The beginning of the cryptocurrency market is effort and methods, the middle is wisdom and mindset, and the high end is character and cultivation. One must clear away distractions and maintain a calm mind to overcome all human flaws in order to grasp the chips of profit.
I sincerely suggest that whether you are a novice entering the circle or an experienced veteran, you must read this article I wrote today, as it will undoubtedly provide you with great assistance. I went from bankruptcy to financial freedom, achieving a 1800 square meter villa and owning a Rolls Royce plus a nanny car in Shenzhen!
Enough said, let's get straight to the point!!!
These perplexing technical indicators and candlestick patterns, how exactly are they used [with practical case studies]
1. SAR indicator
The simple "idiot-proof" SAR indicator can help you predict market swings and avoid being trapped. It's primarily used as a stop-loss indicator and is a defensive indicator. Selling immediately if the SAR breaks can help you lock in profits, preventing you from losing them or even turning a profit into a loss.
1. When the price is above the SAR curve, it is a bull market. When the price is below the SAR curve, it is a bear market. If the price breaks below the SAR from the top, it is a sell signal. If the price breaks above the SAR from the bottom, it is a buy signal.
2. When the price breaks through the SAR curve and continues to move downward, and the SAR curve also moves downward, it indicates that a strong downward trend has formed. The SAR curve exerts great pressure on the price, and investors should firmly hold on to the currency and reduce their positions when the price rises. In my observation, this indicator is more suitable for 12-hour trading.
Compared with the MACD indicator, it will be clearer and avoid the situation where the MACD lines are stuck together and the dead cross and golden cross cannot be distinguished.
The SAR indicator has the following advantages:
1. The operation is simple, the buying and selling points are clear, and the operation can be carried out when the buying and selling signals appear. It is especially suitable for small and medium-sized investors who have not been in the market for a long time, have little investment experience, and lack buying and selling skills.
2. It is suitable for a continuously rising "bull market" and will not be easily shaken out or cleaned up by the main force.
3. Suitable for a bear market with continuous decline, and will not be deceived by the rebound during the decline.
4. Suitable for medium and short-term band operations.
5. Although long-term use of the SAR indicator cannot buy at the lowest price or sell at the highest price, it can avoid the risk of being trapped for a long time and at the same time avoid missing out on the bull market.
Disadvantages of SAR indicator: It is easy to fail in volatile markets.
Things to note:
1. When the SAR curve moves downward at an angle greater than 45 degrees, it indicates that the bears are strong and the decline is rapid and will continue. At this time, investors should firmly hold their coins and wait and see, and should not rush to buy rebounds.
2. When the SAR curve moves upward at an angle greater than 45 degrees, and the SAR curve has just started to move upward, it indicates that bullish forces are beginning to accumulate and will continue to rise. At this time, investors should firmly hold on to their coins and wait for the price to rise.
3. When the SAR curve's upward angle is greater than 45 degrees, and the SAR curve has been rising for a long time and has risen too much in a short period of time, it indicates that bullish forces have been exhausted and the price of the currency may reverse downward at any time. At this time, investors should closely monitor the SAR curve's trend and resolutely liquidate their positions as soon as the SAR indicator gives a clear sell signal.
4. When the downward angle of the SAR curve is less than 45 degrees, and the SAR curve continues to run downward for a long time (at least more than 3 months), once the stock price breaks through the SAR curve upward, it indicates that the medium- and long-term downward trend of the stock price may end, and you can start buying on dips.
Switching and application of pressure and support
Support lines and resistance lines are very important in judging trading points, and trading points determine profits.
Conversion of support and resistance levels:
Once the support level is broken by large volume, the original support level will become a resistance level. Similarly, once the original resistance level is broken, the resistance level will become a support level.
The reliability of this conversion should also be judged based on the following two aspects:
The number of times the market has tested the support or resistance level in the past;
The size of the transaction volume during the trial.
Resistance levels are also called resistance levels. They become resistance levels because a large amount of capital is trapped near them. If the price reaches this level again, it will encounter a large amount of selling from the trapped capital, making it impossible to break through the resistance level. If there is no large-scale selling, or if the buying volume exceeds the selling volume, the level is broken and market confidence looks to a higher level.
