How to Ride the Trend in Cryptocurrency Trading
Trend trading strategy has always been a profitable business in the world. Thousands of trading strategies have been developed but the elite traders always prefer to take the trades with the key trend. They know very well that trend is by far the most stable tool that allows the traders to make a consistent profit. Sadly, novice traders don’t have the strong knowledge to take the trades with the key trends.
Some of you might be thinking that you can use the EAs and find the perfect trend in the bitcoins, dash, or any other popular cryptocurrencies. But this is not going to work since you need to check the trend direction manually. In this article, we are going to give you some amazing guidelines that will allow you to trade with the existing trend of the market.
Analyze the fundamental factors
Before you analyze the existing trend in bitcoins by using the technical tools, we suggest using the fundamental data. Read some news on the crypto trading industry and get a general idea about the existing trend. Once you have the basic knowledge about the cryptocurrency trend, you may move to the technical data. Use the daily time frame to analyze the potential direction of the trend. Though daily time frame trading is extremely boring, it is by far the most efficient way of finding the perfect trend.
Use the retracement tool
To find the perfect point to execute the trade, you may use the Fibonacci retracement tools. Since most of the cryptocurrencies are in a strong uptrend, you may draw the bullish retracement levels from key swing low to high. But remember, if you do the data analysis with the low-end platform, you might not get the actual reading. Crypto trading requires access to professional trading platforms like SaxoTrader. So, select your broker very carefully as it will define your performance factor.
Learn the candlestick pattern
Blindly taking the trades at the important support and resistance level is going to be an immature act. To survive in the retail trading industry, you should learn to trade with candlestick patterns. The use of candlestick patterns is often known as a price action trading strategy. Unless you study the candlestick pattern in the demo account, you will never able to trade with confidence. At the initial stage, use the bullish and bearish pin bar in the trade execution process. And try to take the trades in favor of the existing trend.
Use the simple moving average
To trade the cryptocurrency with the existing trend, you may use the 100 or 200 periods SMA. The slope of the moving average should give you the direction of the major trend. For instance, if the slope is up, you should be looking for the long trade signals only in the volatile market. On the contrary, when the slope is down, you should be looking for the sell signal. If possible look for the crossover in the 100 and 200 period SMA. When the 100 moving average will cross below the 200 MA, you may consider a new bearish trend is established in the market. Similarly, when the 100 SMA crosses above the 200 SMA, expect a strong bullish rally.
Look for the chart pattern
Chart pattern trading strategy is very effective when it comes to cryptocurrency trading. By using the chart pattern, you can even trade the key reversal in the market. But to be on the safe side, we suggest the trader's trade with the existing trend only. While looking for the major chart pattern, use the daily or the weekly time frame only. But do not think you will never lose money just because you are trading key chart patterns and executing the trades in favor of the trend. No one can predict the direction of the market with 100% accuracy. So, always trade with managed risk as it will protect the capital.