Day Trading Strategies For Cryptocurrencies
Nonetheless, it's after 10:00 already, at least where I'm sitting. Good morning, good afternoon or good evening, depending from where in the world you've joined us and welcome to our very, very first webinar here livee from the PrimeXBT Trading Academy. My name is Dirk and I'm the Head of Trading Education here at PrimeXBT.com and I am what probably you would consider a
professional trader. So I've been trading for 20 plus years, actually started my career in 1998, so that makes it 24 years, so already almost a decade already have been working throughout my life for numerous institutions such as banks, family offices and brokerage companies, as financial advisor, as a trader, as risk and many of us also in Singapore. And since 2019, I have decided, or in 2019 I decided that I don't want to be an employee anymore because I always loved very much trading as a profession. But what I didn't like is, you know, all of us corporate political games you sometimes have in company. So I decided I want to run my own trading book, which I've been focusing mainly
since 2019 on in last year, I was approached by a prime expert team and they basically told me, Hey Dirk, you have been a client of us for quite some time now already. You are very successful in what you are doing with your trading, and we are looking for somebody that helps us build up a trading academy that takes our clients by their hands and shows them from a professional point of view. All those little trips that can linger out there on your way to to becoming a professional trader. And I think this is something you do not see that often in this industry. So it was more than happy to to join and, you know, and a couple of times a week to share my thoughts on the market on trading, whether it be with YouTube or in the format of life webinars as such as this. And we are also life now on our homepage. So if you go to PrimeXBT.com and the products here,
you will find the trading academy on the right. Here you always see the webinar that's coming up next. So today, you'll see the webinar for next week probably today. We have this section called "That Crypto Show", where I once or twice a week share my my thoughts on what is going on in the cryptocurrency markets. You can also find everything, of course, on YouTube. You'll find platform guides here that show you how to operate the PrimeXBT platform, basically, and we have trading and crypto courses that you know, go more into general things like focus on what is technical analysis and more specific things. For example, here's one how to find
the perfect stop loss, so go and check it out. You can find everything, of course, also here on YouTube. And I'm, of course, very happy if after this webinar, you want to check that out and maybe become a subscriber. That's of course free. So nothing to lose them.
Also, before we start, of course, if we are going to to talk about trading, about day trading today. So I'm really I'm somebody that is very hands on. I'm not going to talk very much like or you should have could have and so on and so forth. And I want to show you really a strategy that I am trading almost daily and I'll show you what trades. This strategy did yesterday will use bitcoin as an example, but you can use the strategy basically on every market out there.
Nonetheless, guys, this is not a fire and forget strategy. So this is very important. Never follow somebody just blindly. Yeah, I'm a pro. I know what I'm doing. I've been doing this for a very long time and all of what I'm showing you is working. But just because it's working for me doesn't necessarily mean it's working for you. Trading is very, very individual thing, and I'll give you an example of it. I used to have a colleague who was a very, very good day trader when it came to oil futures so he would trade WTI oil futures all day was very good at that brilliant I would call him. But when he tried to apply his trading strategy
to other markets, he would utterly fail, fail. And for me, it's the other way around. I'm pretty good in a lot of markets, especially cryptocurrencies and forex. But when it comes to trading oil, I tend to always lose money. So this is what I mean. You know, our trading strategy is always something very, very personal. So I hope that I can inspire you a little bit. Or maybe take what I'm going to teach you about your day to stop building your own trading strategy that is really suited to your personal mindset. So that is very, very important. And never just blindly copy trade. Somebody always use your own brain, do your due diligence, and there is no
trading strategy out there that is like the holy grail of trading with an indicator that is correct all the time and that guarantees you to become a millionaire within two weeks. If you read about something like this out there. It's 100 percent B.S., so please don't fall for that. OK, so we're going to start here before looking at the strategy itself by.