As shown in the above chart, the price failed to rise repeatedly at 6800, followed by a massive decline. 6800 will become a significant resistance level, creating pressure on subsequent upward movement. If it can break through this resistance level, further bullish momentum can be expected. However, if it repeatedly encounters resistance and then pulls back, it is important to note that repeated failed upward attempts may lead to a decline.
The principle of support and resistance levels may seem simple, but don't underestimate their importance. They can improve the accuracy of trend analysis. Furthermore, support and resistance levels can serve as important buying or stop-loss points.
As shown in the above figure, if the volume rebounds above 6334 in the near future, there is no need to hesitate and you can immediately chase the rise. If it breaks through this important resistance level, it will continue to look towards the next high resistance level of 6800.
Take any daily or hourly chart, the conversion of support and resistance levels is effective. Even when the market is stable and fluctuating, the most important reference for short-term operations is whether it can break through the resistance level or whether it will fall below the support level.
2. Bollinger Bands
Bollinger Bands are a very useful technical indicator. Like KDJ, RSI, and MACD, they often signal buy signals through golden crosses, but they lose their effectiveness when the market is fluctuating sideways. Often, when the market is sideways, we want to know when a rally will occur, and this is when Bollinger Bands come into play.
1. The narrowing of the Bollinger Bands indicates that a market change is imminent (as shown in the figure above)
As we can see in the chart above, at this point in Bitcoin's price range, the Bollinger Bands have become extremely narrow and have remained flat for several days. This indicates a convergence of forces between bulls and bears, with neither side gaining the upper hand. When the Bollinger Bands narrow, Bitcoin is poised for a potential breakout; the narrower the band, the greater the potential for a breakthrough. However, whether this will be an upward or downward breakout remains uncertain. The only certainty from the current state of the Bollinger Bands is that a market reversal is imminent and could occur at any moment, signaling a major rally. Caution is advised against rashly using leverage, especially short-term trading, as this could leave you with a loss of even the necessary commissions.
2. Tips brought by the widening opening of the Bollinger Bands: When the currency price reaches a certain high level, it has risen for a period of time, and the Bollinger Bands opening has reached a maximum extent, and suddenly begins to shrink, it is a sell signal, which is usually accompanied by a round of sharp decline. When the currency price reaches a certain low level, the currency price moves on the white line in the middle of the Bollinger Bands, and after the Bollinger Bands narrow, the opening suddenly widens, which is a buy signal.
3. The BOLL channel is calculated by adding or subtracting the average fluctuation range of historical prices. If the price fluctuates significantly on that day, the channel will be deformed. Therefore, the Bollinger Bands have their lag and are less valuable than other technical indicators in judging market reversals, but they are indispensable in judging the end point of a consolidation market.
Volume (volume-price formula)
Increase in trading volume is a turning point and a key signal; rises and falls without volume are both scams; shrinking trading volume indicates sideways trading, and the more it shrinks, the closer it is to a reversal; if the price rises after the trading volume increases, but the subsequent buying volume does not keep up, it will still fall; if the price remains unchanged due to the increase in trading volume, it is accumulation at a low level and selling at a high level.
1. You must take the highest position, even if it is wrong.
2. If there is a large volume at a high position, you must run away, even if you make a mistake.
3. If there is no volume at a low level, you must wait, even if you wait for the wrong reason.
4. Follow the trend when the volume increases at a low level, even if you are wrong.
5. Volume increases and price remains flat, turning negative
6. Buy when volume increases and price rises
7. Volume and price increase, increase position
8. Volume and price fall, exit
9. Volume decreases and price increases, hold
10. Volume increases and price drops, hold the currency
The above 10 points are only for your reference. Remember that large volume is an important signal. It is better to analyze the overall market situation to determine the specific direction. You cannot simply use the above formula.
