Creation of a trade strategy for Ethereum (ETH): A beginner guide
Ethereum, the second largest cryptocurrency after market capitalization, has become popular in recent years. With its generalized introduction and innovative decentralized applications (DAPP), ETH will be about to continue their upward trend. As an investor or beginner dealer, creating a trade strategy for Ethereum can be a little intimidating, but with this article we will lead you throughout the process.
Understand the commercial environment of Ethereum
Before you immerse yourself in the creation of a trade strategy, it is important to understand the commercial environment of Ethereum. Some important factors must be taken into account here:
- Volatility of the market : ETH is known for price volatility, which can be both an advantage and a disadvantage.
- Trend next to trend revenge
: Ethereum was historically trendy, with its prices often upwards. However, the cryptocurrency market is very dynamic and the trends can change quickly.
- Support and resistance : ETH prices Measures are influenced by support and resistance that are essential for the identification of trade opportunities.
- Sensation of the market : The feeling of the Ethereum community plays an important role in market training.
Select a trade strategy
Several trade strategies are particularly available for Ethereum:
- Next trend : This strategy implies the purchase or sale of ETH when it reaches certain price levels in accordance with the historical trends.
- Average reversal : This strategy is to identify the undervalued or overvalued areas of the market and the bets that the prices return to their average values.
- Skalping : This strategy is to do several small shops in a short time to use the price fluctuations.
For this article, we will concentrate on creating a following trend with the help of a technical analysis.
Technical analysis
The trade volume of Ethereum and the price movement is particularly influenced by various technical indicators:
- Middle Mobiles : A combination of two average or more cell phones can help identify trends and support / resistance levels.
- Relative strength index (RSI) : This indicator measures the speed and variation of the price movements in order to recognize the conditions for overcapit or occurrence.
- Bollinger tapes : These ligaments represent an area between high and low prices, which contributes to identifying volatility and potential trading opportunities.
Creation of a trend according to the strategy
Here is an example of how you can use the technical analysis to create a trend tracking strategy for Ethereum:
- Select a deadline : Select a deadline for your trading style (for example daily, weekly).
- Identify the level of support and resistance : Use graphics models and indicators to identify support and potential resistance.
- Create an input strategy : Define a purchase or sales order if the price reaches a certain level in accordance with your selected indicator.
- A loss of stop : Define a loss of the stop below the entry point to limit potential losses.
Example of a trend according to the strategy for ETH
Here is a simple example of a trend tracking strategy using RSI and Bollinger groups:
- Buy ETH when it reaches 25 and the price is higher than the lower Bollinger band (B2).
- Sell the ETH when it reaches 50 and the price is lower than Bollinger’s upper band (B1).
Additional advice
* Remain disciplined : Avoid making impulsive decisions depending on the emotions or fear of the absence.
* Diors your portfolio : Share your investments over several cryptocurrencies to minimize the risks.
* Monitor the feeling of the market : Keep the feeling of the market in the eye and adapt your strategy accordingly.
Diploma
The creation of a trade strategy for Ethereum requires a solid understanding of the commercial environment of cryptocurrency, technical analysis and the following strategies.