1.How to make money on cryptocurrencies?
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange
3. Trend analysis.
4. Japanese candlestick analysis.
5. Conclusion. Statistics.
1.How to make money on cryptocurrencies?
In order to make money on cryptocurrencies, you need to trade systematically and not to hurry. You need to use conservative money management methods. However, traders often want to get quick gains and resort to aggressive money management techniques. One of such methods is martingale.
Martingale is an aggressive money management method that involves an increase in a position size following a losing trade. The conservative approach implies that the position size may be increased by 10-20%. Under the aggressive approach, a trader may double the position size in order to recoup all the previous losses. After making a profit, the trade size may be reduced to the initial reading. This method can provide you with long-term gains. However, there is the high probability of losing the entire deposit in case of a protracted series of unprofitable trades. To avoid this, you need to test this strategy. If a long-term period of tests shows positive results, you can try to apply this technique with a small trade size. Using the martingale trading strategy, the yield curve can be as follows:
The figure shows downward spikes indicating that a trader suffered several losses in a row but then recouped them with one profitable trade. This is a characteristic feature of martingale trading systems.
The martingale system can be only part of a portfolio composed of several trading systems. The trade size should be small, since this is an aggressive approach and you can suffer huge losses.
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange.
Bitcoin is correcting sideways. This may be a sign of subsequent strong momentum. Let's consider the levels of the maximum traded volumes based on the Chicago Mercantile Exchange. These indicators show the activity of major market players.
28.04.21 - The level of the maximum traded volume (POC - Point Of Control) - 54410
29.04.21 - The level of the maximum traded volume (POC - Point Of Control) - 54410
The POC has moved down, the price is above the maximum traded volume. The market is moving in a sideways trend. In such a situation, according to the volume analysis, you can open both short and long positions.
3. Trend analysis.
The second step in this analysis is to determine the short-, medium-, and long-term trend. It is worth opening trades when the direction of all three trends coincides. Trend analysis is carried out with the help of an exponential moving average:
EMA 1152 (blue) shows the long-term trend on the H1 chart, which is similar to EMA 48 on the D chart;
EMA 288 (red) shows the medium-term trend on the H1 chart, which is similar to EMA 48 on the H4 chart;
EMA 48 (black) shows the short-term trend on the H1 chart.
The price is above the short-term EMA and in line with the medium-term EMA, but it is below the long-term EMA. The trends do not coincide. According to the trend analysis, it is possible to open both short and long positions.
4. Japanese candlestick analysis.
Market analysis with the help of Japanese candlesticks is the third step in this trading system. Let's analyze yesterday's daily candlestick:
The candlestick has closed downwards, the candlestick is black. The low is below the low of the previous candlestick. The candlestick pattern matches the trend, it has a long body and small shadows. According to the Japanese candlestick analysis, it is worth considering sell orders.
5. Conclusion. Statistics.
Volume analysis - BUY SELL.
Long-term trend - SELL.
Medium-term trend - BUY SELL.
Short-term trend - BUY.
Japanese candlestick analysis - SELL.
Conclusion: On April 30, 2021, you can open both long and short positions on bitcoin as the different types of analysis provide different forecasts.
To analyze the effectiveness of this trading approach, you should use statistics. Based on these forecasts, we track the data on completed transactions and open new deals in a separate account. Transactions are made on four instruments: Bitcoin, Ethereum, Litecoin, and BCHUSD. They are analyzed in the same way. Statement:
We do not open new positions as the market situation is rather uncertain.
The risk is not more than 1% per trade, this approach is conservative. According to this system, a stop-loss order is placed beyond the daily low or high, depending on the direction of the trade. We do not set take-profit orders, enabling the price to grow without limits. We follow the trade, moving SL beyond the extreme points of the future sessions.
Since trading is carried out on the daily charts, this recommendation remains relevant throughout the day.
Trade along the trend and you will make a profit!