Be cautious when the volume increases, as it indicates the start of a new market trend
Excessive volume refers to a sudden increase in trading volume, with the lower bar becoming noticeably taller. This typically occurs at price turning points and is a significant signal. While some investors are firmly bearish, others are firmly bullish, which fuels increased trading volume. Excessive volume during a decline often signals capital flight, suggesting a high probability of further decline. However, if the market has already fallen significantly, it could be the final wave of downward momentum, exhausting the market's strength and triggering a sideways or upward movement. Excessive volume during a price increase suggests continued gains. Similarly, if the market is at a high point, it could be the final wave of buying, followed by a subsequent decline.
The signs of high volume vary depending on the stage of the market. At high levels, rising prices and increased buying volume may signal the exhaustion of buying power and the final frenzy of the bull market. At low levels, it signals capital inflow. At low levels, falling prices and high selling volume may signal the end of the bear market, the exhaustion of selling power, and the beginning of a turnaround. At high levels, it signals selling. This is of some reference value.
The relationship between volume and price takes many forms and uses in the stock market, such as the phrase "increasing volume leads to rising prices." What this means is that volume continues to expand while prices steadily rise. This concept doesn't apply in the cryptocurrency market, where limited capital makes sustained volume and price increases difficult. Looking at historical charts, you'll find virtually no examples of evenly increasing volume and prices. The cryptocurrency market thrives on sideways movement, sharp rises, and plummets. However, there's one key point you need to be aware of: volume-price divergence. Simply put, if after a sudden surge, buying activity decreases and becomes less active, beware; the good times may be over. For example, Bitcoin experienced a surge on July 18, 2018, followed by a subsequent surge in trading volume. It then surged again on the 24th, followed by another surge on the 27th. However, volume has clearly shrunk, and buying power is no longer sufficient, which can easily lead to a price decline.
Quantity-price relationship:
Volume Index VOL
The red and green bars in the chart above represent trading volume. The red and green colors represent current price fluctuations, not buy and sell volume. Some analysts will tell you, "Look at the large red bar, so much stock has been sold, capital is fleeing," while the green bar indicates strong buying and high volume. These are very one-sided. Trading volume is only meaningful in terms of size. A large bar indicates that both parties agree on the price, resulting in a transaction. A large disagreement indicates low trading volume. When prices fall, large red bars indicate strong buying and selling. A slight increase in selling doesn't necessarily guarantee a future price drop. Therefore, trading volume alone shouldn't be used to determine whether capital is involved in buying or selling, as this can lead to errors.
Identifying Air Coins by Transaction Volume
Buy amount + Sell amount = Transaction volume: For currencies with a transaction volume of less than $1 million USD, you can easily check the transaction volume of a currency through the Feixiaohao website (as shown below) and the app. If the 24-hour transaction volume is less than $1 million USD, it is not worth buying.
Currencies whose trading volume has fallen to the floor (as shown in the figure below): Judging from the K-line, the trading volume is close to the floor, so be cautious when buying. Investing 50,000 yuan can basically pull the market up.
Stagnant coins: As shown in the figure below, the minute chart often shows zero transactions, and the K-line trend has no candlestick pattern.
Inflated coin: As shown in the figure below, the transaction volume is evenly distributed like a comb
Simple bottom-picking signals:
To buy at the bottom, you must see a stop-loss signal before entering the market; the stop-loss signal at the support level will become very reliable, but if it is not a support level, the reliability will be much worse.
A simple summary of bottom signals is: a large bullish candlestick or doji candlestick with heavy trading volume, forming a MACD divergence at a key support level. There are several key points: The appearance of a large bullish candlestick or doji candlestick on the candlestick chart. The two most common signals in the cryptocurrency market are: A MACD divergence formed by trading volume at a key support level.
Please remember these four points. They are not absolute, and there is no guarantee that you will always find the bottom, but they are enough to greatly reduce the risk of bottom fishing. First reduce the risk, then we can consider maximizing profit.
In terms of time period, because the cryptocurrency market is constantly trading and is global, it changes very quickly. If you look at the 15-minute K-line, the effective time of the signal is 15*4; if you look at the 1-hour K-line, the effective time is 1*4=4 hours, and so on.
The above chart shows a large bullish candlestick with significant volume (red indicates an increase in some markets, depending on your market conditions. I used Huobi's chart, where green indicates an increase and red indicates a decrease). If such a candlestick is found at a support level, it could be a signal to halt the decline.
If a bullish candlestick with some volume appears on the 2-hour chart and a MACD divergence is present, then the market is at least stable and will not fall within the next 8 hours. Unfortunately, the volume is not strong enough, so it can only rebound weakly and will eventually fall unless there is a sudden increase in volume to change the situation.
Long-legged cross star: as shown above
If Bitcoin's long-legged doji is green, it will be more reliable and will not fall again in the next few days. If it is green, it will basically rise directly. This doji is also accompanied by MACD divergence, which is also an important support level.
Trading volume is essential, otherwise it indicates weakness and a subsequent decline after a rebound. As shown in the above chart, both times the support level was broken, but trading volume was insufficient. This situation is very dangerous. Even after the support level is broken, there is no strong pullback with large volume, indicating a lack of confidence in bottom-fishing.
Schematic diagrams of several common pins: different positions represent different meanings
Generally speaking: top escape signal, bottom buying signal, and mid-way wash-out signal.
Basic knowledge MACD classification:
MACD is a must-read indicator for all-in traders and leveraged traders. Everyone gets excited when they hear about all-in trading. Investors love to go all-in, to go all-in, to put their entire fortune on the line. Position management and all that stuff—I just can't do it, and I don't enjoy it. I feel like I'm speaking for the vast majority of investors. But! Is all-in trading based on gut feeling? No, we need to go all-in rationally! Guaranteed winning odds!
MACD—a crucial indicator for analysis and judgment, the primary reference for low-frequency, all-in, and leveraged traders. Everyone knows that moving averages can form death crosses and golden crosses, but they are typically delayed, and buying and selling based on them will result in minimal profit margins. This improved MACD signal provides signals even earlier than moving averages.
For example, in the figure below, the golden cross of the daily line is delayed by half a month compared to MACD.
The same is true for a death cross. By the time you see a death cross on the daily chart and are ready to sell, your profits have already fallen a lot. (See the image below)
MACD stands for Moving Average Convergence Divergence (MACD), which is a bit of a mouthful, so just remember the English name. It consists of two lines, a fast line and a slow line, and the trend is determined by the constant crossing and separation of the two lines. The parameter settings are generally set to 12/26/9 (see the figure below).
MACD has four components: the fast DIFF (white), the slow DEA (yellow), the 0 axis, and the horizontal line between the red and green bars. The DIFF, or white line, is the core, while the yellow line is the auxiliary. (See the image below)
However, the golden cross below the 0 axis is not 100% reliable. It only proves that the decline may stop. To be safe, you can wait for the white line to cross the 0 axis upward. As you can see from the picture below, the rise will accelerate after breaking through the 0 axis.
Golden cross above the 0 axis. In the currency circle, if you see a golden cross above the 0 axis, you can basically go all in and chase the rise, but it is not the case in the currency circle. Bitcoin has not yet formed a reliable golden cross above the 0 axis, and it is basically below.
MACD Usage: Usage 2 - Death Cross
The fast line crosses the slow line downward from above, that is, the white line crosses the yellow line downward. Similarly, above the 0 axis, this is a sell short and a callback signal.
Below the 0 axis is a signal of accelerated decline. Don't hesitate, liquidate your position immediately! It's perfectly fine to bravely sell at this point! Don't hesitate and wait until you've already suffered heavy losses before selling at a loss. That's not just cutting flesh, it's cutting bones! If two death crosses form, it's an enhanced escape!
MACD usage: usage three - energy column
What is an energy column? The energy column is very simple. It is a red and green column above and below the 0 axis. Below the 0 axis, the short position is dominant, and above the 0 axis, the long position is dominant. Learn to read this, and you don't need to ask others whether the short position or the long position is in favor.
The change in power can be judged by the change in the energy column.
MACD usage: usage 4 - divergence
You must learn to see divergences, because every indicator you learn has this usage, including RSI and OBV.
Top divergence: Top divergence occurs when the price hits a new high, but the indicator does not hit a new high. In this case, the price usually falls back, which is also often called a consolidation indicator.
Bottom divergence Bottom divergence is when the price hits a new low, but the indicator does not hit a new low. This is a bottom divergence signal. If you are aggressive, you can buy the bottom at this position. If you are cautious, you can wait for the price to stabilize before entering the market. Risk and return coexist.