By having some thoughts, so when I come on to my sit down at my trading desk in the morning, I usually go through the news first because I want to get an impression on how probably the market that I want to or the markets that I want to trade today are going to behave in terms of volatility. So for those of you guys who don't know what volatility is, this basically means how high the swings to the upside and downside are going to be. And as traders, especially for day trading, we are always looking for a bit of volatility. So we want, we want, we want the market to swing up and down a little bit because we need some movements in order, of course, to profit from that. Nobody likes the market but just goes sideways. You're not going
to make money usually from that, except maybe you are selling options, but that's a whole different story. And so I want to make up my mind in the morning. Is this going to be a low volatility day today with asset? Is that going to be like normal volatility? Or are we going to expect high volatility because this is going to have an impact on the decisions I allow my trading system later on to to make? It's going to make different, more conservative decisions, and the high volatility setting is going to be a little bit more aggressive when I expect it to low volatility. So I'm going to show you later on the trade with a system in bitcoin I did yesterday for now. So yesterday I sat down and I kind of expected Zoom in here a little bit for you,
but it's probably going to be somewhat emit today volatility because the news out there yesterday were like not so specific about what's like talk going on here on Bloomberg, on that regulators across the globe are. Kind of getting more serious about regulation, but nothing that is my opinion was not already in the market. Also, we were approaching this middle band of the Bollinger Bands. And usually the market is not going to
go through that with a lot of momentum. So I kind of expected for yesterday, maybe we're going to attack this middle band and then probably we are going to close above where we started, which was correct. Yeah, as you can see here, we're up here, wick down here with the opening and closed pretty much together. So this is what I like to call it Volatility Day if I'm
expecting a high volatility day and this is always difficult to expect, of course, because usually price swings like this candle here, for example, are coming. I wouldn't say out of nowhere, but it's hard to to forecast them than low amid volatility day. If you see something like this and you are a day trader and you really see the markets go crazy, like this day where bitcoin really dropped by 12 percent. By the way, this is too much volatility. Usually there is,
at least from my experience, no trading system out there that can handle this type of volatility. So this is a typical day where you might want to decide, Oh my God, things are going crazy. The mechanisms of the market that usually work are not working anymore. So I want to stay at the sidelines today, and I'm just going to watch the market participate in this. This is totally legitimate and absolutely something you should do because our main goal, especially the beginning, if you're a beginner trader, is always to first come to a point where we might to long term do not lose money anymore. When you have reached the point, then you can start thinking about, OK,
now I want to go the next step, I want to start earning money with it. So we made a volatility decision for yesterday. We thought, OK, it's going to be a middle volatility or low volatility day, probably. And this is going to mean we can maybe be a little bit more aggressive with our trading system, with the entries and exits of our trading system. And this trading system. Is actually taking into account one, two, three, four, five different things, so it consists of of a shot. In this case, it's bitcoin here on the left chart, the right shot, by the way, the S&P 500. More on that later. Why you have two shots here for trading bitcoin. And so I have Bollinger
Bands Simple Standard, Plain Vanilla Bollinger Bands placed here on on my Bitcoin charts. It's a five minute bitcoin chart, by the way, but you can do trade the same also on on 15 minutes, 30 minutes an hour and so on and so forth. One minute maybe might be a little bit difficult because probably the trading fees at one point are going to be too high in relationship to your earnings expectations. You'll see what I mean by that later on when I show you the statistics about yesterday. Excuse me, I always need some coffee in my mouth. So we want so we have a Bollinger Bands up here, down here, we have an RSI and I like to always call this my special RSI.
