Let me talk about myself. First, let me introduce myself: I was born in 1990, from Changsha, Hunan. I entered the crypto sphere in 2013, and really started to play seriously in 2016. In 2017, I caught the big bull market and made my first 10 million right from the start. Afterward, I lost all the money I earned, and even lost over 3 million of my parents' hard-earned savings. I also borrowed 500,000 from relatives and friends to trade and lost it all in the market, totaling over 8 million lost. My whole family was on the verge of collapse, and my beloved wife kept fighting with me over this, threatening divorce. Under such immense pressure, I even considered jumping off a building. Thankfully, my willpower remained firm at that time; I believed I could earn it back!
I'll share a truth: Don't be jealous. No one who gains great wealth in the crypto sphere does so by luck; don't be unconvinced.
I won't talk about how many pitfalls existed in ancient times, it's 100% more thrilling than now. Just talking about now, those who have made a lot of money and hold onto it, their actions regarding their large positions must perfectly avoid all of the following issues:
In the crypto sphere, wanting to truly achieve financial freedom, class jumps, and compounding is crucial for methods, techniques, and forming your own profit system!
- Once you learn to master it, the circle will be like your 'ATM', making money will be as easy as breathing!
Having traded for over ten years, my wealth journey is summarized as follows:
The first million took the longest and was the most painful. The trading system constantly reshaped and polished, taking a year and a half.
The second million took three months
The third million only took 40 days
The fourth million took only five days. 75% of the funds were earned in half a year.
First, the answer: there’s a chance, but you can only trade contracts, and it requires a bit of luck
In the crypto market, 3000 is about 440u!
The optimal solution recommendation: contracts
Use 100u each time to gamble on hot coins, and manage stop-loss and take-profit well
100 turns to 200, 200 turns to 400, 400 turns to 800.
Remember at most three times! Because the crypto sphere needs a bit of luck, each time this type of all-in gamble happens, it’s easy to profit nine times and lose once!
If 100 passes three levels, then the principal will rise to 1100u!
At this time, it's recommended to use a triple strategy to play
Do two types of trades a day, ultra-short trades and strategy trades. If opportunities arise, then enter trend trades
Ultra-short trades are for quick attacks, doing 15-minute level trades,
Advantages: High returns
Disadvantages: High risk
Only trade at the level of major coins
The second type of trade, strategy trades, is to use small positions
For example, using 10x to do contracts around the 4-hour level
Use profits to save up and invest in major coins weekly
The third type, trend trades
Medium to long term trading, once spotted, go directly
Advantages: High gains
Find the right point
Set a relatively high cost-performance ratio for profit and loss
Ultimately, wanting to earn Q is not about the method, but about execution.
A trading system is a weapon that allows you to achieve stable profits.
It can help you mark key levels + discover entry signals, find trading opportunities that can make you money.
So to put it another way, as long as there is a stable trading system, just act on the opportunities that arise within the system. If you lose, you can take revenge; do what you need to do, and leave the rest to the market. After all, in the end, it always covers losses with profits.
However, 99% of people's biggest problem is that they do not have their own trading system, so when trading, they fear losing money, because once lost, it cannot be earned back. Even if they happen to earn it back by luck, they will ultimately lose it all by skill.
So how do you have a trading system?
An excellent sniper, from the moment you receive the task, you should start formulating a complete plan
For example, how to select sniper positions, understand the habits and behaviors of the target, what equipment you need, your entry route, your escape route, the environment you need to observe, the camouflage you will use, and you must patiently wait for the target to enter your shooting range
This allows for precise hunting! The same goes for an excellent trader; the most important aspect is to find your sniper position, that is, how to accurately find the main support and resistance levels?
This article gathers my years of trading experience. Though long, it is immensely valuable. I strongly recommend those who want to learn technology to read it thoroughly; you will certainly feel like you have gained a treasure.
1. Identify the five secrets of key levels
So how can we accurately identify the key level in the candlestick chart?
Remember these five conditions
The more contact times, the better
Has had a strong reaction
Very clear, easily visible at a glance
Once rejected multiple times
At the same time, it has been both a support level and a resistance level
The above five conditions
You don't need to meet all conditions to call it a key level
But the more conditions met
The more powerful and effective that position represents
Next
I will break down the above five points step by step
The more contact times, the better
To prove whether a price is a key level
There is a very simple method
This is the number of times the market has made contact
In our daily lives
When you discover a situation that keeps repeating
The first or second time you might think it’s just a coincidence
But when this happens for the third or fourth time
Do you feel this matter is rather suspicious?
