Achieving financial freedom at 38! Entering the cryptocurrency world at 25 and earning eight figures in ten years. Blood and tears warning: 99% of people fail due to 'mindset,' not technique!
At 25, I invested my entire fortune of 50,000 in the cryptocurrency world; at 38, I earned enough money to last a lifetime through cryptocurrency trading, with assets exceeding 10 million. No team, no insider information, and not even working a single day — now I wake up naturally every day, walk my dog, drink tea, and look at the K-line. Troubles? Non-existent.
But if you think this is a 'feel-good article,' you can swipe away now.
The truth I want to tell may chill the spines of 80% of people in the cryptocurrency world.
Nine iron laws summarized by a senior trader; remember them well, and you will benefit for a lifetime. Shared only once.
One, about returns.
Assuming you have 1 million, after achieving a 100% return, your assets will reach 2 million. If you then lose 50%, your assets will be 1 million again.
This means your assets will return to 1 million. Clearly, losing 50% is much easier than earning 100%.
Two, about price fluctuations.
Assuming you have 1 million, if on the first day you gain 10%, your assets will reach 1.1 million. If the next day you drop 10%, your assets will be 990,000. Conversely, if you drop 10% on the first day and then gain 10% on the second day, your assets will still be 990,000.
Three, about volatility.
If you have 1 million, earn 40% in the first year, lose 20% in the second year, earn 40% in the third year, lose 20% in the fourth year, and earn 40% in the fifth year,
In the sixth year, losing 20% results in assets remaining at 1.405 million. The annualized return over six years is only 5.83%, which is even lower than the coupon rate of a five-year treasury bond.
Four, about earning 1% daily.
If you have 1 million and can earn 1% every day and exit, then after 250 days, your assets could reach 12.032 million, and after 500 days, your assets will reach 145 million.
Five, about 200% annually.
If you have 1 million and achieve a 200% return over five years, your assets will reach 24.3 million after five years. However, such high returns are difficult to sustain.
Six, about tenfold in ten years.
If you have 1 million and hope to reach 10 million in ten years, 100 million in twenty years, and 1 billion in thirty years, then you need to achieve an annualized return of 25.89%.
Seven, about averaging down.
Assuming you bought 10,000 yuan of a coin at 10 yuan, and now it has dropped to 5 yuan, if you buy another 10,000 yuan, your average cost will be lowered to 6.67 yuan, and not the 7.5 yuan you imagined.
Eight, about holding costs.
If you have 1 million and invest in a coin earning 10%, when you decide to sell, you can leave 100,000 yuan worth of chips, and your holding cost will go to zero. You can then hold it long-term without pressure. If you are extremely bullish on this coin and leave 200,000 yuan worth of chips, you will find your profit rises from 10% to 100%. However, don't be complacent, because if this coin drops 50% later, you may still incur a loss.
Nine, about asset allocation.
There are risk-free asset A (annual return 5%) and risky asset B (return -20% to -40%). If you have 1 million, you can invest 800,000 in risk-free asset A and 200,000 in risky asset B, thus your worst annual return is zero, and best return could be 12%. This is the prototype of the CPPI technique applied to capital preservation funds.
The methodology I mentioned today is universally applicable for making money in both the cryptocurrency world and the real world.
Many people teach how to make money and will tell you what to do. Business people, for instance, may tell you to be honest and altruistic.
When a senior official tells you to do solid work and serve the people, only then can you achieve today's status like him.
He will use himself as an example, saying he succeeded because of this. If you simply believe it, you will definitely not make money.
They may not even realize it, but they all made a causal inversion error.
They are talking about their own results; all the things that can be recognized by most people are just results, not causes.
For example, in a market where everyone conducts business honestly and sells good products, being a good person.
If you want to get rich, you must work hard to sell counterfeit goods.
If everyone sells counterfeit goods, then to make big money, you should abandon the huge profits from counterfeit goods and sell only genuine products.
Doing the same thing as most people will definitely not make you rich.
In business, this is called differentiation. When you pursue a girl, and she tells you to be sincere, if your competitors are all like that and you are like that too, you won't be able to win her over, no matter how impressive the course you took was, or who guided you; it doesn't matter. At that point, you rely on boasting and fabricating value, and your chances of winning will greatly increase.
If your competitors are all boasting and exaggerating, then you need to be incredibly sincere. By being different from them, your chances of winning will greatly increase.
Knowing oneself and knowing the other implies doing things differently from them.
In the cryptocurrency world, when others are unwilling to arbitrage during a bear market, you should work hard to take advantage of it. Then you can get rich.
