Trading cryptocurrencies is never a casual success. Every trader, from the moment they enter the crypto space, faces countless setbacks; some are knocked down, while others rise again. The difference lies in whether one can transform the hardships of the process into nutrients for personal growth. Everyone experiences challenges, but not everyone is good at self-reflection and summary.
The trading journey of Qiu Zong has also been full of hurdles. Looking back, there is much to reflect on. Today, I have specifically organized the essence of these experiences to share, hoping to help fellow traders avoid detours!
1. Skillfully use the morning market: In the morning, market sentiment is at its purest. If the price plummets significantly, do not panic; this may be a good opportunity to 'pick up' low prices. If the market rises sharply in the morning, do not be greedy; take the opportunity to lock in profits.
2. Grasping the afternoon strategy: If a sudden surge occurs in the afternoon, do not be impulsive and chase the trend; most of the time it is a false alarm, and buying at high levels can lead to losses. Conversely, if there is a significant drop in the afternoon, it’s wise to stay calm, wait a bit, and find the right low point to enter the market the next day, often yielding low-cost chips.
3. Stabilize your mindset during a downtrend: When you wake up to see a drastic drop in cryptocurrency prices, do not rush to cut losses; the market changes rapidly, and early morning fluctuations are often a 'misleading tactic.' If the market is stagnant and calm, do not rush; it may be worthwhile to take a break, conserve energy, and wait for opportunities.
4. Strictly adhere to buying and selling principles: If the coins you hold haven’t risen to the expected high, don’t sell easily; a small profit is still a loss. If it hasn’t fallen to your psychological price, hold off from buying rashly to avoid catching a falling knife. During a consolidation stage, when the market is chaotic and directionless, trading is undoubtedly like a blind man touching an elephant; it’s better to observe from the sidelines.
5. Operate using candlestick patterns: Buy on bearish candles, sell on bullish candles; this is a classic strategy. A bearish candle indicates a price correction, making chips cheaper, which is an excellent time to buy; a bullish candle indicates the formation of a short-term uptrend, and selling high to secure profits is wise.
6. Breaking through with counterintuitive thinking: To stand out in the cryptocurrency space, sometimes you must go against the tide. When everyone is frantically pursuing, maintain some calm; when everyone is in a panic selling, show some courage and dare to operate counter to the trend, so that you can seek niche opportunities for wealth outside the mainstream tide.
7. Endure the agony of consolidation: When prices consolidate at high or low levels for a long time, it is most trying. At this time, do not be swept away by anxiety and act impulsively; maintain your patience and composure, and wait for the trend to clarify, whether it is an upward push or a downward probe, then strike with full force.
8. Seize the final spike: After a prolonged period of sideways movement at a high level, once there is another surge upwards, do not hesitate; this is likely the final frenzy. Timely selling will allow you to secure your profits; otherwise, they may vanish quickly, and the cooked duck will fly away.
Super simple and effective Bitcoin trading methods!
First trick: Trading volume is the guiding light for price trends.
Supply and demand, technology, policies, and money supply are undoubtedly the main factors affecting digital currency prices. However, the key force determining the rise or fall on a given day is the trading activity in the market itself. No matter how significant the bearish or bullish factors are, they cannot surpass the impact of trading volume. The directional indicator role of trading volume is particularly obvious in real transactions. Here’s a very accurate mnemonic: Volume increases and price rises, there’s still an increase; volume increases and price falls, there’s still a fall; be wary of a sudden spike in stock prices at high points; sudden spikes in stock prices at low points likely indicate a future surge.
Price trends indicate direction while trading volume indicates momentum. Since trading volume is the sum of buying and selling contracts, high trading volume does not necessarily mean more buyers or sellers. An uptrend simply indicates buyers are willing to transact at higher prices, while a downtrend indicates sellers are willing to transact at lower prices. Momentum and direction are two different concepts that should not be confused; only then will volume-price analysis serve as a guiding light for our future predictions.
Second trick: Where there is accumulation, there will be explosive power.
What does this mean? It means that if a price oscillates for several consecutive days within a narrow range, the longer the oscillation lasts and the more solid the candlestick pattern, the greater the force when a breakout occurs. We must pay attention to such opportunities when trading digital currencies.
The reasoning is also very simple; it’s like magma in a volcano. Before a volcanic eruption, magma must contend with the hard crust, the longer it is suppressed, the greater the eruption's force. This is the so-called 'in silence there’s an explosion, in silence there’s extinction.'
The meaning of the chart is also easy to understand. Indices in a narrow range of oscillation, whether going long or short, have little profit in this area; any profit is basically given to transaction fees, losing the significance of closing positions. Therefore, the number of open contracts will inevitably increase. At this point, large players will either actively collect chips waiting for a counterattack or seize the opportunity to distribute chips during the oscillation to prepare for leaving space for opponents. As time prolongs, the transfer of chips will gradually complete. When the equilibrium in the concentrated area is finally broken, a surge upward or a plunge downward will naturally manifest, and at this time, three forces will boost this runaway market.
