💥 Learn the Strategies of the Best Traders with Clear Examples using #Bitcoin 🌍💸
We are going to analyze key strategies that elite traders have used to trade successfully, explaining when, how and why they apply them, with detailed examples using Bitcoin ($BTC ) as an asset. 📊📈
1️⃣ Trend Following 🔄📈
Who uses it: Richard Dennis and the Turtle Traders.
They followed trends using moving averages and other indicators to confirm the direction of the market.
How to apply it in Bitcoin?
You look at the daily chart (1-day time frame or D1) and notice that the 50-day moving average (MA50) crosses above the 200-day moving average (MA200), indicating an uptrend ("Golden Cross" signal). This crossover is a signal that Bitcoin could continue to rise in the coming weeks or months.
Action: You buy BTC and hold the position as long as the uptrend continues. You watch the moving averages for a reverse crossover, which tells you when to exit. If the crossover is bearish (MA50 crosses below MA200), you sell.
⏱️ Time Frame: Daily (D1) or weekly (W1) chart to identify medium or long-term trends.
Click the "Technical Indicator" button to add EMAs.
In the indicator search box, type “EMA.” Then, select the “Exponential Moving Average” option to add it to the chart.
Click the "Settings" icon to adjust the EMA period.
First, set the 50-day EMA by setting the length to 50. Then, repeat the process to add a second EMA, but this time set the length to 200 days.
When the 50-day EMA (black line) crosses above the 200-day EMA (white line), it is a bullish trend signal. This indicates a good time to buy Bitcoin. On the other hand, when the 50-day EMA crosses below the 200-day EMA, it is a bearish trend signal, indicating that it is time to sell or exit the position.
💡 Current analysis: At the moment, the chart suggests that the Bitcoin price could be approaching a downtrend. It is advisable to set your stop-loss at profit to protect yourself from potential downsides. If the price breaks below the 200-day EMA, it could confirm a downtrend, so keep an eye on the data.
2️⃣ Short Selling ⬇️📉
Who uses it: Paul Tudor Jones, known for predicting the 1987 crash, shorting the market.
How to apply it in Bitcoin?
You see that BTC has risen too quickly and the RSI (Relative Strength Index) is showing overbought levels (above 70). This indicates that the price might correct soon. You decide to open a short position.
Action: You short BTC in anticipation of a correction. When the price drops, you close the position by buying again at a lower price and make the difference as profit.
⏱️ Time Frame: 4-hour (H4) or 1-day (D1) chart to detect medium-term corrections.
As we showed above, head over to Technical Indicators. Type RSI in the search bar and select “Relative Strength Index” to add it to your chart. This indicator will allow you to identify whether the Bitcoin price is at overbought or oversold levels – there’s no need to change the default settings.
The current RSI is at 49.18, a neutral zone that indicates the market is in balance, with the potential to break out in either direction. Although there is no clear overbought signal, the trend is losing strength. If fundamentals or a bearish crossover at the EMAs are observed, it could be a good time to consider short selling.
💡 Current analysis: The market is in a 50/50 position, with equal probability of breaking up or down. However, given the current fundamentals and the behavior on the liquidation map, Bitcoin is likely to end the month in a bearish trend. In this case, a short could be a viable strategy if additional signals are confirmed. Tomorrow afternoon we will be able to see things better with data, it is better to stay out or take the risk.
3️⃣ Macroeconomic Analysis 🌐💼
Who uses it: Paul Tudor Jones and Jim Rogers, who analyze global macroeconomic factors such as interest rates and monetary policies.
How to apply it in Bitcoin?
You read that the US Federal Reserve is going to raise interest rates to combat inflation. This usually causes investors to flee risky assets, such as Bitcoin, and seek refuge in the dollar.
Action: You sell BTC anticipating a drop in its price due to unfavorable global macroeconomic conditions.
⏱️ Time Frame: Daily (D1) or weekly (W1) chart, since this type of analysis has a long-term impact.
💡 Current Analysis (September 2024):This week, on September 17 and 18, 2024, the Fed could announce an interest rate cut, which would have a major impact on the cryptocurrency market. The Fed is expected to reduce rates by 25 basis points (0.25%), which could generate greater liquidity and eventually boost the price of Bitcoin. However, analysts warn that if the cut is more aggressive, by 50 basis points, the market could interpret it as a signal of "panic," which could weaken the price of Bitcoin. Currently, Bitcoin is struggling to stay above $58,000, and the behavior following the Fed's decision will be critical in defining the short-term trend.
4️⃣ Technical Analysis 📊🔍
Who uses it: Larry Williams and Bruce Kovner, who rely on chart patterns and technical indicators such as RSI or moving averages.
How to apply it in Bitcoin?
You notice that the RSI on a daily chart (D1) is above 70, indicating overbought. This suggests that Bitcoin could be ready for a correction. You can also identify support and resistance levels to know where to buy or sell.
Action: If the RSI indicates overbought, you can short BTC waiting for a correction. When the RSI returns to normal levels (30-50), you close the trade.
⏱️ Time Frame: Usually 1-day (D1) charts to analyze medium-term trends.
In this 4-hour chart (I use this time frame to make the post more dynamic), we use the 50-day and 200-day EMAs, along with the RSI that we set up previously. The 200-day EMA at $58,815 is acting as a major resistance, while the immediate support is at $57,086. If the price fails to break the resistance, we could see a correction towards the support. The RSI is at 37.25, which indicates that the market is close to oversold levels, which could anticipate a bounce. If the price fails to break the resistance of $58,815, we could see a downward movement towards the support at $57,086. ✨ Important note: In the technical analysis, we have used the EMAs and the RSI that we set up previously. However, there are as many indicators as there are tastes, but in many cases, less is more. Keeping the chart simple and clear is key to effective analysis.