When others look down on inscriptions, you work hard; then you can get rich.
Everyone rushes to play with altcoins and contracts; if you do too, you will definitely lose everything.
The source of accumulating BTC to get rich lies in the fact that most people do not accumulate, while you accumulate vigorously. While others accumulate for only four years, you accumulate for over ten years, and then you can get rich.
If you are also a tech enthusiast and are studying technical operations in the cryptocurrency world, you might want to follow the public account (Yuan Yuan Ju Cai), where you will get the latest cryptocurrency information and trading skills!
If you want to treat cryptocurrency trading as a second career to support your family, then you must study this article seriously to at least save yourself ten years of detours!
You may be wondering: what is price action trading? Price action trading is a method that assists trading decisions based on historical prices (including opening price, highest price, lowest price, and closing price). Unlike indicators, fundamental analysis, or algorithms, price action trading provides observations of actual market behavior rather than market expectations based on personal predictions. If you invest time in learning price action trading, you will be able to trade using clearer charts and more accurately determine your entry and exit timing.
In this guide, you will learn the following:
(1) The truth about support and resistance is often overlooked by market participants.
(2) The secrets behind market behavior: revealing the true trends of the market.
(3) The secret to interpreting candlestick patterns: how to time your trading entry with extremely high precision.
(4) Candlestick pattern cheat sheet: understanding candlestick patterns without memorizing any candlestick shapes.
(5) M.A.E trading formula (a simple price action trading system that anyone can learn).
2, about the truth of support and resistance.
(1) Define support and resistance levels.
Support level: a horizontal area on the chart where buyers expect to push prices higher; resistance level: a horizontal area on the chart where sellers expect to push prices lower, as illustrated in the specific example below.
Support and resistance levels for EUR/USD Daily.
Support (USD/CAD)
Resistance Level (GBP/JPY).
Additionally, support and resistance levels have a converting nature, meaning that when a support level is broken, it may turn into a new resistance level, and similarly, when a resistance level is broken, it may turn into a new support level, as illustrated below.
Previous support opened resistance (GBP/AUD)
Previous resistance opened support (NZD/USD).
But why does such a shift occur? The reason is that when the price breaks below the support level, the traders who originally went long will suffer losses and be in a losing state. Therefore, when the price rebounds back to the support level, these traders can now close positions at breakeven to reduce losses, leading to selling pressure. This is only part of the reason, as those who missed the breakout opportunity will want to short the market, further increasing selling pressure. This is why when a support level is broken, it often turns into a new resistance level.
At this moment, you might ask: How do I draw support and resistance levels on the chart? Here are the guidelines I use:
1) Narrow your chart (for me, at least 200 candlesticks are needed).
2) Draw the most obvious levels (if you need to guess again, it may not be an important level).
3) Adjust levels to obtain the most 'contact points' (the actual body or wick portion of the candlestick).
(2) Dynamic support and resistance levels.
According to classical technical analysis theory, support and resistance levels are depicted as horizontal areas on the chart. This method is usually quite effective when the market is in a range or weak trend. However, in strong trending markets, this method may be less applicable, which is why you need to rely on dynamic support and resistance levels in strong trending markets.
So, what exactly are dynamic support and resistance levels? Dynamic means that these levels change with the 'movement' of prices, rather than being fixed. For example, in a strong trending market, the 20-period moving average can act as dynamic support, as illustrated in the chart below.
Alternatively, in a healthy trending market, the 50-period moving average can act as dynamic resistance, as illustrated in the chart below.
Professional advice: Dynamic support and resistance levels can also appear in the form of trend lines or trend channels.
3. The secrets behind market behavior: revealing the true trends of the market.
The essence of trading is that the market is always in motion; it may be in an uptrend, downtrend, range volatility, low volatility, or high volatility states. However, if you can step back and observe the market from a more macroscopic perspective, you will find that the market is often in one of four stages: accumulation, advance, distribution, and decline.
(1) Accumulation phase.
The accumulation phase usually occurs after the price has experienced a decline, appearing as a seemingly sideways market within a downtrend. During this phase, the following points need to be monitored:
1) Prices have been continuously falling for the past five months or longer (in the daily time frame).
2) The market exhibits range characteristics with clear support and resistance areas, even though the overall trend is downward.
3) The 200-day moving average tends to flatten.
4) The price fluctuates around the 200-day moving average.
As illustrated in the specific example below.
(2) Advance phase.
The advance phase is an uptrend accompanied by a series of higher highs and higher lows. During this phase, the following points need to be monitored:
1) Occurs after the price breaks through the resistance level in the accumulation phase.
