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The nine iron rules and ten strategies of short-term trading: Balancing discipline and technique in the cryptocurrency circle.
1. Short-term essentials: Fast, accurate, decisive, and independent. If you cannot embody these four words, you are not suitable for short-term trading, or you will never do it well. Independent means you are most familiar with the currency type.
2. The entry point for short-term operations must be extremely precise. Once the ideal entry price is missed, you must give up and maintain the discipline of 'better to miss than to do a wrong trade.'
3. Trading rules: Think about retreating before entering; you must know that every opening carries risk. Therefore, before opening a position, you must know where to stop loss in case you are wrong. In principle, if the stop-loss amount exceeds (8%), you should give up (or patiently wait) for the best point to re-enter. In extreme market conditions, you can chase orders, but you must strictly control the position.
4. Position management: There may be two to three good opportunities for short-term opening every day. To ensure that you do not miss better profitable opportunities due to excessive capital occupation after opening a position, control the funds for each opening to 10-20% of available funds.
5. Stop-loss: Whenever possible, use conditional orders to open positions or place orders. Once executed, immediately set the stop-loss. Do not overly trust your execution ability; remember: you can hesitate on taking profits, but stop-loss must be resolute.
6. Take profit: If there is a profit, close part of the position at important support or resistance levels (operating at break-even). Ensure the success of this trade.
7. Position holding: As the profit ratio increases, gradually reducing the remaining position percentage, do not leave positions overnight if the remaining profit has not reached 15% (or has not broken even). If it exceeds 15% and the trend is intact, you can leave a single position (20%). Enjoy the charm of the trend and strive for maximum profit.
8. Control trading frequency: If there are two consecutive stop-losses in short-term operations on the same day, one should generally stop short-term trading. Unless a very stable (meeting the four major conditions) variety and point appears, consider a third operation.
9. There are many methods of investment, and trading rules vary. Others' methods may not suit you because everyone has different investment habits based on their personality. Some prefer short-term, others prefer swing trading; hence, what suits you best is the best.
Top Ten Strategies: Next, we will discuss the top ten strategies of the top intraday short-term traders.
First Principle: Do not break the low point—buy.
Condition 1: The K-line is in an upward trend.
Condition 2: Previous oscillations have completed, short-term profits have been taken, and the bearish pressure has weakened.
Condition 3: The intraday line gradually flattens, forming a relatively gentle point A. Wait for point B. If point A is not broken, buy immediately as soon as the intraday line rises.
Note 1: Many short-term traders are also waiting during the intraday; once point B arrives, shorts cover, and longs open positions, a rising wave forms.
Second Principle: Buy quickly during sharp declines, buy slowly during gradual declines.
Condition 1: On the 3, 5, and 15-minute charts, the K-line shows an upward trend.
Condition 2: The 3, 5, or 15-minute K-line charts frequently exhibit abrupt drops.
Third Principle: The intraday line shows a zigzag pattern; observe.
Condition 1: The intraday line changes from its usual smooth form to a zigzag pattern.
Condition 2: The intraday line shows a group-like oscillation.
Fourth Principle: Do not rush during upward arcs, do not be slow during downward arcs.
Condition 1: The upward arc increases; be careful of a drop when trading volume shrinks.
Condition 2: An upward arc increases; be careful of a rise when trading volume shrinks.
Fifth Principle: The channel is intact; do not rush to reverse.
Condition 1: The channels formed by the 5 and 10 moving averages are intact on the 3 and 5-minute charts.
Condition 2: The K-line has not yet formed a relatively obvious line approach.
Sixth Principle: The channel is closed near the edge line, and the three lines converge towards the red line—buy.
Condition 1: On the 3-minute chart, the downward channel has closed, and the 5, 10, and 20 moving averages are flat and sticky, approaching the red 60 moving average.
Condition 2: On the 5-minute chart, the red 60 moving average begins to flatten or has already flattened.
Seventh Principle: A high point cannot form a bottom, and a low point cannot form a top—reverse.
Condition 1: The K-line rebounds, slightly weak in the middle, or the K-line opens significantly high.
Condition 2: The K-line falls back, nearing its end, or the K-line is in an upward trend, oscillating downwards.
Eighth Principle: Triple top, charging for the fourth time—buy.
Condition: A triple top forms on the intraday line, preferably parallel.
Ninth Principle: Moving averages close and then open—buy.
Condition 1: The moving average is in an upward trend.
Condition 2: The 5 and 10 moving averages first close the channel downwards. The K-line is supported near the 20 moving average, the five-day average rises, and the channel opens again.
Upward channel
Note: Why emphasize the first time? Because the trend moving average of 10 or 20 must produce at least 2-3 effective supports in a wave.
Tenth Principle: Sharp top, long positions run fast; sharp bottom, short positions run fast.
Condition 1: The previous day's K-line closed bearish, and today’s K-line pushes up slightly.
Condition 2: The previous day's K-line closed bullish, and today’s K-line dips slightly.
Discipline is the most important in the cryptocurrency circle. You should buy when it's time to buy and sell when it's time to sell. However, human nature is inherently weak, especially in front of money, and it is inevitable to have some lucky thoughts.
However, if you think carefully, having good skills and methods without strict discipline makes it absolutely impossible to gain anything in this predatory speculative market.
At the same time, you must understand one thing: the trading system is just a form. If your execution ability is insufficient, it is just a blank sheet of paper; the 'rules' are meaningless, and 'discipline' is non-existent.
