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?
If you want to make money on cryptocurrencies, you should refrain from using aggressive trading approaches, especially if you are a beginner. The best thing to do would be to apply a traditional method. Let us take a look at aggressive money management approaches that should only be used by experienced traders.
Locking is an aggressive money management strategy. According to this approach, a trader does not close a losing trade but opens a new one in the opposite direction. Thus, the position is locked, and a buy and a sell trade are open at the same time. A lock is several positions open for one instrument in different directions.
On the chart above, there is an example of how a lock is used. We open a long position, hoping that the bull trend extends, but do not place a Stop Loss. When the trend reverses, we open a short position, thus minimizing losses.
Any lock, if held for a long time, will be cancelled by a commission. If a position is held overnight, a commission will be charged, which means that losses will expand, albeit at a much slower rate. That is why there is no need to hold locks for a long time.
Thus, locking is an aggressive and complex money management strategy. It should only be used by professional traders.
2. Volume analysis of BTC from the Chicago Mercantile Exchange (CME)
Bitcoin is still moving sideways. Let us consider the levels of the highest traded volume from the Chicago Mercantile Exchange (CME). These levels indicate bull activity.
04.05.21 – the level of the highest traded volume (POC – PointOfControl) – 55,730
05.05.21 – the level of the highest traded volume (POC – PointOfControl) – 57,315
The POC has moved up. The price is below 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.
EMAs start heading up, indicating the possibility of the upward trend. That is why you should enter long positions 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 white daily candlestick has closed upward. Extreme points are outside the previous candlestick. It is the Absorption candlestick pattern. Yesterday's candlestick is bigger that the prevoius day's one. Based on Japanese candlestick analysis, you should consider entering long positions today.
5. Conclusion. Statistics
- Volume analysis – BUY/SELL
- Long-term trend – BUY
- Medium-term trend – BUY
- Short-term trend – BUY
- Japanese candlestick analysis – BUY
Conclusion: You can both buy and sell BTC on May 6, 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. 3-months gains: 12.1%. 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 you will generate profits!
