Since they are called big shots, they must have made money!
A friend in the cryptocurrency space, a man from Beijing, three years ago told me over the phone that he had blown up his contracts and was 60 million in debt, then disappeared. It turns out he has been in seclusion for three years. Now that his debt is cleared, he has several million in assets and earns a seven-figure monthly income in the cryptocurrency space, with an eight-figure annual income!
Recently, I met him and summarized the methods he realized over these three years, organized them, and through thousands of trading practices, the win rate reached 98%. Now I share it with those destined to receive it.
Iron rules of trading coins.
First, for those coins with complex situations that you cannot clearly see, do not rashly enter. Pick the soft persimmon to squeeze; trading coins is the same.
Second, don’t invest all your money in one coin at once, even if you are very optimistic about it. Even if you are right later, don’t buy it all at once. Because the market changes rapidly, no one knows what will happen tomorrow.
Third, if you mistakenly buy a coin in a downward trend, be sure to sell quickly to avoid enlarging your losses.
Fourth, if the coin you bought has not lost yet but has entered a downward trend, you should also quickly exit and observe.
Fifth, for coins that are not in an upward trend, it is recommended to pay less attention. Who knows how it will turn out in the future? Don’t accompany the major players to build positions. Retail investors don’t have time to waste with them.
Sixth, don't fantasize that you can make money by constantly doing short-term trades every day. Frequent entries and exits may give you a thrill but will cause you to lose a lot of money. The only beneficiary is the exchange, and you won't have that high level of skill. You're not a market maker. Don't buy too many types of coins; ideally, don't exceed 10. You don't have that much energy to keep an eye on them. It's like wanting to marry five wives; even if you are fit enough, you can't satisfy them all. The story of Wei Xiaobao only happens in novels.
Seventh, just because this coin is very cheap and has dropped a lot does not mean it is a reason for you to buy. It could get even cheaper!
Eighth, just because this coin is very expensive and has risen a lot, does not mean it is a reason for you to refuse to buy or sell. It could rise even higher!
Advice.
1. Don't easily throw away bullish coins; prioritize bullish coins, make both hot and strong coins work, and ensure a balance between investment and speculation.
2. The trader's most important ability is adaptability in the market.
3. Qualitative analysis must be well done. Qualitative analysis on large cycles, selecting coins on weekly charts, verifying on monthly charts, and tracking on daily charts.
4. Follow the rules strictly, use Bollinger Bands or moving averages that you deem feasible to observe the market.
5. Skills must be taught, relying entirely on technical proficiency, repeating successful experiences, and making profit-making a habit. Regular profit is more important than big profits.
As an old hand in the cryptocurrency space, I summarized 12 iron rules for trading coins today, each is a lesson learned through blood and tears. After reading this, you can lose 100,000 less!
1. The time difference between the East and West: Stay up late to monitor the cryptocurrency market is generally concentrated during European and American times (Beijing time 21:30-7:30). Late night is when the big rises happen! So, do you want to make money? Staying up late is a must! Sleep at 20:00, wake up at 4:00 to monitor the market; this is the schedule of a qualified trader.
2. Don't panic when there's a big drop during the day: Is it that foreigners are pulling the market up while the domestic market drops during the day? Don't be afraid! At 21:30, when foreigners enter, they will pull it back in no time! Remember: a drop during the day is an opportunity to buy the dip; don't chase after a rise during the day, as it will likely drop back at night.
3. The deeper the pin bar, the stronger the signal: K-line pin bars (long upper and lower shadows) are a common tactic of market makers; the deeper the pin, the stronger the reverse signal!
Pin bars are often the best time to buy or sell; don’t be fooled by market makers!
4. When news lands, it’s usually bearish: Before major meetings or positive news, the price will definitely rise, but once the news lands, it will immediately drop back! So, plan ahead, run as soon as the news is out, don’t be greedy!
5. Heavy positions lead to liquidation, while light positions are the way to go: Holding heavy positions? Congratulations, you are already on the exchange's liquidation list! Market makers specifically target heavy users; with one pull and one drop, they can liquidate you in seconds! Therefore, diversifying light positions is the path to survival!
