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?
In order to make money on cryptocurrencies in a sustained manner, you need to control risks. Risk management distinguishes trading from investment. For example, in trading, you can limit the maximum loss to 10% of your capital. When investing in cryptocurrencies, this task is not easy. If you use the "Buy and hold" strategy, you should be ready for a 90% drawdown on your deposit. Risk management in trading allows you to avoid such situations.
How to properly create your own risk management system? Sound risk management can be developed on the basis of trade statistics. Therefore, if you do not have statistics on your trading system with the selected money management technique, it is too early to set up a risk management system. For effective statistics, you need to make at least 100 transactions a year. Test your history and protect yourself from challenges in real trading.
If you have tested your trading system using a demo account, you can monitor the trading account and see the risk statistics:
The figure shows statistics on risks of the trading account in which transactions are made based on forecasts. This historical data allows you to see the risk limits of your trading system and then reflect these figures in the risk management algorithm.
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.
11.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 55880
12.05.21 - The level of the maximum traded volume (POC - Point Of Control) - 56680
The POC has moved up, 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 all three EMAs. The trends are downward. 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 beyond the extreme points of the previous candlestick. The candlestick pattern is engulfing, its body and shadows are longer than the body and shadows of the previous candlestick. 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 13, 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 have opened a new short position on bitcoin.
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!
