Thousands of originally happy families eventually end up in ruin, which stems from the pursuit of an unattainable dream of making a fortune in the cryptocurrency world.
Seven Major Taboos in Cryptocurrency Trading
The First Major Taboo in Cryptocurrency Trading - Full-Time
The so-called full-time refers to investors operating non-stop 24 hours a day, 365 days a year. Whether it's trading cryptocurrencies or stocks, the most important thing is to assess the overall trend. When the trend is positive, one should actively go long; when the trend weakens, one should hold cash or maintain a light position and rest. However, some investors do not operate this way; regardless of whether the market is hot or cold, they buzz around like diligent bees, busy for trivial profits. This approach not only results in wasted effort but also exposes them to greater risks. Investors in the cryptocurrency market must learn to assess the situation and rest at appropriate times based on trend changes, so they can accurately seize the opportunities worth participating in. Otherwise, this rhythm of 365×24 will drag you down.
The second biggest taboo in cryptocurrency trading – rushing to recover losses
In a market crash, investors often face significant losses, leaving them with significant paper losses. Some investors, eager to recover losses, arbitrarily increase their trading frequency or invest more money to cover their positions, blindly spreading costs. This approach is not only futile but can also exacerbate losses. When the overall market is weak, investors should minimize or refrain from trading, patiently waiting for the market to improve and for the trend to become clear before intervening.
The third taboo of cryptocurrency speculation: full profit
"Full profit" refers to investors who always try to buy at the lowest price and sell at the highest, blindly pursuing maximum profit. Some investors prefer to chase huge profits, always trying to pocket all the profits from a single coin, resulting in a constant cycle of ups and downs. Striving for the most achievable profit, giving up a little at the head and tail, and grabbing more of the meat in the middle, while maintaining steady growth, is the true path to profitability.
The fourth taboo of cryptocurrency speculation – rushing to catch a rebound
Especially in a market where the decline is not yet over, trying to catch a rebound is like trying to pull chestnuts from the fire. A little carelessness can easily lead to disaster. In the recent market environment, there is no possibility of missing out. Investors should not risk being deeply trapped by greedy rebound profits.
The fifth taboo of cryptocurrency trading: full positions and leverage
In the cryptocurrency world, many investors are bankrupted due to excessive leverage, ultimately ending up forced liquidation by the exchange. Stock trading, like life, requires flexibility in everything, allowing for maneuver. For retail investors, if the money they invest in cryptocurrency is their livelihood, the immense psychological pressure and anxiety caused by being fully invested will inevitably affect their analysis and judgment of future market trends, and the ultimate consequences are self-evident.
The Sixth Biggest Cryptocurrency Taboo: Over-Fear
Panic is the most common emotion investors experience during a market crash. In the cryptocurrency world, there are rises and falls, slow and fast. This is a natural law. Nothing stays in one direction, and no coin will fall forever; it will eventually rise. Investors should take advantage of the bear market downturn to conduct serious research, actively select coins, and prepare for the bull market early to avoid the old habit of chasing rising prices and selling falling prices when the market turns positive.
The Seventh Biggest Taboo of Cryptocurrency Trading – Complacency
Some investors often make gains when they first enter the cryptocurrency market. However, as they become seasoned traders, having earned some money, learned some indicators, and read a few books, they gradually become overconfident, chasing rising and falling prices, and rapidly entering and exiting the market. As a result, they often lose more than they win, leading to significant losses. Pride and complacency hinder investors' operational skills and distort their understanding of the overall market. Both the cryptocurrency market and the stock market are constantly evolving. Anyone who becomes complacent will stagnate and ultimately be eliminated.
If you want to be in the cryptocurrency circle, you must know the correct way to open a cryptocurrency contract: I just used a principal of 1123u, and it only took 12 days to roll over to 87,000u. This method is suitable for everyone, especially novices!
Anyone who uses the "all-in thinking" to roll positions is doomed to die before dawn. The real profiteering roll position is to use the "counter-intuitive position control method" to reduce risk to the extreme.
1. The death line of the first warehouse (90% of people fail here)
The first position of 1000U capital is strictly prohibited from exceeding 50U (5%), but 95% of people can't help but directly open a 100U first order. Two steps must be completed:
1. Set a 0.8% price range stop loss (the specific algorithm form can be downloaded from my private page)
2. Prepare 3 levels of margin calls in the trading pair (price intervals must be calculated in accordance with volatility)
2. Wave Tearing Tactics
When the 4-hour volatility exceeds 200% of the historical average (a common phenomenon in the 2024 SOL ecological currency), the "third-order fission boost" will be initiated.
