Trading Mindset for Volatile Markets: Swing Highs and Lows Like a Pendulum (No Indicators, Pure Practical Experience Sharing)
I. How to Identify Volatile Markets?
- Price Behavior Characteristics:
Repeated testing of highs and lows: Prices swing back and forth within a range, for example, Bitcoin fluctuating between $60,000 and $65,000 for a week, each time hitting $65,000 and then retreating, dropping to $60,000 and then bouncing back.
Moving averages and Bollinger Bands flattening: Short-term moving averages are tangled together, and the Bollinger Bands are flat, showing no clear direction. Decreased trading volume: The market is quiet, with significant rises and falls lacking sustainability.
- Market Sentiment Signals: Retail investors complain that "prices are neither rising nor falling," with both bulls and bears arguing with each other;
Positive news causes a one-day rise, negative news causes a one-day drop, but quickly returns to the starting point.
II. Core Strategy for Volatile Markets: Box Trading
Mnemonic: “Don’t chase the rise at the upper edge, don’t panic sell at the lower edge, watch the show in the middle”
- Define the Range Boundaries: Support Level: A price point that has repeatedly failed to drop below recently (e.g., $60,000); Resistance Level: A price point that has repeatedly failed to break above recently (e.g., $65,000).
(If the boundaries are unclear, draw a horizontal line connecting the last three highs/lows)
2. Specific Operations: When the price drops near the support level, buy to go long. When the price rises near the resistance level, sell to go short. Do not trade when the price is in the middle area; resist the urge to act and wait for boundary signals.
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