For example, the EOS 5-minute chart below shows a divergence. You can buy at the bottom when it reaches a new low, but the 5-minute divergence lasts for a very short time, so you need to enter and exit quickly and make money within 30 minutes. Therefore, it is not recommended for novices.
This indicator is very, very critical. Even if you don’t understand other indicators, you must understand this one.
MACD buy pattern
As can be seen from the figure below, after the golden cross of DIF and DEA, it rises with the rise of the currency price, and then goes down as the currency price pulls back. When the main force washes the market, the currency price pulls back, and when the DIE line pulls back to near the MACD line, the DIF line reverses upward, forming an upward Buddha's hand pattern.
Duckling out of water: After DIF crosses DEA line below 0 axis, it does not cross 0 axis or crosses a little and then returns to below 0 axis, and then crosses DEA downward. After a few days, it crosses DEA line again (as shown in the figure). This pattern is the bottom pattern of the currency price after it has fallen to the bottom and the selling pressure is exhausted. It should be understood as a bottoming rebound signal, and you can choose the opportunity to enter the market.
For example, the buying point of Bitcoin on April 8, 2018, formed a duckling out of water pattern in front, starting the bull market.
Strolling in the Blue Clouds - This occurs when the DIF line crosses the DEA line above the zero axis, then crosses below the zero axis and forms a golden cross at or above the zero axis. This pattern forms when the price of a currency is consolidating after bottoming out and rebounding. It can also be a bottoming pattern with an upward trend. This should be understood as a positive intervention signal, and you should enter the market decisively.
This trend has never appeared on the Bitcoin daily chart, but it has appeared on the hourly chart.
Swan Spreading Wings - refers to the DIFF line golden cross DEA line below the zero axis, and then it pulls back if it does not cross the zero axis, moving closer to the DEA line, the MACD green column shortens, but if there is no death cross DEA, it reverses upward again, and at the same time, the MACD green column lengthens, forming a swan spreading wings pattern. The formation of this pattern is mostly a bottom pattern, which is the bottom pattern that appears when the currency price has fallen to the bottom and the selling is exhausted. It should be understood as the main position building area, and you can choose the opportunity to intervene.
The "Aerial Tether" pattern refers to the situation where the DIFF indicator in the MACD indicator crosses the DEA line below zero, then trades above it for a while. As the price corrects, the DIFF also begins to pull back. When the DIFF crosses the DEA line, the two lines converge into a single line. When they diverge again, a buying opportunity is created, signaling the start of a new uptrend. This pattern often occurs during periods of consolidation and market manipulation. After a brief period of price consolidation, the price exhibits a strong upward trend, signaling a decisive buy.
Aerial Cable Car - This pattern primarily refers to the DIFF line forming a death crossover with the DEA line above the zero axis, but not crossing below it. A few days later, it forms a golden crossover with the DEA line again above the zero axis. This pattern often occurs during consolidation at the upper end, a sign of major players washing out the market. After a brief price adjustment, the currency shows strong upward momentum, which can be interpreted as a positive buy signal. Buy decisively, and if the market continues to expand, a strong bullish outlook is warranted.
Submarine Cable—This pattern occurs when the MACD indicator remains below zero for an extended period (generally over 20 days). After the DIFF line forms a golden cross with the DEA line (a golden cross below zero), the two lines do not rise sharply but instead converge into a straight line with the DEA line, with values nearly equal. Once the two lines begin to diverge in a bullish direction, a buy signal is indicated. Submarine Cable patterns below zero often form when selling pressure has exhausted the currency's bottoming momentum after the price has fallen to a bottom. This is when major investors intervene to absorb stocks at the top of the support column, and should be considered a strategic entry point.
Reaching for the moon in the bottom of the sea refers to the secondary golden cross generated by DIFF below the zero axis, indicating that the currency has completed its bottoming out and is beginning to move out of the bottom, and you can choose the opportunity to intervene.
OBV indicator
When the price of the currency rises and the OBV line falls, it means that buying is weak and the price of the currency may fall back.
