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?
When the cryptocurrency market rallies as it currently does, long-term trading strategies can be the most profitable. That is why traders should definitely have them at hand. Here are the advantages of long-term strategies:
- Little time. When using a strategy on the daily chart, trading can take several minutes a day in the morning, and a trader can be free for the rest of the day. Meanwhile, those who trade on the weekly chart can trade several minutes a week. Such a trading approach can be used even when a trader has a busy schedule.
- Portfolio of trading strategies. Since trading with the help of a strategy takes several minutes, you can implement several of them at once. Having a portfolio of trading strategies, you will be able to yield stable profits because losses from one trading strategy will be offset by profits from the other one.
- Portfolio of trading instruments. Using a long-term strategy, you can trade several trading instruments at once and thus create a portfolio that is diversified not only by trading strategies, but also by instruments. With this approach, there will be more trading signals. Thus, if there is no trend on one instrument, there may be a trend on another one.
Still, long-term trading strategies have their disadvantages:
- Large deposit. In order to trade in the daily time frame, you need to place a stop loss behind the daily extreme points. This can be a large distance in pips. To adhere to the 1% risk rule, you should have a large enough deposit.
- Few deals. The higher is the time frame, the fewer are the trades. That is why you must to be patient, as trade statistics is collected slowly.
- Long drawdowns. If the market is flat for several months, long-term trading strategies may not give results. You must be prepared for such an outcome and keep trading calmly. It takes at least a year to assess the trading strategy efficiency.
A trader should have different trading strategies at hand. Having long-term trading strategies is very important. Moreover, they can be combined with short-term strategies. On top of that, they can be suitable for novice traders, as long-term trading strategies are not time-consuming.
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Bitcoin does not stop to hit new record highs. It has already surpassed the $64K mark. The world's flagship cryptocurrency may well go higher. Let us consider the levels of the highest traded volume from the Chicago Mercantile Exchange (CME). These levels indicate the bullish market.
12.04.21 – the level of the highest traded volume (POC – PointOfControl) – 60,315
13.04.21 – the level of the highest traded volume (POC – PointOfControl) – 63,745
The POC has moved up. The price is above yesterday's level of the highest traded volume. The price and the POC move in one direction. The upward trend is likely. According to volume analysis, you can buy bitcoin 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 market is in a strong upward trend. The price is above all three EMAs. Meanwhile, all three trends are in line. So, based on trend analysis, you can enter long positions today.
4. Japanese candlestick analysis
Japanese candlestick analysis is the third step of this trading strategy. Let us analyze yesterday's daily candlestick:
Yesterday's white candlestick closed upward. Its highs are above the highs of the previous day. It is the Trend candlestick pattern with a long body and short shadows. According to Japanese candlestick analysis, you should consider entering long positions.
5. Conclusion. Statistics
Volume analysis – BUYLong-term trend – BUYMedium-term trend – BUYShort-term trend – BUYJapanese candlestick analysis – BUYConclusion: You can buy bitcoin in a short term on April 14, 2021, since different analysis 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. Statement:
I still keep my long position in bitcoin.
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!