It seems that this matter has a certain purpose and reason for happening
The same position
At different times
The price has repeatedly failed to break through this position
All have encountered resistance or support at this position
We will doubt one thing
This position is significant for the market
Is there a special significance to its existence?
So is this position a very key position?
Is it this year's highs and lows?
In summary
A position that has had one or two reactions
It may really just be a coincidence
But when this happens frequently
The probability of it being a key level will be much higher
Has had a strong reaction
We know that history will always repeat itself
If the price passes a certain position
If there has not been a strong reaction
Then how can we have a reasonable expectation?
Expecting the price to make another significant reaction at the same position in the future?
The market is actually like humanity
All have memories
But we usually only remember some deeply impressionable things
For example
I will remember that day when BTC dropped by 5000 points
But
I will not remember that day when ETH rose by 50 points
Everything is based on a concept
That is reasonable expectation
When the market returns to a previously high or low position
We will have a reasonable doubt about whether the price will repeat history
Make a significant reaction again at the same position
And that significant reaction is our profit space
And inside this position
In fact, many orders deployed by investment institutions have long been ambushed
When the price returns to this key level again
There may be opportunities to trigger their orders
As retail investors
If at this position the views of institutional investors are temporarily aligned
The price will quickly rush towards your desired direction
Far away from your stop-loss
Step towards your take-profit target
As the saying goes
"Follow the market makers, the bull market is daily present"
This is exactly why, with many years in finance
One of the learned institutional mindsets
Very clear, easily visible at a glance a good key level
One condition is that it must be very clear, very definite, and easily visible at a glance
If one day
When you open a chart
You find a position that seems to be a key level
Doesn't seem to be?
You see the price trying to encounter resistance there
Or support
It seems that the price has reacted before
But if the reaction isn't too significant
I advise you to give up this position immediately!
Right now!
Immediately!
Because even if you barely find a reason
Take this as a key level
In fact, your confidence in this position has unknowingly been affected
Why?
Because when a trading signal truly appears
You will definitely have hesitations
It will greatly influence your trading decisions
Even if you really enter the market
As long as the price line moves slightly in the opposite direction
You will feel very afraid
Even if there is a very strong WeChat number
What prompted you to make this trade
You are very likely to doubt that position
And prematurely gave up that truly key level
Causing you to exit early
Then you have abandoned the originally planned trading plan
This trade will end in failure
Then you cannot achieve consistency in this major principle
This market is not lacking in trading opportunities
There are over 200 currency pairs in the digital currency market for you to trade
Different foreign exchange, futures, and securities products
Never fear missing entry opportunities
The biggest fear is not following your own trading plan
Weak entry due to lack of confidence
Speaking of which
Also involves trading psychology
I will also organize and write some articles about trading psychology later
I will explain it in detail then
Once rejected multiple times
When we pursue girls
The most painful thing is not being rejected by the one you admire
Instead of being crazily rejected by the one you admire
Finding key levels is the same logic
We need to find the pain points of the market
We hope to see a certain position
In different times, it has been many times
Or consecutively show a rejection situation
This reaction repeats each time
Our entry opportunity increases by one
To put it simply
You will see candlesticks generate near this position
Lines or consecutive long upper or lower wicks
The price will always move in the opposite direction after being rejected
Means that the price has expressed itself to the market many times
Once rose or dipped multiple times
But they were all rejected by the market
Immediately pulled back by the opposing force
This situation
Represents that this position has strong forces waiting
Every time this situation occurs
Especially when the daily price successfully breaks through this area
We all view this as a powerful and effective key level
At the same time, it has been both a support level and a resistance level
In the world of trading
There are no eternal friends
There are no eternal enemies either
We hope to see a situation
Yesterday's support has turned into today's resistance
Or yesterday's resistance level turns into today's support level
Every time the price breaks through past resistance
Many times it will return to the same position for a rebound
And at this time, if the price is rejected
This represents that yesterday's resistance has turned into today's support
This situation also represents that this position has considerable prestige
Both the white and black markets will give him face
