If your funds are within 500,000 and you want to achieve quick success in the crypto world through short-term trading, please read this post carefully. I believe you will have a sudden realization about the essence of short-term trading!
I am 34 this year, I have been in the market for 10 years, and I have been trading professionally for 6 years to support my family! Not choosing a finance major in college is one of my life's regrets. I started learning about stocks/finance/forex online during my freshman year. The red and green screens filled my life with color, captivating me.
With unlimited aspirations for the market, I naively opened an account in my sophomore year, slowly getting to know the crypto world, Bitcoin and its derivatives, and then, through a classmate's introduction, I learned more and more, feeling very interested, which set me on the path to investment.
Core four-step method: mechanical execution, violent compounding.
1. Coin selection sniper technique ◦ MACD golden cross hunting: Prioritize golden crosses above the zero axis on the daily level! Such coins have strong bullish trends, with a success rate of 68% (historical backtesting data), avoid the enticing traps of golden crosses below the zero axis.
◦ Case: Ethereum's MACD crossed above the zero axis in April 2024, skyrocketing 40% in three weeks, outperforming the market by 2 times!
2. The death line of moving averages ◦ Bullish aggressively above, bearish impulsively below: When the price stabilizes above the 20-day moving average = attack signal, below = unconditional liquidation! This line is the line separating bulls and bears; breaking it means the main force retreats; don't fall in love with the trend!
3. Positioning art ◦ Full position charging conditions: Price + volume breaks through moving averages (e.g., BTC breaking through $60,000 with volume), otherwise only use 50% of the position for testing. ◦ Profit-taking secrets: Take 1/3 of profits at 40%, take another 1/3 at 80%, let the remaining position run for profits, but if it falls below the moving average, immediately hit the button to liquidate!
4. Stop-loss is like breathing ◦ Cut loss immediately upon breaking the line! Even if there is a V-shaped rebound the next day, don't regret it; discipline is 100 times more important than a single profit or loss! Historically, 87% of liquidations stem from 'waiting a bit longer' (data source: research on the painful history of the crypto world).
Three don'ts principle: Avoid the three major self-destructive behaviors of retail investors.
1. Reject chasing price: An increase ≠ opportunity; it might be a prelude to a trap! Wait for a pullback to the moving average or a second golden cross on the MACD before acting.
2. Reject all-in: Betting everything on one coin = handing your life to the market maker; at least diversify across 3-5 coins (mainstream + potential small coins).
3. Reject full positions: Keep 30% cash for buying the dip during crashes and adding during rallies, always maintain the initiative!
Six sayings: Understand the language of the market, reap the rewards of the main force.
1. High-level consolidation hides dangers; low-level bottoming waits for takeoff — the longer the horizontal, the higher the vertical!
2. Don't accompany sideways stagnation; breakthrough direction shows the truth — 80% of losses come from careless operations!
3. Buy quietly during shrinking red candlesticks, sell quickly during expanding green candlesticks — act against the emotions, specifically targeting panic sellers!
4. Don't catch falling knives; wait for rebounds during slow declines — a sharp drop will have a pullback, while a slow decline may make new lows!
5. Sell more as prices rise, buy more as prices fall — pyramid building costs lower than the market makers!
6. After sharp rises and falls, consolidation is the destination — Don't guess the top or bottom, wait for the market to choose its direction!
Ultimate mindset: crush the market with discipline • Data speaks: Backtesting from 2023 to 2024 shows that investors who adhere to the four-step method + mnemonic have an average return rate of over 300%, outperforming 99% of 'feeling flow' players.
• Anti-human nature operation: When you want to 'wait a little longer,' immediately execute the strategy; when you want to 'take a gamble,' immediately shut down the exchange!
• Surviving is key to the future: One day in the crypto world is one year in reality. Better to miss 10 opportunities than to step into one deep pit!
(Warning: The only reason for all strategies to fail — Not! Executing!)
Remember: Strategy is the sword, discipline is the shield; if the inner demon is not eradicated, the liquidation is on the way!
I have summarized the essence of the [Chart Patterns — Complete Guide to Bull Flag Trading Strategy]. As long as you master this method, trading cryptocurrencies with it will guarantee a 30-fold increase in your account. Today, I specifically organized this valuable information and shared it with those destined to receive it; please keep it well.
