Brothers, yesterday morning I practiced the 'high-altitude knife catch' on PIPPIN.
I thought I had caught a perfect bottom reversal, with a peak profit of 14% at one point, feeling quite pleased. However, just when I was hesitating on whether to hold on a bit longer, the market flipped with a 'deep squat', and the profit shrank within seconds, leaving me to escape with a small profit thanks to the dynamic stop-loss I had set in advance.
Reviewing this 1-hour chart (above), I took some time to summarize a few hard logic points that can help you 'earn more and lose less':
1. Don't be greedy in the 'waterfall'
You see the contraction of PIPPIN before, that was the calm before the explosion. But once it opens downward, and the upper and lower bands expand vertically as if torn apart, this is called 'extreme weakness'.
In this pattern, any rebound is just to facilitate a stronger decline. In this coin, a profit of over 10% is like 'pocket money' given by the heavens; don't think about doubling your investment, taking it and running is the real skill.
2. How to tell if the rebound has peaked?
Combining with Bollinger Bands, I learned a lesson from not running away in time this time:
Look at the trading volume: those two green bars during the bottom rebound are actually not big, indicating that the buying pressure is 'insufficient'.
Look at the pink middle line (MB): In this extremely weak trend, the middle line is the 'gate of hell'. If the price rebounds near the middle line and the trading volume does not keep up, and the K-line forms a long upper shadow (refer to the long upper shadows of the last few bearish candles in the image), it is telling you: 'Brothers, I can't go up, better withdraw!'
3. Practical advice for novice brothers
If you also encounter a volatile coin like PIPPIN that has dropped nearly 20% in 24 hours:
Life preservation first: When profits are 10%-15%, close 50% of the position first. Move the stop-loss for the remaining 50% to your entry price.
Overcome the 'illusion': Don't always think about rebounding to the sky. When the Bollinger Bands are extremely expanded downward, being able to rebound to the middle line is a miracle.
Summary of yesterday's practical experience:
Getting it right (successful bottom picking) is just a skill; running fast (decisive profit-taking) is the art.
The 'contraction' of Bollinger Bands teaches you to ambush, the 'expansion' teaches you to stop-loss, and the 'middle line' in between teaches you how to overcome greed.
Tomorrow I plan to talk about 'false breakouts': Why does the price sometimes pull back instantly when the Bollinger Bands open? If you want to see how to avoid the trap of 'inducing long/inducing short' by the market makers, comment 111 in the comment area!