After 10 years of cryptocurrency trading, I have earned nearly 110 million yuan. To change my fate, I must try my luck in the cryptocurrency world. If you can't get rich in this circle, ordinary people will have no opportunity in their lives. Recently, I had the honor to enjoy tea with a big shot in the cryptocurrency circle and discussed the trends of the cryptocurrency market.
His words deeply shocked me.
It turns out that he once faced a margin call due to contract trading within three days, losing as much as 50 million yuan. This experience was undoubtedly a profound lesson for him.
Reflecting on my own journey in the cryptocurrency circle, it has been tumultuous. From initially entering the market with 50,000 yuan, to making tens of millions during the bull market, then back down to over 2 million now at 1.1 million; I am now waiting for the next bull market, aiming for 2 million.
In a chaotic market, many people always try to see everything clearly, but the longer one survives in the market, the more one can realize that the market itself is disordered; 'the path to greatness is simplicity' may be the most effective principle when facing the market.
Trading 'Heart Sutra'
Investment is a systematic management task. The stock market, as a direction of investment, plays an important role in balancing capital management structure and enriching investment targets, which is very important for institutions and individuals. However, many people fail to realize this.
My understanding of trading concepts and the stock market is constantly changing, and this change is also an external manifestation of self-improvement.
Trading 'External Skills'
In trend trading, I will refer to support/resistance levels while also considering some macro factors.
I do not have specific requirements for stock selection; the individual stocks I pay attention to generally do not exceed 5.
At the same time, I will adopt a gradual position-building method for entering the market, with the first position being about 10% of the capital proportion. Depending on the entry period, the stop-loss proportion will vary, but I will be relatively strict in controlling the total position drawdown.
Regarding the mentality of trading, I believe the most important thing is to stick to your original intention.
So how to excel in cryptocurrency trading? Once a person enters the financial market, it is hard to turn back. If you are currently losing yet still confused and plan to make cryptocurrency trading your second career, you must understand the 'Advanced MACD Strategies.' Understanding and comprehending it can help you avoid many detours. These are personal experiences and feelings; I recommend saving and pondering repeatedly!
Without further ado, let’s get straight to the point! I will teach you step by step how to use MACD to find the best trading points!
The MACD indicator is a relatively common technical indicator. The more common the technical analysis, the more people use it as a reference, making it more worthwhile for us to spend time familiarizing ourselves with it. However, most people do not know how to accurately apply the MACD indicator.
Through this article, we will start from scratch to understand this most familiar technical indicator, learning how to use the MACD indicator to identify suitable trading points and trend reversal points, thereby discovering more quality trading opportunities.
What is the MACD indicator?
The MACD indicator, also known as the Exponential Moving Average Convergence Divergence, is an indicator derived from moving averages. The MACD analyzes the relationship between 'short-term' and 'long-term' moving averages to observe changes in market trends, thereby knowing which trend the market is currently in, where trading signals are, and to detect market turning points early. #ETH Staking Exit Dynamic Observation
Beginners who want to understand the MACD indicator more carefully need to have a basic understanding of moving averages. This is because MACD is derived from two moving averages.
How to read the MACD indicator?
The MACD indicator consists of four parts, including the DIF line, DEA line, MACD histogram, and zero line. Each part represents different data obtained from the original chart, designed to present a more in-depth and intuitive way of interpretation, thus giving rise to the MACD indicator.
Here is some introduction about these four parts:
DIF line, fast line
DEA line, slow line
MACD histogram
Zero line
1. MACD Line (DIF Line/Fast Line)
The MACD line is also known as the DIF line (Differential Line), which is the difference between the short-term moving average (16 EMA) and the long-term moving average (26 EMA). The MACD line exists to analyze short-term price changes. The MACD line or DIF line can be either positive or negative. #Binance HODLer Airdrop PLUME
MACD Fast Line = Short-Term Moving Average - Long-Term Moving Average
Positive MACD Line:
This indicates that the short-term moving average value is greater than the long-term moving average value, meaning the short-term average price is higher than the long-term average price, indicating that the financial product is in an uptrend.
Negative MACD Line:
This indicates that the short-term moving average value is less than the long-term moving average value, meaning the short-term average price is below the long-term average price, indicating that the market financial product is in a downtrend.
The MACD line is also known as the fast line because it is most sensitive to changes in market prices.
2. Signal Line (DEA Line/Slow Line)
In simple terms, the signal line (slow line) is the average value of the MACD line over the past period (generally 9 days). Since it is based on past MACD data for analysis, it is also referred to as the slow line. The existence of the signal line is to capture more long-term trends.
Signal Line/Slow Line = ∑(n MACD Fast Line)/n
n = the time period we want to select
The appearance of the slow line is to enable us as traders to discover trading opportunities more quickly.
3. MACD Histogram
The MACD histogram was created to understand the difference between the DIF line and the DEA line. With the histogram, we can see the difference more clearly. #Chinese Investors Flock to Indonesia
MACD Histogram = DIF line - DEA line
The histogram can be either positive or negative. From these histograms, we can know:
Histogram is positive:
The fast line (DIF line) is above the slow line (DEA line)
Histogram is 0:
The fast line (DIF line) and slow line (DEA line) are flat, which is a convergence point.
Histogram is negative:
The fast line (DIF line) is below the slow line (DEA line)
4. Zero Line
The zero line serves as a reference level, distinguishing the fast line and slow line between positive and negative values, acting as a boundary line, allowing us to clearly know which area the current MACD data is in.
How to use the MACD indicator
The MACD indicator has many uses. The three most common ways to use it are to find the following information through MACD:
1. How to use the MACD indicator to observe price trends?
The simplest way to use the MACD indicator is to observe trends in financial product trading, with the most common applications being forex trading and stock trading. In trading, trends are divided into two types: uptrends and downtrends.