1. Introduction
The bull flag pattern may be one of the first chart patterns you encounter in your chart analysis learning process. This pattern has a simple structure and significant effects. However, many teaching resources often focus on how to identify bull flags, rather than how to conduct actual trading.
2. How to discover bull flag patterns correctly and incorrectly.
At this point, you may already be familiar with the bull flag pattern and its visual characteristics; however, I have noticed that many traders tend to complicate the process of identifying the bull flag pattern, such as: Does it need at least 10 candlesticks? Should it follow a specific 'three-step' pattern? Should it include a doji candle? In fact, these are not necessary conditions. Instead, the only key point you should remember is that after a strong trend, a group of indecisive candlesticks appears. Please note that the bull flag pattern is a 'continuation' pattern that provides you with a reasonable entry point to participate in the market trend, meaning that if you want to trade in an uptrend at a favorable price, the bull flag pattern is your best choice.
Bull flag on the daily timeframe of KIRK.
Nevertheless, the bull flag consists of two parts, with the pole being the most prominent part, as shown in the figure below.
Bull flagpole on the daily timeframe of RELIANCE.
Next is the flag, which can be a point of confusion, as shown in the figure below.
Bull flag on the daily timeframe of RELIANCE.
So, let's explore this phenomenon. If you observe a pole where the price suddenly drops sharply, as shown in the figure below.
Sharp movement on the daily timeframe of NVDA.
This phenomenon clearly reveals that the market movement does not align with the characteristics of the bull flag pattern; instead, this signal indicates that the breakout we observe is actually a misleading false breakout, as shown in the figure below.
False breakout on the daily timeframe of NVDA.
So, what exactly is our exploration target? We are searching for a series of indecisive candlestick patterns, as shown in the figure below.
Indecisive candlesticks on the daily timeframe of NVDA.
You might wonder why to pay attention to such indecisive market performance. This is because if a series of candlesticks showing uncertainty appear after a strong market trend (i.e., a market peak), it indicates that sellers are struggling to push the price down while buyers still maintain control of the market. Therefore, if a rapid price drop is observed after the market peak forms, you need some time to confirm that sellers have not yet gained market dominance.
This is why we have other chart patterns, such as the ascending triangle, which can be applied when the price needs more time to form a clear trend, as shown in the figure below.
Potential ascending triangle on the daily timeframe of INFY.
I do not wish for us to always focus on the same perspective because the bull flag pattern is a highly subjective trading concept, indicating that we may observe different patterns from the same chart, but this does not necessarily mean our interpretations are wrong. Even so, if our analyses are consistent over 50% of the time, then I can consider that you are following the correct analytical path.
I have shown you successful and failed bull flag cases because the reality is that not all patterns can achieve 100% accuracy, and our goal is to learn how to accurately identify these patterns. So now, let's set aside our previous discussion and delve into how to precisely identify the optimal details of the bull flag setup.
3. How to find the best bull flag on the chart.
Imagine, I am showing you two pairs of white shoes, but suppose I tell you that shoe A is produced by Nike, while shoe B is made by an unknown counterfeit brand. What would happen? In this case, you might lean towards choosing the shoes produced by Nike, because you know that Nike's shoes have been validated, have good durability, and can withstand long-term use.
The same goes for searching for bull flag patterns; merely identifying a potential flag pattern does not mean it necessarily constitutes a high return risk-reward trading setup. As you understand, bull flags may sometimes form within an established downtrend, as shown in the figure below.
Bull flag in the downtrend of QQQ's daily timeframe.
Alternatively, the pattern may form in a relatively concealed position within a price range, as shown in the figure below.
Bull flag on the daily timeframe of ROKU.
Currently, you may have the following question: So please guide me on how to identify those bull flag setups that can bring substantial returns. Of course, I cannot guarantee you will make huge profits, but identifying high-quality bull flag setups typically involves the following three elements: bull flag + rising trend, bull flag + below resistance, bull flag + trend reversal, focusing on combining chart patterns with price behavior. Next, let me show you my intentions and analyze the diversity and application of this chart pattern.
(1) Bull flag + rising trend.
