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?
To make money in the cryptocurrency market, you need to use several different trading systems. A portfolio of trading systems rather than a single trading system will bring you stable returns. What trading systems should your trading portfolio include?
- Trend trading systems. These trading systems will help you determine the beginning of a new trend and enter the market. Besides, they will allow you to remain in the market as long as possible.
- Counter-trend trading systems. These trading systems will help you determine the end of a trend and enter the market against the current trend. In such trading systems, positions are short-lived, and a profit is rather small.
These are two large groups that include most trading strategies.
Let's take a closer look at trend trading strategies. Trend trading systems cannot provide you with long-term results. However, one or two strong market trends per year can offset all the previous losses and generate sufficient profits. Thus, there is a simple principle of trend trading systems:
Cut your losses and let your profits run.
The way of putting this principle into practice will be considered in the following articles.
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange.
Bitcoin continues to trade downwards. Therefore, it is possible to open short positions amid corrections. 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.
21.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 39410
24.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 37900
The POC has moved down, the price is above the maximum traded volume. The market is moving sideways. 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.
Apparently, the trend is reversing. The price is above the short-term EMA but below the medium-term and long-term EMAs. The trends do not coincide. Therefore, according to the trend analysis, it is possible to open both short and long positions today.
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 upwards, the candlestick is white. The high is above the high 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 buy orders.
5. Conclusion. Statistics.
Volume analysis - BUY SELL.
Long-term trend - SELL.
Medium-term trend - SELL.
Short-term trend - BUY.
Japanese candlestick analysis - BUY.
Conclusion: On May 25, 2021, you can open both long and short positions on bitcoin as 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. Gains for three months amounted to 10.4%, with a maximum drawdown of 4.88% Statement:
The short position on bitcoin was closed at a profit. I do not open new positions as the situation in the market is 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!