Large players are either actively collecting or waiting to distribute. The horizontal development in a narrow range brings storms on the clear horizon, while turbulent undercurrents churn beneath the calm surface. The longer the concentrated chip area stretches along the time axis, the greater the explosive power upward or downward.
When the concentrated chip area finally breaks the equilibrium, three forces will intensify the market changes. One is that strong small traders will not spare their gains and will aggressively increase their positions; another is that those who were trapped earlier and are now forced to cut losses will usually trigger stop-losses, thus fueling the market further. The third is that onlookers will see the trend clearly and quickly become trend-followers, acting in accordance with the trend.
Because the brewing of the concentrated chip area takes time, patience is needed for the breakout. If the direction of the concentrated chip area is uncertain, entering the market rashly carries greater risks than rewards. If prolonged, impatience may lead to numbness in observation, and suddenly the market moves in the opposite direction, and one becomes trapped. It is better to first observe from the sidelines, wait patiently, and place limit orders; only after the market breaks out should one chase the trend.
Third trick: Pay attention to intraday reversal signals.
There is no bull market that only rises without falling, nor is there a bear market that only falls without rising. The alternation of rises and falls is the fundamental rule of digital currency trends. However, trend reversals can evolve in two different natures: one is a change in the big direction, where a strong uptrend turns into a strong downtrend or vice versa.
This type of reversal usually manifests as double tops or double bottoms, also called W or M patterns, three peaks or three troughs, head and shoulders or inverted head and shoulders, all of which belong to significant movements and generally require three weeks to a month and a half to develop.
The other type is a technical adjustment, where small declines occur during a large rise or small increases during a large decline. This type of reversal is typically marked by a high open and low close, often featuring upper shadows in bearish candles; or a low open and high close, often accompanied by lower shadows in bullish candles, and if these conditions occur within a single trading day, we treat them as reversal signals. A large rise or fall often consists of several small waves of rise or fall. After a segment of rise or fall, a correction occurs before the next wave of rise or fall. At this time, we must learn to follow the operation closely: go short during a downtrend, and immediately go long when a reversal signal appears.
Fourth trick: Strategies during fluctuating markets.
The significant rise in digital currencies is not an everyday occurrence; it is usually a one-sided trend. There is often a fluctuating market between a segment of rise and fall, or between two segments of rise or fall, frequently resulting in a back-and-forth market. This back-and-forth is characterized by price oscillating within a narrow range, falling back near the upper limit, and rising again near the lower limit; we call this market consolidation or 'box' movement.
The reason for back-and-forth movements is that there are no obvious bullish or bearish news in the market, causing the market to lose directional momentum. At this time, only short-term speculation is viable, with both sides in a tug-of-war, many people often get confused by 'a fist on the left, a stick on the right.' Because the distance between the upper and lower limits is not large, and as soon as it reaches the upper limit, it turns back down, and as soon as it touches the lower limit, it turns back up, profit opportunities vanish quickly; greed leads to being trapped.
Countermeasures:
1. When the direction of the peaks and troughs is not particularly clear, if you have made a profit and feel the peak is reached, it’s best to take some profits and reduce your position by 30%. If it continues to rise and you sense a stagnation, continue to reduce your position by 20%. If it falls and turns negative, increase your position by 20%; if it continues to decline and seems to have reached a consolidation state, increase your position by 30%. By repeating this process, you will find that no matter how long the box consolidation lasts, your cost will gradually decrease, and you'll end up making a profit without even realizing it.
2. After confirming it’s a fluctuating market, when close to the lower limit, buy to go long; when it rises to the upper limit, close your position and go short. When it falls to the lower limit again, close the position and switch back to going long. This strategy emphasizes maneuverability and flexibility. As soon as it reaches the upper or lower limit, you must immediately reverse your trade. In fact, the best practice is to simply observe without acting. In fluctuating markets, observe until there is an upward or downward breakout before entering the market. But the key question is, do we really have that patience?
Fifth trick: Use technical analysis wisely for short-term trading.
In the cryptocurrency market, even the strongest upward trends cannot peak all at once, and even the weakest trends will not hit a bottom in a vertical line; there must be consolidation in between. After consolidation, a new wave of rise or fall can brew. This consolidation is technically referred to as a technical adjustment. So what causes this adjustment?
Firstly, some sellers are taking profits, which exerts reverse pressure on the market;
Secondly, some loss-makers are increasing positions to average their costs, which changes the market direction;
Thirdly, some large players feel that the adjustment or rise has reached their psychological expectations and conduct short-term operations, which can significantly impact prices. This adjustment provides us with a short-term opportunity. Seize this opportunity, and the profits can be considerable. For example, in an upward trend, if there are three consecutive days of rising red candles, but each one is shorter than the last, with decreasing gains, this signals that a strong rise is about to reverse.
Conversely, in a downtrend, the same logic applies; when a rise occurs during a downtrend, going short is the best opportunity, or when a rebound happens during a fall, going long is ideal.
Conclusion: In grasping specific market trends, there are many technical methods to observe the market, and many people have learned numerous technical indicators, ending up confused. This is truly unnecessary; trading techniques and methods only need to be moderate. Summarizing a set of trading methods that suit oneself is the key to standing undefeated in the cryptocurrency market.
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