1. First warehouse 50U (5%)
2. When the floating profit reaches 50%, add 150U (total position 20%)
3. Add 450U (total position 65%) after breaking through the previous high
The third warehouse must be combined with the on-chain chip concentration index, and the identification method needs to be explained separately.
3. Fatal profit-taking discipline
All rolling margin calls are caused by "not knowing when to leave". My life-saving rules:
When the total profit reaches 300%, the principal + 50% profit will be withdrawn
The "Moving Strangler" is enabled for the remaining positions: for every 10% increase, the stop loss line moves up 7%.
Automatic profit-taking must be set between 1am and 3am (this can be verified by monitoring data during the period when dealers are concentrated on dumping the market)
A strategy that every profitable trader should master: The combination of two moving averages is invincible in the market!
We have shared articles on "Moving Average Trading Strategies" many times before. Every trader has different usage and understanding of moving averages, but they all believe that moving averages are a very simple and easy-to-use auxiliary tool, and an indispensable "weapon station" in the trading toolbox.
However, moving averages are also an indicator that is very easily misunderstood by traders. Many people know how to use them but overlook an important aspect.
Moving averages are a lagging explanation of market trends, so their ultimate effect needs to be viewed through their lens.
Like many other trading strategies, moving averages have their pros and cons. Today, we’ll discuss the advantages and disadvantages of using moving averages in trading.
Moving Average Types
The most common ones are:
1) Simple Moving Average (SMA)
2) Exponential Moving Average (EMA)
3) Multiple Moving Average (MMA)
Based on years of trading experience, the most widely used moving average types in the market are probably simple and exponential moving averages. Therefore, this article will focus on these two types of moving averages.
Simple Moving Average
The Simple Moving Average (SMA) simply averages past data. As the simplest moving average, it is also the most popular one.
A simple moving average calculates the average price over a selected period.
For example, a 50-day simple moving average will select the past 50 days of data (usually as of the current day's close) and plot the average accordingly.
The simple moving average is the preferred option for long-term traders.
Exponential Moving Average
An exponential moving average (EMA) is a variation of a moving average—it gives more weight to recent data rather than all data.
Because the exponential moving average is more sensitive to recent price movements, it is more suitable for day traders.
This makes the exponential moving average the preferred option for many day traders.
Multiple Moving Averages
The moving average combination is divided into "slow line" and "fast line".
The following chart will show you multiple moving averages:
When using a combination of two or more moving average indicators on the same chart, the use of slow (red) and fast (blue) moving averages will appear.
As a general rule of thumb, generally, the faster the moving average, the lower the time stamps. In other words, the faster the moving average, the faster the line changes.
On the other hand, the slower the moving average, the higher the time period used.
For example, if we use a 50-day moving average and a 200-day moving average, the 50-day moving average is faster. The 200-day moving average is the slower moving average because it takes more time to affect the trend.
Here are some popular moving average combinations:
5th and 8th
50 days 20 days
50 days 200 days
Using Moving Averages in Combination with Indicators
It is very common to use moving averages in combination with other indicators. In fact, there are some commonly used indicators that are used in combination with moving averages.
The most popular ones are:
RSI
MACD
Bollinger Bands
I personally don’t like overly cluttered charts. Instead, I prefer simple and neat charts that make it easier to spot market trends.
Probably the most popular way to use moving averages is in conjunction with Bollinger Bands.
Here's how to use the two together:
Bollinger Bands were developed and copyrighted by renowned technical trader John Bollinger.
Bollinger Bands are typically defined by a set of lines plotted two standard deviations (positive and negative) above and below a simple moving average (SMA) of the security's price.
Can be adjusted based on trader's preference.
Here’s an example of Bollinger Bands using a 20-day simple moving average:
A common interpretation is that when the Bollinger Bands channel expands, the market becomes more volatile. On the other hand, when the channel tightens, the market
The volatility will decrease.
Moving averages are used to indicate support and resistance areas. Some traders also use them as buy signals (when prices cross from below to above) or sell signals (when prices cross from above to below).
