1. Fear of stop-loss and fear of losses. The usual reason is that traders fear failure and cannot accept losses. Such traders tend to have strong self-esteem.
2. Closing positions early. Once closed, there will be no anxiety; the cause of anxiety is fear of position reversal, and traders need quick comfort.
3. Wishful thinking. Traders do not want to control trades or take responsibility for them. Traders lack the ability to face reality.
4. Feeling angry after losses, feeling trapped by the market, and being overly attached to specific trades. Being smug during success or demanding the market prove them right can lead to losses.
5. Trading with money you cannot afford to lose or borrowed money. Treating a trade as a last-ditch effort. Traders who want to succeed or fear missing opportunities often fall into this trap; those who do not adhere to records and act greedily will also fall into this trap.
6. Averaging down. Traders do not admit their trades are losses and hope to break even. Such traders tend to have strong self-esteem.
7. Impulsive trading. Traders are easily excited, prone to addiction, and enjoy gambling; they always trade by intuition. When there are no trades, such as on weekends, they become restless and obsessed with trading.
8. Thrilled after making money from trades. Traders become smug, thinking they can control the market.
9. Account funds cannot appreciate—profits are minimal. In this situation, traders lack the motivation to make money, which is often due to psychological reasons such as lack of confidence.
10. Not adhering to one's trading system. Traders may not believe their system is truly useful, or they have not tested it thoroughly. Perhaps the system does not fit their personality, or they may need the adrenaline of trading, or they believe they cannot find a successful system.
11. Overconfidence—over-predicting trading outcomes. Traders fear losses and mistakes, resulting in helplessness. Perfectionists are prone to problems; they want to be certain of outcomes, but definite outcomes do not exist. They do not understand that losses are part of trading, they do not accept the risks of trading, and they do not accept unknown results.
12. Incorrect trading volume. Traders dream that this trade will make money, ignoring risks and the importance of capital management. Perhaps traders do not want to take responsibility for risks, or they are too lazy to calculate suitable trading volumes.
13. Over-trading; traders want to conquer the market, possibly due to greed, and after losses, they seek revenge on the market. This is similar to impulsive trading; please refer to point 7.
14. Fear of trading. Without a system, traders feel uneasy about risks and unknown outcomes. Traders fear losing everything and being mocked; perhaps they lack self-control or confidence in their trading system or themselves.
II. Twelve Don'ts of Stop-Loss in Cryptocurrency Trading
1. Investors who are indecisive and deeply trapped should not stop-loss, as it is too late to do so now. Not only will this not recover many losses, but it will also severely impact their investment mindset.
2. For coins undergoing wash trading by market makers, do not stop-loss. Before a price surge, market makers often use wash trading methods to reduce future lifting resistance and raise the market average cost, attempting to drive out indecisive investors. At this time, investors need to maintain confidence and not stop-loss arbitrarily.
3. Do not stop-loss during normal technical corrections in an upward trend. As long as the overall market trend is not weakening, one can insist on holding medium-term positions and employ a short-term strategy of buying low and selling high.
4. Do not stop-loss when approaching important bottom areas. When stock indexes are in the bottom area, they usually lack downward momentum, but sometimes the market may still have a final volume-less drop. Investors need to firmly hold their positions.
5. When the price of a coin has limited downward space, do not stop-loss. When the price is compressed to a very low position after a long adjustment and significant decline, investors should not panic-sell but rather consider how to actively accumulate.
6. Do not stop-loss when the index is severely oversold. Unlike individual stocks, severe oversold signals for indexes are often more real and reliable. However, when assessing whether the market is oversold, do not use ordinary common indicators; focus on specialized index indicators, mainly STIX, OBOS (overbought/oversold), ADR (up-down ratio), and ADL (advancing-declining index).
7. Do not stop-loss when there is a volume reduction during the late stages of a bear market. A decrease in volume indicates the exhaustion of downward momentum, and cutting losses at this time would be unwise.
