#数字货币财富狂欢
Ten years in the cryptocurrency world is like an exhilarating adventure. In 2015, I stepped into this field full of uncertainties and temptations with a capital of 300,000. Initially, fate seemed particularly favorable to me, as the market boomed, and my assets soared like a rocket, reaching over 3 million at one point. At that moment, I felt intoxicated by my victory, believing myself to be a trading genius. I resolutely resigned from my stable job and devoted myself wholeheartedly to cryptocurrency trading, even going into debt to increase my investments, trying to gain more in this wealth feast.
However, reality hit me like a fierce beast, waking me up from my dream and biting hard. In the days that followed, the market changed dramatically, and various problems followed one after another. The price crash was like a surging tide that mercilessly consumed all my profits and plunged me into deep debt. To repay my debts, I had no choice but to sell my house, and my family was plunged into a huge crisis; my wife and children almost left me. The year 2017 was undoubtedly the darkest moment of my life; within a few months, I fell from the peak to the abyss, and that enormous gap and despair is still etched in my memory.
After enduring countless days and nights of pain and struggle, I began to deeply reflect and summarize my past experiences. I had the fortune to have an in-depth conversation with a cryptocurrency bigwig over tea. His heartfelt words were like a wake-up call, profoundly shocking me and enlightening me. Since then, I embarked on a path of self-redemption and growth, continuously summarizing trading methods, repeatedly reviewing every operation, resolutely abandoning those wrong trading practices, and striving to change my thinking patterns and cognitive levels. Through continuous learning and the guidance of wise mentors, I gradually attained enlightenment. Now, while I cannot claim to be extremely wealthy, I have achieved stable profits, at least consistently outperforming over 80% of investors in the market.
Looking back at my journey in the cryptocurrency world, it has been full of ups and downs. From initially entering the market with 300,000 to being fortunate enough to ride the bull market and earn tens of millions; then, from having a fortune of tens of millions shrinking to over 20 million, and now accumulating a small target of 1.1 million. At this moment, I am eagerly awaiting the arrival of the next bull market, secretly setting a goal: to let my assets break through three small targets.
Next, I would like to summarize and share the valuable experiences I have accumulated over the years in the cryptocurrency world, hoping to provide some useful references and help for investors.
There is a method that seems the most foolish yet is the simplest and most effective, which may help you avoid falling into the quagmire of losses in trading. This method is to follow common sense; as long as you possess a certain level of self-discipline, every cryptocurrency trader can do it. Whether you are an aggressive investor adept at short-term trading, a conservative player preferring to buy low and hold, or a technical trader focused on trend breakthroughs, as long as you are on this big stage of cryptocurrency, you must respect the following eight common sense rules and adhere to them in the long run. You will be pleasantly surprised to find that your trading account will no longer continue to incur losses and will instead start to profit.
The following content is based on my years of practical experience and deep reflection, and I hope everyone can read it carefully, hoping to illuminate a light for those who are confused in trading and provide some practical assistance.
1. When encountering losses in cryptocurrency trading, be extremely cautious with averaging down. The cryptocurrency market is like a jungle full of traps. Many traders, once trapped, become extremely anxious. At this point, they not only lack the awareness to exit and cut losses in time but instead choose to average down in hopes of lowering their holding costs, fantasizing about recovering their losses when prices surge. However, this actually goes against basic trading common sense. The reversal of a downtrend is not something that can be achieved overnight; averaging down is often just a form of self-deception. The more anxious one gets, the easier it is to make erroneous operational decisions, ultimately leading to even heavier losses. We must ask ourselves: why average down at this position? What gives us the confidence that we can profit after averaging down?
2. Trading discipline must be strictly adhered to. Many cryptocurrency traders often meticulously develop detailed trading plans before trading, such as when to enter the market if the index drops to a certain level, or at what price a specific cryptocurrency becomes worth buying, etc. However, regrettably, once they enter trading, they easily get distracted by various stimuli and temptations, thus abandoning their previously made plans. If one cannot even execute their carefully planned trading strategy, how is this different from blindly betting in a casino? In fact, impulsive operations during trading are often wrong, ultimately trapping oneself in difficulties.
