Identify the trend, find the rhythm, and the market becomes your ATM.
First, let me share my views on the current market. Bitcoin is fluctuating around $60,000, neither breaking the previous high nor probing new lows. In such a market, long-term holders may feel anxious, but for us swing traders, it is a perfect opportunity window.
The core of swing trading: Understand the market rhythm
What is swing trading? Simply put, it is about capturing the 'splashes' in price fluctuations rather than trying to catch the entire wave. My goal is to capture those relatively certain intermediate price fluctuations within a few days to a few weeks.
Unlike day trading, which I am familiar with, I don’t need to watch the market all the time because my core is to judge the medium and short-term trends. I also don’t do ‘HODL’ because I believe that the high volatility of cryptocurrencies, if not utilized, is a waste of market opportunities.
My three rules of swing trading.
First rule: Only place orders in the 'value area' I am familiar with.
What is a value area? For me, it is those key support and resistance levels that have been repeatedly validated. My personal habit is to combine the 50-day and 200-day moving averages to judge the big trend.
When the price pulls back to these moving averages, especially if it coincides with previous support or resistance levels, I pay special attention. I never chase up and down because I know the market will always give me a second or third chance to enter, provided I have patience.
Second rule: Wait for a clear price confirmation signal.
Just because the price enters a value area does not mean I need to act immediately. I am like a hunter, waiting for the prey to give the clearest signal.
This signal is usually a reversal pattern of candlesticks, such as hammer lines or engulfing patterns. But more importantly, I believe the essence of the signal is that the price shows ‘rejection’ in this area— for example, it should continue to fall but is quickly pulled back, indicating that bullish forces are beginning to gain the upper hand. Without a confirmation signal, I would rather miss out than make a mistake.
Third rule: Stop loss without hesitation, take profit with a plan.
This is my iron rule and the key to surviving multiple bull and bear markets.
The essence of stop loss lies in the art of ‘being able to afford mistakes.’ I never set my stop loss arbitrarily. Usually, I place it a distance of one ATR (Average True Range) below the value area. This provides enough breathing room for trades, avoiding being 'washed out' due to normal market fluctuations, while strictly controlling the loss of each trade.
As for taking profits, I am never greedy. I usually exit in batches before reaching the next swing high or resistance level. My logic is to proactively realize profits before selling pressure may come. Many times, I choose a strategy of ‘half position take profit, half position floating order’—first close half the position to lock in profits, and set a trailing stop for the remaining half to chase potentially larger profits from the ongoing trend. This way, I can ensure that I gain from every trade without missing out on potentially big market movements.
My personal insight: Mindset is the ultimate weapon.
Techniques can be learned, but mindset needs to be cultivated.
Learning to be in cash is the highest realm. The market is never short of opportunities; what is lacking is the patience to wait for them. When there is no pattern that fits my trading system, resting is the best operation.
Don’t fall in love with the market. Just because you go long doesn’t mean the market has to rise. Admit mistakes quickly, and stop loss should be swift. The purpose of trading is to make money, not to prove that you are always right.
Reduce your trading frequency. Swing trading is not day trading; you don’t need to be busy every day. High-quality trades lead to wealth through a process of refinement. Most of my profits in a year actually come from those few trades where I had the clearest insights and executed the hardest.
Current market thoughts.
From the current market perspective, we are in a weak trend. Such market conditions are very suitable for swing trading. Prices will oscillate significantly around some key moving averages or support levels, providing us with excellent opportunities to buy low and sell high.
In terms of specific operations, I will pay more attention to those mainstream coins that stabilize and show signs of independent strength, rather than chasing those altcoins with huge volatility and difficult-to-control risks. After all, the core of swing trading is probability and odds, not the thrill of gambling on size.
Finally, I want to say that in this market, stable profits are more important than getting rich overnight. Establish a trading system that suits you and consistently execute it to survive for a long time in this brutal yet charming market.
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