20 & 50 SMA Strategy
In this strategy, we will be using 20 SMA & 50 SMA in the Daily time frame for taking our trades.
Pre Requisites: Knowledge of moving averages & price action.
How to Select Coins?
We will be trading in only those coins which are above their 20 Simple Moving Average in the daily time frame. How do we find those? Either we can manually look for such coins by studying their charts or another thing we can do is:-
Go to Coinmarketcap
1) Look for coins that have had recent pumps under 7d %. Most probably these coins are trading above their 20 SMA.
2) Make a list of such coins. For our example, we will go with the first coin in the list Near Protocol.
3) It is important to select coins from the top 100 market cap which are available on reputed exchanges such as Binance or FTX. There are many shady coins also.
Once you have selected your coins, you need to filter out those coins in which:-
1) Both 20 SMA & 50 SMA are inclined in the upward direction (20 needs to be above 50)
2)Price is trading above the 20 SMA
3) All this will be observed in the daily time frame
How to place trades?
1) 2 trades will be placed both at 20 SMA & at 50 SMA with a 15% stop loss. DO NOT TRADE WITHOUT A STOP LOSS
2) You can keep your stop loss as per your risk-taking capacity. For me, 15% works the best
3) This strategy requires patience and you need to constantly place fresh bids and wait for the price to come to your trading zone
1) The first trade that we will get, the price bounces off from the 20 SMA to 103%. You need to book your profits accordingly. Don't hold your trade for too long
2) In the second trade the price goes below 20 SMA for a brief moment but does not trigger our stop loss and the trade rides to an astonishing 169%
3) Our 50 SMA trade did not trigger till now
4) Our 4th trade below hit the stop loss & we exited with a 15% loss
5) But our 50 SMA trade got triggered & gave us an opportunity to earn massive profits till 177%
Important Things to Note
1) Never step in without a stop loss
2) Book profits do not ride your trade for too long. Profitable trades end up in losses sometimes. Take out small profits every now and then. Do not hold your trade without taking profits. I have learned this the hard way!
3) Stop trading when the moving averages start to straighten or go downwards. You can still get a trade but it is better to be safe than take a loss
4) Every coin will be different. Near had good volatility. Some coins might not give you such amazing profits. Further, some coins might not respect these averages with such precision. So you need to study the coin as well!