8. Do not stop-loss when panic selling occurs. The emergence of panic selling is often an important feature of reaching a temporary bottom in stock prices; investors should avoid blindly joining the panic selling crowd.
9. Do not stop-loss when the coin price approaches significant long-term support levels. It is advisable to observe at this time, but do not rush to bottom-fish for rebounds; wait for the final confirmation of the trend before taking further action.
10. When the coin price severely diverges from its value, do not stop-loss. In bear markets, irrational crashes often occur. In this chaotic wave, some stocks with investment or speculative value may drop to unattainable low prices. Investors need to have the patience to hold long-term and should avoid indiscriminate stop-loss.
11. When a coin stabilizes at a certain level and receives attention from mainstream market funds, with new funds actively entering, showing effective volume growth, do not stop-loss.
12. Based on the risk-reward ratio, calculate that if, without considering your profit and loss situation, if buying at the current price, the future risk far outweighs the reward, you must stop-loss. If future rewards far outweigh risks, then do not stop-loss.
Learning Path:
1. Price: K-line Strength → Trend → Support and Resistance → Patterns;
2. Patterns: Introduction to patterns → Recognition and entry methods → Strengthening pattern trading.
To learn pattern trading well, you should master several key points:
1. Strictly controlling risk and maintaining a calm mindset are always the most reliable companions for traders.
2. It is important to understand that patterns are guided by price changes; first understand the changes in 'price', then summarize 'patterns', and finally speculate on 'trends'.
3. Patterns from different time frames have different impacts: Larger time frames help observe price ranges and trends, while smaller time frames are used to judge entry timing and profit-loss ratios.
4. Market consensus is very important; the combination of multiple patterns or different techniques usually has a stronger effect than a single pattern. This is what we often refer to as the 'confluence zone.'
I. K-line Price Behavior
Although price action is the core of traditional patterns, this article focuses not on detailed explanations but on a brief introduction to the concept of price action analysis, analytical tools, and its pros and cons.
(I) Concepts
Price Action Analysis is a fundamental technical analysis method that predicts future trends by observing historical price fluctuations and trading volumes. Price changes are the results of market participants' behaviors, and these behaviors can be seen from price patterns and trading volumes.
(II) Analysis Tools
1. K-line: Each K-line displays the opening price, closing price, highest price, and lowest price within a time period. By observing the arrangement of K-lines, we can understand the strength of market trends during a specific period and also draw specific patterns.
2. Trendline: A trendline connects price highs or lows to identify whether prices are converging, expanding, or oscillating, and also observes the trends and strength changes of highs and lows.
3. Support and Resistance: Support levels are where the price may stop falling, while resistance levels are where the price may face obstacles when rising. Observing the price's reaction at these critical points can help us assess market strength.
4. Pattern Analysis: This is the focus of this article. Pattern analysis combines the above tools to predict future price trends through specific pattern recognition. The following sections will introduce common patterns and how to trade using patterns.
II. Pros and Cons of K-line Price Behavior Analysis
1. Advantages
◎ Easy entry: K-lines and price action analysis do not require complex theoretical knowledge; traders only need to observe K-line patterns and the strength of prices to choose the stronger side for trading.
◎ High reliability: Price action reflects the choices of most market participants and funds; participants with capital advantages often can drive trends more strongly.
◎ High expectations: Understand the starting position of the market and follow the trend of capital strongholds; the profit expectations of trading will be higher.
2. Disadvantages
◎ Cunning main players: Large fund players in the market also understand the principles of trends; they may adjust prices by enticing retail investors to stop-loss, thereby obtaining better entry prices.
◎ Easy to learn but hard to master: Although price action analysis is easy to get started with, relying solely on a single analysis method can lead to rigid thinking. Traders need to accumulate experience through extensive practice and use more filtering methods to avoid traps in the market.
In the cryptocurrency circle, it boils down to a struggle between retail investors and market makers. If you lack cutting-edge news and first-hand information, you can only be cut! If you want to strategize together, comment 333! Those who want to harvest the market makers can welcome like-minded cryptocurrency enthusiasts to discuss together~
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