When the coin price falls and the OBV line rises, it indicates strong buying. Buy on dips and the coin price may rebound.
The OBV line rises slowly, indicating that buying is gradually strengthening, which is a buying signal.
When the OBV line rises rapidly, it indicates that the strength is about to run out and is a sell signal.
How to draw support and resistance lines
The most basic and common way to identify support and resistance levels is by drawing horizontal lines. Resistance levels refer to the price at which a coin needs significant volume to break through. After a breakout, the probability of an upward movement is high, making this a good opportunity to chase the upward trend. Support levels are the lower levels where prices are unlikely to break through. If they do, sell immediately to set a stop-loss order.
principle:
Chip distribution, this position has locked up many plates
Psychological effect, some people buy the bottom or sell after touching the line
When the main force sees that the support level has been broken, it will not support the market, so the decline will accelerate.
How to draw:
Many people are not sure about this drawing method, which leads to misjudgment mainly due to incorrect point selection.
There are several key reasons for selecting the location:
The closer the points are, and the higher or lower the points are, the stronger the effect will be.
Points with little difference can be regarded as the same
If many highs and lows are formed during the operation, you can sort them according to their importance and draw them into horizontal lines.
As shown in the figure above, the pressure and support levels of BTC can be drawn like this. According to the previous multiple large-volume positions, touch positions, and breakthrough positions, four short-term BTC rebound resistance lines are drawn.
The price of the currency encounters resistance or support here many times, and the more times it encounters, the stronger it becomes.
There is a lot of trading volume at this location.
This position is not an integer.
Is this position the highest point or the lowest point?
As shown in the chart above, BTC has reached the 6800 level three times, and each time it hits this level, it immediately falls back, indicating that this resistance level is very strong. Let's see how strong this level is by moving the candlestick chart further up.
After the price fell below 6800 in June 2018, this position became a pressure point. Then the price tried to attack this position many times, but failed each time. Over time, this position became more and more difficult to conquer. Due to psychological effects, many people would reduce their positions when the price reached 6800. Once it broke through, the market confidence would increase greatly, and a new wave of rebound would come.
Notice:
If a strong support line is broken, it will become a strong resistance line.
Once a strong pressure line is broken, it will become a strong support line.
If the resistance line is not broken and the volume falls, you need to sell.
If the support line is not broken and there is a strong rebound, you can increase your position.
If it falls back quickly after a breakthrough, it can be considered a false breakthrough.
In fact, it is that simple. Once you have mastered this principle, you can make good use of the pressure and support points we send to perform long-short conversion operations. Even if we do not actually lead the order, you can still buy and sell, and take profit and stop loss based on the point information we send.
The support level needs to be composed of two or more low points, which have been verified by the market many times and are difficult to fall through. The resistance level needs to be composed of two or more high points.
How to judge the strength of a support or resistance line? It depends on the following factors:
Has the low position been successfully tested by the market many times without being broken?
The size of the trading volume during the test. If the trading volume is too small, the support or resistance is weak.
How long the straight line remains valid
Having been trading for so many years, I've experienced both profit and loss. Let's first summarize the main causes of losses, some of which I've made myself.
Leverage is a double-edged sword. If used well, you can run faster than others; of course, on the other hand, if used poorly, you will die faster than others.
After playing with futures for a while, you'll find that spot trading becomes much easier. Many new traders hope to reap huge profits on a single trade, perhaps increasing their profit 100-fold from 10,000 to 1,000,000, or even losing 50% from 1,000,000 to 500,000, returning to 1,000,000, which would require doubling the profit. Returning to 0, however, would only require doubling the profit.
Therefore, it's easy for new traders to become complacent. After a few profitable trades, they think they're incredibly talented, and in their excitement, they go all-in, only to end up back at square one. Traders who truly want to survive in the cryptocurrency market never put themselves in a desperate situation. From the moment they go all-in, or even heavily invested, they're doomed to failure. I urge all cryptocurrency traders to be vigilant in leveraged trading!
Experienced traders choose to wait and see when the market is uncertain about its ups and downs, and will not rush to trade. They will quickly enter the market when the trend is clear. They also enter the market with small positions, while many ordinary retail investors trade frequently and take large positions when the market is uncertain. This will lead to continuous losses, and if you encounter a fierce main force, the losses will be even greater.