This means both bulls and bears have once held this position
Every time we see a certain position
At the same time, having been both a support and resistance level
We can just judge it as a key level
It’s likely not wrong
After explaining the five conditions for key levels
Next, I will explain five applications
Common mistakes made by many coin friends
And some practical tips for everyone
2. Five common mistakes in finding key levels and how to avoid them
Five common mistakes in finding key levels and how to avoid them
Too many lines drawn
Reckless entry
It is an area, not a line
The range is too large
Large timeframe charts are more accurate
Too many lines drawn
In the application of finding key levels
The first common mistake
It’s to draw a line for all the so-called support or resistance levels seen on the chart
The more lines you draw
Does not mean that the more trading opportunities you have
It does not mean that the money earned will also increase
Because many of the lines you draw are merely market noise
Based on the five conditions mentioned earlier
Many here are not qualified key levels
If the chart is shaped like this
Ultimately, it will only leave us dazzled
Affects our trading decisions
Everyone should know a principle
The fundamental point of viewing charts is to keep the chart clear and concise
Ensure we can clearly see the price action
What we want to mainly see is the price's reaction
If too many things cover the candlestick
Causing us to be distracted or hesitant
This is absolutely putting the cart before the horse
So our focus only needs to be on the most obvious and important
And the nearest main support and resistance levels will do
Reckless entry
The second point is reckless entry
We use an example from the real market
When we find a key level (as shown in the figure)
We saw the last time the price hit this position, it reacted strongly downwards
Thus the price returns here once again
Never think the price will go down again
Immediately enter to short
Doing this greatly increases the chances of suffering painful lessons
We mentioned earlier
There are no eternal enemies in this world
There are no eternal friends
Yesterday's resistance level can definitely become today's support level
Key levels are actually a balance point in the market
Both bulls and bears will want to break through or stick to this position
So the forces from both sides usually confront at this position
What we need to do is wait for the market's confrontation results
Observe the price's reaction to this position
Decide whether to enter the market based on the traces left by both sides' confrontations?
Why enter? When to enter? When to exit? A series of trading plans
Simply put
The best practice is to wait for a trading signal as confirmation
You just entered the market
And this signal can be a technical indicator
Could be a chart pattern
Could be a candlestick pattern
Even it could be fundamental analysis
There are thousands of different combinations that can serve as trading signals
Due to space limitations
I cannot cover everything in this article
So this matter will not be explained here in detail today
I will only summarize two or three trading signals in the last part of this article
The future
I will target different entry signals
Write more detailed articles separately
Friends interested, remember to follow me
Do not miss out
It is an area, not a line
We continue to explain the third misuse
This is the real key level
It should be an area rather than a line
Although the market will constantly repeat history
But the process in between will never repeat 100% identically
Let alone
The digital currency market
Since its inception
Not even ten years
The market’s cycle is like the circle drawn in the above figure
Each circle will have some differences
It’s hard to draw an identical circle
It's not because I intentionally draw it that way
But the market is filled with too many uncertainties
Although the results are quite similar
But it is very unlikely to completely replicate the previous process
Using this as an example
The price shows a signal of rebound again after reaching this position for the second time
When the third time returns here
Based on your analysis
You decide to enter the market
Place the stop-loss at the height of the last retracement
But today the price is set to probe lower
Directly hits your stop-loss
If you draw this key level as an area
This will turn your stop-loss into here
Then your trade will be successful
And bring you substantial profits, the difference between a successful and a failed trade
It's merely a slight area
Draw the key level as an area
It can help us avoid many failed trades
At the same time, it can allow the price to hit our take-profit
This is the direction we want
The chance of unexpectedly exiting significantly decreases
I believe seeing this
Friends who trade contracts should be well aware
The big market clearly has not changed
Still developing according to your expected trend
This is due to a nasty spike
Cleared out
The range is too large
Sometimes we will find
The drawn key level area is very large
This situation
Especially in large ranges, the opportunities are greater
As shown in the figure
A trading signal appears within this candlestick
Normally, if a signal appears at this position
There are already sufficient reasons to enter the trade
But because the range we draw here is too large
Will make us hesitant
Is this candlestick pattern effective?