2) Observing a series of higher highs and higher lows.
3) The price is above the 200-day moving average.
4) The 200-day moving average begins to rise.
As illustrated in the specific example below.
In economics, no market can rise indefinitely; after a period of growth, the market will inevitably show signs of fatigue, marking the entry into the third phase of its development cycle.
(3) Distribution phase.
The distribution phase usually occurs after a period of price increase and is characterized by a sideways market within an uptrend. During this phase, the following points need to be monitored:
1) This stage occurs against the backdrop of prices continuously rising for the past five months or longer (observed on a daily price change basis).
2) The market exhibits a sideways consolidation pattern, with clear support and resistance levels, while overall still in an upward trend.
3) The trend of the 200-day moving average tends to flatten, indicating a weakening of market momentum.
4) The price fluctuates around the 200-day moving average, showing increased uncertainty in the market in the short term.
As illustrated in the specific example below.
In the current market situation, the market remains balanced, with buying and selling forces relatively balanced and at parity. However, once the price breaks below the established support level, the market trend will reverse, and we will enter the final phase of the market cycle.
(4) Decline phase.
The decline phase is characterized by the market entering a downtrend, marked by a series of decreasing highs and lows. During this phase, the following points need to be monitored:
1) The occurrence of the decline phase closely follows the price's breakout of support levels during the distribution phase.
2) The market will show a series of gradually lower highs and lows, marking a downtrend.
3) The price will be below the 200-day moving average, indicating a weakening of the long-term market trend.
4) The 200-day moving average will show a downward trend, confirming the overall downward movement of the market.
As illustrated in the specific example below.
What is the importance of mastering the four stages of the market? In fact, understanding the current stage of the market allows you to adopt appropriate Forex price action strategies or trading strategies. The specific methods are as follows:
1) If the market is in the advance phase, it is suitable to take a buyer's stance (rather than a seller's). At this time, you should seek to buy when the price breaks through or retraces.
2) If the market is in the distribution phase, you should be aware that once the price breaks below the support level, the market may face significant downside risk. In this case, you may consider shorting when the support level is broken or wait for a price pullback after the breakout before selling.
Once you have a deep understanding of the four stages of the market, you will be able to choose appropriate price action trading strategies for different market conditions, thus avoiding losing direction in trading.
4. The secret to interpreting candlestick patterns: how to time your trading entry with extremely high precision.
So far, you have grasped the overall concept of price action trading. You now know where to set trade positions (i.e., near support and resistance levels) and have clarified the strategies to adopt under different market conditions (i.e., the four development stages of the market). However, there is still a key puzzle piece missing in the trading decision-making process, which is to determine the specific trading timing. In this context, candlestick chart patterns become particularly important, as they provide technical analysis tools for choosing trading timing.
What is a candlestick pattern, and how does it work?
A candlestick pattern includes four basic data points, which represent the following information:
(1) Opening Price (Open): Refers to the first trading price at the start of a specific time period.
(2) Highest Price (High): Refers to the highest trading price reached within a fixed time period.
(3) Lowest Price (Low): Refers to the lowest trading price reached within a fixed time period.
(4) Closing Price (Close): Refers to the last trading price at the end of a specific time period.
In candlestick analysis, for a bullish candlestick, its opening price is always lower than its closing price, whereas for a bearish candlestick, its opening price is always higher than its closing price. Next, you will learn a series of powerful candlestick chart patterns that will assist you in planning your trading entry timing with greater precision: (1) Hammer Pattern; (2) Bullish Engulfing Pattern; (3) Shooting Star Pattern; (4) Bearish Engulfing Pattern.
(1) Hammer Pattern.
The hammer candlestick is a bullish reversal pattern formed after a price decline, and here are its identifying characteristics:
1) This pattern almost contains no upper wicks.
2) The closing price is in the upper quarter of the price range for that trading day.
3) The length of the lower wick is approximately two to three times the length of the body (candlestick's body).
The market significance of the hammer candlestick is as follows:
1) When the market opens, sellers dominate, pushing prices down.
2) When selling pressure peaks, strong buying pressure will push prices up.
3) The buying power is strong enough that the final closing price is higher than the opening price.
In short, the hammer candlestick is a bullish reversal candlestick pattern that indicates the market is rejecting lower price levels. However, merely observing the hammer candlestick does not mean that a market trend will immediately reverse; additional 'confirmation signals' are needed to improve the probability of successful trading, which will be detailed in subsequent content.
