I have been in the cryptocurrency circle for 10 years. In 2015, I entered the market with 300,000 yuan, and the highest amount reached more than 3 million yuan. At that moment, I thought I was a trading god. I resolutely quit my job and concentrated on cryptocurrency trading, even borrowing money to trade cryptocurrencies.
However, reality gave me a hard slap in the face. I encountered many problems later, which not only made me lose all my profits, but also left me with a lot of debts. In the end, I had to sell my house, and my wife and children almost left me. 2017 was my darkest moment. In just a few months, I experienced a fall from the peak to the bottom.
Afterwards, I reflected and summarized a lot. I had the honor to drink tea with a big man in the currency circle and talk about the currency market. His words shocked me deeply. Later, I began to summarize methods, summarize, review, change my wrong trading methods and ways, and began to change my thinking and cognition, learning + learning + learning, and I was enlightened by the guidance of the masters! Although I can't say that I am rich now, I have achieved stable profits, at least I can steadily outperform more than 80% of people.
Looking back on my own experience in the cryptocurrency circle, it has also been ups and downs. From the initial 300,000 yuan to catching up with the bull market and making tens of millions; and then from tens of millions to the current 1.1 small goals: and now, I am waiting for the arrival of the next round of bull market, with the goal of achieving 3 small goals.
Next, I will summarize my experience and hope to give some help to my fellow stockholders:
The dumbest and simplest method can help you avoid losses. This trick is common sense. As long as you have self-control, all cryptocurrency traders can do it. No matter what type of investor you are, whether you are short-term trading, buying low and ambushing, or trend breakthrough, as long as you are in the cryptocurrency circle, you must respect these eight common senses. If you stick to them for a long time, you will find that your account will no longer lose money and start to make profits.
The following contents are summarized based on my practical experience and ideas. I hope everyone can read them carefully and provide some help to my confused friends in the trading industry.
1. The more you lose in cryptocurrency trading, the more cautious you should be in covering your position. Many people are very anxious after being trapped in cryptocurrency trading. Instead of thinking about leaving the market, they keep covering their positions to lower their holding costs, hoping to recover their investment in a round of explosion. This is actually against common sense. The process of falling cannot reverse losses in one or two days. Covering positions is just a way to comfort yourself. The more anxious you are, the more likely you are to make mistakes, and you will regret it in the end. Why do you dare to cover your position at this position?
Second, operational discipline must be strictly enforced. Many cryptocurrency traders will make detailed plans before trading, such as how low the market will fall before selling, and how much the price of a coin will be before buying, but they are often easily stimulated and tempted during trading. If you can't even execute your own plan, then you are not playing in the cryptocurrency circle, but in a casino, and the operations before trading are probably wrong.
3. Do not trade frequently in the market. Many of the traders who suffer serious losses are short-term traders. On the contrary, those who only treat trading as entertainment do not have superb skills. Even if they wait patiently, they will not suffer much loss.
Fourth, when speculating in the market, you should avoid constantly adding to your account, while you spend all your money in the circle and make ends meet. However, this is a very real portrayal. Before you have the ability to make money, don't continue to add to your account, especially when it affects your living standards. Losses indicate that there are flaws in your trading system, and you should not use additional investment to fill the hole at this time. Instead, you should reflect on it and calmly explore a set of effective methods before increasing your efforts.
5. You will not lose money if you miss out, but you will often leave the market at a loss if you chase the rise. There is a common phenomenon in the market: the tickets you like but did not participate in all rise very well. When you want to buy at a high price, the stock price will collapse as soon as you buy. The reason is that the business of the enterprise has not changed. Try to choose a median price as a reference. When the price is low, stay in the market and avoid standing guard at a high price.
6. Cryptocurrency trading should follow the trend. There are only three types of trends: rising trend, falling trend, and shock consolidation trend. There is no doubt that when the trend is falling, light positions or even empty positions can participate in the rising trend, and the success rate will undoubtedly increase greatly.
7. If there is no stop in the decline, don't touch it. Buying the bottom during a decline is like catching a flying knife with bare hands, which puts yourself in danger. You must wait for the iconic positive line with large volume to appear, which is a signal to stop the decline, and then you can slowly buy in. This is the right-side buying method. Blindly buying the bottom will only make you more trapped.
8. Never speculate in cryptocurrencies based on research reports or gossip. Many retail investors like gossip, which is totally wrong. Use common sense to understand why others don’t keep quiet and make a fortune, and why they want to bring you along. If a piece of news can reach you as a retail investor, it means that the main force wants you to know and wants you to take over. In this case, there are many people who are trapped.
