Do you want to achieve stable profits in the cryptocurrency market?
Relying solely on luck won’t work; you need to solidly master practical methods that can be implemented.
Sister Han shares the 'Five Core Trading Principles' and '22 Rules of Bollinger Bands' here to help you establish a clear trading logic and avoid detours.
1. Five Core Techniques: First, master the basics of trading
Face profits and losses directly, refuse to rely on luck.
The essence of trading is a game of probability; don’t get carried away when you profit and don’t hide when you incur losses. Many people only show profitable trades and avoid discussing losing ones—actually, losses are key signals for optimizing strategies. Only by honestly facing each trade can you extract lessons from mistakes.
Strictly adhere to the rules, control your hands.
Before opening a position, you must clearly define the scenarios for 'can trade' and 'cannot trade': for example, do not chase trades during extreme market fluctuations, and do not operate when emotions are high. Impulsive trading will only lead to frequent stop losses; strictly following the rules can safeguard your principal.
Plan ahead, act after careful consideration.
Open the trading software to first check the overall direction: Are the short-term, medium-term, and long-term trends consistent? Combine with important data of the day (e.g., Federal Reserve movements, significant events in the cryptocurrency market) to preset 'entry points, stop-loss points, and take-profit points'. Trading without a plan is prone to being led astray by market fluctuations.
Review and optimize, refine habits.
Good trading habits are cultivated. For example, if you tend to monitor the market frequently during simulated trading, you will overtrade when you move to real trading—this bad habit needs to be corrected in a timely manner. After each trade, ask yourself: Does this operation conform to the plan? Where can I improve? Make reviewing a part of your routine, and your trading skills will naturally improve.
Refuse greed, earn the money you should earn.
Don’t always think of 'buying at the lowest point and selling at the highest point'; such greed often leads to 'missing opportunities' or 'getting stuck at a high point'. When you see the price plummet, you rush to buy at the bottom; when it rises to a high point, you hesitate to sell, ultimately leading to losses. Accepting 'reasonable profit margins' allows for long-term winning.
2. Practical Rules for Bollinger Bands: Use technical indicators to pinpoint buying and selling points.
Bollinger Bands reflect market trends through the 'upper band, middle band (20-day moving average), lower band', focusing on four arrangement patterns: Bullish (three bands upward), Bearish (three bands downward), Box (three bands parallel), Divergence (three bands in a 'V' shape). Among these, the four stages of 'divergent arrangement' are key to profit, and combining specific buying and selling methods can significantly improve winning rates.
1. Divergent Four-Stage Operation Logic (Key!)
Consolidation Phase (Buying Point): The upper band moves down, and the lower band moves up, with decreasing volatility, indicating a trend reversal. To buy, two conditions must be met: ① The middle band must move up or stay flat (even slightly down is not acceptable); ② The price must break above the middle band with a bullish candle (false bullish and true bearish signals are ineffective). If you can't see the direction of the middle band clearly, note down its value daily to confirm an upward trend and avoid the trap of a downward reversal.
Uptrend Phase (Holding Stocks): The upper band moves up, and the lower band moves down in a 'V' shape, with the price rising along the upper band. The steeper the angle of the upper band, the stronger the upward trend (but the duration is short); the gentler the angle, the steadier the rise (there may be some volatility in between, so don’t exit too easily). If you haven’t bought in advance, you can chase in when the 'V' shape just forms; if it has been diverging for many days, the risk will increase.
Divergence Phase (Selling Point): The price moves away from the upper band and starts to consolidate, with increasing distance between the upper and lower bands, showing sharp fluctuations but no significant rise or fall. At this time, remember: when 'the price has been 3 days away from the upper band without returning', sell decisively! If you're stuck, set a stop-loss during the upward fluctuations, and don't let the loss continue to expand.
Re-consolidation Phase (Cycle): The market returns to the initial consolidation state, repeating the closed loop of 'consolidation buy → uptrend hold → divergence sell', seizing the next opportunity.
2. Three Practical Buying and Selling Methods
Buying Timing:
▶ Buy at the lower band: After the price breaks below the lower band and consolidates for 3 days, buy when it confirms stabilization (suitable for medium to long-term);
▶ Buy at the lower boundary of the box: When the three bands are parallel, buy when the price drops to the lower band (short-term operation, take profit at the middle band);
▶ Buy at consolidation: After consolidation, when the middle band moves up and the price breaks above it, buy (accurately catch the main upward wave).
Selling Timing:
▶ Divergence Phase: If the price is away from the upper band and consolidating, sell quickly;
▶ Box Phase: If the price hits the upper band, or breaks above and then falls back, take profit in time;
▶ Bullish Phase: If the three bands change from upward to flat, even if it is still volatile, sell.
3. Three Questions to Ask Before Trading: Establish Your Trading System
Before opening a position, stop and think:
Why did I open this position? (Is it because the Bollinger Bands signal is clear, or am I just following the trend?)
Why did the profitable trade end up losing? (Is it because I didn’t set a take-profit, or did I set the take-profit point too low?)
Why do you hold a position until liquidation? (Is it because you didn’t set a stop-loss, or are you being overly optimistic?)
Behind these questions is actually the 'trading system' that hasn't taken shape—a methodology that includes 'opening conditions, closing rules, adding/reducing positions, profit-taking and stop-loss ratios'. With a system in place, each trade has a basis, which can reduce mistakes and eliminate the need to constantly monitor the market. No matter how the market fluctuates, you can remain rational, which is the core of long-term profitability in the cryptocurrency space.
