Stochastic Bitcoin Trading System

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

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

• RSI
• MACD
• Moving Averages Bitcoin Trading Indicator

Example 1: Bitcoin Stochastic System

Sell Bitcoin Trading Signal Generated using Stochastic System

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

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

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

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

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

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

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

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

Example 2: Bitcoin Stochastic System

Buy Trading Signal Generated using Bitcoin Stochastic System

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

Well, the answer is that by looking at the other technical indicators such as MACD cryptocurrency indicator a trader could have avoided the whipsaw, even the MACD technical indicator had not given a crossover trading signal although it was very close to the zero center line level, at the same time the gradient at which the moving averages technical indicators 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 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 markets Stochastic Oscillator indicator will give the fastest bitcoin trading signals which are prone to whipsaws. This is why stochastic indicator is best combined with other indicators & the bitcoin trading signals traded are confirmed by another one or two other Bitcoin indicators.