This short-term trading pattern has a win rate of up to 98.8%, and learning it can make the process of easily moving from 100,000 to 10 million! Just do this one pattern!
Crocodile principle + '-- the trading rules of the greatest traders, a useful and simple trading rule -- 'Crocodile principle.'
Your only chance of survival is to sacrifice one foot.
The Crocodile trading method is as follows:
1. Take out idle money that you won't use for a year to the best of your ability.
2. Strictly select valuable coins and prepare a good capital allocation plan.
3. Build positions in batches; no all-in! No all-in! No all-in!
4. Act according to the situation; in special circumstances, you must reduce positions or even go to cash.
5. Long-term to prevent missing out, mid-term to make money averaging down, short-term to aim for a small profit.
6. Strictly follow the 'Crocodile 4321' strategy.
Crocodile 4321 strategy · Practical operation:
① 4: At least leave 40% of the total capital for averaging down on long-term coins, specifically averaging down by 10% of the total allocated funds for that coin every time it drops by 10% (e.g., if planning to invest 400,000 in BTC, after the first purchase of 120,000, average down 40,000 each time it drops by 10%).
23: Allocate 30% of total capital to long-term value coins; except in special circumstances, only average down, do not cut losses (for example: total planned investment of 1 million, allocate 400,000 to BTC, 300,000 to ETH, 300,000 to BNB, with the first actual allocation of 300,000, BTC 120,000, ETH 90,000, BNB 90,000):
③ 2: Use 20% of funds to position in medium to long-term value coins, with a profit-loss ratio of around 20%;
④1: Use 10% of funds for short-term trades, quick in and out, taking profits and stopping losses at around 5%-10%.
Cryptocurrency trading popularization: What is trading volume*?
Preface.
Cryptocurrency trading is a complex, high-risk puzzle game. In this game, every piece of information can provide a key method, information, or capability to achieve profits. Among these pieces, trading volume is an essential yet often overlooked indicator that can provide deeper insights into market dynamics. Today, I will introduce what trading volume is, explore how to interpret this crucial trading indicator, and reveal the potential market sentiment it signifies.
1. What is trading volume?
In the cryptocurrency trading field, 'trading volume' refers to the total number of tokens traded for a certain cryptocurrency over a given time. This can be defined by hour, day, week, or any other time frame suitable for your trading strategy.
Volume is an important indicator of market activity and liquidity. High volume indicates traders' interest in participating, with large amounts of capital in the market, making it relatively easier to enter or exit trades. Conversely, low volume may indicate insufficient interest in participation, with lower liquidity, making trading relatively more difficult.
Volume and market efficiency.
Market efficiency is an indicator that determines how well prices reflect available information and is the most important part of the Efficient Market Hypothesis (EMH). This hypothesis states that at any given time, asset prices fully reflect all available information. The impact of volume on market efficiency is significant. High volume can promote market efficiency in various ways.
Firstly, market efficiency reflects a higher number of trades, meaning that more information contributes to asset prices. This is because every transaction is an action taken by traders based on their perception of information relevant to the asset's value.
Secondly, high volume indicates high liquidity. In a liquid market, there are rapid buying or selling activities of assets, but this does not significantly affect prices, leading to more effective price discovery. However, it is worth noting that high volume does not always equate to market efficiency. Even with high volume, factors such as market manipulation, information asymmetry, and market sentiment may still distort prices.
Relative Trading Volume.
Relative Trading Volume, usually abbreviated as RVOL, is a volume indicator that traders use to compare current volume with the average volume over a specific period. It measures the trading activity of a specific date or time relative to average trading activity. Relative Trading Volume is a ratio. For example, if RVOL equals 2, it means the current volume is twice the average volume at the same time that day, indicating abnormally high trading activity. It can provide useful insights into market dynamics and investor sentiment.
High RVOL values may indicate significant market events, such as earnings announcements that could impact asset prices, product launches, or news releases. Similarly, lower RVOL values may suggest a calmer market with fewer active trading participants.
Combining relative trading volume with other volume indicators can help traders better understand market dynamics, predict potential price trends, and make more informed trading decisions.
2. The psychological activities indicated by volume.
Volume is not just a number; it represents the collective market sentiment and the psychological activities of traders. High volume usually indicates that traders have reached a high consensus on the current price, signaling strong trends. When volume is high and prices rise, it indicates bullish sentiment as more traders buy the asset. Conversely, high volume with falling prices indicates bearish sentiment, as more traders sell the asset.
