I have been trading cryptocurrencies for ten years, earning close to 1.1 million. If you want to change your fate, you must try cryptocurrency trading. If you cannot make money in this circle, ordinary people will never have a chance. Recently, I was fortunate to share tea with a big player in the cryptocurrency world and discuss the market.
His words deeply shocked me.
It turns out that he once went bankrupt due to contract trading within three days, suffering a loss of 50 million yuan. This experience was undoubtedly a profound lesson for him.
Reflecting on my journey in the cryptocurrency world, it has been full of ups and downs. From initially entering the market with 50,000 to making millions during the bull market; then from millions back to 200,000, and now aiming for a small target of 1.1 million; I am currently waiting for the next bull market, aiming to reach two small targets.
In a chaotic market, many people always try to see everything clearly, but the longer one survives in the market, the more they realize that the market itself is unordered; 'Simplicity is the ultimate sophistication' may be the most effective principle when facing the market.
Trading 'Heart Sutra'
Investment is a systematic management task, and the stock market, as an investment direction, plays a role in balancing capital management structure and enriching investment targets, which is very important for institutions and individuals. Yet many people fail to realize this.
My understanding of trading concepts and the stock market is constantly changing, and this change is an external manifestation of self-improvement.
Trading 'External Skill'
In trend-based trading, I will refer to support/resistance levels while also considering some macro factors.
I have no special requirements for stock selection; generally, I do not focus on more than five stocks at the same time.
At the same time, I will adopt a gradual position building approach, with the first position being about 10% of the capital ratio. Depending on the entry cycle, the stop-loss ratio will also vary, but I will be relatively strict in controlling the total position drawdown.
Regarding trading mentality, I believe the most important thing is to stay true to oneself.
So how can we do well in cryptocurrency trading? Once a person enters the financial market, it is difficult to turn back. If you are currently losing and still confused, but plan to make cryptocurrency trading your second career, you must understand 'Advanced MACD Strategies'. Understanding it thoroughly can help you avoid many detours; these are personal experiences and insights, so I suggest saving and pondering them repeatedly!
Without further ado, let's get straight to the point! I will teach you how to use MACD to find the best buy and sell points in one step!
The MACD indicator is a widely used technical indicator. The more common a technical analysis is, the more people rely on it as a reference, which makes it worthwhile for us to spend time getting familiar with it. However, most people do not understand how to apply the MACD indicator accurately.
Through this article, we will start from scratch to understand this most familiar technical indicator, learning how to use the MACD indicator to identify suitable buy and sell points, as well as trend reversal points, to discover more high-quality trading opportunities.
What is the MACD indicator?
The MACD indicator, also known as the Exponential Moving Average Convergence Divergence, is an indicator derived from moving averages; the MACD analyzes and compares the relationship between 'short-term' and 'long-term' moving averages to observe changes in market trends, allowing us to know what trend the market is currently in, where there are trading signals, and to detect market turning points early. #ETH Staking Exit Dynamic Observation
Beginners who want to understand the MACD indicator in more detail need to have a basic understanding of moving averages. This is because MACD is derived from two moving averages.
How to read the MACD indicator?
The MACD indicator consists of four parts: the DIF line, DEA line, MACD histogram, and zero line. Each part represents different data obtained from the original chart, designed to provide a more in-depth yet intuitive interpretation, leading to the creation of the MACD indicator.
Here are some introductions to these four parts:
DIF Line, Fast Line
DEA Line, Slow Line
MACD Histogram
Zero Line
1. MACD Line (DIF Line/Fast Line)
The MACD line is also known as the DIF line (Differential Line), which is the difference between the short-term moving average (16 EMA) and the long-term moving average (26 EMA). The MACD line exists to analyze short-term price changes. The MACD line or DIF line can be either positive or negative. #Binance HODLer Airdrop PLUME
MACD Fast Line = Short-Term Average Line - Long-Term Average Line
Positive MACD line:
Represents that the short-term moving average value is greater than the long-term moving average value, meaning that the short-term average price of the product is higher than the long-term average price, indicating that the financial product is in an uptrend.
Negative MACD line:
Indicates that the short-term moving average value is less than the long-term moving average value, meaning the short-term average price is lower than the long-term average price, indicating the market financial product is in a downtrend.
The MACD line is also known as the fast line because it is most sensitive to changes in market prices.
2. Signal Line (DEA Line/Slow Line)
In simple terms, the signal line (slow line) is the average value of the MACD line over a certain period (usually 9 days). Since it is based on past MACD data for analysis, it is also referred to as the slow line. The purpose of the signal line is to capture more long-term trends.
Signal Line/Slow Line = ∑(n MACD Fast Lines)/n
n = the time period we want to select
The appearance of the slow line helps us as traders to discover trading opportunities more quickly.
3. MACD Histogram
The MACD histogram was created to understand the difference between the DIF line and DEA line. With the histogram, we can see the difference more clearly. #Chinese investors flocking to Indonesia
MACD Histogram = DIF Line - DEA Line
Histograms can be either positive or negative. From these histograms, we can know:
Histogram is positive:
The fast line (DIF line) is above the slow line (DEA line)
Histogram equals 0:
The fast line (DIF line) and slow line (DEA line) are equal; this is a convergence point.
Histogram is negative:
The fast line (DIF line) is below the slow line (DEA line)
4. Zero Line
The zero line serves as a reference level, distinguishing the fast line and slow line between positive and negative, acting as a boundary line, allowing us to clearly understand which area the current MACD data is in.
How to use the MACD indicator
The MACD indicator has many uses, with the three most common ways being to find the following information through MACD:
1. How to use the MACD indicator to observe price trends?
The simplest way to use the MACD indicator is to observe trends in financial product trading, with the most common applications including forex trading and stock trading. Trends in trading can be divided into two types: bullish and bearish.
