There are many capable people in the crypto space, and there will always be someone who disagrees with who is the strongest. However, it should be undisputed that the strongest bottom-fishing expert in the early days is 'Ouyang Zhuai Bai.' He publicly used low leverage to go long on trends from a few thousand dollars to tens of millions of dollars, witnessed by tens of thousands of people online. His bottom-fishing skills can be said to be invincible. I have observed so many traders and have not seen anyone more accurate than him! For example, back when Bitcoin was over $3,000, he decisively bottomed out and went long. Very few people could catch that spike; it was too fast! Later, he held onto his ancestral big pie and made hundreds of thousands of dollars with just one trade. At the beginning of this bull market, he repeatedly shouted not to sell coins, not to cash out, and not to short, and now he has made a fortune, almost in a semi-retired state! He has publicly shared a trading strategy called 'Ultimate Trend,' which includes bottom-fishing, taking profits at the top, position management, and trading mindset. He has also shared a reading list for traders' growth. In the cryptocurrency market, his strategy is undoubtedly a trading bible!
Ouyang's trading philosophy is to go with the trend and keep trading simple! Every market has its unique patterns, and the most effective and simplest strategy for Bitcoin is to go long during a true breakout. When market sentiment is extremely optimistic, once it falls below the moving average, go short for a waterfall trade. Firmly executing this simple buy and sell can effectively reduce trading frequency and increase the overall win rate, thus achieving stable profits!
The question arises, how to determine a true breakout? The primary task of going long on a true breakout is to identify the trend. Following the trend can effectively increase the probability of the breakout's authenticity, and it is also necessary to identify the consolidation range! The longer the consolidation time, the closer the breakout point is to the end of the consolidation pattern, the stronger the effectiveness of the breakout. Moreover, there must be a significant increase in volume at the breakout; a sufficiently large trading volume makes the breakout more reliable. This is the daily chart of Bitcoin. After a long period of consolidation, it broke out with volume at the end of a flag pattern, which then initiated an epic bull market. Another example is a longer consolidation period where the price never retraced after the breakout! Ouyang rarely shorts because only trading one side helps reduce trading frequency and avoids being repeatedly harvested by the market. However, after the market has been running for a while, once it reaches the end of the trend, false breakouts are likely to occur. For example, when the price breaks out but quickly encounters resistance and pulls back, the characteristics of a false breakout are low trading volume during the breakout and a short oscillation time!
The best timing for a waterfall short position is when market sentiment in the crypto space is extremely optimistic. Falling below the moving average is often the best short opportunity, which is closely related to the excessively high leverage ratio of retail long positions! The moving averages here can be commonly used indicators like MA30, EMA83, etc. When market sentiment is extreme, it often corresponds to such a trend. A bull market always arrives in despair, unfolds amidst doubt, surges amidst hesitation, and ends in frenzy. When the market is entirely bullish and no one dares to short, market liquidity is at its best, which is also the best time for the main forces to offload!
The most important indicator for measuring market sentiment is open interest. The larger the open interest, the higher the market's trading activity. However, if the price fluctuates violently and the open interest suddenly drops sharply, it usually means that a significant portion of one side's positions has been closed or forcibly liquidated, indicating that the market is about to reverse! Historical data of Ethereum also verifies this. Whenever the open interest is at a high level, market sentiment is typically extremely optimistic, followed by significant corrections. Open interest often forms a bottleneck area over time, and once it is touched, it is likely to pull back.
The ratio of long to short positions relative to price can also reflect market sentiment well. If the price rises rapidly, but the long-short ratio increases too quickly, it indicates that retail investors are crazily chasing the rise, and the price is likely to encounter resistance at the next resistance level and pull back! For example, during the rise of Bitcoin, the long-short ratio quickly rose from 1 to 2 or even 3, which can easily lead to an extreme downward trend.
The average leverage ratio of longs is also crucial. Although new funds are entering the crypto market now, in short-term trading, high-leverage positions are the most likely to be liquidated! The average leverage ratio in the real market is hard to exceed 2-3 times because institutions and whales generally use lower leverage, which directly pulls down the overall leverage level of the market. At key positions in the market, you can observe the leveraged levels of publicly trading traders, which often reflect the overall market sentiment!
Position and mindset management. Ouyang believes that position management and trading mindset are the most important parts of the trading system! The total position's leverage should never exceed 2 times. For instance, if you have $10,000, your total position should not exceed $20,000. For uncertain market conditions, pyramid-style phased entry can be used to reduce risk and avoid significant account drawdowns. This method is very helpful for achieving stable compound interest with low leverage.
Controlling mindset is the most challenging part of trading. If you have been continuously losing recently, stop trading immediately, close all high-leverage positions, and take a break for a while! If you have made significant profits recently, avoid becoming arrogant; it is best to withdraw a portion of the profits immediately, as most foolish trading mistakes occur after making big profits. The most important thing in trading is to learn to wait, trade infrequently, enter with a high win rate, and set large stop-losses to improve the success rate of trading. Do not trade full-time; it is better to have an off-market business to maintain a continuous backup source of funds, ensuring the stability of your trading mindset!
