Do not regard stability as some supreme myth. I have been immersed in trading for ten years, with full-time engagement for 6.7 years, enjoying a leisurely lifestyle, almost insulated from stress. The profits brought by this stability are far from what ordinary office workers can reach, but to be pragmatic, it also has its limits, certainly not the infinite wealth some people fantasize about.
After six years of spring and autumn, I gradually explored a trading path that fits myself under the guidance of a wise person. Although I cannot say I have entered the ranks of the wealthy, stable profits have been secured, allowing me to easily surpass over 90% of my peers.
The market is always changing, but the rules remain the same. Your only goal is: to not be washed out in this great sifting of sand. If you feel lost, feel free to bookmark this article as the starting point of your trading journey. Not for getting rich, but to always stay in the game.
Without further ado, here are 5 rules; understanding them means profit!
Rule 1:
Invest small amounts and avoid going all-in
The meme coin market differs from mainstream markets; its high volatility dictates that we should not 'go all in.' Unlike traditional investments, the risk of projects going to zero here is extremely high, so investing small amounts is a rational choice. One important significance of investing small amounts is that even if a project encounters problems, the losses can be controlled within an acceptable range. It is particularly crucial to retain enough 'backhand' in the meme coin market, as this is not only key to protecting the principal but also a sign of alertness and respect for market risks.
Rule 2:
Act promptly and make decisive decisions
In the meme coin market, opportunities often arise in an instant, and excessive hesitation can lead you to miss out on potentially high-yield projects. Acting decisively is not about blindly following but rather based on project evaluation and a keen grasp of market dynamics. Each choice must be accountable for your judgment, but after making a choice, you should act swiftly to seize opportunities in an uncertain market environment.
Rule 3:
Double profits and cash out the principal, gradually realizing the remaining portion.
In the meme coin market, setting good exit strategies and profit targets is particularly crucial. My consistent operational principle is to immediately withdraw the principal when the project doubles, thus locking in profits even if the market fluctuates later, protecting the principal.
Additionally, if the project continues to rise, you can gradually cash out in batches. This method not only guarantees some profit but also adapts to market uncertainty. The reason for setting the principle of 'doubling the capital' with DEXX is that in the meme coin market, dramatic price fluctuations are common. Once a project retraces, both the principal and profits could be at risk; therefore, cashing out the principal promptly after reaching a profit goal is a key risk management strategy. It is important to note that not all projects need to be held long-term; unless specifically marked, it is advisable to exit at target profits to secure gains.
Rule 4: Diversify investments to reduce overall risk
In the high-risk meme coin market, diversifying investments is an effective strategy to avoid concentrated risks. For example, if you plan to invest 500 USDT/10 SOL/1 ETH, consider spreading it across 10 projects, investing $50 in each. This way, even if one project fails, it won't have a significant impact on your overall funds, and the loss can be easily absorbed.
Many projects in the meme coin market carry a risk of going to zero, so diversifying investments is an important means of controlling overall risk. If you can select projects across different industries and diversify into different types of cryptocurrencies, this method further reduces the risk of failure of a single project. Regardless of the market conditions, diversification is always a wise choice to cope with market fluctuations.
Rule 5: Stay patient and avoid rushing for quick success
In the meme coin market, being patient is a crucial psychological quality. There are numerous opportunities in the crypto space, but not every day presents suitable chances. Learning to wait and filter, making prepared choices, is far more stable than blindly following others. Many investors lose everything due to impatience from an unstable mindset, seeking quick profits.
Opportunities in the meme coin market are indeed hard to capture, but with patience, you can always find suitable projects. Not rushing for quick success helps maintain a clear investment mindset and avoids the 'greed trap.' It's essential to remind oneself that there are many 'myths' of dramatic rises and falls in the crypto space, often illusions brought about by speculation; maintaining patience and calm is a necessary path to success.
Dear friends, today I will share the trading strategy for the Three White Soldiers candlestick pattern. Mastering these will give you more confidence in trading.
In Japanese candlestick patterns, the Three White Soldiers is a bullish reversal candlestick pattern that typically appears at the bottom after a price decline, indicating that a price reversal may occur soon.
Since the Three White Soldiers pattern is a bullish reversal pattern, we hope to see a price decline before this pattern appears, making it a common signal for the end of a trend.
How to identify the Three White Soldiers pattern?
The Three White Soldiers pattern is a three-candle pattern composed of three consecutive bullish candles located at the bottom of a downtrend. It is the mirror image of the 'Three Black Crows' pattern.
The method to identify the 'Three White Soldiers' pattern on the chart is as follows:
◎ Three consecutive bullish candlesticks.
◎ Larger body
◎ The wicks should be small or nonexistent
The pattern looks like this on the chart:
Therefore, to identify the Three White Soldiers candlestick pattern on the chart, you need to find three consecutive bullish candlesticks appearing at the bottom of a downtrend.
Additionally, each candlestick must have a relatively long body, and the opening price must be higher than the previous candlestick’s closing price, ultimately forming a 'V' shape.
Variations of the Three White Soldiers candlestick pattern.
Of course, the Three White Soldiers candlestick pattern may look different on daily trading charts.
You may see a significant gap between the closing price of one candlestick and the opening price of the next, making them start from within each other.
You will often see the candlestick gradually getting smaller during its formation.
It may look like this on the chart:
How to trade the Three White Soldiers candlestick pattern.
To trade the Three White Soldiers candlestick pattern, merely finding the same shape on the chart is not enough.
What makes the pattern effective is not just the shape but also its location. This means that the same shape appearing in different locations may indicate different meanings.
