$ETH Ten years ago, I invested 8,000 RMB in the cryptocurrency market. From blowing up accounts to achieving financial freedom today, I support my family through cryptocurrency trading. By 2024, my funds multiplied by 50 times. If it weren't for withdrawing funds twice to buy a house, it should have been 85 times.
Today, I will share my trading strategies and insights with fellow crypto enthusiasts.
There is a saying: standing on the shoulders of giants can save you ten years of effort.
At the end of the article, I will also discuss the most important trading experience summary.
For those who happen to see this and want to improve their cryptocurrency trading skills, be sure to read carefully and consider saving it!
Let's first talk about those who make money:
First of all, they are definitely not contract traders. I know contract traders.
None of them made money. Even if they made money at some stage, the final result was still a loss. The essence of contracts is gambling, making money through probability. Of course, this is slightly better than betting, but it’s basically the same. Those who make money from contracts are generally those who do contract community + signal services. They have long realized that contracts cannot make money, so they start doing contract signal services, where the old non-experts cut the new non-experts.
A piece of advice for those who want to recover their losses or make money through contracts:
So many people who lose money stay in the crypto space just to recover their losses. However, the harsh reality is that most people cannot recover their losses or make money, especially those who wish to recover their losses through contracts. They are simply deluding themselves. Those who have made money through contracts in the market are rare, and if you don't want to fantasize, you are not that person. To be honest, if you want to recover losses through contracts, you really are not cut out for it. No matter how much you lose, it doesn't matter; even if you go bankrupt, you cannot recover losses through contracts. Therefore, I advise those who want to recover losses through contracts to give up contracts, in other words, to give up gambling.
What should spot traders do when they lose money?
First, if the loss is not much, and there is still considerable principal, meaning the principal and the loss are balanced, then recovering losses is relatively simple and easy. In other words, those who need to recover within five times of the investment are all possible. However, the most important point is the entry point and exit point. If you are stuck at a high point, it will be difficult. Most people can make money when a bull market begins or during the main upward wave of the bull market. Losing money usually occurs due to a lack of understanding of how to sell. Therefore, the position to sell is very important, but selling is not the most important thing.
Most importantly, after selling, being able to remain in cash and wait is something that most people cannot do. It should be that 95% of retail players cannot achieve this, which is fundamentally why most people lose money. If you can sell at a relatively high point and not be influenced by market analysts or various positive news at high positions, and insist on cashing out, then that is truly securing the profits.
To summarize the losers.
1. Recover within five times.
2. You need to know how to sell.
3. You need to know how to go short.
Of course, it's the same for spot players, as less than 5% of retail investors make money. This is because the trading market is a battle against human nature: greed, fear, arrogance; very few can overcome them.
So, who are the ones who make money through trading?
Those who truly make money often only learn one trading method, are familiar with the fundamentals, and buy in when the market is in a sideways bottom, holding on until it rises sufficiently before selling. They do not pay too much attention to the news, and when it comes to the types they want to buy, they do not blindly purchase. However, when a bull market comes, any cryptocurrency will rise.
In fact, especially for many novices playing spot, it can be easier to make money.
After trading cryptocurrencies for over ten years, in the past two years, I used 100,000 to summarize and replicate trading methods. In two years, I managed to reach 48 million, and I successfully withdrew it to my Alipay balance!
In the past two years, after hundreds of days and nights researching various charts and summarizing simple and replicable trading methods, I have summarized 8 iron rules from thousands of trading practices. The content is not much but very valuable. If you think it makes no sense after reading it, feel free to say what you want!
1. Divide your funds into 5 parts, only enter one-fifth at a time! Control the stop loss at 10 points; if you make a mistake once, you only lose 2% of the total funds, and if you make 5 mistakes, you only lose 10% of the total funds. If you are correct, set a take profit of more than 10 points. Do you think you will still be trapped?
2. How can we further improve the win rate? Simply put, it is two words: follow the trend! In a downtrend, every rebound is a trap for the bulls, while in an uptrend, every drop creates a golden pit. Which is easier to make money from: buying the dip or low absorption?
3. Do not touch cryptocurrencies that have rapidly surged in the short term, whether mainstream or altcoins. There are very few cryptocurrencies capable of sustaining several waves of major upward trends. The logic is that it is difficult for prices to continue rising after a sharp short-term increase; when high prices stagnate and cannot be pushed higher, they will naturally fall. It's a simple truth, but many still want to take a gamble.
