- How to make money on cryptocurrencies?
- Analysis of volumes for Bitcoin futures from the Chicago Mercantile Exchange (CME).
- Analysis of the trend.
- Japanese candlestick analysis.
- Conclusions. Statistics.
1. How to make money on cryptocurrencies?
If you want to make money on the crypto market, control the risks. To make enough money, you need to manage a lot of capital. How can a trader get a lot of capital for management? Attract investors. Any investor is first interested in risks and only then in profit. Learn to properly manage risks - and you will be able to manage large investment capital. What other risks, besides the risk per trade and per day, should be specified in risk management?
Risk for the week. This risk regulates the maximum drawdown that can be achieved within one week. Why such a restrictive parameter in risk management might be needed? Sometimes the market goes out of its stable state. This may be due to some force majeure events in the world - a pandemic, war, revolution, etc. Changes in economic cycles can also occur, for example, crises in the global economy. As a result of such events, market volatility can increase significantly. And if the previous average volatility was, for example, 100, and now it is 200, then trading systems built with a volatility of 100 will begin to bring losses. Such increased volatility in the markets may last for several weeks in a row. Therefore, if the market has changed and the trading system has brought losses in a few days, for example, 10%, then it is better to stop trading. A weekly risk of 10% will protect your deposit during turbulence in the market. After stopping trading in a calm environment, you can conduct an analysis. Have any mistakes been made, has the volatility increased, or have there been any special events in the market? If the market is in a stable state, then you can resume trading next week. If the market continues to "storm", it is better to wait.
Risk for the week will protect your deposit during crisis periods in the market!
2. Analysis of volumes for Bitcoin futures from the Chicago Mercantile Exchange (CME).
It is possible that a full-fledged downward correction has begun on the market. Consider the levels of maximum horizontal volumes from the Chicago Mercantile Exchange. These volumes show the activity of major players.
05/14/21 - Maximum horizontal volume level (POC - Point Of Control) - 49230
05/17/21 - Maximum horizontal volume level (POC - Point Of Control) - 43025
POC moved down, the price is above the maximum volume level. There is a sideways movement in the market. In such a situation, you can buy and sell in terms of volume analysis.
3. Analysis of the trend.
The second step in the analysis is to check the short-term, medium-term, and long-term trend. It is worth making deals when the direction of all three trends coincides. To analyze the trend in these forecasts, an exponential moving average is used:
- Long-term trend - EMA 1152 (blue) on the H1 timeframe, which is an analogue of EMA 48 on the D timeframe;
- Medium-term trend - EMA 288 (red) on the H1 timeframe, which is an analogue of EMA 48 on the H4 timeframe;
- Short-term trend - EMA 48 (black) on the H1 timeframe.
The price continues to be below all three EMAs, but is already very close to the EMA 48, the market may be preparing for a sideways move. Today, from the point of view of trend analysis, it is possible to sell.
4. Japanese candlestick analysis.
Market analysis using Japanese candlestick analysis is the third step in this trading system. Let's analyze yesterday's daily candlestick:
The daily candlestick closed upwards, the candlestick is white. The low is below the low of the previous candle. Doji candlestick configuration, small body, large shadows. You can buy and sell in terms of candlestick analysis.
5. Conclusions. Statistics.
- Volume analysis - BUY SELL.
- Long-term trend - SELL.
- Medium-term trend - SELL.
- Short-term trend - SELL.
- Japanese candlestick analysis - BUY SELL.
General conclusion: On May 18, 2021, you can buy and sell bitcoin, since different types of analysis give different forecasts.
Only statistics can show the effectiveness of any trading approach. According to these forecasts, transactions are made on a separate account and open statistics of these transactions are provided. Transactions are made in four instruments: Bitcoin, Ethereum, Litecoin, and BCH/USD - which are analyzed in the same way. The yield is 9.1% for 3 months with a maximum drawdown of 4.88%. Statement:
We continue to hold the deal to sell bitcoin, the stop loss has been moved beyond the extreme of yesterday, and part of the profit has already been fixed.
The risk per trade is not more than 1%, this approach is conservative. Stop loss for this system is set behind the low or high of the day, depending on the direction of the deal. Profit is given the opportunity to grow without restrictions, since I do not set take profit. I accompany the trade by moving the stop loss 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 gain profits!