On the other hand, low volume may indicate traders' doubts or lack of interest. For instance, a price increase on low volume may suggest insufficient trend conviction and vulnerability to reversal.
Volume interpretation.
The true power of volume lies in its ability to provide deeper insights into other market indicators, especially price movements. Here are the main methods for interpreting volume:
Volume and trends: Volume indicates the strength of price trends. When prices rise and volume rises, it is usually a good sign as it indicates the trend is supported by significant trading. Conversely, if prices rise but volume falls, the trend may be ending.
Volume and breakout: A breakout is a significant event when the price rises above resistance or falls below support. If the breakout is accompanied by high volume, it indicates strong momentum and is likely to continue. A breakout with low volume may be a misleading signal, potentially indicating a price change.
Volume and market transitions: Volume can also help traders identify potential market transitions; sudden jumps in volume can indicate market tops or bottoms, followed by reversals.
3. Interpret volume using volume indicators.
Utilizing multiple volume-based indicators can enhance your understanding of volume without overwhelming you. Each indicator leverages the core concept of volume while helping traders make more informed decisions from unique perspectives.
Balanced Volume (OBV+): OBV is a momentum indicator that uses volume to predict price changes. It measures bearish and bullish pressure as a cumulative indicator, increasing volume on up days and decreasing volume on down days. When OBV rises, it indicates that buyers are willing to step in and push prices higher. Conversely, a declining OBV reflects bearish dominance, indicating that prices may drop.
Volume Weighted Average Price (VWAP*): This indicator provides a benchmark that filters out volume noise to identify average price trends. VWAP shows the volume-weighted average price of an asset. If the trading price of an asset is above its volume-weighted average price (VWAP), then the bulls control the market. Conversely, if the trading price is below the volume-weighted average price, the bears dominate.
Periods when the price is above the VWAP line (the blue line in the above image).
Volume Rate of Change (VROC*): VROC is used to measure the rate of change in volume over a specific period. It provides insights into volume momentum, allowing traders to gauge the strength of trends. An increase in VROC indicates growing interest in the asset in the market, typically signaling an upcoming bullish trend. Conversely, a decrease in VROC may serve as a warning sign of weakening momentum, potentially foreshadowing an upcoming bearish trend.
When the indicator color turns green, the price immediately rises.
Chaikin Money Flow+: Chaikin Money Flow (CMF) is a technical analysis tool that combines volume and price to quantify the money flow into and out of the market over a specific period. A rising CMF value indicates increasing bullish pressure, signaling a potential price increase. Conversely, a declining CMF value indicates increasing bearish pressure, signaling a potential price decrease.
4. Discover patterns through volume.
Skilled traders possess pattern recognition skills and can identify repeatable volume patterns. Understanding these common volume patterns can provide useful insights into market sentiment and future price movements.
High volume surge: This pattern occurs when long-term price fluctuations lead to a surge in volume, resulting in a trend reversal. It often appears at the end of long-term uptrends or downtrends, potentially signaling market weakness.
Shaking volume: The distinguishing feature of a shaking volume pattern is a significant decrease in volume, leading to early exit of traders before a price reversal. This often traps weak traders who succumb to market pressure.
Volume during pullbacks: This pattern occurs when volume declines during a counter-trend pullback within a larger trend. It signifies market consolidation before the trend continues.
Volume breakout: When the price reaches a new high or low and volume suddenly spikes, a volume breakout pattern occurs. This confirms the strong belief in the occurrence of the breakout and indicates that the market is in an accepting state above or below key obstacles.
Declining volume in an uptrend: If volume decreases during an uptrend, it may indicate waning interest and a potential trend reversal. Conversely, during a downtrend, a reduction in volume may signal a bottoming process, and the trend may reverse upwards.
5. Use volume indicators in your trading plan.
Understanding volume and its effects is one thing, but effectively applying it to your personal trading strategy is another. Here are some suggestions to help you integrate volume analysis into your overall trading strategy:
Compare the number of options on up days and down days: When prices rise, trading is more active than when prices fall. This indicates that bullish pressure exceeds bearish pressure, which is bullish. This may mean that the current upward trend will continue.
Pay attention to volume when retesting support and resistance: When prices retest support or resistance, it is usually important to monitor volume. If volume significantly increases during these retests, those prices are likely to hold steady.