5️⃣ Pyramiding 🏗📈
Who uses it: Jesse Livermore This technique consists of adding to a winning position, increasing the risk in a controlled manner.
How to apply it in Bitcoin?
You buy BTC when the price starts an uptrend and goes in your favor. Instead of selling quickly, you decide to add more capital as the price continues to rise, but in a controlled manner.
Action: You add more BTC on every small correction during the uptrend, maximizing your profits. It is key not to overexpose yourself.
⏱️ Time Frame: Daily chart (D1) or 4-hour chart (H4) to follow the trend.
💡 Practical example:
Initial position: You bought Bitcoin when the price was at $57,500 and opened a short position (betting on the downside).
Increase position: If the price of Bitcoin drops to $55,550 and you confirm that the downtrend remains strong, you place a limit order to sell further at $55,550, adding more capital.
Result: When the price drops to $55,550, the new order is executed and you now have a larger position in the direction of the trend. As the price continues to fall, you will make more money because you have more exposure to the trade.
⚠️ Important note: It is essential to use stop-loss to protect yourself if the market reverses and the trend is no longer going in your direction. Although pyramiding can maximize profits, it also increases the risk of losses if you do not manage your position well.
6️⃣ Stop-Loss: Protect your investments 🛡️⛔
Who uses it: Paul Tudor Jones, famous for applying strict risk management.
How to apply it in Bitcoin?
You buy BTC in an uptrend, but you want to limit your losses if the price changes direction. You place a stop-loss at 3% below the purchase price.
Action: If the price drops by 3%, your stop-loss is automatically triggered, selling your position and limiting your losses. This is a vital tool to protect you from sudden market movements.
⏱️ Time Frame: 1 hour (H1) or 4 hour (H4) chart to adjust it to the short term.
Always place a stop-loss on every trade, especially on riskier strategies like pyramiding. "high overtrading risk"
7️⃣ Contrary Strategies 🎭📉📈
Who uses it: Carl Icahn, who bets against the grain when he thinks the market is being irrational.
How to apply it in Bitcoin?
Bitcoin has been going up for weeks, everyone is talking about it and there is euphoria in the market. You decide to short, hoping the bubble will burst.
Action: You short BTC just before what you think will be a major correction. This strategy goes against the trend, and is for more experienced traders.
⏱️ Time Frame: Daily chart (D1) or 4-hour chart (H4) to capture the possible change in trend.
8️⃣ Risk Management: The art of prudence ⚖️💼
Who uses it: Ray Dalio, known for his focus on diversification and risk limitation.
How to apply it in Bitcoin?
You decide to risk only 2% of your total capital on each BTC trade. You also place a stop-loss to limit the loss on each trade.
Action: You manage your risk exposure in a controlled and careful manner. You diversify your positions and prevent a single trade from affecting your entire account.
⏱️ Time Frame: Applicable to any strategy and time frame. The key is prudence.
Prudence will keep you in the game, while greed can lead to big losses.
9️⃣ Automated Systems 🤖💻
Who uses it: Ed Seykota, pioneer in the use of algorithms for trading.
How to apply it in Bitcoin?
You program an automated system that buys BTC when it breaks a key resistance level and sells when it hits a support.
Action: The system automatically executes orders, eliminating the emotional factor. Ideal for traders who trust in technology and consistency of rules.
⏱️ Time Frame: Charts of 1 hour (H1) or less, depending on the algorithm parameters.
At Binance, you can set up trading bots to automate your strategies, removing the emotional factor and allowing the system to execute buy and sell orders for you. Whether you want to buy on resistance breakouts or sell on support levels, trading bots do it all quickly and accurately.
Binance Trading Bots: Features and Use Cases 👈🌹#BotsDeTrading #Binance
🔟 Fundamental Analysis 🧐💡
Who uses it: Peter Lynch and Ray Dalio, who analyze the fundamentals of companies and assets.
How to apply it in Bitcoin?
You analyze news about the adoption of Bitcoin by institutions and governments, as well as improvements in blockchain technology.
Action: You buy BTC based on analysis of the asset's fundamentals. If you see more companies or governments adopting Bitcoin, this could push the price higher in the long run.
⏱️ Time Frame: Daily (D1) or weekly (W1) chart for long-term strategies.
Tuesday, September 17, 2024:
US Retail Sales (15:30 GMT+3): Indicator of consumer spending and the strength of domestic demand in the US economy.
Wednesday, September 18, 2024:
UK Consumer Price Index (CPI) (09:00 GMT+3): Shows inflation in the UK, key to Bank of England decisions.
Federal Reserve (Fed) Interest Rate Decision (21:00 GMT+3): An interest rate cut is expected, possibly between 25 and 50 basis points, which could significantly impact risk assets like Bitcoin.
Thursday, September 19, 2024:
New Zealand GDP (01:45 GMT+3): Reflects the country's economic growth.
Bank of England Rate Decision (14:00 GMT+3): No change expected, but any comments on future policy could influence markets.
US Jobless Claims (15:30 GMT+3): Key indicator on the state of the US labor market.
Friday, September 20, 2024:
Bank of Japan Policy Rate Decision (02:30 GMT+3): The rate is expected to remain unchanged, but any comments on future policy could weigh on the Japanese yen.
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