6. After stop-loss, the price drops; after take-profit, the price rises: after stopping out a short position, the price drops; after taking profit, it rises. The market maker just doesn't want you to make money! So, be cautious with stop-losses, take profits in batches, and don’t get led by the nose by market makers!
7. Just a little away from breaking even: Stop dreaming: You're about to break even? The rebound suddenly stopped! How could the market maker let you escape easily? Therefore, when approaching breaking even, reduce your position appropriately, don’t be greedy!
8. Excitement = waterfall warning: When you are overly excited, the waterfall is coming! The market maker uses your emotions to cut your losses. Staying calm is key!
9. When you have no money, the market is full of opportunities: When you are broke, every coin is rising, and FOMO emotions are at their peak! But remember, 80% of the market is manipulated; don’t rush in easily; patience is the key to winning!
How can one sustain a long-term existence in the market? To survive and succeed in the market long-term.
You can follow these key strategies:
1. Risk management.
Use spare money to invest, avoid using high leverage or loans.
Set stop-loss points; once the preset loss limit is reached, sell decisively to avoid further losses.
2. Investment strategies.
Diversify investments: Do not put all funds into one project but rather spread investments across different coins and projects to reduce risk. Hold long-term: For quality projects, hold for a longer time, utilizing the compounding effect to achieve wealth growth. Sell at the right time: When significant bearish news arises at market peaks, it may be a good time to sell.
3. Information acquisition and processing.
Establish your own information sources, such as CoinMarketCap+, Defllama+, etc., to obtain accurate market data.
Learn to discern the authenticity of information to avoid being misled by false information.
4. Psychological adjustment.
Stay calm and don’t be affected by the market's short-term fluctuations.
Set reasonable expectations to avoid overtrading and frequent operations.
5. Continuous learning.
Regularly learn about blockchain technology and digital currency-related knowledge, keep up with industry developments, participate in community discussions, and exchange experiences with other investors to broaden your horizons.
6. Balance between life and investment.
Ensure that investment activities do not interfere with daily life and health.
Maintaining mental and physical health is beneficial in better coping with challenges during the investment process.
I tested this method and turned 500k into 10 million, using only this one trick (moving average method), with a win rate of 99%. It's suitable for everyone!
Looking back to when I first entered the trading market, I tried every means to search for knowledge in this area online, hoping to learn everything as soon as possible so I could quickly start practicing and making money.
At this time, moving averages.
Usually, these are some of the earliest technical indicators I learned, and most online teachings are about how to use two moving averages, one fast and one slow.
When the fast line crosses the slow line from below, you buy; when the fast line crosses the slow line from above, you sell.
This type of golden cross and death cross trading strategy is like a treasure for beginners because, compared to other more complex technical indicators, golden crosses and death crosses are at least feasible and can be immediately monetized. If you really believe it, enter the market immediately, and the result is predictable; you will definitely lose badly, and then feel mentally stressed and angry, wondering why you lost money, blaming everything, including the moving averages, calling them useless garbage.
What I've mentioned above is 100% my real experience. When I first started trading, I made mistakes that I believe many newbies are encountering today. Today, I hope to share with everyone through this article all the moving average techniques I've learned over the years, summarizing the mistakes I made and the insights I've gained so that you won’t repeat my mistakes. At least your journey will be much smoother than mine back then.
I’ve summarized that most people's understanding of moving averages is incorrect because they are too superficial, simplifying this issue too much. They think that seeing a golden cross means buy, a death cross means sell. In fact, what we really need to do is think about how to use moving averages to maximize your profits and improve your trading performance.
Today I will discuss two major themes with everyone.
1. Is there a universal parameter setting for moving averages?
2. How to use moving averages to help us achieve a threefold increase in returns.
1. The secret of moving averages.
What is a moving average? Conceptually, it is easy to understand. It is the average price over a certain period, visualized as a line graph.
There are three common types of moving averages.
