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?
The cryptocurrency market is a trend market. Therefore, a strategy of trend trading can be adopted. Since the trend lasts less time than flat in the market, trend trading strategies can often bring losses. The main thing is to strive to keep one-time losses small. Therefore, risk management is important when using such strategies. How can you minimize losses when employing trend trading strategies:
- Stop loss in pips. You can use a Stop Loss equal to a certain number of pips away from the entry price. The order can be tied to daily volatility and determined with the help of the ATR indicator or in another way.
- Stop Loss at a specific point on the chart. A Stop Loss can be set at specific levels on the chart that are considered key. For example, these can be the extreme points of a daily candlestick. A Stop loss located there is triggered rarely, only when the trend changes.
- Stop Loss in US dollars. This approach can be especially effective when averaging, when a series of trades is opened. If losses reach the specified value, then all trades close simultaneously. A Stop Loss in dollars should be small, about 1% of the deposit. This will allow you to continue trading even in case of prolonged drawdowns.
When using trend trading strategies, it is important to follow the principle: Cut your losses fast and short!
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Bitcoin's bear run has stopped. The bullis trend may resume. Let us consider the levels of the highest traded volume from the Chicago Mercantile Exchange (CME). These levels indicate bull activity.
24.05.21 – the level of the highest traded volume (POC – PointOfControl) – 37,900
25.05.21 – the level of the highest traded volume (POC – PointOfControl) – 37,900
The level of the highest traded volume has not changed. The price is above the POC. The market is in the sideways trend. Both long and short positions can be considered based on volume analysis.
3. Trend analysis
Our second step is to check the short-term, the mid-term, and the long-term trends. You can enter the market when all three trends are in line. In this forecast, trends are 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.
It seems that the trend is reversing. The price is above the short-term EMA but below the mid-term and the long-term EMAs. The trends are not in line. Today, you can buy and sell the pair according to trend analysis.
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 downward. Its high is above the high of the previous candlestick. It is the Doji candlestick pattern with a small body and short shadows. The high of the candlestick has already been broken. Based on Japanese candlestick analysis, you should consider entering long and short positions today.
5. Conclusion. Statistics
- Volume analysis – BUY/SELL
- Long-term trend – SELL
- Medium-term trend – SELL
- Short-term trend – BUY
- Japanese candlestick analysis – BUY/SELL
Conclusion: You can both buy and sell BTC on May 26, since various types of analysis provide different forecasts.
Only statistics can reveal how efficient a trading strategy is. In this forecast, trades are carried out in a separate account and conducted in four instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD. Gains for 3 months: 10.4%. Drawdown: 4.88%. Statement:
I do not open new trades due to market uncertainty.
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 generate profits!