Look for divergences in volume: Generally, volume and price should move in the same direction. If they do not, it may indicate a problem. For example, if prices rise but volume declines, it may suggest that the price trend is about to change.
Choose volume indicators suitable for your trading time frame: Whether volume data is important depends on the length of time you plan to trade. If you are a swing trader holding positions for days or weeks, daily volume data will be more useful. In contrast, day traders may find hourly or even minute-by-minute volume data more useful.
Beware of one-time spikes in trading volume: If the volume suddenly rises without reason, it may be misleading, so it is important to look for confirmation signals from other indicators or later trading periods.
Use increases in volume to detect institutional activity: Large investors or 'whale' investors can significantly impact the market. A sudden increase in volume on high time frame charts may indicate that institutional traders are buying or selling a certain token.
Remember, no single indicator, including volume, is a 'magic bullet' that guarantees successful trading. Analyzing volume is just one of many strategies available and should be used in conjunction with other criteria, indicators, and analytical tools. As the old saying goes, 'Volume precedes price.' Applying volume analysis to your trading plan can give you a deeper understanding of market dynamics, help you make more informed trading decisions, and potentially gain an advantage in the market.
6. Drawbacks of volume analysis strategies.
While volume analysis strategies are a powerful tool in a trader's toolkit, it's important to be aware of their drawbacks. Using this strategy, you may encounter the following challenges:
Market manipulation: In some cases, market participants, especially those with significant capital, can manipulate volume levels to create false signals and mislead other traders.
Lagging signals: Sometimes, changes in volume may lag behind price changes, meaning that a significant increase or decrease in volume may not immediately lead to large price fluctuations.
False spikes: Volume analysis can occasionally provide false spikes. In this case, a sudden surge in volume does not lead to significant price fluctuations.
Price distortion in low float: In assets with low liquidity or 'price float', changes in volume may be distorted, making it difficult to accurately interpret the data.
To mitigate these challenges, a prudent approach is to combine volume analysis with other indicators and technical analysis tools. The combination of multiple signals can enhance the reliability of trading strategies and reduce the likelihood of falling into misleading signals.
7. Conclusion.
Volume provides traders with a way to understand the intensity of market activity and the psychological dynamics of traders. Once you understand what volume is and how it affects price movements, you can incorporate it into your trading strategy, gaining deeper insights into market sentiment.
By using volume indicators such as OBV, VWAP, VROC, and Chaikin Money Flow, and understanding common volume patterns, you can significantly enhance your trading acumen. Integrating these tools into your trading plan allows you to gain deeper insights into market dynamics and predict price movements more accurately.
However, it is important to remember that, like any trading tool, volume analysis also has its drawbacks and should be used in conjunction with other indicators and strategies. Only by employing a comprehensive and multifunctional trading approach can you navigate the world of cryptocurrency trading with greater confidence and efficiency.
An article about traders' 'nonsense' -- many traders easily overlook common knowledge.
I. Prerequisite understanding.
Several market trading prerequisites that subjective technical traders usually need to possess:
1. Only look at charts, do not listen to news. Ordinary people can only rely on technical analysis, not fundamental analysis.
2. Everyone's trading system is unique and cannot be replicated. On fundamental principles and discipline, there are no exceptions.
3. Learning has no shortcuts. The only relatively reliable path is theoretical accumulation and practical verification: reading books and real trading. Quality books (classic Western books, those authors are top-notch, domestic books are all pass), engage in effective real trading operations and calmly review.
4. Whether in the cryptocurrency market, international forex futures, or stocks and indices, it is recommended to focus more on trading at the 4-hour level and above (daily, weekly, or monthly is better) for swing or trend trades. For 99% of people, trading at too small time frames is merely entertainment and not profitable; participating leads to negative return expectations.
5. In the trading system, controlling position size and capital management is the essence -- allow yourself to have a margin for error (for example, a fixed amount or fixed percentage loss per single operation) to survive longer in this market.
II. Own a unique trading system.
(I) Misconceptions / Technical bottomless pit stealing logic.
Many people have a misconception: 'If I find a great place and a great teacher to teach me an incredible theoretical trading method, I will succeed in trading.' This is a huge misunderstanding.
What you can do relies solely on yourself.
