After seeing the huge rise in the BTC and after watching institutions getting involved in crypto many people started to invest and trade cryptocurrencies. Many of them might even be made big profits during this uptrend and most of them don't even know why & how that particular coin reached the All-Time High (ATH). Trust me market looks great when everything is green but it is very scary and stressful to see the market in a downtrend. So if you are a newbie and want to stay competitive in the market for a long time you need to understand the basic analysis and see when and why the uptrend can result in the scary downtrend, once you get familiarised with those technicals then you can balance your risk-reward ratio and even make profit in a downtrend. So in this article, we will see one of the fundamental indicator and a strategy.
So let's dive in!!
So this is the name of the strategy, you can guess what indicator we are going to use here, yes its momentum indicators (MACD, RSI)
Moving Average Convergence/Divergence Oscillator (MACD) is one of the fundamental indicators in trading and is one of the most used indicators by active traders. Another advantage of this indicator is that it is easy to use and understand that's why it fits best to start your journey of technical analysis.
As I already told you MACD is a very powerful indicator & it can be used in various trading strategies. Here, we will use the easiest one, the MACD signal line crossover. We will use the indicator to spot the perfect entry and exit for our trade, so in that way, we can maximise our profits and minimise losses in any situation.
First spot the coin which is in an uptrend
Enter in trade or buy that coin when the MACD line cross above the MACD signal line
Exit trade or sell that coin when the MACD line cross below the MACD signal line.
Yes, that's the strategy!! Sounds easy, isn't it?
Things to Consider
1) Set at least a one-day timeframe, as most of the trading strategies and indicators work best at a longer timeframe.
2) Set the proper trading environment with timeframe and indicators on the chart. Make sure you use the listed indicators, not any customised indicators.
3) Try this strategy in the demo before getting involved with real money to get an understanding of its risk-reward ratio and profitability.
Strategy on Real Chart
Now you after discussing the important points and the strategy itself, let's see how it works on the real historic chart.
Here is the historic chart of ADA (Cardano) with indicators.
Let's discuss what things to look at before and how to execute the strategy.
Now, first of all, we will check the timeframe of the chart and after confirming its one day chart we will confirm the indicators and understand various lines on that. We can confirm that the ADA is in an uptrend just by looking at the chart. So in this step, we confirmed all of the pre-required things to move further in the strategy.
Now, look at the bottom part where you can see the Moving Average Convergence/Divergence Oscillator (MACD) indicator where you can see the labelled lines as the MACD line and MACD signal line. From there you can see when the MACD line cross above the MACD signal line you get the buying signal and when the MACD line cross below the MACD signal line you will see the selling signal. In this way, you can execute this strategy and make a profit from the market.
Where Can I Use This Strategy?
Spot Market: If you are comfortable with the traditional buying and selling way of trading then you can use this strategy in the spot market.
Margin Market: If you are looking to maximise your profits and take a little more risk then you can also use this strategy in Margin Market.
Futures Market: This strategy can also be used in the futures so that you can earn more on your leveraged positions.
Note: If you are a newbie and not very confident in trading yet & don't want o use your capital then I'll suggest you try the demo version or use free money to trade.
So this is it, for now, hope you guys liked this article and found it informative. Don't forget to send your feedback through comments.