Copy Trading Master’s Winning Strategies Review — Episode 78

Easy Copy, Smart Trade! Discover the winning strategies of our popular traders.

1. Copy Trading Master’s Introduction

User Nickname: Ray

Trader’s Profile: https://www.lbank.com/copy-trading/lead-trader/LBA3D77497

Trading Style: Short-Term Swing Trading

2. Trade Operation Recap

Full Position 5x Leverage Short on $TRUMPSOL, Entry Price 22.1 USDT, Exit Price 19.113 USDT, Single Trade ROE +67.58%, as shown in the chart below.

3. Trade Review

3.1 Market Background

1) On January 27, the emerging AI powerhouse DeepSeek disrupted the global computing power market with its low-cost breakthrough technology, triggering volatility in capital markets. Global tech stocks broadly declined, with Japanese semiconductor stocks and leading A-share AI stock Cambricon under pressure, while Nasdaq futures plunged over 2%. Analysts believe DeepSeek’s cost-efficient model raises doubts about the return on massive industry investments.

In specific market performance, the Nikkei 225 closed down 1%, SoftBank Group and Tokyo Electron plummeted 8% and 5%, respectively, Cambricon dropped nearly 10%, and Bitcoin fell below $99,000, losing over 6% intraday. Investors expressed concerns about the industry’s outlook, particularly given increasing skepticism over the return on substantial capital investments.

2) In the early hours of January 30, the Federal Reserve announced its interest rate decision, keeping rates unchanged while removing the phrase “inflation is making progress toward target” and reaffirming the strength of the labor market. As a result, market expectations for rate cuts were scaled back, leading to declines in U.S. equities, bonds, and gold.

Powell clarified in a press conference that the removal of the inflation statement was merely a wording simplification and did not signal a resurgence in inflation. He also emphasized that current interest rates remain significantly above the neutral level, and the Fed is not in a hurry to adjust its policy. His dovish remarks eased market sentiment, narrowing losses in U.S. equities, bonds, and gold, but U.S. stocks still closed lower across the board.

3) On January 31, the U.S. December PCE Price Index was released, aligning with expectations and continuing a moderate growth trend. Weak real income growth could provide support for future Federal Reserve rate cuts.

Inflation Data:

• The December PCE Price Index increased 2.6% on a year-over-year basis and 0.3% on a month-over-month basis.
• The Core PCE (excluding food and energy) rose 2.8% on a year-over-year basis and 0.2% on a month-over-month basis.
• The three-month annualized Core PCE growth rate dropped to 2.2%, marking its lowest level since July of last year.

Consumption and Income:

• December real personal consumption expenditures increased 0.4% on a month-over-month basis, showing strong performance.
• Personal income grew 0.4% on a month-over-month basis, but real disposable income showed almost no growth, while the savings rate dropped to 3.8%, reaching a two-year low.

The data eased market concerns about a resurgence in inflation. Analysts suggest that consumers may have made purchases ahead of time due to concerns about potential tariff hikes. Federal Reserve Chairman Powell previously stated that more evidence of declining inflation would be needed before considering rate cuts.

Labor cost growth slowed, with the Employment Cost Index rising 3.8% year-over-year in the fourth quarter, marking the lowest level since 2021. Following the data release, U.S. stock futures, the dollar index, and gold showed little short-term movement, while U.S. Treasury yields edged slightly higher.

4) On January 31, White House Press Secretary Caroline Levitt announced during a briefing that the White House confirmed a 25% tariff on goods from Mexico and Canada starting February 1. Following the announcement, U.S. Stocks reversed gains and turned negative, with the S&P 500 dropping 0.7% in a single day, widening its weekly loss to 1%.

Tech stocks experienced significant volatility. Despite Nvidia’s year-to-date gain of 14%, it recorded its largest weekly loss since September 2022, with over $450 billion in market value wiped out, marking the largest single-week loss in U.S. stock market history. Data showed that hedge funds’ net long positions in tech stocks fell to their lowest level since 2022. The market is reassessing whether tech stocks can continue to lead the bull market amid technological transformation and geopolitical challenges.

