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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?
Money management plays an important role in successful trading. In previous articles, we considered different methods of money management. Let's draw conclusions and put the theory into practice.
How to choose the best money management method? To do this, it is necessary to test the trading system using a standard lot. Your statistics should include at least 100 transactions over the last year. After that, you should calculate the yield curves of the trading system for different money management methods. Then choose the best method with the maximum reward-to-risk ratio.
What is the best conservative money management method? The fixed risk ratio method allows you to increase profits and quickly get out of drawdowns.
Is it possible to use aggressive money management methods? It is possible provided you have sufficient experience. Due to the increased risks, these methods should be only part of your trading systems portfolio with little capital to manage. Pyramiding can be considered the optimal aggressive money management technique.
Sound money management will help you increase profits with minimal risks.
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange.
Bitcoin continues to correct sideways. 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.
07.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 57975
10.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 57370
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 price is below the short-term and medium-term EMAs, but it is in line with the long-term EMA. The trends do not coincide, but a downward reversal is highly likely. Therefore, according to the trend analysis, it is possible to open both short and long 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 has closed downwards, the candlestick is black. The extreme points are beyond the extreme points of the previous candlestick. The candlestick pattern is engulfing, with long body and long shadows. According to the Japanese candlestick analysis, it is worth considering sell orders.
5. Conclusion. Statistics.
Volume analysis - SELL.
Long-term trend - BUY SELL.
Medium-term trend - SELL.
Short-term trend - SELL.
Japanese candlestick analysis - SELL.
Conclusion: On May 11, 2021, you can open both long and short positions on bitcoin 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. Gains for three months amounted to 11.1%, with a maximum drawdown of 4.88% Statement:
We do not open new positions as the situation in the market 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!
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
