The most practical trick for short-term trading in the cryptocurrency world, Old Jin directly shares the basic skills I have learned over ten years of trading.
Perhaps some people will say that short-term trading is speculation!
First, it must be said that short-term trading is not speculation. True short-term trading is an investment behavior that requires mastering certain market operation rules and strong skills. Short-term trading truly tests a person's skills and patience.
A person proficient in short-term trading must have seen many candlestick charts, studied their trends, and summarized general patterns.
The patterns mentioned here can only be considered as concepts from a probabilistic perspective. It is impossible to have completely accurate judgments, as the entire market unfolds across emotions, information, and many dimensions, with emotions being the hardest to predict. Therefore, we can only attempt to make rough judgments.
How specifically to do it? We need to learn to summarize historical trades and identify the conditions under which certain patterns emerge in future trends. In this process, the role of candlestick charts is indispensable. Besides reflecting short, medium, and long-term fluctuations, the most macro point is that it can tell you which projects are well managed in terms of market capitalization and which projects plummet after being dumped, purely cutting retail traders.
For instance, we have mentioned multiple times that there are many fork coins of BTC; in fact, apart from BCH, other fork coin candlestick charts are essentially unreadable.
These fork coins' candlestick charts have been in a continuous decline since the top, with basically no fluctuations, sliding down like a slide, hardly giving retail traders a chance to escape. From their candlestick charts, it can be seen that the market makers no longer hold a large number of coins; these coins are concentrated in the hands of retail investors, hence no one is pushing the price up, essentially becoming legacies.
Many retail traders have turned short-term trades into mid-term, then into long-term, and finally into legacies.
As a novice in the cryptocurrency world, we need to pay attention to a few points:
1. First ensure the probability of success, then consider the frequency of entry. Pursue quality before quantity. During short-term operations, take it step by step, the principle is to avoid large losses.
2. When making money, be satisfied; when losing money, be rational. Trading coins is actually the art of regret, we cannot set our expectations too high.
3. Practice makes perfect. If there are experts leading the way, asking them for advice will lead to faster progress.
If you can achieve the above three points, then at least as a retail trader, we won’t lose our way in the cryptocurrency world.
What is the difference between the cryptocurrency world and gambling?
The probability of gambling is random and lacks patterns. Randomly it’s 48:52, if you overdo it, you will definitely incur losses. In the cryptocurrency world, experienced traders can have certain judgments. There are some periods (very few) when there is almost a 90% probability of rising. Some periods are unclear. Some periods have over 90% probability of falling.
If you can overcome your inner demons, filter out most periods that are unclear or likely to fall, and only trade during the very few high-probability rising periods, then you will achieve permanent profits. So is there a way to maintain 'eternal profit'? Today, on the 6th, I will share with you.
There is the simplest trading method for coins that I have tried many trading methods, but most methods lack practicality. Only this method has enabled me to achieve relatively continuous profits, and I still use this method now, which is highly effective and stable.
Don't worry about whether you can learn it. If I can seize this opportunity, so can you. I’m not a god, just an ordinary person. The difference between others and me is that others overlook this method. If you can learn this method and pay attention to it during future trades, it can help you earn an additional 3 to 10 percent daily.
First step: Add coins that have increased in the ranking within the last 11 days to your watchlist. However, be careful to exclude any coins that have fallen for more than three days to avoid exiting with profits.
Step two: Open the candlestick chart and only look at the coins with a MACD golden cross at the monthly level.
Step three: Open the daily candlestick chart, here only look at one 60-day moving average. As long as the coin price corrects near the 60-day moving average and shows a strong candlestick, invest heavily.
Step four: After entering the market, use the 60-day moving average as a standard. If above the line, keep holding; if below, exit and sell. This is divided into three details.
The first rule is to sell one-third when the wave increase exceeds 30%, the second is to sell another third when the wave increase exceeds 50%. The third is the most important, and it determines if you can make a profit. If you buy on a certain day and the next day an unexpected situation occurs causing the coin price to drop below the 60-day moving average, then you must exit entirely without any delusions. Although the probability of falling below the 60-day line using this monthly and daily line selection method is very small, we still need to be risk-aware. In the cryptocurrency world, preserving capital is the most important thing. However, even if you have sold, you can wait until it meets your buying criteria again before buying back.