4. Use MACD+ to determine entry and exit points. If the DIF line and DEA form a golden cross below the 0 axis and break through the 0 axis, it is a solid entry signal. When MACD forms a death cross above the 0 axis and moves downward, it can be seen as a signal to reduce positions.
5. I don't know who invented the term 'averaging down,' but how many retail investors have tripped over it and suffered huge losses! Many people lose more and more as they average down, which is one of the biggest taboos in trading. Remember to never average down when you are in a loss; rather, average up when you are making a profit.
6. Volume-price indicators come first. Trading volume is the soul of the crypto market. Pay attention to volume breakouts at low price levels during consolidation, and decisively exit at high price levels when volume surges.
7. Only trade cryptocurrencies in an upward trend, as this maximizes the odds and does not waste time. When the 3-day moving average turns upward, it indicates a short-term rise; when the 30-day moving average turns upward, it indicates a medium-term rise; when the 84-day moving average turns upward, it indicates a main upward trend; and when the 120-day moving average turns upward, it indicates a long-term rise!
8. Insist on reviewing weekly, checking whether the holding logic has changed, analyzing whether the weekly K-line trends align with judgments, and whether the direction has seen a trend change. Adjust trading strategies in a timely manner!
Specially identifying overbought and oversold! What is the charm of the favorite short-term oscillating indicator of the 'father of MACD'?
Based on oscillating analysis, the analysis of divergence has become a significant milestone in the history of technical analysis, and they have proven the advantages of this indicator with impressive results. This indicator is the renowned MACD.
Nowadays, identifying market reversal signals through the dual lines of DIF and DEA, as well as the changes in red and green bars, has become the first stop for many people when they start trading.
However, the shortcomings of MACD are also very obvious; only when the high position dies and the bars change significantly is there a clearer entry signal. It is not sensitive enough to short-term price fluctuations, and the indicators can easily become blunt.
Therefore, Gerald Appel and Fred H. Meyer invented the Rate of Change (ROC) indicator, which predicts price trends by tracking the rate of price changes.
Find the critical points of trends like throwing a small ball.
Although ROC may not be as well-known in the trading world as MACD, it is one of the most favored indicators among many trading masters.
One of the most famous trading systems in the trading world is the Pring Oscillator System, which is based on ROC-type oscillators to predict market trend turning points from the perspective of momentum analysis.
Pring compares trading to throwing a ball upward. Due to gravity, the ball's upward speed will gradually slow down until it experiences a brief pause before starting to move downward.
Therefore, Pring believes that when prices reach high levels, they will start to gradually lose momentum. By monitoring this process, we can identify market turning points, and the key indicator responsible for tracking this rate of change is the ROC indicator.
Mr. Martin Pring is globally recognized as one of the three top technical analysis masters of contemporary times. His outstanding achievements in popularizing and broadly researching technical analysis have made him known as the 'technical analyst's technical analyst' by the famous American financial magazine (Barron's).
The calculation formula for the ROC indicator consists of only 3 steps.
1. AX = today's closing price - N days ago's closing price.
2. BX = N days ago's closing price.
3. ROC = AX / BX.
Compared to MACD, the calculation of ROC is not complicated. In fact, it compares the current price to the rate of change from n days ago, generally taking 12 units of time. Like most oscillators, ROC also identifies trend reversals through overbought and oversold zones.
When reaching the limits of overbought or oversold areas, a trend does not necessarily reverse immediately; it merely indicates the timing for buying or selling.
However, in most cases, when ROC surpasses the boundaries of overbought or oversold zones, if it then returns to the equilibrium level, it is a very reliable buy or sell signal.
However, this is not absolute. Pring believes that there is also the phenomenon of excessive overbought or oversold.
Generally speaking, if ROC enters the oversold zone, the next return to the equilibrium zone signifies the beginning of a market rebound. However, if the market has experienced a long trend, significant overselling at this time indicates that the bulls have exhausted their chips, and the bears can easily break through the bulls' defense, leading to a high probability of continued downward movement.
The key point here is that the market has continued for a long time, enough to exhaust the market chips in one direction.
A similar special situation is extreme swings.
Excessive overbought or oversold conditions still fluctuate from the equilibrium zone to the overbought and oversold zones. However, if the sellers attempt to pull up the market for profit before exhausting their chips, they may briefly enter the oversold zone, only to quickly swing into the overbought zone due to the bulls' efforts.
So, you will briefly see ROC quickly swing from the oversold zone to the overbought zone, but this is actually a very precise bottom signal.
