Hey everyone! It’s RkY here, sharing another trading strategy from my 5+ years of experience in the cryptocurrency world. Today, I’ll tell you how I made a massive 2300% profit in $ALPHA in just 20 minutes, using a strategy we’ve discussed before the Reversion Strategy. Many of my students often ask me how I identify profitable setups and avoid getting trapped. So, let's dive right in, step by step.
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What Happened with $ALPHA?
Recently, $ALPHA pumped over 159% in the spot market and became the top gainer. While many traders were looking for long opportunities, I did something differentI shorted the market, and that’s where the big gains came from. Let me explain why shorting can sometimes be more profitable than longing, especially in these pumped scenarios.
Step 1: Set Up Your Chart on 1D
The first thing you need to do is set your chart to the 3-day timeframe. Why? Because we want to find strong previous resistances and supports. For this strategy, since we are shorting, we need a strong resistance level. This resistance will act as our reference point where we expect the price to reverse.
Take a look at the chart below. I’ve indicated several points with green circles where the price consistently hit a strong resistance level (marked in red). These resistance points are areas where the price struggled to break above, leading to a reversal. This is exactly what we look for when setting up a short trade.
This resistance zone will act as a barrier for the price, and in such scenarios, the market is likely to drop after hitting it especially when the momentum slows down, which is perfect for shorting.
Step 2: Identify Strong Resistance
Once you’ve set your chart to 3D chart, look 1D chart for a significant resistance level. This is where the price has previously struggled to break through. In the case of $ALPHA, I found a solid resistance level after its massive pump. The key here is patience don’t rush into the trade until you’ve found a strong resistance.
Step 3: Zoom In and Use Moving Averages (MA 7 and 21)
After identifying the resistance on the 1D chart, switch to a smaller timeframe, like the 15-minute or 5-minute chart.
Here’s where we introduce our tools:
Moving Average (MA) 7 and 21: We look for a crossover between these two moving averages. If the shorter MA (7) crosses below the longer MA (21), that’s a bearish signal, indicating the market might be ready to reverse down.
Take a look at the chart above. Here, I’ve marked a bearish signal with a green circle, showing when the MA 7 (orange line) crosses below the MA 21 (green line). This is called a dead crossover, and it’s a strong indication that the market might be ready to reverse downward.
In this case, as soon as I saw this crossover at the resistance level, it was confirmation for me to enter a short trade. Combining this with other indicators like the Bollinger Bands strengthens the likelihood of a reversal. This step is key for making sure your entry point is solid and you’re not getting caught in a trap!
Step 4: Apply the Bollinger Bands (BB)
In the chart above, we’ve now added the Bollinger Bands (BB). Notice how the price wicked outside the upper Bollinger Band (red line) right at the 1D strong resistance. This is a classic sign of the market being overbought, meaning there’s a high probability the price will reverse downward.
This wick outside the Bollinger Band, especially at such a critical resistance level, is a strong signal to enter a short position. The price is losing steam and is likely to fall as it struggles to break through the resistance zone.
This combination of Bollinger Bands with resistance and the Moving Average crossover we saw earlier gives us multiple confirmations to safely enter a short trade. Always wait for these confirmations to reduce risk and improve trade accuracy!
Step 5: Enter the Short Trade
All these conditions are met, I entered the short trade. In the case of $ALPHA, when the price hit the resistance without a proper break and showed a wick outside the Bollinger Band, I knew it was the perfect time to enter. I placed my short order, and the market reversed exactly as expected, allowing me to make 2300% within just 20 minutes!
Trade Results:
Did you notice the accuracy??
Why Shorting Was More Profitable ?
Now, here’s why I believe shorting can be more profitable than longing. In crypto, things move fast, especially when a coin is pumped hard. What goes up quickly often comes down even faster 😄 (Newton's third law). By shorting at the right moment, you can capture these quick drops and make profits faster than waiting for the price to go up further.
It’s a bit like Newton’s Third Law: "For every action, there's an equal and opposite reaction." When a price shoots up quickly, the reaction is often a sharp pullback. This sudden drop offers great opportunities for short sellers to profit.
Another reason is psychology. When people see red candles (which show that the price is dropping), they start to panic. The fear of losing money makes them sell quickly, causing the price to fall even faster. This fear-driven selling creates great opportunities for short sellers to take advantage of those quick drops.
In short, while most people are scared of the falling market, smart traders know how to turn that fear into profit.
Final Words
This strategy isn’t rocket science—it’s all about patience and timing. By combining the Reversion Strategy, moving averages, and Bollinger Bands, you can spot shorting opportunities that others might miss. I’ve learned this through years of experience and countless questions from my students.
Remember, always manage your risk and don’t rush into trades without confirmation. Stay disciplined, and you’ll see the rewards!
Happy trading, and until next time!