Ultimately, the difficulty in making money is not the method but the execution. 'When the coin price directly drops below the 60-day moving average, you must exit entirely without any delusions.' This single statement has killed 90% of the people.
In short, in the cryptocurrency world, you cannot be rigid; adaptability is the key to long-term survival in the market. So we must pay attention to the market and individual coin situations being completely opposite. Trading coins appears to be a battle against the market, but in reality, it's a battle against human nature. The risks you see on the surface may be opportunities. Sometimes, what you perceive as an opportunity could be a trap tempting you.
Those with self-discipline in the cryptocurrency world experience both pain and joy; where there is hope, hell can also be paradise.
Position management rules of 334+ first and second type buy and sell points combined
We adopt a 3/3/4 strategy for bottom fishing, so what is the 334 strategy?
The position management rule is to divide your planned investment into 10 parts: buy 30%, reserve 30%, and leave 40% for potential trades.
So the initial 30% is called the base position. Those who go all in on any coin they have their eye on are being reckless! Imagine, after establishing a base position, if the rise does not meet your expectations, you can reduce your position to realize profits.
If you misjudge and it goes down, you only bought 30%, so it won't be a devastating blow.
So when do we add the second 30% position? You must wait until the purchased coin rises, and enter after the first wave of correction finishes, which corresponds to the first and second type of buy and sell points in the Cheng theory.
Never chase highs, as all coins will undergo a technical correction after a wave of rise. When combined with MACD and RSI, if it corrects to a key support level, that is when you can buy the second 30% position;
At this time, with 60% of your position in hand, you can attack or defend. The final 40% is easy to understand; you constantly trade during price fluctuations. This will reduce your cost, and while others only profit from one wave, you can profit from several waves! Moreover, your capital utilization efficiency will be greatly improved.
We all know that the emotions involved in trading coins are the biggest enemy of retail traders, and the mid-term reason for this emotion is the proportion of your positions. Imagine using only 1/10 of your position to buy, you would be wishing for it to drop every day.
Neglecting position management can lead to a lack of capital or being sidelined, because our cash flow is limited. We need to consider having enough funds to buy when good opportunities arise in the future, rather than going all in and then being left helpless. Having liquid funds, even in an upward trend, requires having a 3-layer position to cope with black swan events; too much will pose risks, while too little won’t yield a profit effect.
Taking an example of 100,000 USDT as capital, after a 10% drop it becomes 90,000, and a 10% rise from 90,000 only brings it back to 99,000. To break even, it needs to rise by 11.11%.
When losing 20%, it needs to rise 25% to break even;
When losing 30%, it needs to rise 42.86% to break even;
When losing 40%, it needs to rise 66.67% to break even;
When losing 50%, it needs to rise 100% to break even;
When losing 80%, it needs to rise 400% to break even;
When losing 90%, it needs to rise 900% to break even.
It can be seen that as the extent of floating losses increases, the difficulty of breaking even also increases. When losses exceed 50%, if you do not add positions, the road to recovery looks bleak;
Take the relatively popular ETHFI as an example:
Assuming you buy a 3-layer position at 6.5 during the first wave of the market and add another 3 layers near 5.1, your average price will be around 5.6. When the market rebounds to 6.7, you will be in profit, and you can first sell 3 layers, because the second sell occurs at 6.7, at which point your average price is 5.6;
When the market corrects to around 3.6, you can add 3 layers to lower your average price. At this time, your average price will be around 4.6. When the market breaks 3.6 and tests a double bottom at 3.3, we can place orders to recover the remaining 4 layers. This way your average price will be around 3.7, and when the market rebounds to 4.2, you can profit again;
No matter how this wave of the market goes down, you still remain unscathed;
Conversely, the same applies to upward trends. Following this method to reduce positions will not lead to roller coaster markets, but this requires you to effectively apply the first and second type of rules;
Players from all sides grasp the market pulse with lightning speed, striving to achieve wealth appreciation in a short time. However, facing complex technical indicators, vast amounts of information, and volatile markets, how can one maneuver effortlessly and become a consistent winner on the cryptocurrency short-term contract battlefield?
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