So it's a relative strength index, a vanilla one, and then I put two and moving averages over it. First of all, a weighted moving average and the second is exponential moving average. And now the definition, like the textbook definition of of an hour is a trading strategy would be you want to sell if the RSI goes over 70 and you want to buy if the RSI goes under 30. But this strategy does not work. So there's a lot of research that has been going on about RSI, and this textbook strategy does not work, so we need to modify it. It's still a good indicator, in my opinion, because it shows you is up the price of the market of your asset of bitcoin. In this example, at the moment, prices that are out of what you can
expect from is standard deviation. So from the goss and bell curve, so to say or are they in line, but you can if you treat it like like textbook. So for example, you would have entered the market here. At risk Canada already at. So you would have thought here at thirty eight thousand six hundred. But look what, what happened after this? The market still went up by more than 600 U.S. dollars, but the market went against you and this is going to do stuff to your mind, of course. So there must be better ways of entering the market. And in my opinion,
a better way of entering the market is to, first of all, wait for those sorts of extremes and then wait until with, in this case, a sharp decline virus if it's below its moving averages. And if you do, that's all you can see. But let me zoom in a little bit for you here, so it's better to see to see so that what has happened here at this point. At this candles, so you would have thought
at the I sort not would have in this case at the opening of the next candle here at thirty eight thousand nine hundred and fifty roundabout or forty. And you can see much, much better entry and then what you would have had with a classic definition of our site. Right. And so and so this is what we the first rule of thumb here for this trading system. We want to wait
for sharp corrections of the arrows. I know those two moving averages. And you want those corrections to be in extreme zones. So we don't want to we don't want to see this. We don't care so much about what is going on here between 40 and 60. So whenever you see across them, I'm pretty much going to ignore that if we are in, if I expect a day with that same medium volatility, I might also trade crossings, which I see here on the downside, between 30 and 40. That's why I have lost two green lines here and sell the market if I see shop crosses between 60 and 70. Now the cross itself is not the only thing I'm looking for here. I also want to see
that the market has reached for by position this lower end of my Bollinger Bands, and I want to see the other four sell positions that the market has reached the Upper Bollinger Bands or penetrated it in this case already, because I want the market to be as extreme overbought or oversold as possible, and we can go through a trade here, for example, my first trade on this yesterday. So I saw the market coming down. We were already trading at the lower Bollinger Bands here. I saw the RSI coming back from under 30 and going over and over its moving averages, so I entered the market. So here on the next can open roundabout at thirty eight thousand three hundred. And what I'm doing then is
two things I'm going to wait. Obviously, I'm going to set my stop loss at the last law, so that would have been here or that was here in this case. And then I'm going to wait and see if the market really does an upswing once the market has reached this middle line of the Bollinger Bands. I tend to I tend to move my stop loss to break, even because the market has gone into my direction already, and I don't know if it's going to reach the upper end of this point still. So I want to move my stop loss to break, even to make sure I'm not losing money on this trade anymore in this case, with the market continue upwards. And my take profit is going to be at the upper end in this case,
a roundabout at thirty eight thousand four hundred fifty three. Picture perfect trade in this case worked out very well. What you will see very often also and you'll see that later on, is that once the market has reached the middle Bollinger Bands, it's going to reverse and maybe hit a stop loss. This is part of the game, so don't be set. You know, if the market comes back, then hits your stop loss, which at this point probably is going to you're going to go get out of the market without winning or losing anything. It's just normal. And if the market then continues up, well, salary, this is what happens, but you just move on to the next trade. So second, trade in this case was an extreme trade. So I saw we saw this sugar spike up here.
I mean, this is a five minute chart, of course. The movements of March, the two percent always look a very huge on on five minute charts, but we saw the RSI, the market and the RSI spiking up. I waited until we saw the cross again. It was a nice cross over 70. So this is really an extreme sign. Saw the market up here at around about thirty eight thousand nine hundred and fifty. Market
went down when it reached the middle end. I moved my stop loss to break. Even in this case, the market moved even further down. I got a little bit nervous because I saw the market approaching here and then retracting again, so I closed the trade round about here already sort of waited a little bit longer. I would have had the chance to get out even lower. Nonetheless, this was a great trade and this was a great trade picture, perfect trade for this trading system.