When trading the Three White Soldiers, we first want to see a price decline, forming a bearish trend.
The Three White Soldiers pattern that appears after this bearish trend may be a signal for an upward reversal.
It looks like this:
So when should we enter trades based on the Three White Soldiers pattern?
It's simple: when the high of the last candlestick is broken, you can enter the trade.
This is your trigger to adopt a conservative bullish strategy, as shown below:
For stop-loss, we can set it below the first candlestick of the Three White Soldiers pattern.
Additionally, to improve accuracy, we want to trade the Three White Soldiers candlestick pattern by incorporating other technical analyses or indicators.
Trading the Three White Soldiers candlestick pattern strategy
Strategy 1: Using trend reversal indicators - RSI and Stochastic Oscillator
The two most effective indicators to confirm a trend reversal are the Relative Strength Index (RSI) and the Stochastic Oscillator. Essentially, these technical analysis tools indicate overbought and oversold areas, helping you identify potential reversal zones.
As seen in the following AUD/USD 1-hour chart, when the Three White Soldiers pattern appears (with RSI below 30 and Stochastic below 20), both the RSI and Stochastic are below the oversold area. This validates the candlestick pattern and provides additional signals for the upcoming trend reversal.
In the example above, the trader will establish a long position after the third bullish candlestick completes, setting a stop-loss at the lowest level of the first candlestick or below. The take-profit should be at the highest level of the previous bearish trend candlestick.
Additionally, you can also use RSI divergence to trade the Three White Soldiers pattern. This is somewhat different from other trading strategies.
To find a bullish RSI divergence, we want to first see the price in a downtrend, forming lower lows and lower highs.
Operational steps:
◎ Find a downtrend.
◎ Mark the lows formed after each price drop
◎ Compare the price lows with the RSI indicator
◎ When you see the RSI forming higher lows while the price forms lower lows, you have found a divergence.
◎ Wait for the Three White Soldiers pattern to appear at a lower price low, aligning with a higher low in RSI
◎ Go long when the price breaks above the high of the last candlestick of the Three White Soldiers pattern.
◎ Set stop-loss and take-profit targets, expecting the price to rise.
Strategy 2: Trading the Three White Soldiers with Fibonacci
Besides using trend reversal indicators, you can also use Fibonacci retracement levels to detect possible support or resistance areas and determine if a trend reversal may occur.
Fibonacci shows the retracement levels where price often reverses. Depending on the strength of the trend, the effectiveness of different levels in combination with the Three White Soldiers pattern may vary.
Operational steps:
◎ The market is in an uptrend
◎ Then wait for a decline.
◎ Use the Fibonacci tool to draw levels from the low to the high of this wave.
◎ When the price touches the Fibonacci level and the Three White Soldiers pattern appears, this is the signal to wait.
◎ Go long when the price breaks above the high of the third candlestick of the Three White Soldiers.
◎ Set stop-loss and take-profit targets, expecting the price to rise
To draw Fibonacci retracement levels, you need to find a completed trend and drag it from the previous trend's low to its high (as shown below).
Once the Fibonacci retracement levels are drawn, you can zoom in and look for entry levels. Additionally, you can use Fibonacci to find stop-loss positions and take-profit targets.
Using the above example, the entry point will be the closing price of the third candlestick (as the market trading price is above the 78.6% Fibonacci level).
Then, the stop-loss can be set at the lowest level of the first candlestick or the 0.0% Fibonacci level (i.e., the lowest level of the previous price range). Finally, the take-profit can be set at the highest level of the previous trend or below one of the Fibonacci levels.
Strategy 3: Trading the Three White Soldiers using moving averages
Moving averages are excellent indicators for trend trading. When the price is in an uptrend, it tends to pull back to the moving average.
Operational steps:
◎ Find an uptrend where the price jumps above the moving average.
◎ Wait for the price to fall back to the moving average.
◎ Check if the Three White Soldiers pattern appears on the moving average
◎ Go long when the price breaks above the high of the last candlestick of the Three White Soldiers.
◎ Set stop-loss and take-profit targets, expecting the price to rise again.
What is the success rate of the Three White Soldiers pattern?
According to the internationally renowned trader Thomas N. Bulkowski, the success rate of the Three White Soldiers candlestick pattern is as high as 84%.
Advantages and disadvantages of the Three White Soldiers candlestick pattern.
The following are the most common advantages and disadvantages of trading the Three White Soldiers pattern:
Summary
The Three White Soldiers is a candlestick pattern consisting of three consecutive bullish candles.
To ensure effectiveness, it must occur after a price decline.
This is a bullish reversal pattern, indicating a potential upward reversal in price.
To improve accuracy, you can use RSI, moving averages, and other trading indicators to trade the Three White Soldiers.
The win rate of the Three White Soldiers candlestick pattern is 84%.
It's worth noting that no trading strategy is foolproof; sometimes, while using a strategy, you may encounter significant market shifts, and the market begins to develop with strong momentum.
To ensure you can withstand appropriate risks, please lock in profits appropriately when the trend is in your favor.
Remember to rigorously test these strategies or indicators in simulated trading.
This is my personal opinion and insight; if you find it helpful, feel free to like and save it. I am Qing Tian, experienced through three cycles of bull and bear markets, skilled in logical coin selection and technical timing, trading only within my cognitive range, and every directional move has been validated by the market!
Even the most diligent fishermen won't go out to sea during stormy seasons, but they will carefully guard their boats; this season will pass, and sunny days will eventually arrive! Follow Yan An for both fish and fishing skills; the crypto market's door is always open. Only by going with the trend can you lead a life in sync with it—save this and keep it in mind!