SMA (Simple Moving Average)
WMA (Weighted Moving Average)
EMA (Exponential Moving Average)
SMA is simply dividing all prices to get an average, responding relatively slowly to recent prices and market trend changes. EMA and WMA are conceptually similar, just differing in calculation methods.
They tend to carry more weight, so the response speed will be faster, making them more sensitive to recent significant price changes.
1. Is there a universal parameter setting for moving averages?
In fact, regarding moving averages, the most frequently asked question is whether there is a universal parameter for moving averages, what is the best parameter? 20? 50? 100? Or 200?
This question is like going to a coffee shop and telling the staff: 'Please give me a cup of coffee!' The staff asks you: 'Sir, what kind of coffee do you want?' I say I don't understand these, just give me the best coffee. Generally, at this point, if you encounter an impatient staff member, they might randomly give you a cappuccino. You pay and leave.
It’s like some online teaching that tells you to use the 144 EMA and 68 EMA, saying if 68 crosses above 144 EMA, then buy or sell; it’s completely baffling.
On the contrary, responsible and patient staff will slowly guide you: 'Sir, do you want iced coffee or hot coffee? Do you want coffee with milk or without?' Cappuccino has softer foam, Mochaccino comes with chocolate syrup and is a bit sweet, and Espresso is rich and fragrant. If you like black coffee, you will definitely be satisfied.
Similarly, as a responsible and patient trading coach, I would ask, what is your purpose in using moving averages?
Do you want to have an objective indicator to judge long-term trends? Or are you looking for a better entry point? Or do you want to use moving averages to set a stop-loss point?
All the issues mentioned above can actually be managed with moving averages.
But here comes the key: I can responsibly tell everyone here.
There is no best moving average parameter setting in this world.
There is only the most suitable parameter setting!
And this parameter should not be determined by you or me, or any individual. What determines it is the market itself. Depending on different market conditions, trends, and strengths, the most suitable parameter settings will vary.
We will judge which cycle's moving average line is most suitable for this market based on two words – compliance.
Here, I use the three most common moving average periods, 20, 50, and 200, as examples. Let's look at the examples of the above three parameter settings being followed by the market.
We see from the above image that the current price is in a downward trend, and we see that each time the price touches the 20 EMA, it seems to be subject to an invisible pressure to continue to drop, indicating that the current market is adhering to this 20-period EMA.
Let's switch to comparing the 50 and 200 period moving averages. Do you see the difference? They both confirm that the market is in a strong trend because the 20-period moving average is best suited for a relatively fast trend with small retracement.
The second example.
I used the 50 period EMA and also saw that the market is following the 50-period moving average, which indicates that the market is in an upward trend.
If you look at the 20 and 200 EMA, you'll find that 20 EMA isn't very suitable because it constantly weaves back and forth between prices, and the 200 EMA is too far from the price.
The last example, the 200 EMA, is more suitable for a long-term and relatively weak trend. Although the price touches it at greater intervals, from a larger perspective, the market is still following this 200-period moving average.
Overall, it continues to move towards an upward trend.
When we open the 20 and 50 EMA, we see that they seem to weave back and forth in a somewhat slow or visually indistinguishable trend. The 200 EMA is a good choice. I wonder if the above knowledge has provided you with some inspiration.
2. How to use moving averages to help us achieve a threefold increase in returns.
Next, I will discuss the second issue that more friends are concerned about: how we can use moving averages to improve our trading. I will divide this into two parts.
The first: use moving averages as a filtering condition.
The second: to use moving averages to find a better entry point and achieve a better risk-reward ratio.
As we mentioned earlier, different periods of moving averages can reflect different strengths of trends. The 20, 50, and 200 EMA represent short-term, medium-term, and long-term market trends respectively.
Here, I will take the long-term trend, which is the 200 EMA as an example. If the price remains above the 200 EMA, we can judge that the long-term trend is upward. If the price is below the 200 EMA, we can judge that the long-term trend is downward.
Of course, this is just a very rough judgment method; it is best to use Price Action.
(Price Action trading method), but for beginners, Price Action is relatively complex, so I recommend that before learning Price Action, you can temporarily use a 200 EMA as a filtering function to filter out some trades that conflict with market trends.
