Tokenized asset exchange Coin Market Solutions offers access to conduct financial transactions with both cryptocurrency pairs and classic financial assets (such as gold, oil, stocks and stock indices) denominated in cryptocurrencies.
How to apply trading strategies? To begin with, we will determine what professional strategies are.
In relation to the transaction to the trend:
According to the duration of transaction retention, strategies can be:
According to the degree of algorithmization, there are strategies:
According to the methods of collecting information for making trading decisions:
We have told you a classification of professional trading strategies. In a sense, this classification may be considered simplified, but it clearly shows the variety of trading strategies that can be used to work on the tokenized assets exchange.
There is no single answer to the question - which strategy is right and which is wrong? They are all workable, but each of them brings results in its own way.
There are 2 factors that influence your choice.
The first one is a market factor. Each financial asset has its own “character”. For example, the cryptocurrency market is characterized by violent price fluctuations. The value of cryptocurrency pairs usually fluctuates with an amplitude of approximately 5% per day. But on especially volatile days, the price can change by 10%, 50% or even more. Such explosive movements are less characteristic of the market for tokenized stocks, especially for those underlying assets behind which solid corporations stand. Each strategy must adapt to the nature of the market.
The second factor is the trader’s personality factor. There is a fair opinion which claims that there is no equally suits all types of traders universal strategy. A lot depends on the personal circumstances, the personal qualities of the trader, his experience, ability to take risks, the skills to make the right decisions and respond to a changing situation.
Therefore, if you can’t immediately decide which strategy to use, don’t worry, this is absolutely normal.
You should develop through experimentation.
Advice #1. Learn more about Coin Market Solution promotions and bonuses. This will give you an advantage in finding a strategy that is most effective for you.
Advice #2. Get a shopping diary. Write down your ideas, results, conclusions. This is the best way to get to know yourself as a trader and find your strategy.
We will analyze such a professional approach as trading on kickbacks.
We will use the ETH cryptocurrency chart.
The mentioned example is an example of work:
This strategy can be used not only in cryptocurrencies but also in the markets of tokenized stocks, commodity assets; and also it can be used on hourly and daily timeframes. Open an account, try to find entry points on the chart.
Tip. Follow the publications on the Coin Market Solution blog, we will periodically share proven strategies in the “Training” section.
Among exchange traders, such a concept as support and resistance levels is widely used. They are easy to visualize when looking at the graph.
Why has it happened? This is because there are no traders above the resistance level who are ready to buy a stock asset. That is, the strength of demand is running out, and the level of resistance seems to limit the market, showing that the asset is too expensive.
Accordingly, the level of support determines the boundary value of the price, below which no one wants to sell the asset. This means it is too underestimated under the level of support.
How to use support and resistance levels in trading? Consider the example of strategies.
This example considers the dynamics of prices in the market of tokenized oil.
This decision is supported by the fact that, firstly, the price has already confirmed the resistance level on the chart. And secondly, against the background, there was a decrease in prices from 35 USDT. Professional traders know that in a downtrend, local resistance levels have a stronger effect. Therefore, a trading strategy for rebounding from these levels has good chances of success.
Similarly, you can trade on a rebound strategy from the support level. An example is from the Bitcoin Cash market.
Professional traders know that support and resistance lines have a unique property; it lies in the fact that:
This phenomenon is called the principle of “mirror levels”. How to use it in trade and investment? Consider an example.
Here is a chart of the daily period, it shows the dynamics of the value of the tokenized stocks of Aphria, it is a cannabis manufacturer, its securities are listed on the Canadian stock exchange.
Knowing the principle of mirror levels, traders could establish sales positions as close to the level of 4.2 USDT per share. Thus, they minimized risks and received an excellent risk ratio to the potential reward.
Similarly, the principle of mirror levels can be used for shopping. Consider an example from a 15-minute chart of tokenized gold prices. This example shows that this strategy works in different markets and different timeframes.
When working with charts in terms of classical technical analysis, traders usually recognize the so-called patterns to search for entry points. Patterns are visual figures (like constellations in the night sky) that are formed as a result of price fluctuations over time. The figures actually differ quite a lot - these are “flags” and “pennants”, there are figures “double bottom” or “triple peak”, the pattern “head and shoulders”, the pattern “butterfly”. The whole encyclopedia of patterns.
In this article, we will consider only one pattern - a triangle. But this is a very effective pattern because it correlates with the cause of price changes in the markets. The tapering sides of the triangle indicate that the market is in a temporary balance between the forces of supply and demand, and the price of an asset equally suits both buyers and sellers. However, when the price goes beyond the boundaries of a narrowing triangle, this indicates that the balance is upset and the market is entering a trend state. Therefore, opening a position on the breakdown of a triangle is a reasoned way to enter the beginning of a trend.
Consider this as an example. Before us is a chart of the ETH cryptocurrency in relation to the USDT. Red lines indicate the formation of a triangle. At point 1, the price went beyond the triangle; this event indicates that the asset is allegedly entering a growth phase. When buying breakdowns of a triangle, traders have a positive chance of capital growth due to the trend phase.
In the previous example, we looked at what patterns are. Now let's talk about indicators. Indicators are a very popular tool used by traders who trade according to the principles of technical analysis.
In the trading platform on the Coin Market Solution tokenized assets exchange, several classic indicators are presented. In this example, we will show how to trade effectively using 2 of them.
The graph of the LTC / USDT cryptocurrency pair has a smooth line which rushes up. This is an indicator of the exponential moving average with a period of 50. At the bottom of the graph is a broken line. This is a CCI (Commodity Channel Index) indicator with a period of 14. How can I use these indicators to trade? It’s not difficult at all.
First, you determine the direction of the trend using a moving average. Since the line is directed up, you should look for inputs into purchases. Selling is not recommended. The CCI indicator will help you find good points for opening a deal. When the indicator reaches its minimum values, traders enter into purchases (these points are indicated by green circles). And when the indicator reaches its peak values, traders close their positions profitably.
As you can see, the trading strategies that we have examined are quite understandable. Their apparent simplicity can be misleading. Is it that simple? But in fact, professional traders have successfully applied the described approaches for many years. The main thing here is discipline and systematicity.
You may come up with ideas for combining different strategies. For example, add CCI indicator signals to the back end trading strategy to gain more confidence in the signal accuracy. Here appears an element of creativity. By combining various strategies, traders can find unique rules that:
We advise you in your own trading rules: