Copy Trading Master’s Winning Strategies Review — Episode 81
Easy Copy, Smart Trade! Discover the winning strategies of our popular traders.
- Copy Trading Master’s Introduction
User Nickname: Monkey
Trader’s Profile: https://www.lbank.com/copy-trading/lead-trader/LBA3D77398
Trading Style: Medium-to-Short-Term Swing Trading
2. Trade Operation Recap
Opened a full-position 35x leveraged short on $VIRTUAL at an entry price of 1.2422 USDT and a closing price of 0.9981 USDT, achieving a single trade ROE of +687.77%. As shown in the image below:
3. Trade Review
3.1 Market Background
1. On February 12, 2025, the U.S. January Consumer Price Index (CPI) rose 3% year-over-year and 0.5% month-over-month, both exceeding market expectations of 2.9% and 0.3%, respectively. Core CPI, which excludes volatile food and energy prices, increased 0.4% month-over-month and 3.3% year-over-year, also surpassing forecasts. The primary driver of this inflation was rising housing prices. Analysts suggest that a strong labor market and persistent inflation risks may prompt the Federal Reserve to maintain high interest rates in the short term.
Federal Reserve Chair Jerome Powell stated during a congressional hearing that while inflation has moderated, it has not yet reached the Fed’s target, so restrictive policies will remain in place for now. Chicago Fed President Austan Goolsbee emphasized that the CPI data was concerning, and traders now widely expect the Fed to cut rates only once in 2025, postponing the expected rate cut from September to December.
Following the CPI release, U.S. stock markets declined, with the Nasdaq barely closing in positive territory at +0.03%. The S&P 500 fell 0.27%, and the Dow Jones Industrial Average dropped 0.50%, with the energy sector being the worst performer due to declining oil prices. Bond markets reacted sharply, with the 10-year U.S. Treasury yield surging above 4.6%, and the U.S. Dollar Index experiencing a brief rally.
2. On February 15, 2025, Argentine President Javier Milei announced the launch of the Meme coin LIBRA via his official X account, revealing its contract address. According to crypto lawyer Wassielawyer, 74,698 traders suffered losses from LIBRA token transactions, with total losses amounting to approximately $286 million. 21Shares Head of Strategy Eliézer Ndinga posted on X, stating that the LIBRA scandal marks the peak of the Meme coin frenzy, highlighting the urgent need for stricter risk management measures on Launchpad platforms.
At the same time, clarity in global regulations is becoming increasingly important, particularly regarding government officials launching their own Meme coins. While permissionless innovation should be open to all, appropriate safeguards must be put in place to protect consumers and prevent fraud. For instance, automated systems could flag contract addresses linked to past “Rug Pull” scams, helping investors avoid fraudulent schemes.
3.2 Trade Analysis
On the 4-hour K-line chart from February 15 to February 17, 2025, $VIRTUAL surged to the descending trendline but was rejected, leading to a pullback. Subsequently, the weak rebound indicated a continuation of the downtrend. The trading background is shown in the chart below:
- From February 15 to 17, mainstream cryptocurrencies generally exhibited a gradual downtrend with weak bounces, with the AI sector showing relative weakness.
- On February 17, $VIRTUAL displayed a steady downward movement. At the 2-hour level, the rebound lacked strength and was suppressed by the 120-day moving average, indicating insufficient buying support at the current price level and a higher probability of further decline. A market order was placed accordingly, with a $1.3 limit order and a stop-loss set between $1.32 and $1.4. See the chart below:
3. On the morning of February 19, overall sentiment in the crypto market leaned positive. $VIRTUAL formed a high-volume spinning top near $0.94, with its range gradually narrowing, suggesting a potential short-term bottom. Considering the broader market trend, the short position was closed near $1.00. See the chart below:
3.3 Winning Strategies Summary
4-Hour Swing Trading: A Strategy for Capturing Medium-to-Short-Term Trends
4-hour swing trading is a strategy positioned between short-term and medium-to-long-term trading, aiming to capture trend fluctuations on the 4-hour K-line chart for efficient profit realization. Compared to ultra-short-term trading on the 1-hour or 15-minute levels, 4-hour trading is better suited for capturing mid-term market movements, making it ideal for traders who wish to avoid frequent operations while seizing larger price swings.
This article will explore the fundamental concepts of 4-hour swing trading, its practical application, key technical indicators for trend identification, and essential strategies for risk control and position management.
1. Basic Concepts of 4-Hour Swing Trading
4-hour swing trading relies on the 4-hour K-line chart to analyze market trends and is typically used to capture mid-term price fluctuations, with a time span ranging from several hours to a few days. Compared to daily charts, the 4-hour timeframe provides more frequent entry and exit opportunities while still capturing medium-to-short-term market movements. Traders employing this strategy analyze price action, technical indicator signals, and macroeconomic conditions to forecast market trends within the next few hours to days and make informed trading decisions accordingly.
