Nearly a decade ago, I embarked on my trading journey, determined to succeed. However, the first three years were nothing short of disastrous. I invested 1.2 million yuan in the stock market, only to see my balance plummet to a mere 100,000 yuan. My lack of a structured approach led to devastating losses, and the criticism from friends and family made it even harder to keep going. Labeled as reckless and foolish, I began to doubt myself.
Yet, I refused to quit. I promised my partner I’d make one last attempt—this time with focus and precision. I dedicated months to analyzing charts, learning from past mistakes, and refining my trading rules. That perseverance paid off. In just three years, I transformed 100,000 yuan into an astonishing 30 million yuan. This wasn’t a stroke of luck—it was the result of disciplined trading and relentless learning. Now, I’m sharing the strategies that helped me turn my fortunes around, so you can apply them too.
Golden Rules for Successful Trading
1. Master Market Sentiment
Understanding market psychology is key to identifying trends and reversals. Pay close attention to trading volume and price action:
During a Decline: High volume with a halt in price drops often signals the end of a bearish trend.
During a Rally: Moderate, consistent volume indicates strength, while sharp spikes can warn of an impending reversal.
Breaking Key Levels: Increased volume when prices break support or resistance validates the direction of the breakout.
2. Focus on Critical Price Levels
Identifying and responding to significant price levels is crucial:
Mark support and resistance zones.
Use tools like Fibonacci retracement to anticipate potential reversal points.
Take decisive action when prices approach or breach these levels.
Optimizing Your Trading Timeframes
To execute trades effectively, use the following timeframes strategically:
1-Minute Chart: Pinpoint precise entry and exit points.
5-Minute Chart: Monitor short-term price fluctuations.
1-Hour Chart: Assess overall market trends and direction.
Pro Tip: Never chase losses. If a trade goes against you, accept it, reset your mindset, and approach the next trade with a clear perspective.
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A Simple and Profitable Trading Strategy
This method is straightforward yet powerful when paired with discipline. Here’s how it works:
Step 1: Use Moving Averages
Add three moving averages to your chart:
6-day moving average: Tracks short-term trends.
20-day moving average: Monitors medium-term trends.
40-day moving average: Acts as a crucial support or resistance level.
Step 2: Smart Capital Allocation
Divide your trading capital into three equal portions:
1. First Phase: Enter with 33% of your capital when the price breaks above the 6-day moving average.
2. Second Phase: Add another 33% if the price crosses the 20-day moving average.
3. Final Phase: Invest the remaining 33% once the price surpasses the 40-day moving average.
Step 3: Exit at the Right Time
1. Sell Phase 1: If the price falls below the 6-day moving average, sell your initial position.
2. Sell Phase 2: If it drops below the 20-day moving average, liquidate the second position.
3. Exit Completely: If all three moving averages are breached, close the trade entirely.
Step 4: Reentry Rules
If the price recovers and moves above the 6-day or 20-day moving averages, reenter with the same phased strategy.
Step 5: Locking in Profits
Use the reverse approach to secure gains:
Sell 33% if the price starts falling below the 6-day moving average.
Retain the remainder unless it breaks below the 20-day or 40-day moving averages.
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The Key to Long-Term Success
This strategy’s simplicity is its strength, but its effectiveness hinges on your discipline. Avoid emotional decisions and respect your stop-loss rules. Consistent adherence to these principles can help you achieve stable results and navigate the market with confidence.
This method transformed my trading journey and my life. While no system is foolproof, adopting these practices will provide a structured approach to minimize risks and maximize opportunities. Success is a result of preparation and perseverance—let this be your guide to a brighter trading future.