Stochastic Bitcoin Trading System

This topic should be called: Combining Stochastics with other Indicators, but Stochastic Bitcoin Trading System sounds real nice.

Stochastic Oscillator cryptocurrency indicator can be combined with other bitcoin indicators to form a cryptocurrency trading system. For our example we will combine it with:

• RSI
• MACD
• Moving Averages

Example 1: Bitcoin Stochastic Trading System

Sell Bitcoin Trading Signal Generated using Bitcoin Stochastic Trading System

From our bitcoin trading system the sell cryptocurrency signal is generated when:

1. Both Moving Averages are moving down
2. RSI is below 50
3. Stochastic heading downwards
4. MACD moving downwards below center-line

The sell cryptocurrency signal was generated when all these bitcoin trading rules were met. The exit cryptocurrency signal is generated when a signal in the opposite direction is generated i.e. When the crypto indicators reverse.

The good thing about using such a cryptocurrency trading system is that we are using different types of bitcoin indicators to confirm the bitcoin trade signals and avoid as many bitcoin trading whipsaws as possible in the process.

• Stochastic - is a momentum oscillator crypto indicator
• RSI- is a momentum oscillator crypto indicator
• Moving Averages- is a bitcoin trend following crypto indicator
• MACD- is a bitcoin trend following crypto indicator

It is very useful to combine more than one cryptocurrency indicator, as a combination of bitcoin trading signals is better than relying on just a single cryptocurrency indicator. The cryptocurrency indicator combinations reinforce each other, and cancel out false whipsaw cryptocurrency signals.

A bitcoin trend following indicator helps a bitcoin trader to see the overall picture, while using more than one momentum cryptocurrency indicator gives better and more reliable entry & exit points for trading bitcoin.

The cryptocurrency indicators combinations and their bitcoin trading signals help to decipher a lot of the btcusd trading market activity.

Example 2: Bitcoin Stochastic Trading System

Buy Crypto Trading Signal Generated using Bitcoin Stochastic Trading System

For this example the bitcoin trend is clearly upwards, but at some point there were a few bitcoin trading whipsaws generated by the stochastic oscillator cryptocurrency indicator, can i spot them? So the question is how can a bitcoin trader avoid trading these bitcoin trading whipsaws?

Well, the answer is that by looking at the other technical crypto indicators such as MACD cryptocurrency indicator a bitcoin trader could have avoided the whipsaw, even the MACD indicator had not given a crossover cryptocurrency signal although it was very close to the zero center-line level, at the same time the gradient at which the moving averages turned was not so sharp as to warrant a decisive cryptocurrency trading market trend reversal. Well the thing is that it’s not so obvious when it comes to recognizing cryptocurrency market whipsaws; it is a skill that takes some time but after some time you can spot whipsaws from a mile away.

One tip is that as long as MACD cryptocurrency indicator is above zero center-line even if the MACD lines are heading downwards then the bitcoin trend is still upwards. As you can see from the above example MACD cryptocurrency indicator never went below zero line and afterwards the upward bitcoin trend continued with the MACD cryptocurrency indicator maintaining above Zero line and continuing to move upwards.

During ranging cryptocurrency markets Stochastic Oscillator cryptocurrency indicator will give the fastest bitcoin trading signals which are prone to whipsaws. This is why stochastic oscillator indicator is best combined with other cryptocurrency indicators and the bitcoin trading signals traded are confirmed by another one or two other Bitcoin indicators.