A too large area will make us feel confused
Even if a clear signal appears
But some pointless annoyances will occur
Making us indecisive, missing opportunities
When this situation appears
We can try to connect as many entity points as possible
Try to shrink this area to a reasonable range
Also ensure connections to at least three contacts
This will make the entire event much clearer
Large timeframe charts are more accurate
Large timeframe charts are more accurate
You may have heard of it
The larger the time frame, the more accurate
In fact, the logic in it is quite clear
If something takes more time to brew, plan, and prepare
Its success rate will definitely be higher than in a very short time
Spontaneous events will be much higher
We look for key levels in the same way
Always start with a large timeframe chart
Here
I want to share a tip from my years of chart observation
This was also taught to me by a renowned institutional trader
From the weekly chart
To the daily chart
Then go to the 4-hour chart
1-hour chart
Layer by layer going down
Analyze each currency pair
It always starts with a large timeframe chart
Formulate the trading plan for the next week
When you know the market's overall trend
You stand on the right side of the opportunity
Naturally, it will increase
If you belong to those with little trading experience
I suggest you start with a large timeframe
For example, starting from the daily or even weekly chart
First, establish your confidence in trading
Slowly try moving towards smaller timeframes
Take you practically into the market to find main support and resistance levels
Finally finished explaining these five conditions for defining key levels and the five application errors and secrets
Everyone might think what I just mentioned is somewhat subjective
It is very difficult to have a clear, quantifiable condition to define
For example
What counts as a strong reaction?
How many rejections does it take to count as multiple? When does it count as valid?
If you also have this question
Congratulations! Your comprehension is excellent!
You may have already started to absorb and digest this concept
This is also why I classify this course as advanced technical analysis
Indeed
Finding key levels is a very subjective matter
Including all technical analyses of price actions are
A single chart shown to different people
The results derived may not be the same
So the only way is to backtest yourself
Practice more, observe the charts more
Action speaks louder than words
Next
Let me take you to see some examples
Immediately put what we just learned into practice
OK!
Before looking at chart examples
I first need to teach everyone how to draw a key level
Step 1
We use a line to draw the positions where the most candlesticks have made contact
And this line will follow a principle: entities are more important than wicks
Why?
Because we need to focus on the price at the end of the candlestick
That is the result
And the meaning of wicks is that they used to
Not the result
Step 2
Draw an additional line above and below the earlier line
The goal of these two lines is to touch the candlesticks as many times as possible
Whether it is an entity or not
Wicks or not
Step 3
Remove the line in the middle
Then you will derive a preliminary key level area
If this area range is too large
Then you can follow the secret I just mentioned
Adjust according to the principle of connecting the most contact times - down
Remember a principle
That is, entities are more important than wicks!
If the entity and wick conflict
We choose to sacrifice the wicks!
Next
We officially begin looking at some chart examples
The first candlestick chart
Can you guess where the key level is?
How many conditions does it also meet?
That's right!
It's right here!
First, we draw a line
Try to let it touch more entities
Then draw an additional line above and below
Each draw an additional line
Form a draft
Lastly
Let’s make slight adjustments
This area is the key level
Do you see this position has some violations?
For us
In fact, it is acceptable
Because the market is usually not perfect
There’s a very small probability it will look like those drawn in some books
A similar pattern occurs
As long as that flaw is not too significant
It won't affect its qualification as a key level
Finally
Let's see how many conditions this key level meets?
Very clearly
This position meets three conditions
Step 1
It has at least three contacts
Step 2
We have also seen that the price has had a strong reaction before
Step 3
It has also been both a support level and a resistance level
Alright, let's take advantage of the momentum
Next, let's look at the second candlestick chart
Let's try to find the key level together
Still the same drawing method
Step 1
Draw a line
Try to connect to all entities
Step 2
Draw an additional line above and below it
Thus, we find a preliminary key level
Step 3
Let's make slight adjustments
This key level meets four conditions
First, it has more than three contacts
This second position is very obvious and can be seen at a glance
The third time has had more than one strong reaction
The fourth is through candlestick patterns
Seeing the price has been rejected multiple times
Good
Third time's the charm!
Let's do the last set of exercises
This chart looks a bit difficult
If you see the price starting to linger in the lower half of this area
There is a slight selling bias accumulating power
Of course
Today's breakout may fail
Be careful of false breakouts!
