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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?
Risk management will help you make money in the cryptocurrency market even amid major corrections. Let's continue to consider the main risks that should be described in the risk management algorithm.
Monthly risk. This risk determines the amount of losses that can be suffered over one month, for example, no more than 20% of the deposit. Why is this necessary? The trading system can face a global trend reversal or a change in the global economic cycle. Imagine that prior to that, the market had been bullish for quite a while. Prices were growing, market sentiment was optimistic, and the trading system was profitable. However, then the market fell into a protracted bearish phase. Prices began to decline, fundamental factors became negative, and the trading system started to bring losses. This market condition can last for months or years. In order not to suffer huge losses, you need to stop trading at the beginning of such changes. If the maximum monthly risk is reached, it is worth stopping trading and analyzing the situation. Besides, you should analyze trade statistics, fundamental news, and macroeconomic indicators, as well as try to understand the causes of this phenomenon. If the market dynamics have not changed, you can resume trading in a month. If there have been dramatic changes in the market, it is better to refrain from trading using this system. Therefore, a trader should have a portfolio of trading systems. In this case, such a situation will not have a severe impact on your trades.
2. Analysis of Bitcoin futures volume on Chicago Mercantile Exchange.
Apparently, the market has entered a downward correction. 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.
17.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 43025
18.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 43335
The POC has moved up, the price is below the two levels of the maximum traded volume. The market is moving downwards. 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 remains below all three EMAs. All the 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 has closed downwards, the candlestick is black. The extreme points are within the extreme points of the previous candlestick. The candlestick pattern is uncertain, with a small body and small shadows. According to the Japanese candlestick analysis, it is worth considering sell orders.
5. Conclusion. Statistics.
Volume analysis - SELL.
Long-term trend - SELL.
Medium-term trend - SELL.
Short-term trend - SELL.
Japanese candlestick analysis - SELL.
Conclusion: On May 19, 2021, you can open short positions on bitcoin as different types of analysis provide the same 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 9.1%, with a maximum drawdown of 4.88% Statement:
We continue to keep the short position on bitcoin open. The stop-loss order has been moved beyond the extreme point of the previous day. Part of the profit has already been locked in.
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!
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