In my opinion, that happened. And if you have one of those trades a day, you're already going to make a bank. I can promise you that now as we move forward in the in the day. So this was yesterday at around 10:00 a.m. As we move forward through the day, I'm going to start shifting my focus to also look at the S&P 500. You see a little bit forward, yeah, here we go. I'm going to
also stop focusing on the S&P 500 for my bitcoin trades. Now why am I doing this? Excuse me. Because there's a large correlation between the stock market and especially the S&P 500, which is the most important index, a stock index in the world contains the 500 largest publicly traded U.S. companies by market capitalization. And if we. If the S&P 500 or you can also do the same with a nest egg, by the way, goes up or down by a large margin, you will usually also see cryptocurrencies doing the same moves. And this is something normally we we cryptoassets. And as you can see, I'm really a bitcoin enthusiast in the long run is something we don't like to hear. We don't like to hear that. Yeah, the stock markets are influencing the cryptocurrency market, but it's true. And the closer the opening of the stock market comes,
so the official opening of the S&P 500 of the US stock market. New York Stock Exchange is at 3:30 p.m. my time with more on a normal trading day. That is, you will see that bitcoin is going to move very much like the S&P 500. And so I'm have to switch here in my consideration of taking positioning. And not only what is going on with the RSI and the Bollinger Bands here in Bitcoin, I also need to have an eye on the S&P 500. So if I see, for example, the signal here, it tells me,
Hey, I need to sell the market here. But the S&P 500 is maybe at this lower Bollinger Bands. I really have to strongly reconsider if I want to trade this trend, because if it if the stock market's been suddenly starts running up, the chances of bitcoin copying that moves are very, very high. This does not work every day like this. Usually there is a correlation and there is a correlation, by the way, because you have a lot of algorithmic traders algo, but so to say, trading this correlation. So it's a bit of a self-fulfilling prophecy, and I'm going to show you an example also from yesterday for this now. Again, here we have bitcoin. So this was at
at 130, around about 135 going up again. The RSI going above 70, we were hitting the upper Bollinger Bands here. We saw the cross, the sharp cross that is so you don't want a slide because you really want to slump down in this case here again for for bitcoin. So at this point, we're at thirty eight thousand six hundred seventy five roundabout. And but if you look here to the right and I hope you can see my cause of it as well. The S&P 500 was also at the Upper Bollinger Band, but if you look at the RSI for the S&P 500, it was still a little bit in no man's land. So there was not so much going on nonmember. The less
I decided yesterday to take this trade and watch what happened then. So I shot at the market here, and at the same time I saw the S&P going further up. Bitcoin was going a bit sideways, so you could see really, OK, the market wants to wants to go sideways here. And but. Due to the rising stock market, there was also pressure to the upside, as you can see in this candle, it was like the market wanted to go up, but it couldn't at that moment, very good and I was, in this case, quite lucky. So because we actually moved to this middle Bollinger Bands, I was able to put my stop loss to my break, even in this case. You can see market continued lower then, but then reverse to the upside very, very quickly again. And this is because S&P started to
started to go to the upside as well. And you can see, let me circle this here for you. So it's maybe more more clear what I mean, like if you look at this phase of the market, the S&P on the right and the same face. For bitcoin, you can see how much alike most movements are. This is really because the closer we get to the opening bell of the New York Stock Exchange, not with S&P. Don't be confused. It's traded almost 24 seven, but in the morning European morning with an
invitation session with very low volumes. That's why, in the beginning of the day, I'm always not looking too much on the S&P 500. But the more we move towards opening bell of the New York Stock Exchange, the more I'm going to also consider what is the S&P 500 doing or what's Investec doing and taking consideration with my bitcoin positioning here? And you can see the moves very much like so bitcoin was merely copying the S&P 500 in this case. And then at 3:30 opening bell, things always go a little bit crazy on the stock markets vis repositioning going on. Same here, Bitcoin. So