Give some advice to those wanting to break even or make money through contracts:
So many people who lose money still stay in the crypto sphere to break even, but a harsh reality is that most people cannot break even or earn money, especially those who wish to break even through contracts, are even more delusional. Those who make money through contracts in the market are extremely rare, and it's not worth fantasizing about why you're not that person. Honestly, you are not suited for trying to break even through contracts, no matter how much you lose, it’s the same. Even if you lose everything, you cannot break even through contracts. So I advise those who want to break even through contracts to quit contracts, in other words, quit gambling.
What should spot traders do if they are losing money?
First, if the loss is not much and the principal is still relatively large, meaning the principal and loss are balanced, then breaking even becomes easier, or it can be possible to break even if it needs to multiply by five times or less, but the most important point is the entry point.
And the selling point, if you are stuck at a high point, it becomes difficult. Most people can make money when the bull market starts, or during the main uptrend of the bull market. Losing money is because they do not understand when to exit. After exiting, during the distribution phase (exiting) by the main forces, repeatedly entering at high points gets harvested. Therefore, for retail investors, knowing where to sell is very important, but selling is not the most important.
Most importantly, after selling, be able to persist in holding cash and waiting. This is what most people cannot do; it’s the fundamental reason why 95% of retail players lose money. If you can sell at a relatively high point, and after selling, not be influenced by analysts in the market or various positive news at high points, and persist in holding cash, that is truly locking in gains, and only then can it be considered true earnings.
Summarizing the characteristics of people who lose money
1. Good break-even within five times
2. You must know how to sell
3. You must be able to hold cash
Of course, it's the same for spot traders. Less than 5% of retail investors make money because the trading market is a struggle against human nature: greed, fear, arrogance, and very few can overcome it.
So who are the people making money through trading?
Those who genuinely make money often only learn one strategy, can read the fundamentals, that is, when the market is at the bottom and sideways, buy in, hold on, then sell when it has risen enough, without paying much attention to the news. For the coins to buy, they are not blindly buying. However, when a bull market comes, all coins will rise.
In fact, especially many newbies playing spot trading find it easier to make money.
In the crypto sphere, let me talk about two simple methods to make money:
The first type:
Making money from trading is actually that simple; just follow these three steps! Master them and easily increase your account tenfold!
Step 1: Look at the trend first
Step 2: Find the key level again
Step 3: Find entry signals
Enter the market, profit, close the position, and leave
Isn't it simple?
Let’s talk about the details below
Step 1: Look at the trend first
The state of a market
Major market movements have only three outcomes: rise, sideways, fall
What is a major market movement? Look at the timeframe chart of 4 hours or more.
For example, 4-hour, daily, weekly (my personal habit is to look at 4 hours)
Buy when prices rise, sell when they fall, and do not trade during sideways movements
Step 2: Find the key level
Whether the market is rising or falling, it will bounce back like a bouncing ball, level by level from bottom to top or top to bottom
What we need to do is enter at the launch point and exit at the next drop point. How to find the precise step becomes key
This is what we call a key level (main support and resistance level)
(How to accurately find the main support and resistance levels can be seen in my previous articles)
Step 3: Find signals
Generally, if you discover a trend in a large timeframe, you should look for trading signals in a smaller timeframe to enter
Everyone has different strengths in trading strategies, mastering one to two is enough
More importantly, a quick formulation of the trading strategy
A complete trading strategy includes
(1) Target - What to trade;
(2) Position - How much to hold;
(3) Direction - Long or short;
(4) Entry point - At what level to trade;
(5) Stop-loss - When to exit a losing trade;
(6) Take profit - When to exit a profitable trade;
(7) Countermeasures - How to respond to unexpected situations;
(8) Aftermath - Operations after the trade ends.
The famous TLS technical analysis method, trend + key position + signal = successful trading
Before making each trade, follow the process to formulate a strategy. I believe you won't lose too badly.
Form good habits, accumulate over time, and you will find the shortcomings in your trading process, work hard to change them, and you will succeed!
Lastly, let's talk about something heart-wrenching
However, the market does not have a surefire secret; it is just a probability game. The pullback confirmation rule + its essence is to use rules against human nature—remaining calm when others panic, restraining oneself when others are too excited.
When the market starts, profits double! Follow Cheng Ge to go with the trend, and wealth will naturally come
Keep an eye on: SPK, FIDA