On February 2, U.S. President Donald Trump signed an executive order imposing an additional 10% tariff on all goods imported from China and a 25% tariff on goods from Mexico and Canada, including a 10% tariff on Canadian energy products. The White House stated that if retaliatory measures are taken, the U.S. may further increase tariffs.

This move sparked widespread opposition both internationally and domestically. The Chinese Ministry of Foreign Affairs reiterated that there are no winners in a trade war and that China will firmly safeguard its national interests. Canadian Prime Minister Justin Trudeau stated that Canada is prepared to respond, while Mexican President Claudia Sheinbaum emphasized a calm approach to defending national dignity. Additionally, Trump revealed plans to impose tariffs on EU goods due to the EU’s refusal to import U.S. products, although the timing remains uncertain.

3.2 Trade Analysis

From January 31 to February 2, 2025, $TRUMP declined steadily on the 4H candlestick chart, dropping from $28 to near the 0.618 Fibonacci extension level. A doji candlestick formed at a key support level, indicating a temporary pause in bearish momentum. The trading context is shown in the chart below:

1) On January 27, the emerging AI powerhouse DeepSeek disrupted the global computing power market with its low-cost breakthrough technology, triggering turbulence in capital markets. Global tech stocks broadly declined, with Japanese semiconductor stocks and leading A-share AI stock Cambricon under pressure, while Nasdaq futures plunged over 2%. Analysts believe DeepSeek’s cost-efficient model raises questions about the return on massive industry investments.

2) In the early hours of January 30, the Federal Reserve announced its interest rate decision, keeping rates unchanged and removing the phrase “inflation is making progress toward target” from its statement, while reaffirming the strength of the labor market. This led to a pullback in market expectations for rate cuts, resulting in declines in U.S. equities, bonds, and gold.

3) On February 2, U.S. President Donald Trump signed an executive order imposing an additional 10% tariff on all goods imported from China, along with a 25% tariff on goods from Mexico and Canada, including a 10% tariff on Canadian energy products. The White House stated that if retaliatory measures are taken, the U.S. may further increase tariffs.

From January 31 to February 2, due to the impact of DeepSeek disrupting the AI industry, changes in rate cut expectations, and the U.S. imposing tariffs, the crypto market followed U.S. stocks in a continuous decline. $TRUMP stabilized temporarily after dropping to $18.57, with a weak rebound. As shown in the chart below:

4) On the morning of February 2, 2025, after following U.S. stock declines, the crypto market gradually recovered. However, with heightened macroeconomic uncertainty, overall market sentiment remained bearish.

$TRUMP found support around $18.5, but trading volume did not see a significant increase, indicating weak reversal signals. In the short term, price action is more likely to remain range-bound. Previously, after entering the $25-$32 range, market demand remained weak, with price fluctuations primarily occurring around key support and resistance levels and liquidity-clearing zones.

From an intraday trading perspective, following the market trend, shorting near resistance levels had a higher probability of success. Based on the liquidation heatmap, a short order was placed near the strongest liquidation zone at $22.1, with a stop loss set at $23 and a target take profit level at the lower support of $19.1, resulting in a risk-reward ratio of 3.3.

Subsequently, $TRUMP rebounded to $22.6 before trending downward, eventually dropping to $19.1, successfully hitting the take-profit target. Although prices continued to decline further, under the range-bound trading strategy, this trade met its expected target and aligned with the strategy’s logic. As shown in the chart below:

3.3 Winning Strategies Summary

Range-Bound Trading: How to Seize Opportunities in Sideways Markets

Range-bound trading is a strategy based on price movements within a specific range. Unlike trend-following strategies, range-bound traders focus on price fluctuations between support and resistance levels, aiming to profit from price reversals at these key levels. While price movements in a range-bound market tend to be smaller, traders with precise judgment can still achieve stable profits. Below, we explore how to improve success rates in range-bound trading through effective strategies and risk management.

