In a market with repeated fluctuations, how should we respond besides waiting?
In fact, if you review the cryptocurrency market, you will find that 20% of the time, the cryptocurrency market is a so-called one-sided market, and 80% of the time it is a volatile market. Because it is impossible to say which sector, which currency, or which stock will have such a continuous upward trend for years and months. This does not exist. 20% of the time it is one-sided, and 80% of the time it is volatile. In other words, when you trade, you will face this volatile market most of the time. So for the volatile market, you need to have a set of appropriate ways to deal with it.

So how to deal with volatile market conditions?

First of all, you need to understand one of the properties of this currency, which is the intraday volatility. This may involve some replays, and you need to spend time to verify and test. Once you understand the volatility of the currency, you will have a better idea of ​​the range of fluctuations. For example, if the intraday volatility of BTC is 3,000 points, and it is now within this range, it fluctuates up and down 3,000 points, what should you do?

This involves the position of the central axis. What is the central axis? For example, if this is a box, the upper and lower support and resistance are 50 points, then the central axis is about 1500 points, at this position, in the middle. If the price is exactly in the middle, it is obviously not appropriate to go long or short at this time. Because the central axis plays a role of both pressure and support.

As for the central axis position, it has not been broken after many attempts. Every time it reaches this position, it begins to encounter obstacles. Once this position is broken, the market will accelerate downward. The same rule applies to any other variety. Don't open an order easily at the central axis position. If you do, do it at the upper and lower edges of the range.

Then some people say, "Okay, I get it. Isn't it just selling high and buying low?" In fact, the phrase "selling high and buying low" is wrong and not rigorous. Selling high and buying low does not mean that you should stick to the upper edge of the range and enter the market with a short order as soon as you reach the upper edge. Some people even place a short order directly at this position. This operation idea is absolutely wrong. In my opinion, your operation idea is very subjective.

What is the reason? By the time you see this range formed, it has already gone through a long period of consolidation, which means that it may break out of the range at any time. We have said, what are support and resistance used for? What is the range used for? It is used for breakthrough. A range on the way up or down is a process of accumulating power and consolidation. It will definitely break out in the end, and once it breaks out, the force will be very strong. So when this market is close to the upper edge of the range again, you put a short order at this position, how do you know that it will not break out this time? If it breaks out from this position, your stop loss will be hit no matter how large it is, so it is absolutely wrong to enter a short order directly at this position.

You need to pay attention to what? Pay attention to signals. We often say that we should turn a deaf ear to the outside world and focus on the signals. Then this signal is a detail for your trading system to identify the turning point. You can look at it in five minutes, one minute, or even in the time-sharing chart. It doesn't matter. Let's take the simplest example, the most popular one. For example, within this range, a big Yang line slowly moves up and reaches the upper edge of the range. At this time, it does not continue to break up, and a cross star appears. After the cross star, a small Yin line appears.

In this case, it is obviously better to go short than to go short directly when the positive line just touches the resistance level. Because a very rough signal has appeared. Why do we say it is rough? Because this is the most basic K-line structure. Obviously, if you review the market, this K-line structure is not very helpful, and it is not worth pondering. Let's take this as an example. Of course, it is not particularly appropriate, but just to illustrate the problem. That is to say, when reaching the upper and lower edges of the range, you cannot enter the order directly. You must wait for the right signal and enter the market accordingly.

Another very significant feature of the consolidation range is that it sometimes causes the market direction to change. We know that patterns are divided into tops and bottoms, such as head and shoulders top, head and shoulders bottom, W shape, W bottom, M shape, M head, there are many shapes. One of them is box oscillation, which does not belong to any standard form, but it is also a kind of trend change.

If a box-shaped oscillation appears at the end of a wave of continuous upward trend, and the consolidation time is long enough, once it breaks down, at this time, this consolidation area is equivalent to a top structure, and then it indicates that the market will start a wave of continuous downward trend, and the direction will change fundamentally.

In actual combat, when investors encounter repeated shock patterns, they should pay attention to the following points:

(1) When a repeated oscillation pattern appears, if the market has already risen significantly and is clearly overbought, and is accompanied by the appearance of other top patterns in the daily K-line chart, the probability of a downward trend in the future is relatively high.

(2) When a repeated oscillation pattern appears, if the market has already experienced a significant decline, the market is obviously oversold, and is accompanied by the appearance of other bottom patterns in the daily K-line chart, then the probability of a higher trend in the future is relatively high.

(3) When a repeated oscillation pattern appears, if the price is running above the short-term moving average system in the daily K-line chart, it means that the price has entered a short-term upward trend and the probability of continued short-term market growth is relatively high; conversely, the probability of continued short-term decline is relatively high.

(4) When a repeated oscillation pattern appears, if the price is running above the medium-term moving average system in the daily K-line chart, it means that the price has entered a medium-term upward trend and the probability of continued high prices in the medium term is relatively high; otherwise, the probability of continued decline in the medium term is relatively high.

(5) When a repeated oscillation pattern appears, if the price is running above the long-term moving average system in the daily K-line chart, it means that the price has entered a long-term upward trend and the probability of a continued bull market in the future is relatively high; conversely, the probability of a continued bear market in the future is relatively high.

Summarize:

1. Disorderly fluctuations may cause you to stop out of loss continuously. The market does not respect us at all, so it is very important to move to cost quickly.

2. When designing and optimizing the system, you must consider the worst case scenario, and don't always think about how to make more money. The less you lose, the more you will earn. With a small-cycle stop loss and a large-cycle stop profit, the development of trends starts from a small cycle, gradually grows and develops, and eventually develops into a large trend. The smaller the entry cycle you choose, the more you can save on stop losses, and saving on stop losses also reduces costs (currently, 1H and 4H are also used for entry). Doing the cryptocurrency circle is the same as doing business. You don't know when customers will come to patronize you, but if you want to make more money, reducing costs is definitely the only rule.

The road to trading is lonely and long. I hope we can walk side by side on this promising road. In the face of the volatile market, be more patient and less anxious; I believe that time will give an answer to investment.