How To Use Moving Average Trading Strategy?
When it comes to trading cryptocurrencies, there are as many strategies as there are crypto coins. But out of all, one of the widely utilized ones are those that make use of moving average. Even professional traders who offer their services as crypto signals use momentum as a catalyst to get into the trade. In this article, we’ll show you some of the best moving average strategies.
Momentum trading is a great way to make money when the price movement is in your favor. You buy only those assets that are moving up, and then hope they will go even higher than where you bought them at some point down the road – usually, before their purchase price has decreased enough so as not be too profitable anymore (this concept of “bottoming out”).
Is Momentum Trading Effective?
Momentum trading is a popular investment strategy that has been around for centuries. It was first mentioned in academic studies like “Two Centuries of Multi-Asset Momentum,” which analyzes the performance history and forecasts future returns based on momentum strategies as well as other factors such as investing styles, market conditions, or economic indicators with two different time periods (20 years up to 10). The findings show how these methods can be used by investors looking at long-term goals while still providing them protection from high-risk stocks during drops due to instability within certain economies across all territories.
With the potential to be used in so many markets, it’s no wonder this strategy has been making waves lately.
Here are a few good techniques that you can use.
1.. Breakout
When you trade breakouts, it’s important that before the breakout (otherwise known as a buildup) there is tight consolidation and low volatility.
When the market is volatile, it can be hard to predict what will happen next. So you need a large enough stop-loss that allows for some margin of error in case things go wildly wrong — but at lower volatilities, this seems unnecessary since traders are often looking more closely than ever before!
The market moves from periods of low volatility to high ones and vice versa.
When you’re positioned right, this can mean good things for your trading strategy; as when it’s a positive change in direction with higher risk rewards on any given trade 1:5 or better (or more).
2. Trend Continuation
Trend continuation chart patterns are a great way to trade in the direction of trends. These include Bull Flag, Ascending Triangle, and more!
3. Bouncing from MA
A healthy trend usually respects the 50-day Moving Average (MA). This means you can look for buying opportunities as the price retraces towards this important technical indicator.
It’s important to wait for a pullback towards the 50-day moving average if you want high returns. If that doesn’t happen and prices are higher than their long-term trend, then it’s time to go short on an upcoming open with 1 ATR below the swing low as your stop-loss strategy.
Conclusion
To get the best possible scenario, use multiple factors to consider the momentum such as RSI, demand-supply zone, support and resistance level, and more. When your setup creates a confluence, you’d know it’s one of the best crypto signals that you can use to trade.
