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?
In order to make money on cryptocurrencies, you should develop an effective money management strategy. To begin with, let us consider conservative money management strategies:
- Standard lot. Novice traders should start managing their capital with the standard lot method. In this case, a trader constantly trades the same lot size, often the minimum one. The lot size can be increased only if a trader makes a big-enough deposit. Then again, trading is carried out with a standard lot.
What are the advantages of this money management strategy? It helps beginners gain experience in the market by trading real money with limited risks. Also, it helps traders test their trading strategies. A good trading strategy is the one profitable in pips. If a strategy is not profitable when trading a standard lot or it brings near-zero profits, then it needs to be revised. Using other more sophisticated money management techniques will not improve a bad trading strategy. Aggressive methods such as martingale or averaging can only give a temporary semblance of profit. At the same time, risks can significantly increase.
How long can you trade with a standard lot for? - Until you gain confidence in your trading strategy. The strategy should produce good statistics. Meanwhile, statistics should reflect at least 100 transactions and several months of trading. Only then can you move on to more complex money management methods and increase the lot.
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Bitcoin has stopped falling. Bears have recently been trying to push the price down, but bulls remain strong. Let us consider the levels of the highest traded volume from the Chicago Mercantile Exchange (CME). These levels indicate bullish activity.
19.04.21 – the level of the highest traded volume (POC – PointOfControl) – 56,515
20.04.21 – the level of the highest traded volume (POC – PointOfControl) – 56,120
The POC has moved down. The price is below yesterday's level of the highest traded volume. The market is in the downward trend. Based on volume analysis, you can sell 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 EMAs are intertwined. The trend reverses. The price is in line with EMA 48 and EMA 1152, which indicates that the market is a flat. The long-term trend, the mid-term trend, and the short-term trend are not in line. Therefore, you can enter long and short positions today based on trend analysis.
4. Japanese candlestick analysis
Japanese candlestick analysis is the third step of this trading strategy. Let us analyse yesterday's daily candlestick:
The white daily candlestick closed upward. Its low is below the low of the previous candlestick. It is a Hammer candlestick pattern, headed up. According to Japanese candlestick analysis, you should consider entering long positions.
5. Conclusion. Statistics
Volume analysis – SELLLong-term trend – BUY/SELLMedium-term trend – SELLShort-term trend – BUY/SELLJapanese candlestick analysis – BUYConclusion: You can buy and sell bitcoin in a short term on April 21, 2021, since various analyses provide different 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 do not open new trades because of a flat in the market.
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!