it's going to become a little bit jumpy and throughout the day, even until at least the closing of the New York Stock Exchange, you were on a normal day. See the cryptocurrency markets pretty much copying what the S&P 500 is doing and other things you want to have a close eye on are economic events. So if we, for example, let's see what we have today. Later on today, folks, we have the ADP national employment coming out. So this is pretty, pretty important. At 2:15,
you might want to try to stay out of the market because if this number four most important event is like very, very different from what is forecasted, the market might go crazy for a little while and all the technical analysis we are doing, all trading systems usually cannot handle this. So you might want to wait a little bit at the sideline, maybe for a half hour or 45 minutes until things have normalized a little bit again. And this is especially true like first Friday every and every month. So it's going to be this Friday again when the unemployment report from the U.S. comes out. All right. So quick summary again here for strategy, and then I'm going to show you some results of yesterday. This again, we want to have we want to wait for a full set of signals until the price of bitcoin reaches the high end of the Bollinger Bands. We want to see the RSI
falling below its moving averages, and the higher the better that happens, the better the sectors. If the market goes down, we're going to initially put the stop loss at the last high, by the way. So always, please always use a stop loss. Markets can go crazy any time and you don't want to,
especially if your trading desk without having a stop loss in place. I can tell you stories, for example, of a friend of mine who had a euro dollar position, then went on a plane for an hour, and when he got out, he had lot of her. He had lost 50000 U.S. dollars just because he didn't put a stop loss. And then the market went crazy why he was up in the air flying. So you don't want to do that and you protect your capital under all circumstances. Once the market reaches the middle Bollinger Bands, we are going to put our stop loss to break even maybe a little bit more than break, even because we're also, of course, paying trading fees once we reach this area. Let me
say of a lower Bollinger Bands we can close for trade for a long trades is the other way around. So we had an example here, folks, yesterday. And as you can see, I like to play this conservative. So here the market came about as I came back from the low 30s crossed as moving averages market. I entered the trade market went up middle. Bollinger Bands hit move. My stop loss to break even Upper Bollinger Bands hit and I take profit them the later day. It gets all the more we are getting into the area of the opening of the New York Stock Exchange. The more we
need to take into consideration also what the stock market, the S&P 500 or nest egg is doing. So if you have a signal here, even if it's in the extremes, but you see the stock market's doing something totally different at the moment, you might want to decide to wait it out at the sidelines because on normal days, the crypto markets are going to copy what the stock markets are doing that we don't like that, as I said, as crypto heads, but nonetheless, it certainly is true. OK. So let me show you some results. So for this strategy yesterday, and this is, by the way, another important part of being a trader, if you want to do things in a more professional way, you need to have something like a trading diary. Take. Own take note of all the traits you did, not only because you want to have an overview by the end of the day and by the end of a month, what you were earning and how your risk reward ratio was. And all of us have a nice little financial metrics. You can apply to your trading, but you you really want to keep track of what your net profit is if you want money. Have you lost money? If you see, Hey, I lost money,
you can go back and really into the shots and say, OK, what was going on? There was something maybe I didn't see that that happened on the market. And for bitcoin, as you can see the strategy, I'm trading on a number of different assets out of them. And with bitcoin, I made three trades yesterday. They were all impressive profit. This was quite a good day for the strategy yesterday. It does not have to be like this every day, so it's totally normal.