1) Key Characteristics of a Range-Bound Market

A range-bound market typically has well-defined support and resistance levels, where prices oscillate within a set range. Understanding and identifying the formation of these trading ranges is the first step in range-bound trading.

• Support Level: A price level where a downtrend is likely to pause due to increased buying interest, preventing further decline.
• Resistance Level: A price level where an uptrend encounters selling pressure, making it difficult to break higher.
• Trading Range: The price fluctuation zone formed between support and resistance.

In a range-bound market, price movements often lack a clear directional trend. Traders can capitalize on these key price levels to make strategic entries and exits, taking advantage of repeated fluctuations between support and resistance.

2) Key Strategies for Range-Bound Trading

In a range-bound market, the primary goal for traders is to capture opportunities from price rebounds and pullbacks. Below are some commonly used strategies:

• Bounce Buy/Sell Strategy: Go long when the price touches the support level, and go short when it reaches the resistance level. This strategy relies on the validity of the trading range, so it is essential to confirm whether the range remains intact or is about to break.
• Pre-Breakout Trading: Enter a position when the price approaches the support or resistance level, aiming to catch a potential rebound before it happens. This strategy requires a good understanding of historical volatility within the range.
• Mean Reversion Trading: In a range-bound market, prices tend to revert to their mean value within the range. Tools like Bollinger Bands can help traders identify opportunities to trade when prices return to the midline of the range.

3) Identifying Signals in a Range-Bound Market

Recognizing signals within a trading range is crucial for successful execution. Below are some common range-bound trading signals:

• Reversal Signals: A bullish reversal signal (e.g., bullish engulfing, hammer candlestick) forming near a support level suggests a potential buy opportunity, while a bearish reversal signal (e.g., bearish engulfing, inverted hammer) near a resistance level indicates a potential sell opportunity. These signals suggest possible price reversals, allowing traders to enter long or short positions accordingly.
• Breakout Signals: If the price breaks above resistance or below support, the market may be transitioning into a new trend phase. In this scenario, traders must confirm whether the breakout is valid to avoid losses from false breakouts.
• Price Stagnation Signals: When price consolidates within the range for an extended period and trading volume declines, it may indicate that the market is preparing for a breakout. Traders should remain alert and be ready to respond to the upcoming volatility.

4) Risk Management and Position Sizing

Since range-bound trading involves relatively smaller price movements, it requires strict risk control and disciplined position management:

• Set Stop-Loss Levels: Placing stop-loss orders near support and resistance levels helps mitigate potential losses in case of a breakout beyond the trading range.
• Risk-Reward Ratio Control: In range-bound markets, it is generally recommended to maintain a risk-reward ratio of at least 1:2 or higher to ensure long-term profitability and trade sustainability.
• Gradual Position Entry & Exit: When price approaches support or resistance levels, traders can scale into positions in batches to reduce the risk associated with entering a full position all at once.

5) Fundamental Principles of Range-Bound Trading

• Confirm the Trading Range: Before entering a trade, ensure that the price is truly moving within a defined range to avoid premature entries ahead of a breakout.
• Follow Market Momentum: Although range-bound trading typically involves counter-trend strategies, be mindful of momentum-based opportunities, especially near the upper and lower boundaries of the range.
• Strictly Adhere to Stop-Loss Rules: Since price fluctuations in a range are relatively small, a breakout could lead to significant losses. Always ensure stop-loss levels are set appropriately.
• Stay Flexible: A trading range is not permanent. Be ready to adjust strategies according to market conditions. If the market shows increased volatility, take profits or cut losses accordingly.

6) Conclusion

Range-bound trading focuses on analyzing price movements between support and resistance levels, allowing traders to capitalize on price reversals. Although market fluctuations within a range are relatively small, traders can still achieve consistent profitability by utilizing precise signal identification, strict risk management, and disciplined position sizing.

The key to success lies in staying attuned to trading ranges and adapting strategies to market changes. Continuous practice and experience refinement will enhance a trader’s ability to navigate range-bound markets successfully and achieve steady long-term profits.

Note: Personal opinion, for reference only. Opportunities and risks abound, always do your research before investing.

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