Simple Techniques to Trade Cryptocurrency

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The contest article by Triyono

The popularity of cryptocurrencies has grown rapidly in the recent time. Its booming started when the price for Bitcoin rose up to US$1,000 per BTC. Investors started to use this type of cryptocurrency as an investment instrument alongside with litecoin, namecoin, and peercoin that were in demand as well.

Many forex brokers see potential in cryptocurrencies as there are a number of advantages associated with the e-currency trading:

1. The trading is available 24 hours/7 days a week, so you can make transactions even at weekends;

2. Minimal commissions and low spreads;

3. Available for demo accounts;

4. Could be done anywhere.

And I am sure that any e-currency trader can point out to some other strong characteristics of transacting in Crypto accounts that he or she encountered in their Forex trading activity.

I would like to share a simple strategy in cryptocurrency trading. Many traders know that the candlestick chart is very useful and easy-to-use. Here, I analyze BTCUSD and LTCUSD.

The following chart of BTCUSD dates back to June 4, 2014.

Simple Techniques to Trade Cryptocurrency

From the chart above we see that the Bid price for 1 BTC is US$658,310 and the Ask price is US$658,709. Some brokers, including FXOpen, provide the leverage of 1:1, 1:2, and 1:3 to facilitate traders’ transactions. If you have a limited capital, you are offered to use the leverage of 1:3.

We can start with analyzing the H1/Hourly timeframe. June 1, 2014, the highest price reached 667.530, then came the second high (June 3, 2014) of 667.000. Then, on June 4, 2014, the price went down to

Simple Techniques to Trade Cryptocurrency

The overall market trend is bullish; we can make entry with the Buy order targeting at highs of 667.000 or 667.530.

What about Stop Loss? We simply place it in a safe area, i.e. at the lows of June 3, 2014.

Simple Techniques to Trade Cryptocurrency

The second example is a simple strategy with the LTCUSD candlestick chart. See the LTCUSD hourly chart below:

 Simple Techniques to Trade Cryptocurrency

June 4, 2014, LTCUSD Bid price was 11.34000, while the Ask price – 11.38471.

Next, we start with a simple analysis of the candlestick charts to look at the previous history: the high of 11.49850 on June 1, 2014 and then the high of 11.59578 on June 2, 2014.

Low prices were noticed at 10.95556 on June 2, 2014 and then at 11.15000 on June 3, 2014.

The overall trend is bullish, so traders can enter with Buy order targeting at 11.49850 and 11.59578 with the Stop Loss placed at the minimum of June 3, 2014, as seen on the chart below.

 Simple Techniques to Trade Cryptocurrency

The method is the same for other pairs with the following keys:

1. Analyze the overall trend; if the inclined candlestick is bullish, we can enter the market with Buy order;

2. If you see the high and low points 2-3 days ahead to determine the target of your buy order, place the Stop Loss at the minimum of the previous day (you can add a few points, so that the Stop Loss could become shorter);

3. Once everything is ready, you can enter the market with the Buy order and wait until the target is reached.

The same can be performed for the bearish trend provided you change the target point (Take Profit) and Stop Loss.

Hopefully, this article can give you a little insight into the cryptocurrency trading.

The article is written by Triyono and is participating in the Forex Article Contest. Good luck!

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.