If the price breaks out of the upper Bollinger Band, it means that the price is overbought and it may be time to sell. On the other hand, when the price breaks out of the lower Bollinger Band, it is usually a bullish signal.
Using Moving Averages in Combination with Support and Resistance
Moving averages are often used in conjunction with support and resistance levels.
When traders talk about two or more signals appearing simultaneously in a confluence area, it means that a bullish moving average crossover may be occurring above the support level.
This is considered a stronger signal than a simple moving average crossover.
The daily chart of EURIJPY is given below, which shows an example of this situation:
Conversely, a bearish crossover signal that occurs below a resistance level is considered stronger than a simple bearish crossover.
Here is an example of a GBPIJPY daily chart:
Using Moving Averages in Combination with Supply and Demand Zones
This article will show you how to use supply and demand zones in conjunction with moving averages.
This is very similar to support and resistance, and placement is most important when trading moving averages in conjunction with supply and demand zones.
Steps to use the moving average combined with the supply and demand zone:
Step 1: Price enters an established supply and demand zone and changes direction.
Step 2: Plot the moving averages and get confirmation from the crossover.
By using supply and demand zones, you will be able to filter out many of the false signals that occur when using moving averages.
Below is an example of a bullish setup a demand zone trader might take:
As you can see, the moving average crossover is above a major demand zone in the Dow Jones.
After the 50 EMA crossed over the 200 EMA, many new buyers rushed in and pushed the price higher.
Now let's look at an example of a supply zone:
In the EURU/SD example above, you can see a supply zone and the subsequent moving average crossover that occurred.
Additionally, you can clearly see that the bears accelerated their selling after the crossover occurred.
Moving average crossovers are even more powerful when they are confirmed by supply or demand zones.
One of the only drawbacks of this strategy is that if you use a long-period moving average (or more than 50 periods), the signals may lag.
But once the right signal appears, it is usually a very strong signal that will attract a large number of market participants.
Moving Averages and Money Management.
Any money management system must begin with establishing correct expectations.
While financial markets give the impression that prices are always trending, this isn't actually the case. Markets also have their own "80/20 rule," where they trend 20% of the time and spend the majority of their time range-bound.
If you already know this, it means you need to be prepared to withstand a lot of false signals or adjust accordingly.
Which method would you choose?
Of course, choose to adjust accordingly.
Here are the 5 most important factors to consider when adjusting your money management strategy:
1. Understand the market participants
2. Don’t risk more than 2% of your total capital
3. Use a realistic risk/reward ratio
4. Follow your trading rules in good times and bad
Bull Market and Golden Cross
It is very important that we mention this here because it is one of the most watched patterns by moving average users.
Simply put, trading the golden cross pattern means buying when the shorter-term moving average crosses above the longer-term moving average.
A moving average golden cross occurs when the 50-day moving average crosses above the 200-day moving average.
The golden cross signal is often used by ultra-long-term traders. It is often used in conjunction with other technical indicators.
Alternatively, many traders are waiting for the golden cross to occur and then look for a price pullback before buying in. The golden cross is a good signal and a "filter" for a bull market.
The golden cross signal is mainly used by ultra-long-term traders.
Bear Market and Death Cross
The death cross is the opposite of the golden cross.
To verify the death cross signal, you need to:
◎50-day moving average
◎200-day moving average
◎50-day moving average crosses below 200-day moving average
◎Confirmation of bearish trend
The Death Cross is primarily used by long-term traders and investors. This pattern is very successful and, like its "brother" the Golden Cross, is often used in conjunction with other indicators.
Common ways to use Death Exchange are:
Elliott Wave
◎ RSI indicator
◎ Bhavana level
Used by traders as a primary bearish market signal, the death cross is a very powerful market signal.
Best Moving Averages for Day Trading
Traders often choose different crossover combinations when day trading.
Typically, day traders choose moving averages with shorter periods than those used by long-term traders.
A popular combination is the 5th and the 8th, as shown in the following example:
The red line is the 5-day moving average. Usually, day traders go long when the 5-day moving average crosses the 8-day moving average.
On the other hand, when the 5-day moving average crosses above and below the 8-day moving average, we will get a short signal, as shown in the figure above.
Best Moving Averages for Long-Term Trading
There is no such thing as the best or worst moving average. Some moving averages may work better on certain instruments, especially those that are more volatile.
Under market conditions.
