If your funds are within 500,000, and you want to achieve quick success in the crypto world through short-term trading, then please read this post carefully. After reading, you will gain a profound understanding of the essence of short-term trading!
I am 34 years old this year, I have been in the market for 10 years, and I have been making a living from trading for 6 years! Not choosing finance as my major in university is a major regret in my life. Starting from my freshman year, I began to learn about stocks/finance/forex and so on online. The red and green screens filled my life with color, making me fascinated. With infinite longing for the market, I opened an account in my sophomore year, and later learned more about the crypto world and Bitcoin through the introduction of a classmate, and I became increasingly interested, thus starting my investment career.
Like most friends who recently entered the market, at first, everyone is fascinated by technical indicators, continuously backtesting different coins to find patterns; eager to enter low-priced coins or those that have significantly retraced, thinking their safety is higher. In fact, this understanding of the market is completely wrong.
Only then did I realize that if you want to make quick profits in the market, you must engage in short-term trading. Medium to long-term compounding should be done together!
In summary: Don't let the blood of profits cloud your judgment; know that the hardest thing in the world is to maintain consistent profits. You must review carefully whether it’s luck or skill, and a stable trading system that suits you is the key to continuous profit.
There is a saying that impresses me: If you don’t occupy an ideology, others will.
The trading mindset I share with you today is the essence that has allowed me to stand firm in the market for a long time. If you study it seriously, you will gain enormous benefits and undergo a revolutionary change in your understanding of trading!
A must-read for beginners! 10 iron rules for trading from an experienced crypto trader.
As an old trader who has been through the crypto market, I have summarized 10 iron rules for trading, each being a blood-and-tears lesson. After reading, you can avoid losing 100,000!
1. Time difference between East and West: Staying up late to monitor the market—crypto market trends are mainly concentrated during European and American hours (Beijing time 21:30-7:30), and the real surge happens in the early morning! 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 routine of a qualified trader.
2. Don’t panic if there’s a big drop during the day: If the foreigners raise the market while it drops during the day, don’t be afraid! When foreigners enter at 21:30, they will bring it back in no time! Remember: a big drop during the day is a buying opportunity; don’t chase highs when there's a big rise during the day; it is likely to drop back at night.
3. The deeper the pin, the stronger the signal: K-line pins (long upper and lower shadows) are a common tactic of market makers. The deeper the pin, the stronger the reverse signal! Pins often present the best timing for buying or selling, don’t let market makers trick you off!
4. News landing is a bearish signal: Before major meetings or positive news, coin prices will definitely rise, but once the news lands, they immediately drop back! Therefore, lay out your positions in advance, and when the news comes out, run quickly; don’t be greedy!
5. Community recommendations? Reverse your position: Are there coins being crazily promoted in the group, boasting about their potential? Don’t believe it! It is likely a trap! The hotter a coin is, the more cautious you should be; reverse operations are the way to go!
6. Heavy positions must lead to liquidation; light positions are the way to survive. Holding heavy positions? Congratulations, you’ve made it to the liquidation list of the exchange! The market makers specifically target heavy position users, one pull and one drop can liquidate you in no time! Therefore, spreading out light positions is the way to survive!
7. Stop losses lead to drops, take profits lead to rises: Short position stop losses lead to drops, take profits lead to rises; market makers don’t want you to make money! Therefore, stop losses should be cautious, and taking profits should be done in batches; don’t be led by market makers!
8. Almost breaking even: Stop dreaming: About to break even? The rebound suddenly stops! How could market makers let you escape easily? Therefore, when close to breaking even, reduce your position appropriately; don’t be greedy!
9. Excitement = waterfall warning: When you are overly excited, a waterfall is about to come! The market makers use your emotions to cut you off; staying calm is the way to survive!
10. When you have no money, the crypto market is full of opportunities: When you are broke, every coin seems to be rising, and FOMO emotions are at their peak! But remember, 80% of the market is manipulated; don’t jump in easily; patience is the key to winning!
Today, I share this with friends who are destined to receive it, hoping it will inspire you.