Learn the five-day line trading method, and you won't have to worry about short-term cryptocurrency trading.
The five-day line is actually the five-day moving average, which refers to the average transaction price of a currency over five days, abbreviated as MA(5). Doesn't it sound simple? Simplicity is often the most practical. The method for setting the five-day line on each trading platform is roughly the same; let's discuss how to set the five-day line on Huobi.
Five-day line trading method
The rise or fall of cryptocurrency prices generally follows the trajectory of the five-day line. The trajectory of the five-day line can be divided into three trends: upward, downward, and flat. Below is the reference guidance for buying and selling points on the five-day line. It should be noted that the cryptocurrency market is ever-changing and influenced by countless factors, including news and policies. The five-day line combined with the brilliant teachings of K-lines and MACD works best.
1. The five-day line gradually flattens from a downward trend and slightly heads upward, accompanied by the price breaking upwards from below the five-day line. The K-line shows a bullish line breaking through the five-day line, clearly standing above it; at this time, it is a reference for buying.
2. If the price is running above the five-day line, after a pullback breaking below the five-day line, and then rises again with a clear bullish line standing above the five-day line, it is considered a buying point.
3. The price is running above the five-day line, and during a pullback, it breaks below the five-day line, but the short-term five-day line continues to trend upward. At this time, it is considered a buying point.
4. When the price is running below the five-day line and suddenly drops sharply, getting too far from the moving average line, the K-line shows a large bearish line pulling down. As extremes will reverse, it is highly likely that it will approach the five-day line in the future; at this time, it is considered a buying point.
5. The price is running above the five-day line, and after several days of large increases, it is getting farther from the five-day line. Similarly, extremes will reverse; recently, investors have gained significantly, and there will be selling pressure from profit-taking at any time. At this time, it is considered a selling point.
6. The five-day line gradually flattens from an upward trend, and when the price breaks down from above the five-day line, it indicates increasing selling pressure; at this time, it is considered a selling point.
Trend analysis
From the perspective of the five-day line, the current price of the currency is entangled with the five-day line. The five-day line is gradually flattening from an upward trend, and in the short term, it remains as Xiao He previously mentioned; without any major negative news, it is still mainly oscillating. If it breaks below the five-day line before midnight, a pullback may occur. After the blood-sucking performance of the currency king on April 25, the momentum of many bears was released, and now small coins are starting to surge together. Before the absolute battle between bulls and bears ends, you can take advantage of the currency king's oscillation to make a few small short-term trades.
There are several methods for short-term trading in cryptocurrencies:
1. Technical analysis: Use chart analysis, trend analysis, and other technical indicators to judge price movements, including support levels, resistance levels, moving averages, etc., to find opportunities to buy and sell.
2. News-driven: Pay attention to news and events in the market, analyze and predict their impact on the cryptocurrency market, and buy or sell quickly.
3. Intraday trading: Profit by capturing short-term price fluctuations, usually completed within a day.
4. Breakout trading: Determine the direction of the market by observing changes in trading volume when prices break through resistance or support levels, and buy or sell at the right time.
5. Swing trading: Utilize the characteristic of larger price fluctuations for medium to short-term buying and selling operations.
However, the cryptocurrency market is high-risk and operates within a short time frame, requiring investors to have a high risk tolerance and familiarity with market conditions. Additionally, short-term operations must also pay attention to controlling risks, reasonably setting stop-loss and profit targets to protect capital and achieve good returns.
If you are determined to stay in the cryptocurrency circle for a lifetime and hope that one day you can trade cryptocurrencies to support your family! Then please remember these ten rules below. The content is not much, but every sentence is valuable. Share it with those destined!
Article 1: Preserve your capital to survive in the market for a long time. Capital is the lifeline and must be firmly protected! Many people pursue high returns.
Ignoring risks leads to heavy losses in the end.
Article 2: As long as you are not greedy, making a profit is actually very simple. Maintain a stable mindset; earning a little less may be easier for accumulating wealth.
Article 3: Concentrate investments; do not go all in and go with the trend. Avoid blindly diversifying investments and prevent full allocation; adjust strategies according to market trends.
Slightly.
Article 4: Avoid heavy positions, do not stubbornly hold on, and trade less. Control your position; do not stubbornly bear losses—trade moderately.
Article 5: Enter calmly, exit decisively, and be resolute with stop-losses. Do not rush to buy; when selling, act quickly and set the stop-loss line.
Strictly enforced.
Article 6: The profits in the market are limitless, but losses can be endless. Don't be greedy for money that can't be earned, but losses may consume everything.
Article 7: Once a stop-loss is triggered, exit immediately. A stop-loss is protection for your account and should not be hesitated upon.
Article 8: Whether long or short, locking in profits is the safest strategy. Regardless of whether you are doing long-term or short-term, you must ensure that you lock in profits.
Article 9: The unchanging truth of the market is that extremes will reverse. Regardless of rise or fall, there is a limit that will inevitably reverse.
Article 10: Don't operate if there’s no opportunity; missing an opportunity is not scary. Do not force yourself to seize every opportunity; being able to capture part of it is already enough.
Life must go through bumps and bruises to gain great enlightenment! As long as you don’t give up, the more you try, the closer you get to success. The greatness of a person's life is not about having done something, but about doing one thing for a lifetime.
I am Xiao He. Although I did not accompany you to watch the stars and the sea, nor did I accompany you to see the summer evening glow, I can take you to the shore of success. Friends who like me can follow me. Thank you for your likes; let’s move forward together!