Going against the medium and long-term trend and holding orders against the market will lead to death.
Many people believe their futures losses stem from prolonged trading cycles, and that short-term trading is fine. However, when losses reach a point where the market is clearly moving against them and a stop-loss is necessary, they face a constant psychological struggle: should they stop? Sometimes, they simply hope the price will recover, leading to their own demise by holding onto positions against the trend for too long. Even worse, new traders who don't understand trends often hope to increase their positions and average out their costs. Later, as the market moves further away from their own positions, their positions become heavier, accelerating their decline. This leads them down the first path to death.
That is, do not hold a heavy position, do not carry a single order, trade frequently, and chase rising and falling prices.
After several attempts, the available margin becomes smaller and smaller, until there's nothing left to be gained, leading to failure. Most losses and margin calls can be attributed to the three reasons mentioned above, such as excessive greed, which is often caused by overinvesting. See the following ten blind spots in futures trading for details.
Trading with a full position - a full position will definitely lead to a loss.
Frequent trading - lack of technical guidance.
Going against the trend----low probability and high risk.
Locked position trading----not accepting the fact of loss.
Lowering or raising the average holding price - making matters worse.
Guessing the top and bottom without setting a stop loss - finding excuses for mistakes.
When you are too full, you become empty; when you are empty, you become too full. Excessive pursuit of perfection is aimless.
Believe in news and follow trends blindly - lack of understanding of the market.
Not good at self-reflection and doubting the market - causing fear of market conditions.
Develop a long-term trading plan - the future is uncontrollable.
Many times, trading in the cryptocurrency market is like driving on the road.
First, go to a driving school and learn how to drive. Even if you can drive well, if you don't follow traffic regulations, you'll eventually get into an accident. Even if you follow traffic regulations, if you don't hit someone, someone will hit you. There are pitfalls everywhere, so if you want to drive safely, you also have to learn how to avoid them.
And what are the rules and regulations for cryptocurrency transactions?
See the following eight right and eight wrong things about cryptocurrency trading:
It is right to follow the trend, and wrong to go against the trend. (Once a trend is formed, it is difficult to change in a short time)
A light position is right, a heavy position is wrong----position affects attitude, and attitude affects decision-making.
Contentment is right, greed is wrong -- greed is the enemy, contentment is the key.
It is right to stop loss to protect profit, and it is wrong to let things go - preserving capital comes first, making money comes second.
Objective operation is right, subjective analysis is wrong. Operate objectively and follow the rules.
It is right to wait and be patient, and it is wrong to be impetuous and impulsive. Cultivate patience and act at the right time.
It is right to increase your position when you are making a profit, and it is wrong to increase your position when you are trapped. Profit is the right direction, and being trapped is the wrong direction.
Being calm is right, and worrying about gains and losses is wrong. The essence of trading is the confrontation between human nature and mentality.
The secret to success in the cryptocurrency world. You will regret it if you don’t read it:
Profitability comes from holding onto trend-following trades that others have given up on, seizing opportunities that others refuse, and doing what others dare not do. There's no such thing as complete failure in investing, only giving up due to a lack of persistence. The same is true for trading. You might initially favor a direction, but as the market fluctuates, you change your mind. You might initially be bearish, but exit the market due to a slight rise, and instead go long. Ultimately, you miss the downtrend and end up losing money against the trend. Such examples are countless in trading; any success requires persistence.
So what are the four mindsets and five skills a successful cryptocurrency trader should have to survive in the market for a long time?
1. Don’t be complacent when you make a profit
A proud person will always end up destroying himself in his pride. In the investment and financial management process, if someone becomes complacent due to profits, they will inevitably suffer losses. The reason is that complacent people, overwhelmed by their modest achievements, become intolerant of others' opinions and suggestions. Even if the market fluctuates, they will continue to believe in themselves, believing their decisions are always correct. They will also neglect risk management, and ultimately suffer losses.
