In the crypto space, complicated technical analysis can deter newcomers. Today, I share a 'foolproof' trading method validated by practical experience—the 5-day moving average strategy. Even newcomers can avoid emotional trading traps and achieve stable profits as long as they strictly follow it.
I. 5-day moving average: The 'key to understanding' candlesticks.
The 5-day moving average (MA5) is a curve formed by the average transaction price over the past 5 days. It acts like a 'thermometer' of market sentiment, intuitively reflecting the holding costs of short-term funds.
Binance setup steps:
Open the candlestick chart and click the 'Indicator' button in the upper right corner.
Choose 'MA (Moving Average)' in the technical indicators.
Only keep the MA5 parameter, delete other moving averages (to avoid clutter that interferes with judgment).
II. Core logic: Follow the moving average, do not go against the trend.
The essence of the 5-day moving average is the average cost line over the past 5 days, which determines its two main functions.
In an upward trend, when the price of the coin pulls back near the 5-day moving average, it indicates that most people are temporarily trapped, and there is a market demand for repair. This is a safe window to increase positions or go long.
In a downward trend, when the price of the coin rebounds to the 5-day moving average, it precisely reaches the relief point for short-term trapped positions, and selling pressure will increase, indicating a signal to reduce positions or go short.
Remember: simple rules are more effective than complex predictions, and moving averages serve as a 'compass' to filter out noise.
III. Practical signals: specific operations of 3 buys and 2 sells.
(1) Buying signal (timing to go long).
Breakthrough reversal: The 5-day moving average changes from downward to upward, and the price of the coin crosses above the 5-day moving average and stays above for more than 3 candlesticks. This is the time to build positions for the first time.
Pullback confirmation: If the price of the coin operates above the 5-day moving average, briefly dips below and quickly recovers within 1 hour, it is considered a washout, and one can increase positions by 20%.
Trend continuation: The 5-day moving average remains upward at an angle of over 45°, and the price of the coin briefly dips below but does not deviate from the moving average by more than 3%. This is considered a healthy pullback, and one can buy more on dips.
(2) Selling signal (timing to go short).
Deviation too large: The price of the coin deviates from the 5-day moving average by more than 10% for 3 consecutive days, entering a 'runaway' state. It is necessary to reduce positions by 50% to lock in profits.
Breakout reversal: After the 5-day moving average flattens and turns downward, if the price of the coin breaks below the moving average and 3 candlesticks fail to recover, one should liquidate or go short.
IV. Practical mantra: engrave the rules into muscle memory.
"Do not sell on spikes, do not buy on drops, and do not operate while in sideways movement."
"Buy on the dip, sell on the rise" (lurking during pullbacks, exiting during spikes).
"High-level sideways then spike, decisively take profits; low-level sideways then new lows, patiently wait."
V. Six money-making techniques adapted to different market conditions.
Two-way hedging method: Use the 5-day moving average to go long in a bull market, go short in a bear market, and stay out in a sideways market, adapting to the entire market cycle.
Mainstream coin holding method: Only track BTC/ETH, buy when above the 5-day moving average, sell when below, and hold core assets.
Altcoin chasing method: In a bull market, if a quality altcoin drops more than 15% in a single day without breaking the 5-day moving average, you can enter with a small position.
Gradient bottom-fishing method: Buy in 3 batches, buy 30% above the 5-day moving average, buy 50% if it drops below the 5-day moving average by 5%, and buy 20% if it drops another 10%.
Profit compounding method: After each profit round, withdraw the principal and reinvest the profits to achieve zero-risk appreciation.
Low-priced coin diversification method: Select 5-8 potential coins below $0.1, use the 5-day moving average for swing trading, with a single coin position not exceeding 5%.
VI. Final warning: Discipline is more important than methods.
The core of making money in the crypto space is not skill, but overcoming greed and fear. The essence of the 5-day moving average strategy is to replace emotional decisions with mechanical rules.
Do not go all in due to a large bullish candlestick; check whether it remains above the 5-day moving average.
Do not cut losses due to a large bearish candlestick; observe whether it effectively breaks below the 5-day moving average.
By strictly executing for 1 month, you will find that doing less is more profitable than doing more.
The market is always creating illusions, and emotional trading will only turn you into the harvested chives. If you cannot determine the market direction for now, it is better to establish trading discipline using this method, ensuring that each operation has a basis. Remember: the crypto space rewards not the smartest, but the ones who can control their hands.
Blindly acting alone will never bring opportunities. Follow Super Brother, and I will guide you to explore tenfold potential coins! Top-tier resources!
