Bitcoin Millionaire Reveals His Efficient Method of Trading

The Best Bitcoin Trading Strategy – 5 Easy Steps to Profit

As we’ve explained before, this is a cryptocurrency trading strategy that can be used trading all the important cryptocurrencies. Actually, this is an Ethereum trading strategy as much as it’s a Bitcoin trading strategy. If you didn’t know Ethereum is the second most popular cryptocurrency (see figure below).

The best Bitcoin trading strategy is 85% price action strategy and 15% a cryptocurrency trading strategy that uses an indicator.

Now…

Before we move forward, we must define this mysterious technical indicator you need for the best Bitcoin trading strategy and how to use it:

The only indicator you need is the:

On Balance Volume (OBV): This is one of the best indicators for day trading bitcoin used to basically analyze the total money flow in an out of an instrument. The OVB uses a combination of volume and price activity to tell you what is the total amount of money going in and out of the market.

OBV Indicator

The OBV indicator can be found on most trading platforms like Tradingview and MT4. How to read the information from the OBV indicator is quite simple.

In theory, if Bitcoin is trading up and at the same time the OBV was trading down, this is an indication that people are selling into this rally so the move to the upside wouldn’t be sustainable. The same is true in reverse if Bitcoin was trading down and at the same time the OBV was trading up.

What we really want to see is the OBV moving in the same direction as the Bitcoin price. Later on, you’ll learn how to apply this information together with the cryptocurrency trading strategy.

No technical indicator is 100% effective every single time and in this regard, our team at Trading Strategy Guides uses the OBV indicator with other supporting evidence to sustain our trades and give some more confirmation of our trades. On this part comes the Ethereum trading strategy which will be used to identify Bitcoin trades.

Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the best Bitcoin trading strategy.

Let’s get started…..

The Best Bitcoin Trading Strategy – 5 Easy Steps to Profit
(Rules for a Buy Trade)

Step #1: Overlay the Bitcoin chart with Ethereum chart and the OVB indicator.

Your chart setup should basically have 3 windows, one for the Bitcoin chart, the second one for the Ethereum chart and last but not least one window for the OVB indicator.

If you followed our cryptocurrency trading strategy guidelines your chart should look the same like in the figure above. For now, all should be good, so it’s time to move forward to the next step of our best Bitcoin trading strategy.

Step #2: Look for Smart Money Divergence between Bitcoin price and Ethereum price.

What do we mean by this?

Simply put it, we are going to look after price divergence between Bitcoin price and Ethereum. Smart money divergence happens when one cryptocurrency fails to confirm the action of the other cryptocurrency.

For example, if Ethereum price breaks above an important resistance or a swing high and Bitcoin fails to do the same, we have smart money divergence. It means that one of the two cryptocurrencies is “lying.” This is the main reason why we have called this cryptocurrency trading strategy and Ethereum trading strategy as well.

In the above figure, we can notice that Bitcoin price fails to break above resistance while Ethereum price broke above and made a new high which is the first sign that the best Bitcoin trading strategy is about to signal a trade.

The reason why the smart money divergence concept works is because the cryptocurrency market as a whole should move in the same direction when we’re in a trend. The same principles have been true for all the other major asset classes for decades and it’s true for the cryptocurrency trading strategy as well.

Before buying we need confirmation from the OBV indicator, which brings us to the next step of the best Bitcoin trading strategy.

Step #3: Look for the OVB to increase in the direction of the trend.

If Bitcoin is lagging behind Ethereum price it means that sooner or later the Bitcoin should follow Ethereum and break above resistance.

But, how do we know that?

Simply, the OBV is a remarkable technical indicator that can show us if the real money is really buying Bitcoin or quite the contrary they are selling. What we want to see when Bitcoin is failing to break above a resistance level or a swing high and the Ethereum already broke is for the OBV to not only increase in the direction of the trend, but to also move beyond the level it was when Bitcoin was trading previously at this resistance level (see figure below).

Now, all it remains for us to do is to place our buy limit order, which brings us to the next step of the best Bitcoin trading strategy.

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