Copy Trading Master’s Winning Strategies Review — Episode 80

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

1. Copy Trading Master’s Introduction

User Nickname: Colin

Trader’s Profile: https://www.lbank.com/copy-trading/lead-trader/LBA3D77447

Trading Style: Short-term Swing Trading

2. Trade Operation Recap

Opened a 5x cross leverage long on $LDO, with an entry price of 1.7797 USDT and a closing price of 1.84 USDT, achieving a single trade ROE of +16.95%. See the image below:

3. Trade Review

3.1 Market Background

On February 12, 2025, the U.S. Consumer Price Index (CPI) for January rose 3% year-over-year and 0.5% month-over-month, both exceeding expectations of 2.9% and 0.3%. Excluding volatile food and energy prices, core CPI increased 0.4% month-over-month and 3.3% year-over-year, also surpassing market expectations. The rise in inflation was primarily driven by higher housing costs. Analysts believe that the strong U.S. labor market and inflation risks may prompt the Federal Reserve to maintain high interest rates in the short term.

Federal Reserve Chair Jerome Powell stated in a congressional hearing that while inflation has made progress, it has not yet fully reached the target, and thus the Fed intends to keep its policy restrictive for the time being. Chicago Fed President Austan Goolsbee called the CPI data a wake-up call, and traders now expect the Fed to cut rates only once in 2025. Market expectations for a Fed rate cut have been revised downward, with the anticipated timing pushed from September to December.

Following the CPI release, all three major U.S. stock indexes declined, with the Nasdaq barely closing up 0.03%. The S&P 500 fell 0.27%, while the Dow Jones Industrial Average dropped 0.50%, with the energy sector underperforming due to lower oil prices. The bond market reacted sharply, with the 10-year U.S. Treasury yield rapidly climbing above 4.6%, and the U.S. dollar index experiencing a short-term surge.

In the European market, the impact of the CPI data caused a temporary pullback in European stocks due to weakness in U.S. equities, but the pan-European stock index continued to hit new highs. On the corporate front, Dutch brewing company Heineken reported strong earnings and announced a stock buyback program, pushing its share price up more than 14%.

Additionally, the Bank of Canada’s meeting minutes indicated that U.S. President Donald Trump’s tariff threats could lead to a depreciation of the Canadian dollar. In global energy markets, U.S. crude oil inventories surged, ending a three-day winning streak for oil prices. The U.S. CPI data also impacted the gold market, with prices initially declining before rebounding to close roughly unchanged.

The market fluctuations triggered by this data suggest that inflationary pressures have not yet fully subsided, and future policy directions will have a significant impact on financial markets.

On February 13, recent U.S. economic data has shown mixed signals. The job market remains strong, with initial jobless claims in early January at 213,000, lower than both expectations and previous figures. Meanwhile, January’s Producer Price Index (PPI) rose 3.5% year-over-year, primarily driven by rising food and energy costs. Core PPI increased 3.6% year-over-year, with a monthly increase of 0.3%. These figures exceeded expectations, indicating that inflation has not significantly eased.

However, January’s PPI did not substantially push up the Fed’s preferred inflation gauge — the core Personal Consumption Expenditures (PCE) index. The market expects core PCE to rise 0.3% month-over-month and slow to 2.6% year-over-year. Due to this expectation, U.S. Treasury yields have slightly retreated.

Trump announced that he is considering imposing “reciprocal tariffs” but has not yet implemented new duties, leading to a rebound in the U.S. dollar. His statement drew market attention, particularly regarding potential tariff adjustments in the automotive, semiconductor, and pharmaceutical sectors.

On the geopolitical front, Trump expressed his intention to push for peace talks between Ukraine and Russia, which was met with a positive market reaction. Meanwhile, the UK and Japan also released economic data, with the UK’s fourth-quarter GDP unexpectedly growing, reducing expectations for a Bank of England rate cut.

In the U.S. stock market, tech stocks performed well, with the Nasdaq leading gains and significant increases in shares of Nvidia and Tesla. European stock markets hit all-time highs, with Germany’s DAX and France’s CAC indexes showing strong performance.