3. Avoid frequent trading in cryptocurrency. Our observations reveal that those who suffer significant losses in cryptocurrency trading are often keen on ultra-short-term trading. In contrast, ordinary investors who merely treat cryptocurrency trading as a form of entertainment, even if they lack advanced trading skills but patiently wait for opportunities, often do not suffer substantial losses. Frequently entering and exiting the market only entangles oneself in an endless trading vortex, making it difficult to extricate oneself, ultimately being mercilessly consumed by the market.
4. Do not blindly increase your position in cryptocurrency. There is a vivid saying in the cryptocurrency circle: 'Spending lavishly in the cryptocurrency market, yet living a tight life.' Until you possess a stable ability to make money, never continuously add funds to your trading account, especially when this behavior has significantly affected your normal living standards. Because once you incur losses, it indicates that there are significant flaws in your trading system. The correct approach at this point is not to increase your position to fill the gap but to calm down and deeply reflect. Once you have devised a set of effective trading methods, it will not be too late to gradually increase your investment.
5. While missing out may evoke regret, chasing prices often leads to painful outcomes of cutting losses. In the cryptocurrency world, a very common phenomenon is that the cryptocurrencies you previously focused on but did not trade often perform well, and when you impulsively want to buy at a high price, you often face the embarrassing situation of buying just as prices plummet. The root cause lies in the fact that the fundamentals of these cryptocurrencies have not undergone substantial changes. Therefore, when trading, one should try to choose a relatively reasonable median price as a reference. Enter cautiously when prices are low, thereby effectively avoiding the risk of being trapped at high positions.
6. Be adept at following the trend in cryptocurrency trading. Market trends can generally be divided into three types: upward trends, downward trends, and sideways consolidation trends. Undoubtedly, in a downward trend, we should hold light positions or even be flat and wait patiently for opportunities; while in an upward trend, actively participating in trading can significantly improve the success rate of trades, giving us an edge in the market.
7. Do not easily touch cryptocurrencies that are in a downward trend and have not yet stopped falling. Blindly trying to catch a falling knife in a downtrend is akin to catching flying knives with bare hands, placing oneself in an extremely dangerous situation. We must patiently wait for a significant bullish candlestick to appear, as this is a signal that the market has stopped declining and stabilized. Only then should we gradually buy in, which is the so-called right-sided trading rule. Blindly catching a falling knife will only deepen the entrapment, leading to irretrievable depths.
8. Never rely solely on research reports or rumors to trade cryptocurrencies. In the cryptocurrency world, many retail investors have an affinity for rumors, but this is a fatal mistake. Think with common sense: if a piece of information truly holds significant investment value, why wouldn't those in the know silently profit instead of leaking it to you, an ordinary retail investor? In fact, any information that reaches the ears of ordinary retail investors likely results from the major players' intentional actions, aiming to attract you to enter the market. In such cases, the instances of retail investors being trapped are numerous.
Insight into market patterns through trading volume
Experienced traders often possess sharp pattern recognition abilities, allowing them to accurately identify repeatable volume patterns. A deep understanding and grasp of these common volume patterns can provide us with invaluable insights into market sentiment and predict future price trends:
Surging volume: When prices dramatically increase trading volume during a prolonged fluctuation, prompting a reversal of market trends, this pattern emerges. Typically, it appears at the tail end of a long-term uptrend or downtrend and often indicates that the market is about to enter a state of fatigue.
Consolidating volume: The significant feature of the consolidating volume pattern is a substantial reduction in trading volume. This situation can easily force early-entering traders to exit just before a price reversal, trapping them. These weak traders often find it hard to withstand market pressure and ultimately have to yield.
Retracement volume: When trading volume decreases during a counter-trend retracement phase within a larger trend, this pattern is formed. It signifies a brief consolidation period before the market continues its original trend, representing a normal adjustment stage in the trend continuation process.
Volume breakout: When prices achieve new highs or lows while trading volume suddenly surges, the volume breakout pattern emerges. This phenomenon strongly confirms the market's strong expectations and recognition of the breakout, indicating that the market is in a state of active acceptance when breaking through key resistance or support levels, and subsequent prices are likely to continue moving in the direction of the breakout.