This trading strategy often integrates trend-following and range-trading approaches. Trend-following helps traders capture medium-to-short-term movements within a larger trend, while range-trading is used when the market is in a consolidation phase, aiming to identify potential reversals or breakout opportunities.
2. How to Implement the 4-Hour Swing Trading Strategy
The 4-hour swing trading strategy involves distinct trading methods. Traders need to consider both the overall market trend and short-term fluctuations while utilizing appropriate technical analysis tools to determine entry and exit points.
Steps to Apply the 4-Hour Swing Trading Strategy：
1) Identifying Market Trends
In 4-hour swing trading, the first step is to confirm the overall market trend. By analyzing the 4-hour K-line chart, traders can determine whether the market is in an uptrend, downtrend, or consolidation phase. Common tools for identifying trends include moving averages (such as the 50-day and 200-day moving averages) and trendlines.
2) Using Technical Indicators to Confirm Entry Points
Technical indicators are essential tools for swing traders. Some commonly used indicators include:
- MACD (Moving Average Convergence Divergence): MACD helps traders confirm trend direction and strength. A bullish crossover (when the short-term moving average crosses above the long-term moving average) suggests a potential uptrend, while a bearish crossover indicates increased downward pressure.
- RSI (Relative Strength Index): RSI helps identify overbought and oversold conditions. When RSI exceeds 70, the market may be overbought, signaling a possible pullback. When RSI falls below 30, the market may be oversold, indicating a potential rebound. In swing trading, RSI can be used to identify short-term buy and sell signals during price retracements.
- Bollinger Bands: Bollinger Bands help traders determine market volatility. When the price breaks above the upper band, a pullback is likely, whereas a break below the lower band may indicate an upcoming rebound.
3) Setting Swing Targets & Stop-Losses
After confirming the market trend and entering a trade, it is crucial to set realistic swing targets and stop-loss levels. These can be established based on previous swing highs and lows, with stop-loss levels adjusted according to market volatility. A stop-loss can be set at the previous swing reversal point or calculated using ATR (Average True Range) to determine an appropriate price range.
4) Using Price Patterns & Trendlines to Confirm Reversal Signals
In swing trading, price patterns (such as Head & Shoulders, Double Tops, and Triangles) and trendline breakouts are key indicators of potential trend reversals. 4-hour swing traders can anticipate reversal points by closely monitoring these formations, allowing them to capitalize on price fluctuations.
3. Key Technical Indicators & How to Use Them in 4-Hour Swing Trading
In 4-hour swing trading, the combination of technical indicators and price patterns is crucial. Below are commonly used technical indicators and their applications:
1) Moving Average Crossovers
Moving average crossovers are important signals for identifying potential trend reversals. On a 4-hour chart, commonly used moving averages include the 50-day and 200-day moving averages. When the short-term moving average crosses above the long-term moving average, it signals the start of a trend. Conversely, when the short-term moving average falls below the long-term moving average, it suggests a possible trend reversal.
2) Support & Resistance Levels
Support and resistance levels play a critical role in swing trading. Traders can observe how price reacts at these key levels to determine whether the market will break through or reverse. When the price approaches a support level and bounces, traders may consider long positions. When the price nears a resistance level, it may indicate a potential shorting opportunity.
3) ADX (Average Directional Index)
The ADX helps traders assess whether the market is in a trending or range-bound state. When ADX is above 25, the market is usually in a strong trend, making trend-following strategies more effective. When ADX is below 25, the market is consolidating, making range-trading strategies more suitable.
4. Risk Management & Position Sizing in 4-Hour Swing Trading
Even though swing trading can generate substantial profits, risk management and position sizing remain key to long-term success. Proper risk control and position management help traders minimize losses and protect capital.
1) Stop-Loss Setting
A stop-loss is an effective tool to prevent significant losses. In 4-hour swing trading, stop-loss levels can be set below key support levels or above resistance levels. Alternatively, a dynamic stop-loss can be determined using ATR (Average True Range).
2) Risk-Reward Ratio Management
Traders should establish a reasonable risk-reward ratio, typically recommended at 1:2 or higher. This means that for every trade, the expected profit should be at least twice the potential loss, ensuring stable profitability over the long term.
3) Position Sizing
To mitigate risks caused by market volatility, traders should avoid using full leverage or going all-in. Proper position sizing helps diversify risk. A common recommendation is to limit the risk per trade to no more than 2% of the total account balance.
5. Conclusion
4-hour swing trading allows traders to capture medium-term price movements within a relatively short time frame, making it suitable for those who want to balance short-term opportunities with larger price swings. By correctly identifying trends, using effective technical indicators, setting appropriate swing targets and stop-losses, and strictly implementing risk management and position sizing strategies, traders can achieve steady profitability in 4-hour swing trading.
However, traders should remain flexible, continuously refining their strategies based on market conditions and trading experience to adapt to different market environments effectively.
Note: Personal opinion, for reference only. Opportunities and risks abound, always do your research before investing.
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