But the same premise is that this trend has been sustained for quite a long time. Without this assumption, the accuracy of ROC in identifying trend reversals will significantly decrease.
Commonalities of oscillators: divergence and deviation.
Since the ROC indicator itself tracks the rate of price changes, it can also draw trend lines, and in conjunction with indicator breakthroughs and price relationships, further improve accuracy.
1. Identify signals through divergence.
Like other oscillators, when the ROC indicator and price trend show divergence, it is often a signal of a trend change.
For example, if ROC is clearly weakening, but the market stops falling or even shows signs of a rising low, this indicates that the market is resistant to falling, which is a clear signal of bottoming.
It is worth mentioning that ROC and MACD have a similar characteristic: the closer they are to the equilibrium line (the 0 axis), the more effective the breakout signals that appear.
Because near the equilibrium line, the rate of price change is actually very small, any action to push the price will lead to significant fluctuations.
In actual trading, combined with trend lines, the strength of the signals will be even more apparent, especially when the market is about to break through the trend line. At this time, if ROC crosses above the equilibrium line, a significant upward trend often follows.
2. The golden cross and dead cross relationship between ROC and MAPOC.
MAROC indicator has also been introduced in ROC.
MAROC is the M-day moving average of ROC. By analyzing ROC and MAROC, you can identify whether the current ROC is deviating from the average fluctuation level, thus identifying extreme price changes.
When ROC falls below MAROC from above, it is a sell signal; and when ROC rises above MAROC from below, it is a buy signal. In actual trading, ROC is more sensitive to short-term prices, and the golden cross formed between the bottom and MAROC often occurs earlier than MACD, allowing for early detection of bottoming signals.
Some investors also set 13 and 26 periods of ROC indicators, using the golden and dead crosses of long and short period indicators to identify trend signals. This is similar to the DIF and DEA dual lines in MACD.
The essence of the golden cross and dead cross is to identify extreme fluctuations through the divergence rate between indicators. From a long-term perspective, short-term and long-term prices tend to converge.
Third, the trading volume ROC indicator.
Mr. Pring, based on traditional oscillator analysis, also introduced the volume oscillator. His idea is that when prices break through or enter a peak selling point, the trading volume usually expands significantly. Therefore, processing trading volume data into a rate of change indicator allows for early detection of price breakthroughs. It should be emphasized that trading volume ROC and trading volume are not the same indicator.
The trading volume ROC always reflects the rate of change, indicating that the market is attempting to break through by increasing trading volume. As shown in the figure, although the trading volume ROC has quickly expanded, the trading volume has not significantly increased, indicating that the previous accumulation has gradually exhausted.
So, this wave of increased trading volume did not drive the market, but instead exhausted the chips, which is reflected in the price as a signal of a peak.
By combining the rate of change in trading volume with trading volume, we can further confirm the effectiveness of increased trading volume.
Conversely, the same applies: if both trading volume and price reach high levels, but trading volume ROC does not show significant changes, it is usually not a useful signal.
Thus, through the trading volume ROC data, we can confirm whether we are at a crucial price breakout point. However, how to break through must be determined based on the specific market conditions.
For example, when the market is about to break below the trend line, if the trading volume ROC quickly expands and enters the oversold zone, this is not a buying signal; on the contrary, it indicates that the selling climax has raised the trading volume, and subsequently, the market often plunges.
Through a simple combination of trend lines and trading volume ROC, we can relatively accurately predict market selling and buying signals.
Of course, regarding trading volume, we can also track it through some professional tools, such as EBC's order flow tool.
Compared to identifying market trading volume through indicators, the EBC order flow tool + ten-level order book real-time Tick data allows for a more intuitive understanding of order flow in the market.
For example, this is a typical footprint chart of the EBC order flow tool. It clearly records the number of orders corresponding to each K-line, with the left side being short positions and the right side being long positions. Through a comparison of strength, you can clearly understand the movements of the major forces.
In summary, the ROC indicator, as one of the most representative oscillators, is very sensitive to short-term price changes and works well with MACD, while also possessing the advantages of indicators like CCI and KDJ. Additionally, with its simple algorithm, ROC can be widely applied to different variables, helping us more accurately identify changes in momentum factors.
Crypto circle essentials! Five major suggestions for cryptocurrency newbies.