1. When entering the market, do not only look at the K-line trends of the coin, especially for short-term trading, you also need to look at the 30-minute K-line. At the same time, the overall market should stabilize and resonate before entering. For example, sometimes you see a K-line with a long upper shadow and feel there’s no opportunity, but the next day a big bullish candle or even a limit-up appears. In fact, looking at the 30-minute K-line reveals the subtlety.
2. If the trend and order are not right, taking another look is a mistake. You must follow the trend while ensuring that the upward order is not broken.
3. If short-term trading is not in hot or potential hot spots, it’s better not to trade.
4. Give up all impulsive entries. Trade your plan, and plan your trades.
5. Anyone's opinion or view is merely a reference; you must have your own thoughtful and careful analysis.
6. Lock in the direction first, then select a coin. If the direction is right, the results will be twice as effective; if the direction is wrong, the effort will be halved.
7. Get involved in coins that are currently rising. Guessing the bottom is a big taboo; you always feel that a rebound is imminent, then there’s an ultimate shakeout. Stock prices always move towards the direction of minor resistance levels. Getting involved in coins that are currently rising means choosing a path with less resistance.
8. After a large profit or loss, empty your positions and re-evaluate the market and yourself. Clarify the reasons for the large profit or loss before taking action again. After many years of trading, I found that emptying positions after a large profit or loss has a success rate of over 90%.
Don’t panic in trading; don’t be impatient.
1. Patience is gold; don’t panic during consolidation. When the coin price seems to be stuck in one place, don’t rush in. Patience is your treasure at this time. Because the real show is often later, waiting is worthwhile!
2. Volume and price rise together, buy it! If you see that a coin's trading volume and price have both broken previous levels and can stabilize there afterwards, it’s like seeing a green light—buy it quickly!
3. Did the leading coin drop? Opportunity has arrived! Did the leading coin that everyone is rushing to drop? Don't be afraid, this is your chance! Seize it, and maybe you will be the next to double your investment!
4. Gaps symbolize strength. If the price of a coin suddenly gaps up, leaving a gap, it indicates strong momentum. If the price subsequently retraces but does not break that gap, then wait to see it continue to soar!
5. Getting caught in a speculative limit-up? Don’t be envious. Did you see someone’s speculated coin limit-up? Don’t be envious; it may be a game by the main forces, so don’t be easily fooled!
6. In a bull market, hold your coins and don’t let go. When a bull market arrives, hold on to your coins like they are a lifeline! Don’t let go easily, or you might miss a big wave of market movement!
7. The top is not sharp; at least there is a double top. Don’t rush to sell just because the price has risen high. A real top will not be that sharp; there will at least be a double top. Remember this, and you won't sell too early!
8. MACD dips below the 0 axis; a buying point appears. The MACD indicator is quite magical; when its DIF line dips near the 0 axis but does not break, that’s a buying point! Remember this phrase, and your operations will be easier!
9. 120-day moving average 'upward, buy on dips. If you see that a coin's 120-day moving average is in a bullish arrangement and the trend is upward, don’t hesitate, buy on dips! The accuracy of this strategy is quite high!
10. Continuous small bullish candles°; the main forces are at work. If a coin consistently shows small bullish candles, it’s like seeing the main forces' secret signal. They are quietly accumulating chips! At this time, you need to pay more attention!
Essential for crypto beginners: A must-have tool for identifying trends: an analysis of structural breakout (BOS) strategies, which is also my core wealth code for achieving a monthly income in seven figures and an annual income in eight figures.
Without further ado, let's get straight to the point!
Most profitable traders and professional traders have built their trading systems around the philosophy of 'trading with the trend.'
However, whether the market is trending can be easily judged by a significant rise or fall in price. But the market does not always exhibit a clear trend. In fact, prices are only in a clear trend 25% of the time; the remaining 75% of the time, they are either in a range or exhibit 'ambiguous' trends.
Fortunately, there is a reliable method to identify trends. It is a mechanical model that does not require indicators or subjective judgments from traders. It is called Break of Structure (BOS).