Declining volume in trends: If trading volume gradually shrinks in an uptrend, it may indicate that market participation enthusiasm is waning, and the uptrend might face potential reversal risks. Conversely, a reduction in volume during a downtrend may suggest that the market is gradually bottoming out, with the future trend possibly reversing upwards.
Skillfully applying volume indicators in trading plans
Merely understanding trading volume and its impact on the market is just the first step; the more crucial aspect is how to effectively integrate it into one's trading strategy. Here are some practical suggestions to help you organically incorporate volume analysis into your overall trading strategy:
Compare the number of options on up days and down days: When prices rise, if the trading volume is significantly higher than when prices fall, it indicates that the bullish forces are prevailing, and market pressure leans towards the bulls, showing a bullish sentiment. This largely suggests that the current uptrend is likely to continue.
Pay close attention to trading volume when retesting support and resistance levels: The changes in trading volume during price retests at support or resistance levels are particularly noteworthy. If trading volume significantly increases during these key points, the effectiveness of these support and resistance levels will be further reinforced, and prices are likely to stabilize near these levels and embark on a new round of fluctuations.
Watch for volume divergence phenomena: Generally, trading volume should move in the same direction as price changes. However, if prices rise but trading volume gradually decreases, this may signal an impending change in price trends. This divergence between volume and price often serves as an important warning signal for market trend reversals.
Choose appropriate volume indicators based on the trading time frame: The significance of volume data largely depends on your trading time span. If you are a swing trader holding positions for several days or weeks, then daily volume data will be more valuable for your trading decisions. Conversely, for day traders, hourly or even minute-by-minute volume data may be more practical.
Be cautious of one-time volume spikes: If trading volume suddenly spikes without reason, such one-time peaks tend to be misleading. Therefore, in such situations, be sure to seek further confirmation signals from other indicators or subsequent trading periods and avoid making trading decisions based solely on a single volume peak.
Use increased volume to gain insights into institutional activities: Large investors or 'whale' investors have a strong influence in the market, and their trading behavior can often sway market trends. On high time frame charts, if trading volume suddenly spikes, it may indicate that institutional traders are making large-scale purchases or sales of a particular token, which is of significant reference for us to judge market trends and seize trading opportunities.
It is important to remember that any single indicator, including trading volume, is not a universal 'magic bullet' that can ensure trading success solely on its own. Volume analysis is just one of many trading strategies. In practical application, it should be organically combined with other standards, indicators, and analytical tools to corroborate each other. As the old trading adage goes, 'Volume precedes price.' Skillfully applying volume analysis to trading plans can deepen our insights into market dynamics, allowing us to make wiser and more rational trading decisions and gain greater advantages in fierce market competition.
Limitations of volume analysis strategies
Although volume analysis strategies are a powerful tool in traders' strategy toolboxes, we must also be aware of their shortcomings. When applying this strategy, you may face the following challenges:
Market manipulation risk: In certain specific situations, some market participants with substantial capital may intentionally manipulate trading volume levels to create false market signals, misleading other traders into making erroneous decisions, thus achieving their own profit objectives.
Signal lag: Sometimes, changes in trading volume may lag behind price movements, meaning that significant increases or decreases in volume do not immediately accompany sharp price fluctuations. This lag can lead to delays in decision-making based on volume signals, causing traders to miss the best trading opportunities.
False peak interference: Volume analysis occasionally exhibits false peak phenomena, where trading volume suddenly spikes but prices do not show significant fluctuations. These false volume peaks can severely disrupt traders' judgment, leading to misinterpretations of market conditions and consequently erroneous trading actions.
Data distortion in low liquidity assets: In trading low liquidity or 'slight price fluctuation' assets, changes in volume may appear distorted, making it difficult to accurately interpret and analyze related data. This is because, in low liquidity market environments, a small number of trades can cause significant volume fluctuations, preventing data from accurately reflecting the actual supply-demand relationships and investor sentiment in the market.
To effectively address these challenges, a more cautious approach is to combine volume analysis with other indicators and technical analysis tools for comprehensive judgment. By corroborating and integrating multiple signals, the reliability and accuracy of trading strategies can be significantly improved, reducing the risk of falling into erroneous trading decisions due to misleading single indicators.
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