In the previous content, Lin Mu Yang taught how to create a trading plan from large timeframes to small timeframes. In the article, we discussed the concept of 'key levels.' Today, I will teach you a naked candlestick method with a win rate of up to 90%.
First, we need to identify an important candlestick pattern from the candlestick chart. Please pay attention to the following points:
1. The color of the candlestick is irrelevant, but the body must be moderate and not too long.
2. The length of the inverse shadow must be at least twice the body; otherwise, it cannot be considered an effective candlestick.
3. In actual operations, some deformed candlesticks also meet the criteria, especially when the shadows in the same direction are very short. See the chart below.
We can clearly see the candlestick in the white circle here; the length of the shadow is far greater than the body. We learned in the basics that the opening price is at the bottom of a candlestick, and the closing price is at the top. The closing price is above, forming a long lower shadow, indicating clear bullish momentum. Then, combined with what I previously mentioned about 'key levels,' we can intervene at such positions! The candlestick must be in a key area, such as a major support or resistance level.
Key Point: 1. The shooting star should appear at the top of an uptrend, and the hammer should appear at the bottom of a downtrend.
2. And the candlestick must be at a significant price level.
Regarding how to identify key levels, specific methods can refer to my previous articles. Next, we will discuss the position requirements for shooting stars and hammers. In actual operations, we can find easy-to-understand examples: for instance, a hammer appears in a slight pullback of a downtrend, and its lowest point is the lowest point of that trend. Subsequently, the market reverses and continuously creates new highs; this candlestick is valid. We still take the chart below as an example.
This is a 4H chart. We can see that the amplitude in the white box is not large, and both times it crossed down did not break through the key level, with the lows continuously rising. Therefore, we consider this behavior valid and intervened at the white circle on the right.
After learning how to identify this golden candlestick, we can start making plans!
Although you may have some understanding of technical analysis, I emphasize that this trading strategy is designed specifically for beginners, and it does not require memorizing complex patterns. A simple and clear approach is more effective.
This pattern is not common; for example, it may only appear once a week with Bitcoin. Our goal is to stabilize first, then improve accuracy, because in trading, there are only two directions: profit and loss. Theoretically, every time we intervene, the probability is 50% correct. However, this is not the case in reality. Before we master the knowledge, we need to reduce the frequency of operations to avoid larger mistakes. Although this method has fewer opportunities, it allows you to improve your accuracy every time. In the chart below, we can see that in the white box at the 4H level, there was a slight oscillation for 8 days, and a golden candlestick appeared without breaking the previous high point, which is the key level. So we chose to intervene here, and we subsequently saw a space of about 7000 points!
Finally, regarding profit-taking, if the market unexpectedly provides you with higher profits, consider more advanced profit-taking strategies, such as trailing stop methods.
Note: Lao Lin's daily content is only for general guidance, and specific precise layouts need to be decided in real-time based on market changes! If you are still unable to grasp the market, please read my collection (How Retail Investors Are Trained) carefully. I will continue to create and provide high-quality content in the cryptocurrency space!
