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?
Which aggressive money management approach is the safest one?
Pyramiding is an aggressive money management approach that involves adding to profitable positions to take advantage of an instrument that is performing well. This method is based on the concept of sequence. In trading, a series of profitable trades follows a series of losing trades. Thus, if you have 4 series of profitable or losing trades in a row, you can increase the lot 2 times.
For example, you open a trade with a 0.5% risk of the deposit. If it is a profitable deal, you can increase the risk up to 1% when opening the next deal. If it is a losing position, you keep the risk at the level of 0.5%. If your second deal is a profitable one, the risk can be raised up to 2%. Next time, whatever the outcome, you reduce the risk to the initial 0.5% of the deposit.
Pyramiding allows you to increase your profit several times over a year. At the same time, risks remain under control. But in order to use pyramiding, you should be an experienced trader and be sure to backtest your trading strategy at least for one year.
Thus, pyramiding is the safest aggressive money management approach, but it requires experience in trading and backtesting of your strategy.
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.
05.05.21 – the level of the highest traded volume (POC – PointOfControl) – 57,480
06.05.21 – the level of the highest traded volume (POC – PointOfControl) – 56,995
The POC has moved down. The price is below the POC. The market is in the downward trend. Sell 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 are again intertwined with the price in the middle, indicating sideways movement. That is why you should enter both long and short 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 black daily candlestick closed downward. Its high is above the hing of the previous candlestick. It is the Hammer candlestick pattern with a short body and a large upper shadow. Based on Japanese candlestick analysis, you should consider entering sell positions today.
5. Conclusion. Statistics
- Volume analysis – SELL
- Long-term trend – BUY
- Medium-term trend – BUY/SELL
- Short-term trend – SELL
- Japanese candlestick analysis – SELL
Conclusion: You can both buy and sell BTC on May 7, 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!