In the following sections, we will describe what structural breakouts are, how to identify them, and how to trade them.
Definition
In trading, 'structural breakout' refers to the price breaking through established highs and lows in a trend, clearly indicating the ongoing flow of orders in the current direction. This concept is crucial in trend analysis, helping traders understand market momentum and potential future directions.
In simple terms, this is the process of forming higher highs (HH) in an uptrend, rather than first forming lower lows (LL). This situation is called a bullish structural breakout. In a downtrend, the structural breakout occurs when lower lows are formed first, followed by higher highs, and this is referred to as a bearish structural breakout. In other words, structural breakout signals indicate the continuation of market momentum or market sentiment.
Order is important. A structural breakout is only considered valid if a higher high is formed directly without first breaking the low in an uptrend. In a downtrend, a structural breakout is only valid when a lower low is formed before breaking the recent high. If either of these two scenarios occurs, we can regard it as a market structure shift (MSS) or feature change (ChoCh).
Essentially, a structural breakout means you receive the first signal indicating that the existing trend is weakening, and a reversal is about to occur.
It is important to note that structural breakouts do not only occur in trending markets. When the price breaks key support or resistance levels, established trend lines, or even certain chart patterns, it can also be considered a structural breakout. Any situation that breaks common structures in the market can be regarded as a structural breakout. However, this article will focus on market structure breakouts in trending markets.
In this article, we will delve into the concept of structural breakouts, as it is the most fundamental concept in smart money trading.
Basic market structure
Market structure refers to the way prices vary over time. There are mainly three types:
1. Uptrend: When the price continues to rise, you will see new highs being created continuously, and the price will not break previous lows.
2. Downtrend: Opposite to an uptrend, the price continues to decline, reaching new lows, and the price does not break previous highs.
3. Range-bound: In this case, the price fluctuates within a certain range but does not create new highs or new lows.
The concept of 'structural breakout' is actually only meaningful in uptrends and downtrends. It occurs when the price breaks through important highs in an uptrend or important lows in a downtrend. This is a signal indicating that the trend is strong and may continue. However, in a ranging market, the price does not create new highs or new lows, so structural breakouts do not apply.
Types of structural breakouts
Based on the direction and the nature of the breakout, there are two types of structural breakouts:
Bullish Structural Breakout (Bull BoS):
When the price breaks through the volatility high in a trend, it indicates strong upward momentum and suggests that a bull market (uptrend) may continue.
Bearish Structural Breakout (Bear BoS):
Conversely, when the price breaks below the volatility lows, it indicates strong downward momentum, which may suggest that a bear market (downtrend) will continue.
The difference between bullish and bearish structural breakouts.
The following section distinguishes between bullish structural breakouts and bearish structural breakouts:
Significance
The 'structural breakout' helps predict whether the market will continue in the existing trend or reverse direction. This insight holds significant importance in several aspects.
1. Predict market direction:
By identifying structural breakouts, traders can predict whether the current trend will continue or whether the market is about to reverse. This understanding can help align their strategies with potential future market trends.
2. Trade in collaboration with market makers:
Identifying confirmed structural breakouts allows traders to align their trades with market makers' operations. When a structural breakout confirms a trend continuation, traders can more easily and confidently trade in that direction.
3. Seize the timing for entering and exiting:
Structural breakouts can also serve as important signals for timing market entries and exits. For example, a structural breakout in a bull market indicates a good entry point during an uptrend, while a structural breakout in a bear market may represent a favorable time to exit or establish a short position.
Overall, understanding and utilizing structural breakouts can not only enhance the ability to predict market trends, but also align trading strategies with the powerful forces driving market fluctuations, thereby increasing the potential for successful trades.
How to apply structural breakouts in trading?
Effectively trading structural breakouts requires combining them with other strategies to enhance the accuracy of predicting future price directions. Here’s a simplified explanation of how to combine structural breakouts with moving averages and candlestick pattern strategies:
1. Setup
First, identify lower lows and lower highs in a downtrend. Add a 21-period Exponential Moving Average (EMA) to the chart.
