1. How to make money on cryptocurrencies?
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME).
3. Trend analysis
4. Japanese candlestick analysis
5. Conclusion. Statistics
1. How to make money on cryptocurrencies?
Risk management will help you preserve capital and make money on cryptocurrencies. As soon as you finish testing your trading strategy, you should write a reliable risk management algorithm.
What risks should be described in risk management?
- Risk per trade. This risk regulates the acceptable amount of losses per trade. If you use averaging and open several trades at once, then you need to identify risks for a series of trades. This risk should be small. In general, you need to start trading with the smallest possible lot, and then gradually raise the risk per trade. Then, you can set a 0.25% risk per trade. When you start yielding stable profits, you can increase the risk per trade once a quarter. The highest possible risk per trade (or a series of trades) is 1% of the deposit.
Why is it important to raise risks slowly and avoid exceeding the 1% risk per trade? Markets have distinct phases. Thus, if you generate profits for a month and immediately raise the lot, the next month can bring tremendous losses. The market was in a trend and you made money. Next time, the market can be in a flat. Accordingly, you can incur losses. One more key factor is psychology. You should feel comfortable when trading. That is why the risk should be small. If after a losing trade you get nervous and have a desire to review your trading strategy, then the risk is too high and you need to reduce it. Therefore, if you want to trade comfortably and without fears, you should find your own risk per trade.
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Bitcoin marker is in the downward trend. Let us consider the levels of the highest traded volume from the Chicago Mercantile Exchange (CME). These levels indicate bullish activity.
12.05.21 – the level of the highest traded volume (POC – PointOfControl) – 56,680
13.05.21 – the level of the highest traded volume (POC – PointOfControl) – 50,040
The POC has moved down. The price is below the level of the highest traded volume. The market is in the downward trend. You can sell the instrument today.
3. Trend analysis
Our second step is to check the short-term, the mid-term, and the long-term trends. You can enter positions when all three trends are in line. In this forecast, the trend is analyzed with the help of an exponential moving average:
Long-term trend – a blue EMA 1152 on the H1 chart, which is an alternative to EMA 48 on the D1 chart;
Mid-term trend – a red EMA 288 on the H1 chart, which is an alternative to EMA 48 on the H4 chart;
Short-term trend – a black EMA 48 on the H1 chart.
The price is below three EMAs. Based on trend analysis, you can enter short positions today.
4. Japanese candlestick analysis
Japanese candlestick analysis is the third step of this trading strategy. Let us analyze yesterday's daily candlestick:
The black daily candlestick has closed down. Its low is below the low of the previous candlestick. The candlestick pattern has a long body and a long lower shadow. According to Japanese candlestick analysis, you should consider entering short positions today.
5. Conclusion. Statistics
- Volume analysis – SELL
- Long-term trend – SELL
- Medium-term trend – SELL
- Short-term trend – SELL
- Japanese candlestick analysis – SELL
Conclusion: You can sell bitcoin on May 14, 2021, since different analyses provide similar forecasts.
Only statistics can reveal how efficient a trading strategy is. In this forecast, trades are carried out in a separate account. Trades are conducted in four instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. 3-months gains: 9.1%. Drawdown: 4.88%. Statement:
I keep my short positions in BTC open.
The risk per trade is no more than 1%. A Stop Loss is placed beyond the high/low of the day, depending on the direction of the trade. A Take Profit is not set. A Stop Loss is moved beyond the extreme points of the upcoming sessions.
Since trading is carried out on daily charts, this recommendation is relevant throughout the day.
Trade with the trend and you will generate profits!
