Trade Bitcoin Trading

Creating a Bitcoin System: Technical Indicator Based Bitcoin System

A Bitcoin System refers to a set of bitcoin rules that you follow to manage your Crypto trades. These bitcoin rules will determine when you open a Crypto trade & when you will exit. A trade system is created by combining 2 or more indicators.

For example, the Stochastic Oscillator Technical can be combined with other indicators to form a trading system. For this example stochastics can be combined with the indicators below to come up with the following cryptocurrency system.

  • RSI
  • MACD
  • MAs BTCUSD Trading Indicator

Example

Creating a Bitcoin System

Creating a Bitcoin System - Bitcoin System Examples Template

So the question is how can one create a bitcoin systems that works and how does one write its rules? Follow the steps below:

Seven steps to creating a technical indicator based system

To come up with these set of rules for bitcoin we use the following seven steps.

1. Choose your Bitcoin Time-Frame

The first step depends on the number of hours you want to set a side to bitcoin trading. Whether you prefer sitting in front of the Desktop computer constantly for several hours analyzing short Bitcoin time frames OR you prefer setting up your crypto charts using bigger Bitcoin time frames once or twice a day. Choosing a crypto charts timeframe will mainly depend on what type of Bitcoin trader you are.

Bitcoin Chart Timeframes in MT4

Chart Time Frames in MT4 - MT4 Bitcoin Platform

While testing out your new bitcoin system you may want to find out about its performance on different Bitcoin time frames and then select the most accurate & profitable Bitcoin time frame for you.

2. Select technical indicators to identify a new trend

The goal of a trader is to get into the Crypto trade as early as possible and take maximum advantage of bitcoin price moves.

One of the common ways to identify a new Bitcoin trend as fast as possible is to use MAs Technical Indicator. A simple system is to use a moving average crossover strategy that will identify a new cryptocurrency setup opportunity at its earliest stage.

MA Crossover Technique - Bitcoin System

Bitcoin Sell signal & Bitcoin Buy signal Generated by MA Crossover Strategy Method

Bitcoin Sell signal & Bitcoin Buy signal Generated by MA Crossover Technique

3. Choose additional indicators to confirm the Bitcoin market trend

Once we find a new Bitcoin trend we need to use additional bitcoin technical indicators that will confirm the Bitcoin entry signals and give either a green light for action or save a trader from fake outs.

To confirm the signals we use RSI and Stochastic Oscillator Technical.

RSI and Stochastic Oscillator Technical Bitcoin Indicator System

RSI & Stochastic Oscillator Bitcoin Indicator Trading System

4. Finding entry & exit points

Once indicators are chosen so that one indicator gives the signal & another confirms the signal, it is time to enter a Crypto trade.

A trader should enter as soon as a signal is generated and confirmed after a candlestick closes.

Aggressive Bitcoin traders enter a transaction immediately without waiting for the current bitcoin price bar to close.

Other Bitcoin traders wait until the current bitcoin price bar is closed and then enter the transaction if the Crypto trade setup has not changed and the signal remains valid. This method is more considerate & prevents additional false entries and whipsaws.

Generating Crypto Trading Signals

Generating Trade Signals

Generating Trade Signals

For exits, a trader can either set an amount he wants to earn per trade or use technical tools that help to set profit goals like Fibo Expansion Technical Indicator or set a protective stop loss depending on the Bitcoin market volatility at any specific time. Alternatively one can exit when the crypto indicators give an opposite signal.

When opening a new Crypto trade transaction it's always important to calculate in advance how much you are willing to lose if the Bitcoin transaction goes against you. Although the objective is to come up with the best bitcoin system in the globe, losses are inevitable and therefore being ready to tell where you'll give up and cut your losses before starting a Crypto trade is very important.

5. Calculate risks in each Crypto trade setup

In Bitcoin you must calculate your risk for each Crypto trade. Serious Bitcoin traders will only enter look to open an order it the risk to reward is 2:1 or more.

If you use a high risk to reward like 2:1, you significantly increase your chances of becoming profitable when trading Bitcoin in the long run.

The Risk to Reward Chart below shows you how:

Crypto Trading Money Management Reward Risk Chart

Bitcoin Trade Money Management Reward Risk Chart - Bitcoin Trading

In the first examples of Risk to Reward Ratio, you can see that even if the trade system only won 50% of your open Crypto trades, you would still make profit of $10,000. Read more on this course: Here BTCUSD Crypto Currency Trade Equity Management Rules and BTCUSD Crypto Funds Management Methods.

Before opening a new Crypto trade, a bitcoin trader should define the point at which he will close the open Crypto trade if it turns to be a losing one. Some traders use Bitcoin Fibonacci Retracement Levels and support and resistance zones. Others just use a pre-determined stop loss to set stop loss bitcoin order once they have opened a Crypto trade transaction.

6. Write down the systems bitcoin rules and follow them

A Bitcoin Trade System refers to a set of bitcoin rules that you follow to manage your Crypto trades.

The keyword is A SET OF Bitcoin TRADING RULES that you must follow. If you don't follow the rules then you do not even have a bitcoin strategy in the first place.

The next bitcoin systems lesson displays to you an example of how to use the above steps to come up with your own Bitcoin online bitcoin system:

Next Lesson: Example of Writing Systems Rules

7. Practice on a Bitcoin Practice Account

Without enough Crypto trades, you will not be able to realize the true profitability of your system.

Once you as a trader have your bitcoin system rules written, it is time to test and improve your Crypto trade system by using it on a Bitcoin Practice Demo Account account.

Open a free practice practice account & trade Bitcoin your system to see how well it will respond.

It is strongly recommended to start with a practice account and practice for at least for 1 or 2 months so as to gain some practice and experience how the btcusd market works.

Once you start making some decent profit on your Bitcoin demo account you then can try opening a live account and start bitcoin trading with real money.

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