(Of course later on, I will also update courses on Price Action, don’t forget to keep an eye out for that.)
I don't mean to say that counter-trend trading can't be done. If counter-trend trading is done well, it can also be very profitable. However, trading against the trend has a low win rate and relatively higher requirements for conditions. Friends with less experience, I hope you first learn about trend-following trading and try to follow the market's overall direction in each trade.
Let's look at this example: the price is above the 200 EMA, and let's assume I see a sell signal and decide to short. Logically, my take-profit should be set at the 200 EMA.
Conversely, if I do a trend-following trade and go long, my profit margin is much larger as it can reach the next key market level (which is the main support or resistance level).
Generally speaking, before the market reaches a pressure point, trend-following trades are the best choice. Just like the current BTC market, from $1800 to $20000, from $20000 to $30000, from $30000 to $40000.
......
No one knows where the top is, so let's not guess the top.
The second thing.
How to use moving averages to find better entry points and achieve better risk-reward ratios.
How to ride a big trend, here I will compare two trading methods involving moving averages, namely the golden cross and death cross versus the interaction between price and moving averages. I personally believe the more logical trading method is to observe the interaction between price and moving averages. The same chart, two different trading methods, same stop-loss point, same take-profit point, but due to different entry timings, the results are two different stories.
On the left is the signal of the 20 EMA crossing down through the 50 EMA, with a risk-reward ratio of 3.65. On the right is the entry based on the price interacting with the 20 EMA, with a risk-reward ratio of 8.32. Ah! Do you see that?
Although this situation is one that I carefully selected as an example, similar situations will continuously appear in the market. Looking at the left side where the death cross occurred, the 20 EMA crosses below the 50 EMA. Here, using the previous high as a stop-loss point, let's assume we are very good and can ride the whole trend, for every dollar of risk we take, the return is 3.65 dollars.
Now let's look at an example of price interacting with the EMA, with all other conditions unchanged.
Because we see that the price made a false breakout at the 20 EMA, and when the next candlestick finished, a bearish engulfing candlestick pattern appeared. Compared to the death cross, we entered the market two candlesticks earlier, reacting a bit faster, so we got a slightly better return.
Did you understand? As long as all conditions remain unchanged, if you have a better entry opportunity, you will have a better risk-reward ratio. At critical moments, if you win just once, it can offset several of your losing trades. Only in this way, over time, can you make money, make big money. Those who continuously play short-term trades rarely make money and feel exhausted.
So, for beginners, I sincerely advise: there are hundreds of technical indicators on the market, and you really don't need to learn them all. Too much can lead to confusion; just choose one, delve into it, and mastering it is completely enough for you.
I have seen too many experts who can achieve 100% profitability just by relying on candlestick patterns, countless in number.
Next, let's look at an example of price interacting with moving averages. This is a 200 EMA. Within this roughly one-month cycle, we see that the price only had two opportunities to touch the moving average, which means we only had two trading opportunities.
The first time we see a false breakout at the 200 EMA, a bearish engulfing pattern, and we see the shadow line telling us that the price attempted to rise but was rejected.
The second time we see the price near the EMA making two false breaks in a row, adding a double top pattern, we again enter short, just like the first time, and the result is quite good.
The previous two examples illustrate how to obtain a good risk-reward ratio through the interaction between price and moving averages. You should know that moving averages are essentially dynamic support and resistance levels. Whenever the price retraces to these key levels, we pay attention to whether there’s an opportunity to enter. Trades made at this type of position generally offer a good risk-reward ratio, which is my personally recommended trading method with moving averages.
But when we open the 20 EMA and 50 EMA for comparison, we see three trading opportunities during this period. Roughly, it seems like there were two profitable and one loss, which sounds not bad.
However, if we look a bit deeper, we will find that the risk-reward ratios of these two trading methods are not comparable, with the final earnings differing by more than double. Do you understand?
Strong recovery, assets doubled! Keep up with nostalgia, plan ahead, and effortlessly reap large profits.
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