For beginners, trading cryptocurrencies is not as simple as you think. It is not just about buying low and selling high to make countless profits. A qualified trader must understand the economy, follow news hotspots, understand national policies, care about international situations, and study the fundamentals and technical aspects of virtual currencies. They must constantly battle their own fears and greed, have a big heart to endure large fluctuations, and withstand temptations and hardships. It can be said that those who survive in the crypto space are basically resilient and impervious to harm.
1. Diversify your attention and do not constantly watch the market.
Buying cryptocurrencies is not everything; diversify your attention, do not constantly watch the market, maintain a calm mindset, and avoid psychological imbalance. Watching the market is truly torturous; seeing a rise when you haven’t bought in makes you regret it, and seeing a decline when you bought high makes you feel worse. Control your position well, dividing it into long-term and short-term, setting a profit ratio. If that ratio is not reached, do not sell. Generally, it is unnecessary to watch the crypto market; this can greatly reduce psychological pressure and help in rational investment decisions.
2. Hedging, preparing for both sides.
For Bitcoin, whether in the spot market or the contract market, the factors affecting price changes are the same. The prices in the spot and contract markets often rise and fall together. Investors can use this characteristic for hedging. Whether the price rises or falls, there will always be one market making a profit while the other incurs a loss, balancing out gains and losses.
3. Set a stop-loss position.
Learning to set stop losses is an important investment skill. Due to the high risks in the investment market, to avoid losses caused by investment mistakes, we should set stop-loss orders every time we enter the market. That is, when the exchange rate falls to a pre-set price, and may continue to fall, we should immediately close the trade. Such orders limit further loss expansion.
4. Strictly control your position.
First, strictly control the position to 50%. Retreat for defense and advance for attack. Never go all-in; if you go all-in and the market crashes, no one can save you. Secondly, once it rises 2-3 times, definitely sell half first. After recovering the principal, we use profits to slowly play with the market makers until we reach our ideal selling price, then we can slowly sell off. Finally, we keep 10% of the bottom position to avoid missing out on strong upward pushes from powerful market makers. When the market goes crazy and everyone is chasing prices, you must gradually sell off your holdings in stages.
5. The mindset of investing is very important.
Being profitable will make some people proud and complacent; however, losses will trigger many people's desire to recover their losses. But recovering losses also depends on timing. If one is too eager to recover, it may lead to irrational decisions. For example, some people, eager to recover, will bet all their trading funds on a cryptocurrency that seems to have good 'prospects'. However, the market is always unpredictable and uncontrollable. If that cryptocurrency falls, not only will they not recover, but they will also incur more losses.
Profit can make some people proud and complacent, while losses can trigger many people's desire to recover their losses. But recovering losses also depends on timing. If one is too eager to recover, it may lead to irrational decisions. For example, some people, eager to recover, will bet all their trading funds on a cryptocurrency that seems to have good 'prospects'. However, the market is always unpredictable and uncontrollable. If that cryptocurrency falls, not only will they not recover, but they will also incur more losses.
This is the trading experience that Mi Shao shared with you today. Many times, you lose many opportunities to make money because of your doubts. If you do not dare to try boldly, to approach, to understand, how will you know the benefits and risks? You only know what to do next after you take the first step. A cup of warm tea and a piece of advice; I am both a teacher and a good friend you can talk to.
Meeting is fate, knowing each other is destiny. Mi Shao firmly believes that fate will eventually lead to meeting, while the lack of connection is destiny. The journey of investment is very long; a moment's gain or loss is just the tip of the iceberg along the way. Remember, even a wise person can overlook something, while a foolish person may gain something unexpectedly. Regardless of emotions, time will not stand still for you. Pick up your inner frustration, stand up again, and move forward.
Teaching a man to fish is better than giving him a fish. For investors, whether they are beginners or experts, following Mi Shao not only brings financial gains but also growth in investment knowledge and experience. In the process of following Mi Shao's investments, he will not only provide analytical ideas for market conditions, basic knowledge of watching the market, and methods for using various investment tools, but also bring exciting fundamental interpretations, clarifications of chaotic international situations, and discernment of various investment forces. This allows you to become both a winner and an expert in investing!
Keep going! I am Xiao Qi, a veteran who sincerely wishes you wealth in the crypto space.
Continue to pay attention to BTC, ETH, BNB.
Bulls have their strategies, and bears have their ways of playing.
Xiao Qi will not lead fans to blow up their accounts, nor will he blindly open positions.
It's all about seeking victory steadily, making steady progress. Those who want to profit should keep up with Xiao Qi!