Overall, despite inflationary pressures and uncertainties surrounding trade policies, concerns over an economic slowdown have somewhat eased, leading to a partial market rebound.

3.2 Trade Analysis

On the 4-hour candlestick chart from February 10 to February 14, 2025, $LDO exhibited a choppy upward trend. Notably, after a sharp decline on February 10, $LDO found strong support around $1.4 and formed a typical Pin Barpattern. This reversal signal indicates a potential strong rebound in the market. The trading background is shown in the chart below:

1) From February 10 to 11, major cryptocurrencies generally showed a rebound trend. $LDO found support at a major $1.4 level, successfully stabilizing and rebounding to around the $1.7 region.

2) On February 12, the market pulled back in anticipation of the upcoming CPI data release, with BTC breaking below its February 10 low. However, $LDO briefly dipped to around $1.45, forming a bullish divergence signal, and quickly rebounded, recovering to approximately $1.85. The price action displayed higher lows and higher highs, with the 2-hour timeframe showing a clear bullish trend. See the chart below:

3) On the morning of February 14, overall sentiment in the crypto market leaned positive. On the 1-hour timeframe, $LDO experienced a four-wave pullback and showed stabilization signs at the first wave’s peak. This was followed by the formation of a Three White Soldiers pattern. Based on this technical signal, a base position was first established at the market price, with a pending order set at $1.76. The stop-loss was placed at $1.745, near the bottom of the most recent bullish candlestick, while the take-profit targetwas set at the previous resistance level of around $1.84, ensuring an optimal risk-reward ratio.

Subsequently, the price continued to rise. Although the limit buy order at the lower price was not filled, the take-profit strategy was executed as the price approached the previous resistance level. See the chart below:

3.3 Winning Strategies Summary

Application of Elliott Wave Theory in Short-Term Trading: Capturing Short-Term Trading Opportunities

Elliott Wave Theory is a widely used market behavior forecasting tool in technical analysis, particularly effective in revealing the cyclical nature of market movements. The theory suggests that market prices follow cyclical patterns, and by analyzing these wave patterns, traders can identify trend shifts and reversal signals. In short-term trading, Elliott Wave Theory helps traders recognize price fluctuations within a short timeframe, enabling them to seize high-probability short-term opportunities. This article explores the basic concepts of Elliott Wave Theory, how to apply it in short-term trading, key methods for wave pattern identification, and risk management strategies, aiming to help traders optimize their short-term trading decisions.

1) Basic Concepts of Elliott Wave Theory

Elliott Wave Theory was introduced by Ralph Nelson Elliott in the 1930s, who argued that market price movements are not random, but rather follow a structured and repetitive pattern. The core principle of Elliott Wave Theory states that market price movements follow a cycle of five impulse waves and three corrective waves.

Basic Structure of Elliott Waves:

• Impulse Waves: Consist of five waves labeled 1, 2, 3, 4, 5, where waves 1, 3, and 5 push the market in the trend direction.
• Corrective Waves: Consist of three waves labeled A, B, C, which typically appear after impulse waves and represent market reversals or pullbacks.

Elliott Wave Theory emphasizes the concept of “fractal self-similarity,” meaning that wave structures in larger cycles resemble those in smaller cycles. This allows traders to analyze smaller wave patterns to anticipate broader market trend shifts.

2) Application of Elliott Wave Theory in Short-Term Trading

The goal of short-term trading is to capture price fluctuations by frequently entering and exiting the market within a short period. When applying Elliott Wave Theory in short-term trading, traders need to flexibly identify wave structures and leverage short-term market movements to generate profits.