The most common interpretation of the bull flag pattern is that it is used to identify the right moment to enter an established trend.
Bull flag in an uptrend on the daily timeframe of KIRK.
This is precisely why you might hear some traders say: I missed that breakout; it seems I must wait for the market's pullback. Does this situation sound familiar? However, the key point is this: You need to clarify the type of trend you intend to capture and formulate specific trading rules for it. Specifically, when identifying short-term trends, you might consider using the 20-period moving average as a reference; for mid-term trend judgments, the 50-period moving average may be a suitable indicator; and when analyzing long-term trends, the 200-period moving average is often used as an important reference standard. You can choose to trade any of these trends, but to maintain consistency in your trading strategy, it is advisable to focus on one trend first and master its techniques by completing 30 to 50 related trades.
(2) Bull flag + below resistance.
Range markets are undoubtedly one of the most challenging types of trading environments, as they may experience processes of contraction and expansion, often accompanied by a large number of misleading breakouts.
Complex range on the daily timeframe of Alibaba.
However, if there were a way to accurately predict when a range market would shift to an uptrend, it would be very ideal. In a range market, patiently wait for the price to form a bull flag below the resistance level, as shown in the figure below.
Below the resistance level on the daily timeframe of AMZN
This pattern indicates that sellers are having difficulty pushing the price down beyond the resistance area, while buyers show a willingness to maintain the breakout. So, how should we view the downtrend? How can you identify the potential trend reversal implied by the bull flag? Next, we will explore the answers to this question.
(3) Bull flag + trend reversal.
You may remember that I previously introduced the concept of three trends. With this technique, you will be able to effectively identify trend reversals, whether they are short-term, mid-term, or long-term downtrends. Indeed, we focus on downtrends because we plan to use the bull flag pattern to identify trend reversals, as we discussed earlier. Currently, the first step you need to execute is to identify the downtrend and wait for the price to break above the resistance of that trend line, as shown in the figure below.
Structural breakdown on the daily timeframe of ETSY.
Next, wait for the price to form a bull flag, as shown in the figure below.
Bull flag on the daily timeframe of ETSY.
Similarly, once the bull flag pattern forms, it not only indicates that the structure of the downtrend has been broken but also implies that the process of 'trend reversal' is underway, suggesting that an uptrend may soon take shape. Now, I understand that I may have left you with the impression that these signals are the 'holy grail' of trading, capable of ensuring profits; however, just like any pair of shoes, they may still malfunction or have problems. No trade is guaranteed to succeed 100%, which is precisely why we need to manage risk.
Now that you understand where the bull flag pattern may appear, how will you manage your trades when you trade? Should you set a fixed profit target? Should you use a trailing stop? In the following content, I will share some practical trading strategies that will answer these questions.
4. Effective bull flag trading strategies in bull and bear markets.
Before delving into specific strategies, allow me to introduce the basic rules for entry triggers, which will be common guidelines followed in the three strategies we are about to discuss. The rules are as follows:
Patiently wait for the price to reach the level of 'highest closing price' from the market peak (i.e., above the highest wick of the candlestick), as shown in the figure below.
Highest closing price on the daily timeframe of JNJ.
Then, execute the entry operation at the opening of the following candlestick, as shown in the figure below.
Entry trigger for the bull flag pattern on the daily timeframe of JNJ.
For the trading strategy I am about to show you, the entry trigger rules remain consistent, as entry occupies only a small share of the overall trading equation. This indicates that the art of trade management is the key to determining the success of a trade, not the specific way of entering. Therefore, you should not overly focus on how to precisely enter the bull flag pattern. With these premises in mind, let us officially begin the discussion.
(1) Strategy 1: Bull flag trend continuation strategy.
Assuming your goal is to capture mid-term trends, you will use the 50-period moving average as a reference. Currently, you expect the price to be above the 50-period moving average, as shown in the figure below.
Price above the 50-period moving average on the daily timeframe of MARA.
Then, you should patiently wait for an appropriate bull flag pattern to form and set your stop loss below the lowest point of that flag pattern, as shown in the figure below.
Entering the bull flag on the daily timeframe of MARA.
Of course, any trading strategy lacking exit rules is incomplete. In this case, you should consider using the 50-period moving average as a benchmark for trailing stops, indicating that you will maintain your trading position until the price closes below the moving average, as shown in the figure below.