Higher period moving averages generally perform better when trading long-term, and they avoid some of the day-to-day noise.
A more common moving average combination is the 50-day and 200-day, which you can see on the daily chart below.
Typical Disadvantages of Moving Averages
Many people consider moving averages to be lagging indicators, especially when day trading.
In other words, they are not fast enough to predict changing market conditions. Volatility, price structure, and fundamentals can vary widely between different assets.
Therefore, using moving averages is very unique and cannot be standardized between different tools.
Sometimes it is difficult to choose between the exponential moving average and the simple moving average.
This depends on the instrument and also on whether the trader wants to focus more on recent trade data or all trade data.
If the market is range-bound, the moving averages may show many false signals.
Therefore, the best way to use moving averages is to become very familiar with a few tools and use a small number of MA combinations.
In the end, it’s all about tweaking them until you find what works for you.
The most popular moving average trading strategies
If we need to summarize the best moving average trading strategy, it is probably difficult to have a standard answer.
Some guidelines for choosing the right moving average combination:
First, choose the market you want to trade (stocks, futures, bonds, CFDs or Forex, etc.).
Next, test different moving average combinations (exponential vs. simple) and decide which one works better.
Test different strategies such as 50/200 day moving average crossover or 5/8 day moving average crossover.
Adjust your systems and decide which one works best in the short and long term.
Choosing a suitable moving average strategy is as difficult as choosing any other strategy.
Not surprisingly, moving averages have their pros and cons, and the most important thing for you to decide is whether this is a trading method that suits your personality and whether you can tolerate its shortcomings.
Moving averages are known for giving numerous false signals in range-trading markets, so you need to find a way around or work around this situation.
This is definitely not a strategy for conservative and cautious traders, but with the right tools, and if used correctly, the moving average system strategy can become a great way to profit from the markets on a daily basis.
Summarize
It is difficult to say what is the best moving average. There are advantages and disadvantages, all of which need to be considered when trading with moving averages.
You should test different combinations of moving average crossovers and choose the one that suits your needs. In addition, you should also test different instruments and time frames to see which one best suits your personality.
After all, there's no "holy grail" of moving average trading that will answer all your questions at once. You'll need to tweak and test it yourself. However, what can help is a trading system that has been successfully used by others.
Even then, however, you will still need to perform your own testing and possibly do some additional work to suit your trading needs.
The martial arts secrets have been given to you. Whether you can become famous in the world depends on yourself.
Why do you always lose money when you operate? In the final analysis, it is because you do not have a set of trading disciplines of your own. You buy and sell based on your emotions. Undisciplined trading and investment is one of the core reasons for losing money. Today, I will share with you the trading disciplines that I have always adhered to.
1. Asset allocation and risk diversification
Asset allocation is essentially about sharing risks. Never put all your money on a single currency, as is done in the popular "all-in" emojis in various cryptocurrency groups.
Another extreme is over-diversification. This is a common mistake made by many small investors. They buy a dozen or so coins and rush in when they see a bullish coin recommended by an influencer. They spread their money evenly, resulting in a large position. Even if some coins see significant gains, they still don't make much money. Seeing a few coins rise dramatically, they get carried away, but after all the trading, the average gain doesn't even outperform the overall market...
The ideal number of coins held should be around 3 to 5
2. Think carefully before buying and don’t be swayed by emotions
What to think about:
Is my order short-term, medium-term, long-term, or a swing trade?
What if the price drops after I buy?
Should I continue to add to my position, cut my losses, or hold on to my coins?
What should I do if the fall is very severe?
If it goes up, when should I sell?
If you don’t think about these questions clearly, you are likely to encounter the following situations:
1. The stock fell a lot, but I didn’t think about the stop-loss point in advance. It fell 20% today, but I was reluctant to stop the loss. I thought I would sell it tomorrow when it would rise a little and recover some of the blood. However, it fell another 30% tomorrow, and I regretted not selling it yesterday. Since then, I have been trapped repeatedly until I suffered a huge loss, and then I chose to cut my losses.
Therefore, you must think about the stop loss point when buying, and sell immediately when the price reaches that point. Stop loss means admitting the mistake to avoid greater losses. Gambling-style covering of positions is prohibited!
2. After buying, the stock price goes down or sideways for a long time. Then one day it suddenly rises by dozens of points. You sell it immediately. Then it rises sharply for several days. You slap your thigh
Correct operation: Before buying, you should consider whether this order is long-term or short-term.
