peak of market enthusiasm when everyone is shouting for rises.
For example, in 2024, Bitcoin consolidated between $38,000 and $42,000 for a month; buying at this point stabilizes costs; later, when it drops to $35,000 forming a 'pit', it's also an excellent buying point. When all your friends are talking about 'Bitcoin breaking $100,000', it's a signal to sell in batches.
2. Continuous small rises indicate real rises; continuous large rises mean it's time to exit.
A steady rise of 2%-5% daily indicates funds are steadily entering, reflecting a real market; while a rapid rise of over 10% for more than 3 days is often short-term speculation, and a pullback may happen at any time.
For example, in November 2023, Ethereum rose steadily for 10 days from $1800 to $2200, and then continued to surge to $2800; while a certain altcoin surged 50% for 3 days straight, only to plummet 40% on the 4th day, trapping all those who chased the high.
3. Significant surges need to pull back; don’t dig deep pits or buy heavily.
A sudden surge of over 20% is likely to pull back (retrace); don't heavily buy coins that haven't undergone deep declines (digging deep pits).
For example, if Bitcoin surges from $50,000 to $60,000, don't rush to chase it; wait for it to pull back to around $55,000 before buying; while coins that have been stuck at high levels without dropping (like a certain platform coin that has been around $20 without dropping below $15) are not worth heavy investment.
4. Rapid rises need to see a peak; sell in a rush during sharp drops and sell slowly during gradual rises.
When the market enters a rapid upward phase (main rise acceleration), like increasing by more than 10% daily, it's not far from the top; a sudden drop (sharp drop) means you should sell quickly, while those rising slowly can be sold in batches.
For instance, in 2021, SOL accelerated from $100 to $250 (a 150% increase in 3 days), then plummeted back to $100; while Bitcoin slowly rose from $30,000 to $50,000, selling 10% of positions every time it increased by 5%, earning 20% more than selling all at once.
5. Sudden drops without volume are intimidation; slow drops with volume mean it’s time to exit quickly.
A sudden drop without increased volume (sudden drop without volume) is the main player trying to scare retail investors into cutting losses; a slow decline with increasing volume (slow drop with volume) indicates large funds are exiting, so you must sell quickly.
Judgment method: Look at the volume bars below the candlestick; during a sudden drop, if the bars are about the same as usual (no volume), don't be afraid; during a slow drop, if the bars get thicker (increased volume), decisively exit.
6. Price breaks the life line, don't hesitate to make a swing trade.
'Life line' usually refers to the 60-day moving average. If the price stabilizes above the 60-day line, it indicates a trend reversal, and you can enter for a swing trade.
Operation: Open the candlestick chart and set to daily, add the 60-day moving average indicator; when Bitcoin breaks above the 60-day moving average from below and stabilizes for more than 3 days, you can buy in batches and hold until it falls below the 60-day moving average again to sell.
7. Seriously observe the daily and monthly trends, build positions alongside the main force.
Use the daily chart for short-term trends and the monthly chart for long-term trends; combining both helps to judge the main player's direction.
Tip: If the daily chart is rising but the monthly chart is still falling, it may indicate a short-term rebound; when the monthly chart begins to rise and the daily chart is also rising, it indicates the main player is increasing positions, making it safer to build positions at that time.
8. Price rising without volume, the main force is inducing more buyers, don't stand by.
Price rises but trading volume doesn't follow (shrinking volume increase), indicating the main player is falsely lifting the price (inducing more buyers), absolutely don't chase, otherwise you'll end up stuck at a high position.
For example, a certain altcoin rises from $1 to $1.5, but the trading volume is even lower than usual, and then it falls back to $0.3, leaving those who chased the high stuck.
9. A new low with reduced volume indicates a bottom; an increase in volume with a rebound means it's time to enter.
If the price hits a new low but trading volume shrinks (new low with reduced volume), it indicates selling pressure is waning, which may be a bottom; if trading volume then increases and the price rises (increased volume with rebound), it's a signal to enter.
For example, in 2022, Bitcoin dropped to $16,000 (new low), with trading volume much smaller than during previous declines (reduced volume), then the trading volume increased and it rose to $30,000, which was a great time to enter.
2. Candlestick mantras in the currency circle: understanding candlesticks helps avoid pitfalls.
Candlestick charts are a 'barometer' for judging price movements; these 5 phrases can help you quickly grasp buying and selling signals:
1. Don't sell on highs, don't buy on dips, don't trade during sideways consolidation.
Don't sell unless the key resistance level (high) is reached; don't buy unless the key support level (dip) is reached; during sideways movement, observe more and act less. For example, the resistance level for Bitcoin is $40,000; if it hasn't reached that, hold on; the support level is $35,000; if it hasn't dropped to that, don't buy.