Also, if we have like crazy volatility days like this to lose money with a strategy like this, this is part of the the game. That's why it's so important to never risk all of your money or last large portions of your money on one trade. So I risk you release something between one to five percent maximum if I'm like, really, really, very, very sure about a trade and you can see I had to. So this is, by the way, bear this diary takes on what happened in the trade. If one bitcoin was traded later on, I'm going to show you, I'm adjusting this with the leverage I took on an individual trade. So I'm not always just trading a leverage of one to one or one to five. Depending on how good the signal is, I might choose a higher or lower leverage. And you can see with one bitcoin, I made 734 US dollars from this trading strategy, paid a little bit of ECL. Luckily, Prime Expertise is a trading platform with very, very low fees, and you can see
how how the fees really affect. If I would have paid something like zero point one, five or 0.2 percent, like a lot of the platforms out there take in fees, I probably would not be able to earn money with a strategy because the fees would eat it up all. And so I'm going to take this down for every asset I am trading. I'm going to do adjustments for leverage and conversions because I usually count my profits and losses in U.S. dollars. So I need to convert them, of course, to U.S. dollars. And then by the end of the day, I have a total. I have this extra sheet summarizing and adjusting the leverage for every asset. I'm trading the strategy and as you can see, bitcoin
because I took a little bit more leverage on the second trade than a very good signal. It was like really the superstar yesterday. Quite a lot of money. But you can also see here, for example, Ethereum and especially in Apple and and the next tech where this didn't really work out well yesterday. And this is very, very normal. If you trade this kind of strategy on any strategy on a number of markets, you always have markets. But David, don't work out too well. You have markets that work out very, very well by the end of the day and one thousand eight hundred and fifty us on us with this, and I paid 690 U.S. dollars in trading fees. And I mean, they match. And this is worth 0.05 percent. Imagine this would have been 0.10,
then I would have paid already double for trading fees. That's why it's so important to to have a platform where you trade something like this that has low fees and luckily PrimeXBT is one of those platforms. So by the way, if you are not yet a client of prime expertise, I'm going to leave you a link where you can sign up. I'm going to put this in the chat and hope you guys can see this. And the beauty of it is that if you sign up under this link and the guys out there will see that you are a student of the training academy and they are going to have some nice perk every now and then for you. And if you want to start training already, you can also use a promo code. So this is this one here called TRADINGACADEMY, and you can enter the promo code if you go to your margin account and win here on the left account, the promo code, the trading academy, all in capital letters. And then you can get up to 7000 U.S. dollars in bonus on your deposits.
So it's quite nice and gives you some some extra margin and you can trade with and secure your trades. OK, so I have enough advertisment on that. I hope I kind of inspired you guys a little bit with how you can approach trading. So my goal really is that after this, we now know which is going to end in a couple of minutes that you maybe sit down and not copy this one to one, but understand that through first of all, no trading strategy is always going to work. Second of all, you can take classic trading strategies like the RSI and modify them and play a little bit around with the averages, with the Bollinger Bands, with a settings for this until you find something that you are comfortable with and that you understand that market influences of the financial market is the biggest puzzle, in my opinion of the world. That's why I'm personally so fascinated by it, because you have all those little tiny wheels that end up influencing if we focus on the S&P 500 or bitcoin is going up or down. And it's our task as traders to find out what was turning wheels are actually investment banks had for hedge funds, spend hundreds of millions of US dollars every year to find out exactly that. And so these are the guys when it comes to day
trading sometimes that we are competing against. So we have to choose our trades very carefully. And you can see I'm talking about day trading here, but in the case of bitcoin, I only did three trades yesterday because it's important to be patient. It's important to wait until you really see a good signal. I do not trade because of the click click click action and the adrenaline it gives you when you when you enter or exit a position trade, when you see that a good sign and a high probability set up. And even if the set up fields well and move on to the next rate,
don't take it personally. Never risk. More than one to five percent of your account balance per trade must always remember for for every good trade, for every good day trading day out there, but it's going to be a better day on the horizon coming up and a better day where you make losses with both. Any trading strategy should not be a day that really blows, account or destroys 50 percent or even 100 per cent of your account balance. Don't do that because this is going to mess you up mentally. All right. Thanks for your attention. I hope you liked this. Later on,
check out our website again. So next week, I'm definitely going to be back with another webinar. And if you have any questions, any requests, maybe specific assets that you would like to to me to talk about and or to analyze. You can also write to us and the academy at. Prime sbt dot com. So this is this this email with a directory reach me and my promise is I'm going to answer every single e-mail coming back, so don't be shy and request some things other than that. Remember to go to our YouTube page and leave us to like, subscribe to our channel. I'm going to see you again next week. Take care. All the best. And remember, always use a stop loss. Goodbye.
2022-02-07 13:14