If you're investing long-term, you're more inclined toward value investing. You'll need to deduce the future market size of the sector your investment project is in. Then, based on fundamentals, you'll determine the market share your investment project will capture. This will help you determine its likely valuation in two to three years. Based on this valuation, you'll determine whether the current price is a good time to invest and how much room for growth there is, effectively determining your return on investment.
If you can see this clearly, you can increase your position when the market falls, because you are not afraid of these declines at all. What you value is the future value. You will not make a move unless the price reaches your psychological estimate, and refuse to sell at a high price when it rises!
If it is a short-term investment, you need to think clearly about the buying logic of the currency. Is it a good news, a good main narrative, or a buying point determined by the K-line technical analysis?
Buy slowly, even slower, and don't think that the price will go up after you buy. If you have this mentality, you are being controlled by your emotions! It is bound to cause problems.
Never rush into buying and sell when the price drops. Think carefully before buying and think of coping strategies for all possible situations in advance so that you can rest assured.
3. Cherish life and stay away from contracts
The first principle of investing is risk aversion, and using leverage in contracts increases risk, so absolutely avoid it. You might get lucky and earn extra returns from leverage, but if it leads to greed and damages your mentality, you'll eventually return that money to the market.
Most of my friends who have been using contracts for years have lost everything. In short, they make little and lose more. Don't think your operations are better than others. It's not easy for 100 leveraged users to survive for two years.
In 2021, Liang Xi became famous for shorting 519 during the bull market and made a profit of 30 million overnight. However, two years later, not only did he lose all his earnings, but he was also heavily in debt!
When playing contracts, you can win 10 times, but one failure can make you go back to the pre-liberation era. For contracts, making money is just a process, and returning to zero is the end!
4. Invest your spare money, don’t borrow
Whether it is the cryptocurrency circle or the stock market, we must use our spare money to invest in any investment. We cannot use the money that is absolutely necessary at home. It must be spare money.
The cryptocurrency market is an extremely high-risk market. Once you suffer losses in your urgently needed money, the consequences are often difficult to accept and will cause great harm to your family.
Don't borrow money to invest. Once you borrow money, your risk is 100%, because borrowing has costs. If the market continues to be sluggish and you are still losing money and have to repay the loan, you will have no choice but to sell at a low price! You will be eliminated by the market!
The cryptocurrency market is always characterized by long bears and short bulls. If you borrow money, you will die without a burial place in the cryptocurrency market!
5. Either don’t buy, or buy enough
Although many people will ambush at low prices, once they see the price going up, they will think they have bought too little and will increase their positions as the price goes up, forcing their average holding price to rise several times. Then one day, the market turns around and they are trapped.
This is the most taboo! To put it bluntly, it’s still greed, so next time you are optimistic about the currency, remember to either not buy it, or buy enough!
6. Prefer value investing
For some currencies that you think are very valuable and you recognize their excellent team, great vision, beautiful publicity and strong R&D capabilities, then stick with them.
These valuable currencies should be placed in your mid- to long-term investment portfolio, allowing them to slowly mature into fine wine. Even if prices fall, don't panic sell; hold on firmly. Let time accompany you as you slowly grow richer.
7. Keep a calm mind
In fact, mindset is the most important factor in cryptocurrency trading. Many people know it's not a good time to buy, but they can't help but feel itchy. This is a mindset issue. They feel uncomfortable if they don't buy for a few days. They spend every day hanging out in WeChat groups and influencer comment sections, hoping to find the secret to getting rich quick. Little do they know that the more they read, the more they lose, and the more frivolous their trading, the less money they make. Hahahaha... You must control your hands, spend the most time researching, and the least time trading!
Also, you must not chase high prices to buy coins. You must have this mentality: it will rise as much as it wants, just treat it as if it does not exist. Just ambush the value of the currency at a low price and wait for it to bloom. Making money is not as difficult as you think.
Of course, there are thousands of trading disciplines, but only those that are engraved in your bones are the core genes for making money. Even if many things are taught to you, you still can't remember them if you don't make any mistakes. Often at this time, you need guidance from others or a famous teacher.
I am Axin. If you don’t know what to do in a bull market, click on my avatar and follow me. I will share the bull market spot planning and contract password for free.