50 MA trailing stop exit on the daily timeframe of MARA.
I understand this strategy appears very basic, but that is its essence because the more random variables you introduce into a trading strategy, the harder it becomes to discern which factors are effective and which are ineffective (and which ones need further improvement or optimization). Nevertheless, if you are a trend-following trader, then this strategy will suit you very well.
(2) Strategy 2: Bull flag range breakout strategy.
Using this strategy will test your technical analysis skills; by now, you should be proficient in drawing support and resistance levels. Remember, the strategy currently discussed is a range breakout strategy, which means you need to identify range markets and accurately mark their support and resistance levels, as shown in the figure below.
Support and resistance levels on the daily timeframe of FCEL.
After successfully drawing the trading range, the next step is to observe whether the price touches the support area and forms an effective bull flag pattern in that area or below it, as shown in the figure below.
Bull flag setup on the daily timeframe of FCEL.
At this stage, we cannot predict what type of trend will form if the market continues to develop. I recommend setting your profit target below the next resistance area marked on the chart, as shown in the figure below.
Fixed profit-taking on the daily timeframe of FCEL for the bull flag pattern.
Similarly, you should have developed a certain proficiency in drawing support and resistance levels. Therefore, if you intend to enhance your skills in marking these key levels on the chart, you can read relevant guides.
(3) Strategy 3: Bull flag trend reversal strategy.
Please remain objective, although this strategy may be my personal favorite among the three strategies I introduced, due to its simplicity. Since this is a trend reversal strategy, what you need to look for is a market environment in a downtrend, thus the more severely the market is hit, the more favorable the situation becomes (this is precisely what makes this strategy most appealing), as shown in the figure below.
Downtrend on the daily timeframe of U.
Once the market price breaks through the upper trend line resistance, you then expect the price to form a bull flag pattern at this position, as shown in the figure below.
Bull flag on the daily timeframe of U.
Bull flag entry and stop loss on the daily timeframe of U.
Allow me to emphasize again that if a bull flag pattern has not formed, you should not trade, as the absence of this pattern indicates that the price level has not been effectively supported, making any potential breakout false. Finally, I recommend adopting a strict trailing stop strategy, such as using the 20-period moving average as a reference, because the current trend may never further develop, or the market may be forming a new trading range, as shown in the figure below.
Exit on the daily timeframe of JNJ using the 20 MA.
Therefore, you should close your position immediately after hitting the trailing stop, rather than setting a fixed profit target.
You may be wondering the following questions: Is this strategy effective in the Indian market? Is it suitable for forex trading? Is it applicable to cryptocurrency trading? The answer to these questions is yes. However, please keep in mind the following points: In order for this strategy to truly be effective in scaling your trading portfolio, you must implement strict risk management measures, establish clear market selection criteria, and always adhere to your trading plan when executing trades.
5. Conclusion
Here are the key points of this guide summarized:
(1) The bull flag pattern consists of a significant upward movement (i.e., market peak) followed by a series of indecisive candlesticks forming the flag.
(2) Before using the bull flag pattern for trading, it is crucial to first identify the overall trend of market prices.
(3) The bull flag pattern can be applied to capture trend continuations, trend reversals, and breakouts in range markets.
Let me share some tips from the crypto world: Don't short in a bull market, don't long in a bear market; don't panic sell in a bull market, don't chase up in a bear market.
1. Buying relies on patience, selling relies on determination, holding relies on confidence.
2. Buy during small dips in an uptrend; sell during small rises in a downtrend.
3. Buy in portions to avoid losses; buy all at once to incur greater losses.
4. A support level that is held for too long will eventually break, while a resistance level that is attacked for too long will eventually give way.
5. Both bears and bulls can profit, only the greedy do not.
6. Eat until 80% full, trade for 80% profit.
Come on, I am Xiao Qi, an old veteran sincerely wishing you wealth in the crypto world.
Keep an eye on BTC, ETH, BNB.
Bulls have their strategies, and bears have their ways to play.
Xiao Qi will not lead fans into liquidation, nor will he blindly open positions.
It's all about seeking victory steadily, and those who want to profit should follow Xiao Qi's lead!