4. Discover patterns through volume
Skilled traders have pattern recognition skills and can spot repeatable volume patterns. An understanding of these common volume patterns can provide useful insights into market sentiment and future price action:
High Volume: This pattern occurs when a prolonged price move brings high volume, which in turn leads to a trend reversal. It often occurs at the end of a long-term uptrend or downtrend and can signal market weakness.
Oscillating Volume: Oscillating Volume patterns are characterized by a sharp drop in volume, thus triggering premature traders to exit their trades before prices reverse. This often traps weak traders, i.e. traders who succumb to market pressure.
Pullback/Retracement Volume: This pattern occurs when volume declines during a counter-trend retracement within a larger trend. It signals market consolidation before the trend continues.
Volume Breakout: A volume breakout pattern occurs when prices reach new highs or lows and there is a sudden surge in volume. This confirms the belief that a breakout has occurred and indicates that the market is receptive above or below a key barrier.
Declining volume during a trend: If volume decreases during an uptrend, it can mean waning interest and a potential trend reversal. The opposite is true for a downtrend, where a decrease in volume during a downtrend can signal the bottoming process is occurring and the trend may reverse to the upside.
5. Use volume indicators in your trading plan
Understanding volume and its impact is one thing, but effectively applying it to your personal trading strategy is another. Here are some tips to help you integrate volume analysis into your overall trading strategy:
Compare the number of options on up days and down days: When the price is rising, there are more transactions than when the price is falling. This shows that the long pressure is greater than the short pressure, which is bullish. This may mean that the current uptrend will continue.
Watch volume when retesting support and resistance: When price retests support or resistance, it is common to watch volume. If volume increases significantly during these retests, then these prices will remain stable and may stabilize at these levels. Look for volume divergences: Typically, volume and price should move in the same direction. If this is not the case, it may indicate that something is wrong.
For example, if prices are rising but volume is falling, it could mean that the price trend is about to change.
Choose a volume indicator that fits your trading timeframe: Whether volume data is important depends on the timeframe you plan to trade. If you are a swing trader who holds positions for days or weeks, daily volume data will be more useful. Intraday traders, on the other hand, may find hourly or even minute-by-minute volume data more useful.
Be wary of one-off spikes in volume: A sudden, unprovoked rise in volume can be misleading, so it is important to look for confirmation from other indicators or later trading sessions.
Use increased volume to spot institutional activity: Large investors, or “whales,” can have a significant impact on the market. A sudden increase in volume on a high timeframe chart could mean that institutional traders are buying or selling a certain coin.
Remember that no single indicator, including volume, is a "magic bullet" that will lead you to successful trading. Analyzing volume is only one of many strategies available and should be used in conjunction with other criteria, indicators, and analysis tools. As the old saying goes, "volume precedes price." Incorporating volume analysis into your trading plan can give you greater insight into market dynamics, helping you make more informed trading decisions and potentially gain an edge in the markets.
6. Disadvantages of Volume Analysis Strategy
While the volume analysis strategy is a powerful tool in a trader's arsenal, it is important to be aware of its shortcomings. Using this strategy, you may encounter the following challenges:
Market manipulation: In some cases, market participants, especially those holding large amounts of capital, can manipulate volume levels to create false signals and mislead other traders
Lagging Signals: Sometimes, changes in volume can lag behind changes in price, meaning that a large increase or decrease in volume may not immediately be followed by a large move in price.
False Peaks: Volume analysis can occasionally give false peaks. In this case, a sudden surge in volume does not result in a large price move.
Low Price Flux Distortion: In assets with low liquidity or “price fluctuation,” volume changes can be distorted, making it difficult to accurately interpret the data.
To mitigate these challenges, it is prudent to combine volume analysis with other indicators and technical analysis tools. Combining multiple signals can increase the reliability of trading strategies and reduce the possibility of falling into misleading signals.
7. Conclusion
Volume provides traders with a way to understand the intensity of market activity and trader psychology. Once you understand what volume is and how it affects price movement, you can apply it to your trading strategies to gain a deeper understanding of market sentiment.
By utilizing volume indicators such as OBV, VWAP, VROC and Chaikin Money Flow, and understanding common volume patterns, you can significantly improve your trading acumen. By incorporating these tools into your trading plan, you can gain a more nuanced understanding of market dynamics and more accurately predict price movements.
If you suffered losses because you didn’t meet me in the early stage, that would be a disaster; but if you don’t come to me after seeing my words now, that would be your fate!
$POL $ENS $PNUT
