The liquidation five years ago made me completely wake up.
It was a morning five years ago when I woke up to the red alert of the exchange. In just three hours, my account with 3 million in assets was completely wiped out, leaving not a single cent. Watching the negative numbers flashing on the screen, I felt like I was nailed to the cross of reality.
That experience made me realize: the cryptocurrency world is not a casino, but a battlefield. Later, I borrowed 200,000 in capital, continuously summarized failure cases, learned various trading skills, and eventually formed my own trading method. This method helped me grow my funds to over 20 million in 90 days, with a win rate stable at around 90%.
Today, I want to share some practical insights that I hope will help you avoid detours in your trading journey.
Eight trading iron rules
First, clearly see strong coins. When the market crashes, if your coin only drops slightly, it indicates that there are market makers supporting it. Such coins can be held with confidence, and they often perform well afterward.
Second, master simple entry and exit methods. For short-term trades, look at the 5-day line; hold if the coin price is above the 5-day line, sell if it breaks below; for mid-term trades, look at the 20-day line; hold above the line, exit if it drops below. The key is to stick to execution.
Third, seize the main bullish wave. If the coin price has formed a main bullish wave without significant volume increase, buy decisively. Hold on when there is a volume increase, and continue to hold if there is a volume decrease but the trend is not broken; if there is a volume decrease and the trend is broken, reduce your position immediately.
Fourth, capture oversold rebounds. When a coin drops 50% from its high and continues to drop for 8 days, it usually enters an oversold state, and a rebound could happen at any time.
Fifth, only play leading coins. Leading coins rise the fastest and are the most resilient when they drop. Do not buy just because the coin price has dropped significantly, nor avoid buying just because it has risen a lot. The key is to 'buy high and sell higher'.
Sixth, go with the trend. The buying price is not about being as low as possible, but about being as appropriate as possible. Do not easily call a bottom during declines; decisively abandon weak coins. The trend is your only friend.
Seventh, maintain rationality. Do not let temporary profits cloud your judgment; continuous profitability is the most challenging part. Review whether profits are due to luck or skill, and establish a trading system that suits you.
Eighth, learn to stay in cash. Do not force trades without sufficient confidence. Staying in cash is also a strategy; trading should first consider capital preservation rather than profitability. It’s not about frequency, but about success rate.
Three practical uses of the EMA indicator
Next, I will share the EMA indicator usage I have summarized from practical experience, all of which have been verified with real money.
Identifying major trends: Zero axis crossing method
What I often use is the 'zero axis crossing method', which allows you to determine the trend with just one line. Compared to the simple moving average (SMA), the exponential moving average (EMA) gives more weight to recent prices and is more sensitive to market changes.
Taking Bitcoin as an example, I set the EMA parameters to 12 and 26, analyzing the 1-hour cycle. You will find that each golden cross is a good entry opportunity.
Specifically, when the DIF line (composed of EMA12 and EMA26) crosses above the zero axis, it indicates that an upward trend is forming, allowing for a long position; when it crosses below the zero axis, it indicates that a downward trend is forming, suggesting caution in going long.
EMA resonance signal
The second method is the EMA resonance signal, which is a robust trading method. The resonance parameters I use consist of 6 EMAs; open long positions when all EMAs show a bullish arrangement; open short positions when they show a bearish arrangement.
My experience is to first use the DIF line to determine the major trend, and then use the resonance signal to find specific entry points. The advantage of this method is that the signals are clear, exits are timely, and it helps you seize the best entry opportunities.
For example, in an upward trend, when the EMA shows a bullish arrangement with resonance signals, it presents a good opportunity to go long. This multi-confirmation can significantly improve trading win rates.
Combining multiple time frames
My common method is to combine the judgment of large cycles with entry into small cycles. For example, use the 4-hour DIF line to determine the main trend direction and find specific entry points using the 1-hour or 15-minute EMA signals.
For example, when the 4-hour DIF line crosses above the zero axis (indicating an upward trend), and a golden cross appears on the 1-hour chart, it presents a good opportunity to go long. This multi-timeframe analysis can effectively improve trading win rates.
My recommended practical tools
In addition to trend judgment, I often use some auxiliary tools to enhance profits.
Grid trading: especially suitable for volatile markets. I often use AI grids to automatically buy low and sell high during the consolidation period after breaking new highs. The key is to set reasonable upper and lower limits and adjust according to market changes.
For instance, after a certain cryptocurrency breaks an important resistance level, I would set a grid range around that price level to allow the system to trade automatically. This strategy can continuously accumulate profits in a volatile market.
Arbitrage trading: for large funds, I recommend an arbitrage strategy. By earning funding rates, stable daily profits can be obtained. I invested 30,000 USDT and can basically receive profits three times a day, with high certainty.
Some friends use more than 100,000 USDT for arbitrage, achieving stable returns with controllable risks. This strategy is suitable for large capital users to obtain stable profits from the market.
Core thinking of risk management
After five years of practical experience, I have deeply realized the importance of risk management. Here are a few insights:
First, position management is the foundation of survival. I use the '721 rule': allocate 70% of funds to mainstream coins (BTC, ETH), 20% to potential coins, and keep 10% as cash. Cash allows you to have the capability to buy the dip during a crash.
Second, setting a stop-loss is the lifeline of trading. I set the maximum loss for a single trade to not exceed 5% of the principal; once this is reached, I decisively stop the loss. This can ensure your survival in the market.
Third, conduct regular reviews. I review all trades weekly, checking the reasons for profitable and losing trades. Continuous reflection is the only way to improve trading skills.
Investing in cryptocurrencies is not a matter of one day, but a marathon. My experience is not to pursue overnight wealth but to focus on continuous stable profits.
A true trading expert is not someone who has captured a few big bullish trends, but someone who remains active in the market years later. I hope my experience can help you go further on this path.
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