Market Analysis

Today's market is still in a sideways consolidation phase, identical to yesterday's structure. Therefore, today's article will be brief. If the structure is not clear, you can refer to the structural diagram in yesterday's article.

Will the market accelerate its decline next week? I also want to know if there will be a crash, or if it will reach the expected level near 22,000. However, the market itself is not determined by us, so it's important to prepare relevant contingency plans.

From a probabilistic perspective, there is still a relatively high probability of a further sharp decline next week. Looking at the US stock market, it has already broken the low point from mid-August, and the US dollar index seems to have stabilized at 105 and is continuing to rise. There is also a possibility of Bitcoin's technical aspect forming a 4-hour level consolidation leaving a downward trend. Therefore, next week, it is important to pay close attention to the market situation.

On the 1-hour chart of Bitcoin, it is still in the consolidation phase. It is expected that the consolidation phase will be over soon, and we will wait for further decline next week. At that time, we will pay attention to the intensity of the decline and whether it is an accelerated non-divergent decline or a divergence. Pay close attention to the support near 25,300, which is the same for Ethereum.

Today's Article: A Casual Chat about Trading (Long Text, Feel Free to Skip)

Many of us hope to make a lot of profit from a single trade and when buying spot goods, we also hope that a certain coin can bring us 100 times, or even a thousand times the profit. However, more often than not, things do not go as planned, as the saying goes, "haste makes waste."

Let's take two examples.

I have a friend, let's call him Mr. A. During the bull market in 2021, he bought Dogecoin, as well as the platform coin of a small exchange, and some other coins. Most of the coins he bought in April had a good increase, with profits of more than ten times. However, Mr. A was quite ambitious. Even though I hoped he would sell first and then find other opportunities with the money, he told me that he would not sell until each coin increased by 50 to 100 times. Later, as the market declined towards the end of the year, he realized that most of the profits had been lost.

Another friend, let's call him Mr. B, told me that he had some debts and his salary was not high. He hoped to make some money in futures trading. However, he didn't understand anything about it and followed some big V traders, resulting in increasing losses. When I met him, he said that he had paid off a large part of his debts recently, but had incurred significant losses in futures trading. He said he was ready to invest another 2,000 units, hoping to turn things around.

I told him that it would be best to pay off the debts first, then learn more about the basics of trading before getting involved. However, I knew he probably wouldn't listen. Soon, the 2,000 units were reduced to only 1,000 units. I roughly looked at some of his trades and found that most of them involved high leverage and no stop-loss orders. He traded based on his feelings, either going long when he felt the price wouldn't drop further, or going short when he felt the rebound was weak. He also sought out so-called signal providers. I advised him to lower the leverage, control the position size, and keep the actual leverage within 3 times, but he felt that this approach was too slow. In the end, he lost all the funds in his account and told me that he was really considering quitting trading.

I mentioned these two examples to tell everyone that in trading, slow and steady often wins the race. If Mr. A had sold after making ten times the profit instead of waiting for 100 times, and then found the right opportunity to make 5 to 10 times the profit, he could have easily made 50 to 100 times the profit. Do you really need to find a coin that can increase by 100 times to make a 100-fold profit? You can easily make 10 times first, then find a coin that can increase by 5 times, and finally find one that can double, and you will still achieve 100 times the profit.

I have a general understanding that in a bull market, most people who achieve financial freedom through spot trading do not do so by investing in just one coin. 95% of those who achieve financial freedom in a bull market usually need to multiply their capital two to three times, or even more, to achieve the desired effect.

For people like Mr. B, futures trading should not be treated as gambling. In my opinion, futures trading is a high-risk activity that should be taken seriously. On the first day of trading, you should understand the risks of futures trading, how to control the risks, how to avoid liquidation, and how to balance the relationship between profit, risk, and leverage.

Many people often feel that their capital is small. For example, some of our readers only have a few thousand yuan in hand, and they are not satisfied with making a profit of 10% to 20% each time. They hope to turn a few thousand yuan into tens of thousands in just a few days or a week. In reality, if you lower your expectations for each trade, reduce the leverage, and control the risk, you can still achieve rapid and sustained growth.

After making a 10% profit each time for 49 consecutive times, it will result in a 106-fold profit. Of course, in actual trading, it is not possible to be right 49 times in a row, and there will always be stop-losses. The profit from each trade is not always 10%, sometimes it's more, sometimes it's less. However, when we extend the time horizon, use low leverage in the long term, and trade with a high profit-to-loss ratio, the final profit will be remarkable. On the other hand, with long-term high leverage and large position trading, even if the profit-to-loss ratio is appropriate, after several stop-losses, you may spend a lot of time trying to break even.

Therefore, if you want to survive in the market for a long time, it is better to lower your expectations for each trade and extend the time horizon to accumulate capital.

When the position you hold makes you anxious, keeps you awake at night, and makes you stare at the screen on your phone in the middle of the night, it means that your position is too large. Those who are familiar with me know that I rarely stay up late to watch the market. When it's time to sleep, I sleep. Staying up late to watch the market for a long time is a very dangerous thing.

Trend Direction

Weekly Chart: Downward direction, in a process of oscillating decline on the weekly chart level

Daily Chart: Downward direction, it is very likely that the first daily chart level decline has not ended yet. Specifics will depend on whether there will be an accelerated decline next week

4-hour Chart: Downward direction, currently in a 4-hour level decline, pay attention to the support near 25,300

1-hour Chart: Consolidating, it is highly likely to upgrade to a 1-hour level consolidation by tomorrow. Overall, next week is expected to continue the decline, but pay attention to the intensity of the decline

15-minute Chart: Slightly consolidating, the short-term range is between 26,450 and 26,700

Feel free to follow my public account for further discussion and exchange:

The article is time-sensitive, so please be cautious and note that the above is only personal advice and for reference only!

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