(2) Bullish Engulfing Pattern
The bullish engulfing pattern is a bullish reversal candlestick pattern formed after a price downtrend, consisting of two candlesticks. Here are its identification standards:
1) The closing price of the first candlestick shows a bearish trend.
2) The body of the second candlestick completely 'engulfs' the body of the first candlestick (excluding the wick portion).
3) The second candlestick closes in a bullish manner.
The market significance of the bullish engulfing pattern is as follows:
1) During the first candlestick, sellers dominate, causing the price to end lower than the opening price.
2) During the second candlestick, strong buying pressure intervened, causing the closing price to be above the previous candlestick's highest point — indicating that the buyers have won this price battle.
3) Fundamentally, the bullish engulfing pattern conveys information that buyers have surpassed sellers and gained market control.
Furthermore, due to the way candlestick patterns form across different time frames, the hammer candlestick can often be seen as a bullish engulfing pattern formed in a shorter time frame, as illustrated in the chart below.
(3) Shooting Star Pattern.
The shooting star pattern is a bearish reversal candlestick pattern formed after a price increase, which is noteworthy as the shooting star pattern and hammer pattern present opposite shapes visually. Here are the identifying characteristics of the shooting star pattern:
1) This pattern almost contains no lower wicks.
2) The closing price is in the lower quarter of the price range for that trading day.
3) The length of the upper wick is approximately two to three times the length of the body (candlestick's body).
The market significance of the shooting star pattern is as follows:
1) When the market opens, buyers dominate, pushing prices up.
2) When buying pressure peaks, strong selling pressure intervenes and pushes prices down.
3) The selling power is strong enough that the final closing price is lower than the opening price.
In short, the shooting star pattern is a bearish reversal candlestick pattern that indicates the market is rejecting higher price levels.
(4) Bearish Engulfing Pattern.
The bearish engulfing pattern is a bearish reversal candlestick pattern formed after a price increase, consisting of two candlesticks. Here are its identification criteria:
1) The closing price of the first candlestick shows a bullish trend.
2) The body of the second candlestick completely 'engulfs' the body of the first candlestick (excluding the wick portion).
3) The second candlestick closes in a bearish manner.
The market interpretation of the bearish engulfing pattern is as follows:
1) During the first candlestick, buyers gained market control, causing the price to end higher than the opening price.
2) During the second candlestick, strong selling pressure intervened, causing the closing price to be below the previous candlestick's lowest point, indicating that the sellers have won this price battle.
Essentially, the bearish engulfing pattern conveys information that sellers have surpassed buyers and gained market dominance.
5. Candlestick pattern cheat sheet: how to understand any candlestick pattern without memorizing any candlestick charts.
(1) Trend Behavior.
You may wonder: what is trend behavior? Trend behavior represents the 'longer' part or main phase of the market trend. If the candlestick body is long (in an uptrend), it indicates strong market momentum, as buyers have control over the market. Conversely, if the candlestick body is short, it suggests insufficient buying power, as buyers may have exhausted their momentum, as illustrated in the trend movement example below.
(2) Retracement Behavior.
Retracement behavior constitutes the 'shorter' phase or secondary phase of the market trend. If the candlestick body is long, it indicates that the counter-trend pressure is increasing; conversely, if the candlestick body is short, it indicates a healthy retracement, and the original trend may restore itself, as illustrated in the example of retracement behavior below.
(3) Swing Points.
Swing points refer to the peaks and troughs in price fluctuations, i.e., the 'points' on the chart where price shows a notable reversal, as illustrated in the specific example below.
This is crucial because it helps to determine whether the market is in an uptrend, downtrend, or consolidation state. As a basic guiding principle:
1) If the swing highs or lows show an upward trend, the market is in an uptrend.
2) If the swing highs or lows show a downward trend, the market is in a downtrend.
3) If swing highs or lows do not show an upward or downward trend, the market is in a consolidation phase.
Next, to understand any candlestick pattern, you need to grasp two key elements: (1) How does the price close relative to the trading range? (2) How does the size of this candlestick pattern compare to other candlestick shapes?
(1) How does the price close relative to the trading range?
This element can reveal the temporarily dominating forces in the market, as illustrated in the candlestick chart pattern below.
So, who currently holds market control? Observing that the price closes near the highest point of the trading range indicates that buyers currently have the initiative in the market. Now, please observe this candlestick chart pattern, as illustrated in the chart below.
Who dominates the market? Even when a bullish candlestick appears, sellers may actually control the market because the price closes near the lowest point of the trading range, indicating that the market is rejecting higher price levels. Therefore, if you intend to understand the dominant forces in the market, ask yourself the following question: Where does the price close relative to the trading range?