Uptrend: When both the fast line and slow line are above the zero line, the product is generally in an uptrend.
Downtrend: When both the fast line and slow line are below the zero line, the product is generally in a downtrend.
MACD is not only very suitable for traditional stock trading, but it can also be integrated into short-term trading of other financial products, one of the most popular being high-leverage forex trading.
By using leveraged forex trading, we can operate with a smaller amount of margin, but it also brings risks. Using the MACD indicator can enhance accuracy and reduce risks, helping you operate steadily in a volatile market.
2. How to use MACD Golden Cross and Death Cross to find trading points?
Using the MACD indicator to find trading points is one of the most common analytical methods. By identifying golden crosses or death crosses, we can find long and short points. The following is an example using EUR/USD:
When the fast line (blue line) breaks up through the slow line (orange line) from below, it is called a golden cross, which is a good reference for a buy or long signal.
When the fast line (blue line) falls from above and breaks down through the slow line (orange line), it is called a death cross, which is a good reference for a sell or short signal.
MACD Golden Cross
MACD Death Cross
3. How to find trend reversal points through MACD divergence?
This is the advanced usage of the MACD indicator. When the price trend and the MACD indicator present inconsistent trends, there is an opportunity for MACD divergence to occur. Simply put, the sentiment and views of investors on the price trend have changed, and they believe that the price of the financial product does not match its actual value.
The occurrence of MACD divergence is a warning and can be divided into two types, providing investors with a potential buy/sell signal:
When the price makes higher highs while the MACD line makes lower lows, a top divergence forms. This indicates that the momentum of price increase is weakening, suggesting that the market is actually skeptical about the subsequent price rise. Therefore, the death cross that appears after the top divergence can also be regarded as a sell/short signal.
When the price makes lower lows, but the MACD line makes higher highs, a bottom divergence is formed. This indicates that the downtrend is slowing down, and the market currently believes that the subsequent decline may be a buying opportunity. Therefore, the golden cross that occurs after the bottom divergence is considered a buy signal.
Top Divergence (High Divergence)
Bottom Divergence (Low Divergence)
Adjustment of MACD indicator parameters
Adjusting MACD parameters is an advanced way to use MACD. By fine-tuning the MACD parameters, we can increase the compatibility of MACD with specific financial products.
If you want to adjust parameters, you can start adjusting them by clicking on the MACD settings to enter the settings popup.
The default parameters for the MACD indicator in all charting software are 12, 26, 9, which are considered the best parameters for MACD, representing:
Fast line length: The period of the EMA short-term moving average (generally, the short-term reference moving average for the DIF line is the moving average price of the past 12 K lines)
Slow line length: The period of the EMA long-term moving average (generally, the long-term reference moving average for the DIF line is the moving average price of the past 26 K lines)
Signal length: Length of the MACD signal line (generally, the signal line is the moving average of the MACD line values over the past 9 K lines)
However, the MACD parameter settings can also be optimized based on the nature of different financial products and the needs of the traders themselves.
In a more volatile market, you may consider using shorter time periods.
In a less volatile market, you can use longer time periods.
MACD Indicator Combined with Other Indicators
Since MACD is a lagging indicator, most traders will combine MACD with other indicators or support and resistance lines. One of the most common and easiest usages is to use MACD together with support and resistance lines.
Next, I will guide you step by step on how to combine support and resistance lines with the MACD indicator:
Step 1: Identify the chart's resistance and support
In the selected chart, identify the resistance and support lines, giving us a concept of where the price may experience resistance pullbacks or support rebounds.
Step 2: Import and observe the MACD indicator, find the entry point
If we are bullish, we can wait for the golden cross to occur in the area of the support line. Once the golden cross appears, we can conduct a long trade. After going long, set the stop-loss point below the support line.
Step 3: Decide on the selling point and stop-loss point.
After buying, wait patiently as long as the fundamentals remain unchanged. Close the position when the price reaches the resistance line. If you want to wait until after the death cross to close the position, you may lose some profit due to the lag effect.
If you are also a technical enthusiast, please see the following image:
Written at the End
MACD is a technical indicator with extremely high learning value. Based on the above, one indicator can be designed into multiple trading strategies. Even if MACD is not the main focus, it can be transformed into a supporting analysis. By learning MACD, we can more easily cultivate our logical thinking and better master how to design and optimize strategies.
The myth of getting rich quickly may be distant, but those who control the rhythm can steadily put profits into their pockets. If you have ever felt lost, anxious, and scarred in the market, you might as well try this rhythm.
Calm down and see the road clearly.
Stop when you need to stop, and move when you need to move.
Don't rush, take your time.
Your path to doubling your investment may truly begin from the moment you control the rhythm.
The cryptocurrency market is like a marathon; it is better to run steadily than quickly. Those who earn money by luck often lose it back through skill. Only by embedding position management into DNA can one survive in this ruthless market. Remember: as long as you are alive, you have a chance to turn things around.
The above are ten years of trading insights in cryptocurrencies. After many bumps, these are heartfelt words of great enlightenment. I hope they are useful to everyone. A quality product from Yan'an, there are beauties in the coin circle, unique and independent, with a soulful path and skill in currency!
No matter how diligent a fisherman is, he will not go out to fish in stormy weather, but will instead guard his boat carefully. This season will pass, and sunny days will come! Follow Xiaoxun, teaching you both fishing and how to fish, the cryptocurrency doors are always open, and only by following the trend can you have a life of following the trend. Save this and keep it in mind!
One tree cannot make a boat; a lonely sail cannot go far! In the cryptocurrency circle, if you do not have a good community or first-hand news from the cryptocurrency circle, I suggest you follow Xiaoxun, who will guide you to profit without effort. Welcome to join the team!!!