Hey buddy, is making millions of dollars your goal in the cryptocurrency market? Well, if that it is your goal, it is a fabulous one. But,
Let me break your heart…
This kind of a goal won’t make you a successful trader. Yes, read that line again.
There are some more important goals you should set and achieve. Viz;
- Identifying trends
- Entering the market at the right time
- Trading System to help you avoid making losses
If you can achieve these goals, being a successful cryptocurrency trader won’t be an impossible task for you.
How do I achieve these goals?
Chill, I’m going to tell you how. But I want you to focus your attention on some vital topics.
Identifying Types of trends
Trends simply signify where the values of the coins are going, up or down or sideways. And the major types of trends you can find on your trading chart are;
- Uptrend: This is a trend that is moving up. When there is uptrend, the coins value increases
- Downtrend: When the price of any coin of your choice is coming down
- Choppy trend: This kind of trend is not going up nor coming down. When there is price consolidation
- Ranging Trend: Picture how letter W or M looks. That’s how a ranging trend is. You can easily see this using Bollinger Bands and Support and Resistance Levels.
Entering the market at the right
You can only do this when you already know the kind of trend you want to trade. Warning, don’t you dare trade Choppy trend and a Downtrend, be careful and watchful (but I will recommend you stay off till there is trend reversal).
I hope you haven’t forgotten that you need indicators to confirm your entry. If you have, revisit technical indicator lessons here.
The systems that will help you avoid unbearable losses are what I’m about to discuss next.
How to create your cryptocurrency trading strategies
I just want to let you know that good strategies will make you a lot of money, if you stick to them.
Strategy #1: Multiple Time Frame or Top-Down Analysis
In one of the lessons on how to trade cryptocurrency like a pro, we discussed Timeframe and Top-down analysis.
In creating your trading strategies, you first need to know the time frame that goes with your personality. Are you a 1hr person? 2hrs? 4hrs? Even 10minutes? Decide that and stick to it. Top-down analysis is simply doing your analysis from Bigger to smaller time frames.
If you are not a patient (which you must be) trader, you will incur some losses. But don’t forget, the smaller the time, the more noise in the market and the quicker you lose or leave money on the table.
Strategy #2: Identify the market trend
Like I said earlier, the types of trends in the market are; Uptrend, downtrend, ranging and choppy trend. When you identify them on your trading chart you will know where the market is going. To validate your trend, make use of trendline.
In an uptrend, enter at the pullback. In a downtrend, the best thing you can as a newbie is stay off and wait till the market starts uptrending or reverses.
And, don’t forget to make use of your indicators.
Strategy #3: Confirm the trend
In confirming the trend, make use of your indicators (EMA, RSI, MACD etc) and do so on different time frames.
When the trend is confirmed, you can go ahead to either enter the market or wait or check on other coins.
Strategy #4: Know your entry and exit points
The strategies above, if follow properly will finalize your decision making, whether to enter or stay off the market.
TIP: Before you enter any market, know when you will exit (very important). Your resistance and support levels will give you an idea.
Calculate your profit, set your stop-loss order, set price alerts and keep monitoring the market. For you to properly calculate your profit, know the resistance and support levels and what RSI is saying. Once see your RSI going to 70, 80+ PREPARE TO EXIT!
WARNING: If in a bigger time frame, you see that the RSI is 70, 80, 90+, be careful with such market.
Strategy #5: Calculate your risk
How much can you afford to lose in a single trade or in 24hrs? 1%? 2%? Calculate it and make the point your stop-limit sell order (but make sure you avoid false breakout).
Never, I repeat never must you rely on hope and your emotion. ALWAYS USE YOUR STOP-LIMIT ORDER!
Can you do me a favour?
Yeah, it is not something big. MAKE SURE YOU FOLLOW THESE STRATEGIES.
Wrapping up create your cryptocurrency trading strategies
Guys, I have, in the simplest way I could, revealed to you how to create your own cryptocurrency trading strategies. Stick with your time frame, be patient, identify trends and confirm them before you ever decide to enter the market and make regular use of your technical indicators.
Before you go, make Support and resistance levels your friend.
Do you find anything confusing? Kindly drop your question in the comment section and don’t forget to share.