2. Don’t rush to recover losses
Gains and losses are normal in cryptocurrency trading. Now that we've discussed profits, let's discuss losses. Profits can lead some people to become complacent, while losses can fuel a desire to recoup losses. However, recoupling depends on timing. An impatience can lead to irrational decisions. For example, some people, eager to recoup losses, might bet all their funds on a single, seemingly promising coin. However, the market is inherently volatile and uncontrollable. If that stock declines, not only will they fail to recoup their losses, they may even suffer even greater losses.
3. Don’t be greedy and seek quick results
Accumulating wealth through cryptocurrency trading is a long process. If greed and a desire for quick profits are combined, wealth growth is virtually impossible. These two tendencies lead to blind pursuit of profit, leading to a loss of rationality when faced with high returns. However, high returns come with high risks, and blind investment will only lead to failure. Only by pursuing steady growth can we balance risk and profit.
4. Don’t worry about gains and losses
Yingying believes that investors who are anxious about gains and losses often agonize for a long time before investing, fearing the possibility of losing their money. This tendency becomes even more pronounced once they finally make the decision to invest. Seeing their account balance decrease can cause anxiety and irritation. If the decrease is too large, they will either withdraw their funds or seek out insider information, hoping to quickly recoup their losses, which almost always ends in losses. Furthermore, hearing about platform closures or withdrawal difficulties can further fuel concerns about the security of their investments. Even if the platform itself is operating normally, they may choose not to invest, making it difficult to continue their investment and financial management journey.
If your mindset is not always well adjusted, it will be difficult to see the situation clearly. Once your investment mindset is stable, let's talk about the cryptocurrency trading skills you want to know:
1. Use technical indicators but don’t get bogged down in them
There are countless technical indicators in the K-line chart. Sometimes learning too many of them will disrupt one's objective analysis. The ultimate goal of learning these indicators is to use them to obtain the information you need. If you get the information you need from a certain indicator, then you don't need to worry about other indicators. There are many indicators in the K-line chart that have similarities.
2. Go with the flow.
Those who follow the trend prosper, those who go against it perish. When investing, you should follow the trend. Capturing the big trends is like boarding a spaceship; it will quickly carry you to great heights, making it difficult not to make money. Conversely, trading against the trend, especially during a major market, can lead to a bottomless pit that can never be filled, trapping investors and leading to huge losses. Therefore, grasping the trend is paramount.
3. Although history will not repeat itself, there are things worth learning from.
At the technical analysis level, historical data can sometimes provide clues. Market cycles are unchanging, and they are the same for other markets: they cycle from correction to growth, from growth to maturity, and then from maturity to decline, repeating over and over again. Therefore, historical data can be comprehensively considered in technical analysis.
4. In-depth analysis of the news.
A large amount of information is transmitted in the currency market every day, so it is very important to conduct in-depth analysis of this information. As a qualified investor, the most basic thing is to learn to distinguish the authenticity of information, especially some half-true and half-false news that is very misleading. Sometimes a piece of news will even directly affect the directional judgment of the market.
5. Summarize your experience and find a set of methods that suits you.
Rather than watching the fish in the pond, it's better to retreat and weave a net. How can you get the tiger cub without entering the tiger's den? We often envy others for the amount of money they can earn by investing in the currency market. We always watch them actively trading, but we dare not enter the market ourselves, fearing that if we do, we will lose everything. Qingtian here advises everyone: if you have sufficient knowledge and sufficient skills, how many opportunities are there in life to take risks?
The two major market drivers, technology and news, are a topic of endless debate among investors. In the end, neither is true; it's the human heart that drives the market. Without profit and greed, there would be no traps or competition. Navigating the market requires a deep understanding of both offensive and defensive strategies. Only by remaining unwavering in the face of adversity can one remain unshakable and navigate the pitfalls of adversity. As always, trust me, and I'll reward you with profits!
If you're already in the market and not feeling your best, come to me. I'll help you avoid repeating the same mistakes. If you've already struggled in this market and are battered, come to Qingtian and I'll confidently help you regain your confidence. The initial stage of cryptocurrency trading requires effort and method; the mid-term requires strategy and mindset; and the high-end requires character and self-cultivation. Clearing away distractions, maintaining a calm mind, and overcoming all human flaws are the keys to success.