Bullish: When both the fast line and slow line are above the zero line, the product is generally in a bullish trend.
Bearish: When both the fast line and slow line are below the zero line, the product is generally in a bearish trend.
MACD is not only very suitable for traditional stock trading but can also be integrated into short-term trading of other financial products, one of the most popular being high-leverage forex trading.
Through leveraged forex trading, we can operate with a larger amount using a small margin, but this also brings risks. Utilizing the MACD indicator can enhance accuracy and reduce risks, helping you operate steadily in a volatile market.
2. How to use MACD Golden Cross and Death Cross to find buy and sell points?
Using the MACD indicator to find buy and sell points is a common analysis method. By identifying golden crosses or death crosses, we can find long and short points. The following is a demonstration using EUR/USD as an example:
When the fast line (blue line) breaks through the slow line (orange line) from below, it is called a golden cross, which is a good buy or long signal reference.
When the fast line (blue line) falls from above to break the slow line (orange line), it is called a death cross, which is a good sell or short signal reference.
MACD Golden Cross
MACD Death Cross
3. How to find trend reversal points through MACD divergence?
This is an advanced usage method of the MACD indicator. When the price trend and the MACD indicator show inconsistent trends, there is an opportunity for MACD divergence to occur. In simple terms, investors' emotions and views change regarding the price trend; they believe that the price of the financial product does not match its actual value.
The occurrence of MACD divergence serves as a warning, which can be divided into two types, providing investors with potential buy and sell signals:
When prices rise but the MACD line falls, it forms a top divergence. This indicates that the upward momentum is weakening, suggesting that the market is skeptical about the subsequent price increase, so the death cross following the top divergence can also be seen as a sell/short signal.
When prices fall but the MACD line rises, it forms a bottom divergence. This indicates that the downward trend has slowed, and the current market believes that the subsequent drop may be a buying opportunity. Therefore, the golden cross after the bottom divergence is considered a buy/long signal.
Top Divergence (High Divergence)
Bottom Divergence (Low Divergence)
Adjustment of MACD indicator parameters
MACD parameter adjustment is an advanced version of MACD usage. By fine-tuning the parameters of the MACD, we can increase the compatibility of the MACD with specific financial products.
If you want to adjust parameters, you can start adjusting by clicking on the MACD settings to enter the settings popup.
The default parameters for the MACD indicator in all chart software are 12, 26, and 9, which are considered the best MACD parameters. They represent:
Fast line length: The period of the EMA short-term average line (generally, the short-term reference moving average for the DIF line is the moving average price of the previous 12 candlesticks)
Slow line length: The period of the EMA long-term average line (generally, the long-term reference moving average for the DIF line is the moving average price of the previous 26 candlesticks)
Signal length: The length of the MACD signal line (generally, the signal line is the moving average of the MACD line values over the past 9 candlesticks)
However, the MACD parameter settings can also be optimized according to the nature of different financial products and the needs of the traders themselves.
In a more volatile market, consider using shorter timeframes
In a less volatile market, longer timeframes can be used
Combining the MACD indicator with other indicators
Since MACD is a lagging indicator, most traders will combine it with other indicators or support and resistance lines. One of the most common and easiest usages is to use MACD together with support and resistance lines.
Next, I will guide you step by step on how to combine support/resistance lines with the MACD indicator for use.
Step 1: Identify resistance and support in the chart
In the chart we choose, identify the resistance and support lines, giving us an idea of where the price may have opportunities for resistance pullbacks or support rebounds.
Step 2: Import and observe the MACD indicator, find the entry point
If we are bullish, we can wait for the golden cross to appear in the support line area. Once the golden cross appears, we can enter a long trade. After going long, set the stop-loss point below the support line.
Step 3: Decide on sell points and stop-loss points
After buying, patiently wait as long as the fundamentals remain unchanged. Close the position when the price hits the resistance line. If you want to wait until after the death cross to close the position, you may earn less due to lagging effects.
If you are also a tech enthusiast, please see the following chart:
In conclusion
MACD is a highly valuable technical indicator for learning. Based on the aforementioned, a single MACD indicator can be used to design various trading strategies. Even if the MACD indicator is not the main focus, it can still serve as an auxiliary analysis tool. By learning MACD through Zhihui, we can more easily cultivate our logical thinking and better grasp how to design and optimize strategies.
The myth of getting rich quickly may be far away, but only those who control the rhythm can steadily pocket profits. If you have ever felt lost, anxious, or scarred in the market, why not try this rhythm.
Calm down and see the road clearly.
Stop when you should stop, move when you should move.
Don't rush; take your time.
Your path to doubling might truly begin from the moment you control the rhythm.
The cryptocurrency world is like a marathon; running fast is not as important as running steadily. Those who make money by luck often lose it back through skill. Only by embedding position management into one's DNA can one survive in this ruthless market. Remember: as long as you are alive, you have the chance to turn things around.
The above are ten years of trading insights from cryptocurrency trading, going through many ups and downs; these are heartfelt words of enlightenment. I hope they are useful to everyone. Products from Yan'an must be premium; there are beautiful people in the cryptocurrency world, unique and independent, with soul and skill in trading!
No matter how diligent a fisherman is, he wouldn't go out to fish during a storm; instead, he carefully protects his boat. This season will eventually pass, and a sunny day will come! Follow Lao Chen, and I'll teach you how to fish and fish itself; the cryptocurrency world is always open. Only by following the trend can you have a life that flows with the tide. Save this and keep it in mind!
$ETH $BTC #币安HODLer空投SOMI