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?
The first step is to create your own portfolio of trading systems. In addition to various trading systems, it is important to think about competent money management. Novice traders often underestimate the importance of this issue. At the beginning of their path, traders are focused on the trading system which helps them determine when to buy and sell. As a result, money management Is wrongly overshadowed. However, the prudent trading approach consists three areas of competence:
- trading system,
- money management,
- risk management.
Money management is responsible for choosing a trade size for each new position. This means that the main task of money management is to choose a trading lot. A lot size should be selected in such a way as to maximize profits with minimal risks.
When choosing money management for your trading system, it is important to consider the serial nature of financial markets. A trader can get a series of winning trades, and then a series of losing ones. A lot size should be selected in such a way as to avoid a too large drawdown of the deposit during a series of unprofitable trades.
How to choose a money management strategy for your trading system?
This choice should not be random. It is possible to properly choose a money management strategy only on the basis of:
- testing,
- statistics.
When data on trades is collected, it is possible to simulate trading with different money management techniques and only then choose the most profitable method with small drawdowns.
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange.
There are signs of a reversal in the market. Perhaps we will see a downward movement similar to the previous upward one. Therefore, it is important to trade carefully, using clear stop-loss orders, since there can be false movements in different directions. 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.
16.04.21 - The level of the maximum traded volume (POC - Point Of Control) - 60780
19.04.21 - The level of the maximum traded volume (POC - Point Of Control) - 56515
The POC has moved down, the price is below the maximum traded volume. The market is moving in a downward trend. In such a situation, according to the volume analysis, you can open short 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 long-term trend line that has been in the market since October 2020 seems to be breaking down. The price dropped below the short-term, medium-term, and long-term EMAs. The short-term, medium-term, and long-term trends coincide. Therefore, according to the trend analysis, it is possible to open short 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 closed at the opening level. The extreme points are within the extreme points of the previous candlestick. The candlestick pattern is Doji, with long shadows and no body. According to the Japanese candlestick analysis, you can consider both buy and sell orders.
5. Conclusion. Statistics.
Volume analysis - SELL. Long-term trend - SELL. Medium-term trend - SELL. Short-term trend - SELL. Japanese candlestick analysis - BUY SELL.Conclusion: On April 20, 2021, you can open both long and short positions on bitcoin in the short term 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. Statement:
We do not open new positions as the market situation 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!