2. Identify structural breakouts
A structural breakout occurs when the price breaks below these lower lows. This indicates that the price may continue to move down.
3. Execute sell trades
After a bearish structural breakout occurs, wait for a bearish candlestick pattern to form, such as a bearish engulfing pattern or a Pin Bar. This is your signal to enter a sell trade.
4. End trading
Monitor the relationship between price and EMA. When the price breaks above the EMA, it means the trend may change or momentum may be lost, at which point you can close your position.
Please remember that this strategy is just an example to help you understand how to integrate structural breakouts into your trading. It is important to develop and test your own strategies based on your trading style and risk tolerance. Incorporating structural breakouts as part of a broader strategy can enhance the effectiveness of trades by providing additional confirmation of market trends.
Case study: Trading using bullish structural breakouts and demand zones.
In this trade, we observe a clear bullish structural breakout (Bull BoS) in the market. When the price breaks through the previous important high, it indicates strong upward momentum.
Identification of Bullish BoS:
◎ The market is in an uptrend, creating higher highs and higher lows.
◎ When the price breaks the recent high, it confirms the bullish BoS, indicating that the upward trend may continue.
Formation of the demand zone:
◎ After a Break of Structure (BoS) forms in a bull market, the price retraces to the breakout area, forming what is known as a demand zone.
◎ This demand zone is located near the area where the BoS occurred, making it a key level for potential order accumulation.
Trade execution:
◎ After observing the price trend, wait for the price to return to this demand zone.
◎ As expected, the price entered the demand zone and began to show signs of order accumulation. This is my signal to prepare for a buy trade.
Trading results:
◎ After orders are filled in the demand zone, the price begins to fluctuate upwards.
◎ This volatility confirms my analysis.
A buy trade has been executed under strong upward momentum.
◎ This trade offers a high risk-reward ratio because the entry point in the demand zone provides a clear stop-loss level, and due to the confirmed upward trend, the potential for upward movement is also considerable.
How to operate structural breakouts in crypto trading?
In a bull market, when the price breaks the structure, you should mark the cause zone (in price action trading, the cause is a smart money trap, which can take the form of order blocks, supply and demand zones, or support and resistance zones) and wait for the price to retrace to that zone and rebound.
When the price touches the cause zone, you can look for confirmation signals for buy trades in a lower time frame, such as Market Structure Shift (MSS) or trend reversal.
In a bear market, when the market breaks the structure, you should mark the cause zone and wait for the price to retrace to that zone and rebound.
When the price touches the cause zone, you can look for confirmation signals for sell trades in a lower time frame, such as Market Structure Shift (MSS) or trend reversal.
ICT MSS and BoS
As we discussed earlier, structural breakouts indicate a breakout of previous structure (highs/lows) after breaking through the cause zone.
While the ICT market structure shift (MSS) indicates a breakout of volatility lows or highs.
Therefore, the difference between structural breakouts and market structure shifts lies only in the cause zone.
Structural breakouts signify substantial changes in price trends, while market structure shifts indicate preliminary changes in structure.
You can refer to the following image to understand the difference between BoS and MSS:
Conclusion
Overall, 'structural breakout' is a very important concept in price action trading. It helps us judge whether the market will continue to rise or fall. We understand that combining structural breakouts with other tools (such as demand zones or candlestick patterns) can make our trading strategies more effective.
Remember, structural breakouts are a great guide, but they work best when combined with your own trading plan. The key is to better understand the market and make wiser trading decisions. Continuously practicing this concept will help you master how to leverage it in trading.
When trading using the structural breakout strategy, we should always remember that no strategy is foolproof, so all account funds should not be invested in this strategy.
Additionally, to reduce risk, you should always set stop losses to protect your principal.
One tree cannot make a forest; a solitary sail cannot sail far! In the crypto world, if you do not have a good circle or first-hand information, I suggest you follow me. I will help you get on board without cost; welcome to the team!!!
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