If you are into Bitcoin trading and are looking for an excellent plan to have a trading success, then we might have the plan for you. The best strategy is about 85% price action strategy, and the rest 15% is a strategy for cryptocurrency trading. This uses the On Balance Volume indicator.
OBV is one of the best indicators when it comes to Bitcoin’s day trading. The main objective of it is to analyze the total amount of money flowing in and out of any instrument. It uses a combination of price activity and volume. OBV can be found on almost all trading platforms. With the OBV indicator, you would want the OBV and the bitcoin price to move in the same direction. Let us now get into the strategy.
Overlaying the charts
In the first step, you would need to overlay all the charts together. You will need the bitcoin chart, the OBV indicator, and the Ethereum Chart. As this strategy is actually the Ethereum trading strategy along with being a bitcoin strategy, the Ethereum chart is needed here. Have them all open in three windows. With all these three open, we would now need to move on to the next step.
Smart Money Divergence
The next step requires us to keep an eye out for a Smart Money Divergence. This divergence will happen between Ethereum and Bitcoin prices. This divergence will occur when the other present does not confirm the action of one cryptocurrency. When this happens, it means that the strategy will soon be signaling for a trade. The reason why this concept always proves fruitful is that the whole cryptocurrency market should be moving the same direction, every time we go into a trend. However, before buying, get a confirmation from the OBV indicator, which thus brings us to our next step.
Movement of the OBV indicator
In this step, you need to observe the progress of the OBV indicator. You need to check whether it is increasing in the direction towards the trend. OBV is a very technical indicator that can indicate whether real money is buying or selling Bitcoin. We would now need to place our order of the buy limit.
Placing stop loss
A smart move in the trading process is to place the stop loss below the breakout candle. To take the profits, observe the OBV indicator. When it reads above 105,000, it indicates that the signals will pause in the trend, at least. It is usually here that you would want to take your profits.
This method was for a buy trade. However, for a sell trade, the reverse process needs to be used. Thus, we have now presented you with the best Bitcoin trade strategy for you to achieve ultimate success. However, you may read a Bitcoin Trader Review for better insights and knowledge.
Placing a buy limit order
To place an order for a buy limit, we need to check the OBV indicator when it gives the green signal. You must set the order in anticipation of a possible breakout at the resistance level. It will then be no surprise for us when the trade is triggered, and the Bitcoin price breaks way higher than expected, as the OBV is a fantastic indicator. The next step thus is to place the protective stop loss and to take the profits.
This content is brought to you by Hannah Madison.