2. Buy on dips, don't buy on rises; sell on rises, don't sell on dips; acting against the market makes one a hero.
Buy the bearish candlesticks during a decline (buy on pullback), don't buy the bullish candlesticks during an increase (chasing rise); sell the bullish candlesticks during an increase (selling on rise), don't sell the bearish candlesticks during a decline (cutting losses). For example, Ethereum increases by 5% showing a bullish candlestick, sell at this time; drops by 3% showing a bearish candlestick, buy at this time.
3. High and low consolidations require waiting a bit longer.
When consolidating at high or low levels, don't rush to act; wait until the breakout direction is clear. High-level consolidation could lead to a decline, while low-level consolidation could lead to a rise; operating during consolidation is prone to being trapped.
4. After a high-level consolidation, if it suddenly breaks higher, it’s a good opportunity to sell quickly; if it breaks lower after a low-level consolidation, it’s a good time to buy heavily.
A sudden surge after high-level consolidation is the last chance to escape; if it breaks lower after low-level consolidation, it's often a bottom, suitable for heavy buying. For instance, in 2021, Bitcoin consolidated at $60,000 before surging to $69,000, then plummeted; while in 2023, after consolidating at $16,000, it dropped to $15,000, then rebounded to $40,000.
5. Acknowledge mistakes before acting; better to buy less than to buy too much.
Before buying, think about 'what if it drops?', and plan for stop-loss; better to buy less than to go all in. Beginners are most prone to making the mistake of 'going all in on the first buy', leaving no room for maneuver if it drops.
Three, 8 trading iron rules: controlling your hands is 100 times more important than technique.
Don't panic after a stop-loss: playing contracts with small bets is normal. After a stop-loss, don't rush to open a position to make back your losses; frequent stop-losses mean it's time to stop, review strategies for flaws, and rashly opening positions will only lead to deeper losses.
Discard the mentality of seeking quick profits: trading is not a means to get rich overnight. Getting anxious and heavily investing after a loss is a big mistake for beginners. Stay calm, and wealth comes from steady streams.
Follow the big trend: when a unidirectional market arrives, going with the trend is an iron rule! Both beginners and veterans easily trade against the trend, always wanting to 'buy the bottom and sell the top', only to be taught a lesson by the market. Understand the market, wait for opportunities, and follow the trend to make money.
Grasp the profit-loss ratio: the core of contract profitability is the profit-loss ratio. Always ensure at least 2:1 before opening a position (earn $2, lose $1), allowing profit space to cover loss risk.
Quit frequent trading: beginners shouldn't open positions just because of fluctuations, thinking there's gold everywhere, but in reality, most are traps. Until you become a skilled trader, trading less and trading wisely is the way to survive.
Maintain your cognitive boundaries: only earn money within your understanding; rashly entering beyond your knowledge is like a blind man touching an elephant, with uncontrollable risks. Deepen your knowledge, and 'dig for gold' in familiar fields.
Eliminate the behavior of holding onto losing positions: holding onto positions is a 'death curse' in contracts; the first lesson for beginners is to learn to stop-loss! If the market reverses, stubbornly holding will only make losses snowball; timely stop-loss is key.
Don't be anxious when in profit: don't get carried away with paper profits; getting carried away will definitely lead to trouble. Overconfident soldiers are bound to fail; at this moment, it’s more important to stay calm, strictly adhere to trading discipline, operate according to strategy, and stabilize profits.
I've seen Bitcoin drop from $30,000 to $8,000, and I've accompanied altcoins back from the brink of zero to a hundred times. Early on, I would stare at the market for three days and nights without sleep; a 5% rise would make my heart race, a 3% drop would make me want to cut losses, my account felt like a roller coaster, and I was swept along. After blowing up three times, I finally understood: the red and green fluctuations on the candlestick chart are just a battle of greed among people; some rush to grab, while others wait to smash.
Now watching the market is like watching a chess game in a teahouse; no matter how crazy the rise, I can't be bothered to calculate profits, and no matter how severe the drop, I won't sell out. Those shouting 'disrupting the world' concepts, looking back in two years, most will be just a rebranded funding scheme; while those old coins that were criticized as 'garbage' ended up resilient. There's no myth in the currency circle; it's just that some learned to close their eyes amidst the noise, waiting for the tide to recede before picking up shells—those who rush to shore often choke the worst.
I am Wenhua, a professional analyst and instructor, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I will help you resolve confusion and locked positions, speak with strength. When you are lost and don't know what to do, follow me, Wenhua will point you in the right direction.
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