(2) How does the size of this candlestick pattern compare to other candlestick shapes?
This question aims to reveal whether there is significant momentum (or belief) behind the current market trends. What you need to do is compare the size of the current candlestick with that of previous candlesticks. If the current candlestick size is significantly larger (for example, double or more than the previous one), it indicates that strong power is behind the market trends, as illustrated in the specific example below.
If there is a lack of significant strength behind the current market trend, the size of the current candlestick will roughly remain consistent with the size of previous candlesticks, as illustrated in the chart below.
Now, you have the ability to directly interpret any candlestick pattern without memorizing specific candlestick shapes.
6. MAE trading formula or price action trading in Forex.
So far, you have mastered the core elements of price action trading (including support and resistance levels, market structure, and candlestick patterns). Next, we will use this knowledge to identify high-probability trading opportunities that are consistent and can yield profits. Here, I introduce you to the MAE trading formula, a proprietary trading technique I developed to assist traders in quickly achieving trading results. The trading formula works as follows: (1) market structure analysis; (2) value area identification; (3) determination of entry trigger conditions.
(1) Market structure analysis.
Facing a blank chart, beginners often feel overwhelmed because they are uncertain about what to do next: should they buy, sell, or wait? This is precisely why establishing market structure is so important, as it guides your trading decisions.
Therefore, you should ask yourself the following questions: Is the market currently in an uptrend, downtrend, or consolidation? (In other words, identify the current development phase of the market.) Once the market structure is clarified, you will know to follow the path of least resistance in trading. For example, if the market is in an uptrend, you should focus on finding buying opportunities; if the market is in a downtrend, your focus should shift to selling opportunities; if the market is fluctuating within a range, you can choose to buy or sell based on the situation.
(2) Value area identification.
Simply identifying the market structure is not enough for a complete trading decision, as you also need to clarify the specific entry point for trading. You might be thinking: the market offers several potential entry points; how should I choose? The answer lies in selecting a trade from a valuable market area to achieve the goal of buying low and selling high. For example, the following areas can serve as reference points for trading: support and resistance levels, widely recognized moving averages, trend lines.
(3) Determine the conditions for entering the market.
So far, you have mastered two key elements of trading decisions: one is to determine the market structure, and the second is to identify the appropriate trading entry area (value area). Next, the final part of the trading equation is to determine the specific entry timing. I personally prefer to trade when there is a reversal signal in the market, as such signals can validate my market predictions. These reversal signals may appear in the form of price reversal patterns, such as the hammer pattern, shooting star pattern, bullish engulfing pattern, and bearish engulfing pattern. Next, I will share with you some practical applications of the M.A.E formula in trading.
1) Example One
GBP/USD Daily: Determine Market Structure
GBP/USD Daily: Wait for the price to reach the value area.
GBP/USD Daily: Enter at effective entry triggers.
2) Example Two
T-Bond 4 Hours: Identify Market Structure.
T-Bond 4 Hours: Wait for the price to approach the value area.
T-Bond 4 Hours: Enter at effective entry triggers.
Seven iron laws of trading cryptocurrencies!
1. Strong coins that have dropped for nine consecutive days at high positions must be followed up in a timely manner.
2. Any coin that has risen for two consecutive days must be reduced in position in a timely manner.
3. Any coin that rises more than 7% has a chance to continue rising the next day; you can continue to observe.
4. Strong bull coins must wait for the pullback to end before entering the market.
5. Any coin that has been flat for three consecutive days should be observed for another three days. If there is no change, consider switching coins.
6. Any coin that fails to recoup the previous day's cost should exit in a timely manner.
7. If there are three coins on the rise list, there must be five; if there are five, there must be seven. For coins that have risen for two consecutive days, enter on the dips; the fifth day is usually a good selling point.
Playing around in the cryptocurrency world is essentially a battle between retail investors and major players. If you don't have cutting-edge news and first-hand information, you can only get cut! If you want to layout together and harvest the major players, feel free to reach out to me, and like-minded cryptocurrency people are welcome to discuss together!
There is a saying that I strongly agree with: the boundary of knowledge determines the boundary of wealth; a person can only earn the wealth within their boundary of knowledge.
The mentality of trading cryptocurrencies must be good; do not let your blood pressure rise during a big drop, and do not become complacent during a big rise. Taking profits is essential. For those without many resources, being steady is the unbreakable way to survive.
Want to double your account, want to make a big profit, want to recover your losses.
Stay close to the rainy days and position yourself in the main upward trend of the bull market!
Continue to focus on: BTC ETH BNB.
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