On a night when the red alert was flashing, I watched my account balance go from 6 million to negative. It was at that moment that I truly understood the cruelty of the financial battlefield.
Five years ago, in the early hours of the morning, I was awakened by the red alert sound from the exchange. Within just three hours, all 6 million of my assets in the account were liquidated, leaving nothing behind. Facing the shocking negative numbers on the screen, I felt as if I was nailed to the cross of reality.
After a long period of despair, I finally realized: the cryptocurrency world is not a casino, but a battlefield. After gathering 120,000 in capital, I dedicated myself to studying market patterns, summarizing failed cases, and ultimately developed my own trading method. With this method, I grew my funds from 120,000 to 20 million in 90 days. Today, I will share with you the trading insights that led to my miraculous comeback.
01 The Fantasy of Getting Rich Quickly is Shattered, Reassessing the Market
Like most traders, I initially entered the market with a mindset of getting rich quickly. But soon I understood the wisdom in Richard Dennis' words: 'Trading is simple, but not easy. Trading is a business, and only through hard work can you make money.'
The real transformation began when I understood that the market is unconquerable, it can only be followed. When I tried to fight against the market, the results were always disastrous. Just like that young trader Yang Wenjun, who resolutely came to Shenzhen after many years working at a telecommunications monopoly, I realized I must abandon the gambling mindset and treat trading as a serious job.
There are essentially two states in the market: trend and consolidation. In a trending market, prices constantly create new highs or new lows; in a consolidating market, prices fluctuate within a specific range. Recognizing this is the first step I took to get out of difficulties.
02 The Core of Naked Candlestick Techniques - Understanding Market Language
After countless failures, I discovered the power of price action (PA naked candlestick) analysis. This method helps me define market conditions and apply appropriate strategies.
The essence of market structure
The core of naked candlestick techniques lies in understanding 'market structure'. Market trends can be divided into three basic types: upward trend, downward trend, and consolidation trend.
In an upward trend, prices create higher highs and higher lows; in a downward trend, they show lower highs and lower lows. When prices fluctuate back and forth within a specific range without a clear direction, it is a consolidating market.
Identification of key positions
Through naked candlestick charts, we can intuitively identify support and resistance levels. Support levels are ideal points for going long, while resistance levels are good positions for going short.
More importantly, support and resistance levels can transform into each other. Once a resistance level is broken, it becomes future support; similarly, once a support level is broken, it will turn into future resistance. Understanding this principle allows me to grasp entry and exit points more accurately.
03 My 10 Trading Rules
Buy early when prices fall, sell early when prices rise: market fluctuations are not risks, but opportunities. A significant price drop may be a good entry point, while a sharp increase requires caution for a pullback.
Capital allocation is key to profitability: I always follow the principle that 'the risk of a single trade does not exceed 1% of total capital.' This means if my account has $100,000, the maximum loss for each trade will be controlled within $1,000.
The afternoon strategy relies on stillness to control movement: the market fluctuates more in the afternoon, but at this time it is most unwise to blindly chase highs. I choose to observe and wait for the market to stabilize before making decisions.
Staying calm is the foundation of survival: emotional trading is the main reason for failure. I learned one thing: 'You must be extremely attentive to your emotions.' When trading, I constantly ask myself whether my current behavior is based on rationality or emotional impulse.
Follow the trend, do not trade without clarity: the trend is your friend. When the trend is unclear, I choose to wait patiently and never enter easily.
Yin Yang line strategy: choosing a bearish line when buying is more prudent, while waiting for a bullish line when selling can yield higher returns.
Grasping opportunities with contrarian thinking: although trend trading is mainstream, going against the market under extreme emotional conditions often yields unexpected gains.
Patience is the greatest virtue: Wall Street T3 team traders are right: 'Be patient and wait for opportunities to come to you. Chasing prices means increasing risk.' I will not feel regret for missing opportunities because the market will continue tomorrow.
Risk control in high position consolidation: when the price suddenly rises after consolidating at a high level, it is often a precursor to a pullback. At this point, I choose to reduce my position or exit to avoid getting trapped.
Beware of special candlestick patterns: hammer lines and shooting star lines indicate market turning points. When encountering these patterns, I will control my position and manage risk.
04 Naked Candlestick Practical Skills - Special Candlestick Patterns at Special Positions
The core of my trading strategy is to look for special candlestick patterns at key positions. When the overall market structure resonates with local candlestick patterns, it is the best time to enter the market.
For example, if a 'hammer line' appears near a support level, it is usually a strong bullish signal. Conversely, if a 'shooting star' appears near a resistance level, it is a potential bearish signal.
Using my practical experience in ETH trading as an example: when there is a long upper shadow shooting star in a crucial resistance area followed by a bearish line, this usually indicates a weakening of upward momentum and is a signal to consider going short.
Similarly, near support levels, if a hammer line appears followed by a bullish line, this is a relatively reliable signal to go long.
Importantly, the reliability of these signals depends on their location and the overall market structure. A single candlestick or combination of candlesticks cannot be used as an independent trading basis and must be considered within a larger market context.
05 The Art of Risk Management
The key to successful trading is not how many times you profit, but how much you earn when you profit and how much you lose when you incur losses.
I strictly adhere to two risk control principles:
The risk of any single trade does not exceed 1% of total capital.
The total risk of any day does not exceed 3% of total capital.
This risk control mechanism ensures that even in the face of consecutive losses, I can survive and wait for the right opportunity that suits me.
I deeply understand the impact of the cognitive bias of 'loss aversion' on traders: the pain of losing is felt far more acutely than the pleasure of an equivalent gain. This leads many traders to prematurely cut profitable positions while holding onto losing positions for too long.
To solve this problem, I set a strict rule for myself: never move the stop-loss level. Once a stop-loss is set, it must be executed immediately when the price triggers.
06 From Despair to Enlightenment - My Shift in Trading Philosophy
After years of trading, my biggest transformation is from 'predicting the market' to 'following the market'. I no longer try to prove that I am smarter than the market, but rather learn to humbly listen to the voice of the market.
Just like Yang Wenjun's insights after transitioning from day trading to medium-to-long-term trading: 'The biggest realization of medium-to-long-term trading is that I can sleep well.' I no longer obsess over short-term fluctuations, but focus on grasping those trend opportunities with over 500 points of space.
I deeply resonate with what an experienced trader said: 'You need to survive in trading to qualify for making money.' The longer you survive in the market, the more you understand the importance of risk control.
The sedimentation of time surpasses impulsive revelry. Just like that young trader who came to Shenzhen from Hunan, I transformed from a day trader to a medium-to-long-term trend follower, reducing my position, decreasing leverage, and extending holding time, which instead yielded more stable returns.
Trading is not a game about who predicts the most accurately, but an art about who can best control risk. 'Novices think about how much money they can make from this trade, while experts think about how much they can lose.' When you truly understand this statement, you have already embarked on the path to trading success.
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