I used to be in your position, watching others easily navigate the market while I was messing around blindly.
Later, I realized that the key isn’t luck, but finding truly effective methods.
Today I want to share something that changed my trading: a strategy combining volume analysis and the RSI indicator.
First, let’s talk about volume.
Many people overlook it, but it’s really crucial.
There are two ways to interpret 24-hour volume.
One is USDT-denominated volume, which allows you to compare trading activity across different coins.
But I focus on the volume of the coin itself, like XRP or BTC, which helps you judge liquidity and predict the speed and direction of price movements.
Volume can tell you whether the market is entering or exiting; combined with candlestick charts, you can see if prices are rising, falling, or consolidating.
On the 4-hour chart, I usually look at a few scenarios.
When the market is dull, price and volume both decline simultaneously — a bearish signal.
But sometimes, prices fluctuate within a narrow range while volume shrinks; this isn’t a decline but consolidation.
I call this the “Tsunami Effect.”
For example, BTC touched 69K a few days ago, and the subsequent movement was like this.
Many thought a big drop was coming, but prices kept bouncing within a narrow range until volume started to pick up, and only then did the price truly move.
A sudden increase in volume can indicate two situations.
One is volume rising while price drops, signaling large-scale selling has begun.
The other is volume increasing along with rising prices, which suggests the trend will continue upward with few pullbacks.
Conversely, if prices are rising but volume is shrinking, that’s a dangerous sign, indicating the rally lacks support and may reverse.
I use RSI to confirm entry points.
An RSI above 70 indicates overbought conditions; below 30 indicates oversold; 50 is neutral.
The key is to watch for divergence between RSI and price.
This can greatly improve your trading success rate.
So how exactly do I operate?
First, pick a coin you’re interested in and check its 24-hour volume, making sure it’s not too low.
Then, apply the RSI indicator on the 4-hour chart, with a 14-period setting — the standard.
A buy signal looks like this:
When RSI drops below 30, keep an eye on it, but also confirm that volume is increasing, indicating buyers are entering.
Another scenario is RSI below 50, with price starting to reverse, and volume gradually increasing from lows or beginning to pick up in a narrow range — that’s also an opportunity.
A sell signal occurs when RSI breaks above 70, and you check if volume is starting to shrink.
Decreasing volume suggests buying momentum is waning and a reversal may happen.
Another sell signal is when you see price in a range or sideways movement, but volume suddenly surges while price starts to fall — this is a good time to quickly establish a short position for profit.
Risk management is very important.
Stop-loss should not exceed your expected profit.
You can use Coinglass’s leverage heatmap to see where liquidity might be.
Never enter a trade without a stop-loss; the market can reverse instantly.
Set profit targets in liquidity zones or at positions where double tops, channels, or previous price levels have formed.
Don’t leave your stop-loss at the entry price or fail to close positions before sleeping.
This strategy is suitable for swing traders, typically within 2 to 3 days.
Choose 3 to 5 coins for in-depth research, so you can truly master the coordination of volume and RSI.
Leverage should not exceed 10x.
Honestly, I still make mistakes and suffer losses.
But I never give up.
Fear can consume you, especially the fear of making mistakes or going against the trend.
Overcoming these requires inner work, continuous learning, and practice.
I hope this guide helps you.
Remember, successful trading comes from thoughtful strategy execution, not luck.
Always do your own research and practice before risking large amounts.
For deeper learning, you can read John Murphy’s “Technical Analysis of the Financial Markets.”
Wishing you smooth trading.
