After 9 years of trading cryptocurrencies, it was only 4 years ago that I explored a trading system and methods suitable for myself, and I only gained insight under the guidance of experts.
Currently, it is not about becoming extraordinarily wealthy, but I have achieved stable profits, at least consistently outperforming over 80% of people. A long time ago, I understood that an excellent trading system can effectively assist investors in their investments. I also realized that without a trading system, investing without any rules will inevitably lead to more losses than gains. However, summarizing a trading system is indeed quite difficult.
An excellent trading system is also counterintuitive; it requires you to overcome greed and fear, to act decisively, and to avoid subjective assumptions while executing strictly.
Using technical indicators to master the key to short-term trading, the precise interpretation of volume and trends in the cryptocurrency market. Short-term trading is the first choice for many investors. However, despite the large number of participants, there are not many who can truly make a profit. The reason lies in the rapid fluctuations of the short-term market; if one cannot grasp the necessary technical indicators and apply them reasonably in practice, it is difficult to achieve ideal returns in short-term operations.
Today, I will share with everyone how to effectively apply short-term technical indicators to improve the success rate of short-term trading.
First: Pay attention to trading volume patterns.
Changes in trading volume can provide important clues about market trends. When trading volume shrinks, it usually indicates a lack of confidence from both buyers and sellers regarding future trends, leading to a decrease in market activity. This situation can be subdivided into two categories:
1. Market pessimism: If most investors are not optimistic about future trends and sell off without anyone buying, the market will experience a sharp decrease in volume.
2. Market optimism: Conversely, if everyone is generally optimistic and investors actively buy with no one selling, this will also lead to a sharp decrease in trading volume.
When the trading volume is in an increasing state, it usually means that a trend change is happening in the market. At this time, there is a significant divergence in the views of bulls and bears regarding future direction, trading is active, and investors should closely monitor the next volatility direction to determine which side may prevail and act accordingly.
Second: Observe changes in trend patterns.
In addition to trading volume, investors should also pay attention to chart patterns. Several important formations include: W-bottom, head and shoulders bottom.
Arc bottom, ascending channel, etc. When these formations break above the neckline, they can be considered buy signals, but the following two points should be noted:
1. Effective breakout: Confirm that the breakout is not a false one.
2. Low-level breakout is more reliable: Breakouts at low levels are relatively reliable, while breakouts at high levels may be traps set by manipulators to guide market sentiment for the purpose of offloading.
A prudent approach usually involves waiting for a breakout through the neckline, observing market pullback conditions, and then considering the timing of entry.
Third: The application of moving average trends.
Short-term traders generally use five-day, ten-day, and thirty-day moving averages. Key signals include:
Golden cross: When the five-day moving average crosses above the ten-day moving average, it is usually regarded as a buy signal.
Death cross: Conversely, when the five-day moving average crosses below the ten-day moving average, it is a sell signal.
Additionally, if the three moving averages show an upward trend, it indicates a strong bullish market, and investors may consider establishing positions during pullbacks. Conversely, if the moving averages are downward, one should act accordingly and consider shorting.
Fourth: The use of technical indicators. There are many technical indicators in the market, and investors do not need to be familiar with all of them; knowing a few commonly used indicators is sufficient. Two commonly used indicators are Stoch and RSI: Stoch indicator: When the K value is low (around 20%) and crosses above the D value twice, it is usually a good buying opportunity; when it is high (above 80%) and crosses below the D value twice, forming a death cross, it is a selling opportunity.
RSI indicator: When the RSI value is between 0-20, it indicates that the cryptocurrency is oversold, which is a buy signal; when it is between 80-100, it indicates overbought, which is a sell signal.
It is important to note that technical indicators have a lagging nature and cannot be used as the sole basis for trading decisions.
Some strong cryptocurrencies may continue to rise even when indicators are at high levels, while some weak cryptocurrencies may continue to fall even when indicators are at low levels. Therefore, when using technical indicators, it is essential to consider other factors comprehensively.
Conclusion
The current market trend is highly volatile, with frequent changes. Therefore, it is recommended that investors adopt a quick in-and-out strategy and set proper stop-loss levels, which should be determined based on individual circumstances. If the short-term market changes, it is essential to decisively stop-loss to avoid greater losses. For short-term operations, any price fluctuation can be a potential opportunity, but the premise is to ensure the safety of the principal; otherwise, it is difficult to achieve profit opportunities.
A kind reminder: Recently, with the heat in the cryptocurrency circle, all sorts of monsters have emerged. If you lack discernment or confidence, feel free to ask me first. I may not be able to solve the difficulties you are currently facing, but I can definitely help you avoid falling into bigger pits and facing greater risks.