How to Apply Elliott Wave Theory in Short-Term Trading:

1. Identifying Impulse Waves and Corrective Waves Short-term traders must first determine where the market is positioned within a complete Elliott Wave cycle. Typically, markets exhibit a shorter five-wave impulse pattern (waves 1, 2, 3, 4, 5), followed by an ABC corrective wave. By analyzing price movements and pinpointing the start and end of waves, traders can accurately time their entries and exits.
2. Using Elliott Wave Theory to Identify Reversal Points The core of Elliott Wave Theory lies in spotting market reversals. In short-term trading, wave 2 and wave 4 pullbacks often present good entry opportunities. In a strong uptrend, a wave 2 retracement is often a short-term buy signal. In a downtrend, a wave 4 retracement may signal a short-term selling opportunity.
3. Setting Price Targets Based on Wave Structures Once traders have identified the Elliott Wave structure and entered the market, they can use wave theory to estimate price targets. In a five-wave impulse cycle, wave 5 is typically the last wave before a potential market reversal. Therefore, short-term traders can take profit when wave 5 reaches its projected target.
4. Combining Other Technical Indicators to Confirm Signals To enhance the accuracy of Elliott Wave Theory, short-term traders should incorporate additional technical indicators, such as the Relative Strength Index (RSI), MACD, and Bollinger Bands, to validate entry and exit signals. This helps filter out false signals and improves trading success rates.

By integrating Elliott Wave Theory with risk management and other technical tools, traders can optimize their short-term trading decisions and increase their probability of success.

3) Key Wave Identification Methods in Elliott Wave Theory

When applying Elliott Wave Theory for short-term trading, it is crucial to understand the characteristics of each wave and its market behavior. Below is an analysis of the major waves in Elliott Wave Theory:

1. Impulse Wave 1:

1.1 Wave 1 marks the beginning of a new uptrend or downtrend. The price movement is relatively moderate as market sentiment has not yet fully developed. This phase often presents a good short-term buying or selling opportunity.

2. Corrective Wave 2:

2.1 Wave 2 is a retracement wave, typically pulling back significantly but not falling below the starting point of Wave 1. Short-term traders can wait for the retracement to end and look to enter at the bottom of Wave 2 (if the trend is bullish) or sell at the top of Wave 2 (if the trend is bearish).

3. Impulse Wave 3:

3.1 Wave 3 is usually the longest and strongest wave in the cycle. Market sentiment is fully activated, and prices rise or fall sharply. Short-term traders can enter immediately after Wave 2 ends to ride the strong trend of Wave 3.

4. Corrective Wave 4:

4.1 Wave 4 is another retracement wave, but its pullback is generally smaller than Wave 2. The bottom of Wave 4 should not fall below the starting point of Wave 1. Traders can use this retracement as another opportunity to enter, preparing for the final Wave 5 push.

5. Impulse Wave 5:

5.1 Wave 5 represents the last stage of the market rally or decline. The price often breaks previous highs or lows, forming a final push. Short-term traders can take profits at this stage and prepare for a potential market reversal.

6. Corrective Waves A, B, and C:

6.1 Once Wave 5 ends, the market enters a corrective phase, typically forming three waves labeled A, B, and C. This correction signals a price reversal, and short-term traders should be cautious during Wave C, avoiding buying at the peak or selling at the bottom.

4) Risk Management and Position Sizing in Elliott Wave Theory

Although Elliott Wave Theory can provide effective market direction guidance, the market does not always strictly follow wave structures, making risk management and position sizing especially important in short-term trading.

1. Stop-loss placement: In short-term trading, setting a stop-loss is crucial. Typically, stop-loss levels can be set at the low of Wave 2 (in an uptrend) or the low of Wave 4 (in a downtrend). A well-placed stop-loss can prevent excessive losses.
2. Risk-reward ratio control: Short-term traders need to establish a reasonable risk-reward ratio, which should generally be maintained at 1:2 or higher. By accurately identifying wave structures, traders can use Elliott Wave target levels for profit-taking, ensuring they remain profitable amid market fluctuations.
3. Position management: Short-term traders should avoid going all-in at once. Using a scaling-in strategy can help reduce risk. When confirming market trends, gradually entering and exiting positions can effectively control the risks associated with position fluctuations.

5) Conclusion

Elliott Wave Theory provides an effective analytical tool for short-term trading based on market cyclical fluctuations. By identifying impulse waves and corrective waves, traders can seize short-term price movement opportunities. However, Elliott Wave Theory is not infallible; therefore, combining it with other technical indicators, strict risk management measures, and proper position sizing is crucial for successful application. By continuously optimizing trading strategies and improving wave identification skills, short-term traders can achieve stable profitability in various market conditions.

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

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