As an old crypto trader, I unknowingly traded in the crypto space for 10 years; surviving in the crypto space until now is indeed not easy! I have also been beaten by whales and experienced many liquidations; I was once lost and spent countless times hiding in dark corners, smoking pack after pack of cigarettes. This is the price of growth!
From entering the crypto space and making a profit of 10 million, then going into debt of 8 million, then making a profit of 20 million, to now achieving financial freedom mainly mastering contract skills, trading in the crypto world is like a heartbeat, thrilling and more exciting than a roller coaster.
Today, I will share a summary of my years of trading experience for free, hoping to help everyone!
After 10 years of trading cryptocurrencies, I made a profit of 20 million! In the crypto space, turning 50,000 into 1 million is not a myth. Here are some practical suggestions:
Contract trading: Each time use 100 yuan for contract trading, focusing on speculative hot coins. Set profit-taking and stop-loss, with the target being to double 100 yuan to 200 yuan, then 200 yuan to 400 yuan, and 400 yuan to 800 yuan. Remember, at most three times! Because trading in the crypto space requires a bit of luck, doing this type of all-in speculation can easily yield 9 profits and one loss! If you successfully pass the three levels with 100 yuan, your principal will then be 1100 yuan! At this point, you need to settle down.
In-depth research: Spend time studying and understanding the cryptocurrency market, focusing on the fundamentals, technology, team, and market trends of projects. Understand the risks and potential of different projects.
Diversified investment: Spread funds across multiple promising cryptocurrency projects to reduce the risk of individual investments. Choose projects with long-term growth potential and solid fundamentals.
Time holding: Consider adopting a long-term investment strategy, holding tokens of quality projects, and believing in their long-term appreciation potential. The cryptocurrency market is highly volatile; patience and a long-term perspective are needed.
Use leverage cautiously: If you choose to use leveraged trading, make sure you fully understand the risks of leveraged trading and manage the leverage ratio appropriately.
Active trading: Actively participate in trading and capture market fluctuations. Understand technical analysis tools and indicators, learn trading strategies, but be aware of market risks and volatility.
Continuous learning and adaptation: The cryptocurrency market changes rapidly; keep learning about the industry and market, and flexibly adjust investment strategies based on market conditions.
Risk management: Ensure that you have an appropriate risk management strategy, including setting profit-taking and stop-loss levels, managing position sizes, and maintaining sufficient cash flow.
Triple strategy: It is recommended to use a triple strategy for one day, doing two types of orders: ultra-short and strategy orders. If opportunities arise, then enter trend orders.
Ultra-short positions are used for quick strikes, and the advantage of trading at the 15-minute level is: high returns, but the disadvantage is: high risk. Only trade major cryptocurrencies.
The second type of order, strategy order, is to use a small position, such as 10 times 15 dollars, to trade contracts at the 4-hour level. Use the profits to accumulate and regularly invest in major cryptocurrencies.
The third type is trend-based long-term trading, where you directly enter once you identify the right opportunity.
Through these strategies, you can find your own profit opportunities amidst the fluctuations in the crypto space.
Trading cryptocurrencies is indeed very brutal, with a profit of 1, break-even of 2, and a loss of 7.
This is the only unchanging truth in this market.
If the brothers are currently in a stage of loss and confusion,
And the capital is within 500,000.
If you want to quickly establish a position in the crypto space through short-term trading,
So please read this post carefully.
After watching, you will gain a sudden enlightenment about the essence of trading.
1️⃣ Control your desires; knowing and doing must be unified.
People are driven by greed, anger, and ignorance; when the market rises, they always want to earn a little more, and when the market falls, they start playing dead and refuse to admit defeat.
It's hard to get out of a loss, only to become a cowherd. In this market, if you don't have principles, you will definitely be swayed by the market makers and your own emotions.
My principle is that each loss should not exceed 5% of the principal. If I profit, it should be at least 10-30%. Once I start to give back more than 20% profit, I must ensure that this trade does not result in a loss. Even with a win rate of only 50%, after 100 trades, my returns would still reach 800%.
Is it difficult? The difficulty lies in human greed and fear; knowing and doing must be unified.
2️⃣ Concentrated investment; learn to stay in cash.
The greatest pain point for retail investors: not knowing how to stay in cash, weakly averaging down losses, having less capital but more coins, and stubbornly holding losses. Below 500,000, it is advisable not to hold more than 3 coins; above 1 million, you can control it to a maximum of 5 coins. Those coins with large moving average systems trending down, and those with weak fundamentals, should be eliminated. Admitting mistakes may require great courage, but acknowledging one's errors is the beginning of success.
Those who know how to buy are apprentices; those who know how to sell are masters; those who know how to stay in cash are the ancestors.
When the market is bad, you must be able to control your hands. But when you genuinely see potential, you should dare to take a heavy position; in fact, most profits in the investment market come from a few good coins.
My 60% of funds are never held in more than 5 assets (BTC/SOL/ETH/BNB/DOGE), even in a bull market. 20% is allocated to leading coins in bull market sectors, and the remaining 20% is always held in cash waiting.
3️⃣ Volume and price are the only indicators that do not deceive.
Returning to the basics, mastering volume and price is enough to let you outperform 80% of traders.
Volume breakout often indicates capital involvement, usually leading to significant market movements. A 0.5 time volume indicates obvious shrinking volume, and a new high on shrinking volume shows a high degree of control by the main force, making it possible to rule out the possibility of the main force unloading. In an upward trend, it is highly likely to yield profits.
If the price increase of your coin exceeds the previous day, and the volume ratio is less than 1, it indicates that there is still considerable upside potential. The probability of a further rise the next day is very high. Of course, conversely, if there is a volume of 1.5 times, and the volume meets resistance at a certain level, it often means a signal of a peak. Studying volume must be paired with price; understanding the forces of bulls and bears also grasps the essence of volume and price.
4️⃣ A market crash is a touchstone for evaluating coins.
In a bull market, a sharp drop in the market means an opportunity to catch the bottom and is a good time to select coins. If the market crashes, and your coin only drops slightly or not at all, it clearly indicates that capital is grouping together, refusing to drop, so this type of coin can be held with confidence; there will definitely be returns.
If the market crashes and your coin drops significantly, but the next day the market rises and your coin skyrockets, it is likely that the main force is washing the plate by taking advantage of the market drop; this type of coin is good. You can buy it when the market crashes and sell it when the market rises, taking short-term rebound profits.
5️⃣ The trend is king; follow the trend.
Once a trend is formed, it will not change easily; novices die from catching the bottom, while experts die from reaching the top. The wisest choice is not to guess, not to predict, not to assume; follow the trend. If you can't judge the trend, look at the moving averages; when all moving averages are parallel and ascending at a 45-degree angle, it’s hard to lose money on such coins. If you're trading short-term, watch the 5-day moving average; as long as it doesn't break the 5-day moving average, it remains strong. The lifeline of a wave is the 60-day moving average; coins in an upward trend often have at least short-term opportunities when they first drop to the 60-day moving average.
6️⃣ Buy on divergence, sell on consensus.
This is like the previous Ethereum ecological sector; when Ethereum rises collectively, there will definitely be differentiation because the main force wants to take profits when everyone is willing to buy, cashing out at high positions. Therefore, it is said to sell on consensus.
When buying on divergence, one principle for making strong coins is that the strong remain strong. A coin that can become a strong coin must be favored by the capital in the market. Once someone sells such a coin, more people will buy it, and it often continues to rise, represented by the K-line pattern as a bullish engulfing.
7️⃣ The more the trading is not smooth, the more you need to stay calm.
The difficult road is not something everyone is qualified to walk. Only those who can withstand the pain of rebirth deserve the beauty of rebirth. Many people have suffered huge losses just like me; when I entered the market in 2017, I lost my bearings. I am very grateful for this experience because I stood up, and I believe I will not fall again. In fact, the more successful the trading, the more low-key one should be. Before the first half of 2017, my funds exceeded one million. There was little money, but I was high-profile. The result of being high-profile only leads to blind arrogance, gradually losing awareness of risks.
8️⃣ Why I choose to trade.
I was born poor and cannot die in poverty again. I don't know how many people are like me, coming from a rural background, wanting to change their destiny. I made my first pot of gold in internet finance, and after entering the crypto space in 2017, it seemed tailor-made for people like us. It doesn't require socializing or bowing down. If you have the ability, it becomes your ATM; if you don't, then bear the consequences of your expectations. The crypto space is very fair. Of course, all breakthroughs and transitions are painfully difficult, but each failure is a stepping stone towards financial freedom.
9️⃣ 'One general's success results in countless bones being shed.'
Trading cryptocurrencies is actually very brutal, with a profit of 1, break-even of 2, and a loss of 7 being the only unchanging truth in this market. Many experts in the crypto space that I know study Buddhism; during every major market movement, whether up or down, we choose to release life and make donations, knowing it is meaningless, but hoping for a smooth thought process. If one day everyone succeeds, remember to do something meaningful for society! In a Buddhist perspective, this is karma; in a serious perspective, it’s about benefiting the world when achieving success!
In the end, every brother in the crypto space/US stocks will eventually experience a transformation from short-term speculation to long-term layout, which is not only an adjustment of strategy but also a key mark towards success and profitability.
I will share a set of practical strategies that I have developed over the years, achieving an average win rate of 80%, which is quite a rare achievement in the crypto trading field.
It can be said that I have used 80% of the market's technical methods and will share the most practical strategies in real combat with everyone—the K-line combat strategy, which has proven effective! A profit of 30% in a month.
Before learning about K-lines, let's first understand the two-line reversal pattern.
What is the two-line reversal pattern? We will understand this pattern in three steps.
First step:
Bearish two-line reversal: a bullish candle followed closely by a bearish candle; bullish two-line reversal: a bearish candle followed closely by a bullish candle.
Of course, such situations appear too frequently on the charts! They are almost meaningless; don't rush.
Next, look at the second step:
1. The two-line reversal pattern is prominent, not hidden within a consolidation range.
2. The two K-lines in the two-line reversal pattern, whether rising or falling, strongly advance in the corresponding direction.
3. There is a large area overlap between the two K-lines.
At this point, some investors may feel a bit confused: what counts as 'prominent'? What counts as 'strong advancement'? What counts as 'large area overlap'?
This seems to reflect the differences between the East and West. Just like in cooking, a Chinese chef might say to add a pinch of salt or an appropriate amount of soy sauce, but how much is a pinch? How much is an appropriate amount? This undoubtedly relies on experience. In contrast, a Western chef would take out a scale and tell you how many grams of salt or sugar to add.
These two methods have their pros and cons. The quantification method from foreigners is easier for beginners to grasp. If the environment changes, overly rigid doctrines lack flexibility. But to help everyone grasp this strategy faster, I will still use the foreign quantification method here; everyone can optimize in practice (I will provide examples again at the end).
If we want to quantify the terms 'prominent', 'strong advancement', and 'large area overlap', we need to introduce a concept called 'typical price':
Typical price = (highest price + lowest price + closing price) ÷ 3. From this formula, it can be seen that the so-called typical price refers to the average of a K-line's highest point, lowest point, and closing price.
In trading, we do not need to calculate typical prices ourselves. Here, I will share a simple method: use the moving average indicator to check typical prices. The specific method is to open the parameter settings of the moving average indicator and set the 'time period' to 1, and in 'apply to', select Typical Price (HLC/3):
We selected the daily chart of GBPUSD and set it up as follows:
Next, is the core essence of this strategy.
After understanding typical price, let's redefine the third step for convenience. We refer to the first K-line in the two-line reversal pattern as K-line B and the second K-line as K-line C:
1. How to define 'prominent': In a bullish reversal, the typical price of K-line B must be lower than the low of the preceding K-line (i.e., K-line A); conversely, in a bearish reversal, the typical price of K-line B must be higher than the high of K-line A.
2. How to define 'strong advancement': K-lines B and C must both be trend K-lines (I will detail the trading strategies for trend K-lines later, here you just need to know its definition: the body occupies more than 50% of the total K-line length).
3. How to define 'large area overlap': The typical price of K-line B must be within the range of K-line C, and similarly, the typical price of K-line C must also be within the range of K-line B.
Once we grasp the essence of two-line reversals, we can start looking for entry signals:
When a bearish two-line reversal pattern occurs, if the price breaks below the low of K-line C or K-line B (whichever is lower), it is the opportunity for us to enter a short position.
When a bullish two-line reversal pattern occurs, if the price breaks above the high of K-line C or K-line B (whichever is higher), it is the opportunity for us to enter a short position.
Several classic cases.
Next, we will introduce some typical two-line reversal pattern cases.
Taking the gold 1-hour chart as an example, in the chart below, we have marked 4 bullish two-line reversal patterns (oval areas) and 2 bearish two-line reversal patterns (rectangular areas). Among them, there are more typical ones (B and C) and less typical ones (A and D), let's analyze them one by one:
In the chart, after A-D, all four bullish reversals showed a good rebound, but only B and C belong to more typical two-line reversals. In both combinations, the typical price of K-line B is lower than that of K-line A; both are trend K-lines, and their typical prices are mutually inclusive.
A does not meet the criteria due to two points:
First, the typical price of K-line B did not fall below the low of K-line A;
Second, K-line B is not a trend K-line.
The reason D doesn’t meet the criteria is that K-line B is not a trend K-line.
In the three bearish reversal patterns EFG in the chart, E does not meet the strict criteria for a two-line reversal pattern because K-line C does not constitute a trend line.
F and G meet three conditions, but F fails to trigger an entry signal after it appears, meaning it did not break below the low of K-line C. Only G barely meets the three conditions, and the subsequent pullback is very weak.
From this case, we can see the first use of the two-line reversal pattern: under the condition of maintaining an upward trend on a large cycle chart, the two-line reversal pattern provides a good signal for the start of a short-term pullback and a bottom signal for the pullback, reminding bulls of the opportunity to buy at a low.
Let’s look at the second case, which is the daily chart of EURUSD. In the chart below, I marked more two-line reversal patterns. It is important to note that although many turning points appear in the form of two K-line reversals, not all turning points meet the standards of the two-line reversal pattern.
In the bullish two-line reversal patterns in the chart, except for E and G, all meet the requirements for the two-line reversal pattern because they do not meet the condition 'the typical price of K-line B is lower than the low of K-line A.' In the bullish two-line reversal pattern, I does not constitute a two-line reversal pattern because it does not meet the condition 'the typical price of K-line B is higher than the high of K-line A.'
Of course, there is also a new signal here, which is the position N in the chart. Since this signal has not yet been verified, I added a question mark; everyone can pay attention to whether EURUSD will show a pullback trend in the coming days.
Next, let's look at the third case, the weekly chart of crude oil:
The bullish two-line reversal within the B area of the chart is not standard, because K-line C is not a standard trend K-line (the body accounts for less than 50% of the K-line length). Apart from this, the bullish two-line reversals within the rectangular area are all relatively standard two-line reversal patterns.
This chart reveals a very important aspect of the two-line reversal, which is different from ordinary bullish engulfing patterns, etc.: Starting from November 13, 2022, oil prices entered a consolidation phase, during which multiple bullish engulfing patterns appeared, but none of these patterns met the standards for a two-line reversal.
In other words, the two-line reversal pattern is the essence of excluding false signals within consolidating ranges in naked K-line trading.
Both East and West have their strengths and weaknesses.
Of course, no strategy is 100% successful. We also marked some failed reversal signals in the chart, such as A in the crude oil chart, which involves the strengths and weaknesses of Eastern and Western methods.
When we set the rules too rigidly, we may miss some trading opportunities, such as A and D in the gold 1-hour chart, especially the reversal pattern D that deserves our careful review.
It does not meet the typical two-line reversal because K-line B does not constitute a trend K-line, that is, its body accounts for less than 50% of the whole. However, if we look closely, we can find that the body of K-line B is not small. In K-line language, the body expresses strength and weakness. Therefore, K-line B actually meets the standards of strong advancement. Additionally, the reason why the body does not occupy 50% is due to a long lower shadow, but in K-line language, a long lower shadow is often a bullish signal, consistent with the signal of this reversal pattern itself.
In addition to missing some true signals, one may also be confused by some false signals, such as A in the crude oil weekly chart, which initially formed a 'prominent' trend but quickly returned to the original consolidation range. From the chart, we must wait for this range to break down before confirming the beginning of a downward trend.
Simply put, rules are just to help us quickly understand strategies; once we have accumulated enough experience, we can gradually optimize strategies in trading.
What is a trend K-line?
Trend K-line is a common K-line pattern; its main feature is that the body is long and the shadow is short. Therefore, it is also called a wide body K-line.
Trend K-lines do not have a fixed definition; the length of their bodies mainly compares to the K-lines before and after them. When we see that the body of a certain K-line suddenly becomes much larger than the bodies of the K-lines before and after it, we call it a trend K-line.
The logic behind trend K-lines only appears when the forces of bulls and bears are very unbalanced. Furthermore, the appearance of trend K-lines often indicates that the price has reached a certain supply or demand zone; therefore, these K-lines are often signals of supply/demand zones. So, what methods can we use to predict future price movements based on the appearance of such K-lines? Let’s give an example. Suppose you made a long position at a certain price level, and then very fortunately, you see the price start to rise, forming a trend K-line; we have floating profits. To prevent floating profits from turning into losses, what would you do? Yes, I believe many people will adjust their stop-loss to near the entry price. Even if the price reverses later, we won’t incur a loss.
But soon after, the price began to retrace and approached our entry price.
What would you do at this point? To prevent profits from turning into losses, many people will exit and sell their positions after reaching the entry price, thus accelerating the reversal of the price trend.
After understanding the logic of trend K-lines, there is one thing to note: although trend K-lines are crucial supply/demand zones, whether to long or short when the price approaches these zones should not be generalized; it should be combined with intraday bias and market liquidity distribution. Let's take the short-selling idea I provided on February 5 as an example.
At that time, the price was already close to the previous trend K-line high. If the price continues to rise, many investors will fear a profit pullback and choose to close their positions, switching from bearish to bullish. In this case, the short side will face significant liquidity (the premise of selling is that someone buys; the more buyers, the faster the sell orders are filled), so under the premise of bearish intraday bias, this trend K-line high is very likely to be a reversal point.
As for how to judge intraday bias, I will detail it in another lesson of this course. Next, we continue to introduce other uses of trend K-lines.
Trend K-line uses: breakouts, recognizing buying and selling peaks, and structural changes.
First, let's look at the first use of trend K-lines, which is breakouts. When the price enters a consolidation period, the appearance of a trend K-line often signals a break in consolidation and the start of a new price movement.
I will explain the breakout trading strategy in detail in the next article; for now, we can first understand the role of trend K-lines. The second use is to recognize buying and selling peaks. After a trend has continued for some time, if a particularly obvious trend K-line suddenly appears, it may signal that the trend is about to end and reverse.
The third use is what I mentioned earlier, CHOCH, which is structural change. Trend K-lines can help us recognize wave turning points and also assist in identifying the authenticity of trend reversals. For instance, when the price retraces, how do we determine whether it is a temporary pullback or a change in trend? At this point, trend K-lines play a significant role.
When the price breaks below the opening price of the trend K-line, a reversal may occur. In the chart below, the price forms a morning star pattern, which can easily deceive beginners into thinking that a reversal is imminent. However, we can use trend K-lines for judgment; for example, K-line 1 in the chart is not completely engulfed, so the reversal logic does not hold. Therefore, we cannot yet consider that the trend has reversed. On the contrary, this may just be a profit-taking by the bears, presenting an opportunity to short at a high.
In the same way, if a reversal pattern appears near the opening price of the trend K-line when the price pulls back, there is a high probability that the price may return to its original trend.
Let's look at another case where the price, upon touching the trend K-line, pushed the trend reversal in the form of a reverse trend K-line. The low point of the trend K-line here serves as a suitable stop-loss position.
Successfully recouping losses, doubling the account. Stick to the old rules, take positions early, and enjoy the big profits!
Continue to pay attention: KAIA RVN