Many people wander in the cryptocurrency market with the mindset of finding the 'Holy Grail' of trading, trying to find that 'trading holy grail'. It is a futile endeavor. This is no different from being obsessed with inventing a 'perpetual motion machine', which is impossible to achieve.
In fact, any theory or 'trading tools' are only part of the trading system. Merely having these does not guarantee stable long-term profits.
(II) Build a trading system - the way and method.
Establishing a so-called trading system is not difficult; the challenge lies in consistently practicing it. Treat the market as a game and yourself as an emotionless execution machine.
Techniques, theories, there are no thresholds or secrets -- moving averages, indicators, ratios, Gann, Chan theory, trend lines, waves, naked K... As long as you settle down to learn for a while, you will eventually be able to combine a set of your own procedures.
After establishing your trading system, it naturally includes: entry signals and methods, stop-loss methods, take-profit methods, position management, capital control, etc.
Among them, the most challenging is strict trading discipline and stable trading mindset.
If the chart gives you a trading signal, do you decisively participate? Can you let the market determine your stop loss and take profit? If a trade hits the stop loss, do you calmly analyze and move on? If a trade reaches the take profit, do you stick to the plan and take the profit? If you have three consecutive stop losses, do you still confidently look forward?...
(III) First inference -- There are no shortcuts on the road to trading.
Continuing from above, regarding trading, there is a fundamental cognitive inference: - All forms of [pseudo-learning] [false effort] (gathering some 'teachers' to analyze and teach 'theoretical strategies', while not putting in effort to find 'wealth codes'...) are futile. It's no different from going in circles, wandering in the perilous financial market while stuck in a cycle of losing money for entertainment.
Why I sometimes dislike answering certain questions from some friends (who keep asking): 'Is it bullish or bearish today? Trading 4k...
Individual?.… Because behind the problem lies the underlying logic of non-profit.
People cannot completely replicate each other, including trading systems -- you can only put in hard work to build, verify, and optimize. Building your own trading system relies solely on yourself. Creating it is unique to you, unreplicable.
'Getting rich quickly' is not the goal; adhering to principles and surviving is what's most important.
(I) Surviving longer is the hard truth.
Many partners misunderstand the risks of futures contracts, obsessed with the 'all-in get-rich-quick' myth.
In fact, futures contracts and spot trading are fundamentally the same; the same position size contracts and spot trading yield the same profits or losses.
Financial leverage is not for gambling.
Position management and capital control are key to surviving longer and better in this market.
(II) Adhere to principles and respect science.
A scientific trader always operates:
Strictly control position size; the loss on a single trade should be 1%/2% or a small fixed amount.
Decisively participate in the trend -- if the trend is in place, so is the position; if the trend is not there, neither is the position.
High profit-loss ratio -- typically aim for at least 3:1.
Plan trades, trade plans -- refuse impulsive decisions and arbitrary changes.
Do long-term correct things. -- First, ensure you don’t lose everything and survive, then strive for greater profits.
Long-term adherence to scientific position management discipline.
For example, a fixed loss of 100 on a single trade (calculated based on a 10,000 capital, 1% fixed stop loss), with a profit-loss ratio of over 3:1; (many people are doing trades that lose 100 and earn 50 every day).
So a single operation should either lose 100 or earn 300 or more. Combining the win rate (strictly speaking, called the target achievement rate) shows that as long as the success rate is above 25%, you will not lose money.
If the win rate is 40%, then in the long term: the expected profit of a single operation is 0.4*300-0.6-100=60, which is a positive value.
While most people's formula is: 0.4*100.
0.6*200=-80, long-term operational expectations are negative returns.
The vast majority have win rates not exceeding 50%, and most operations have disproportionate profit-loss ratios; mathematical truths dictate that they are inevitably on the path to loss until they reach zero.
(III) Be a friend of time.
The better state for traders:
1. Calm and unhurried. If you have time, casually flip through (you can have specific ranges and weekly periods), there will always be opportunities. Just follow your system's plan and execute.
Periodically, there will always be opportunities. Just follow your system's plan and execute.
2. Generally do not stare at the screen; focus on the 4H level and above. Most of the time is spent resting, waiting, and holding.
3. Scientific position management, let stop losses and take profits occur naturally.
Relatively poor:
Every moment is spent thinking about and staring at it. Looking here and there, afraid of missing some 'wealth code,' rushing and hurrying...
Those who live long and well are usually not anxious and noisy.