Trading Strategies for Ethereum

Trading Strategies for Ethereum
Ethereum is an open source, public, blockchain based distributed computing platform featuring smart contract functionality. It’s token is called Ether. Transactions with Ethereum are faster than those with Bitcoin, which takes between 12 and 15 seconds. The difference betweenEthereum and Bitcoin is the proof of stake and the fact thatEthereum has real people behind it. You can buy or sell Ether using the cryptocurrency exchanges namely Coinbase and Binance. Binance are known for their strong team, proven products, superior technology, and industry resources. Thus the most recommended and trusted.
The Moving Average Convergence Divergence (MACD) together with the Money Flow Index (MFI) are the common technical indicators used in the Ethereum trading strategies. The MACD is a momentum indicator that helps to spot a trend while the MFI measures the money flow into and out of the cryptocurrency. It is based on price action and incorporates volume in its calculation thus used to measure buying and selling pressure.
Steps to consider when trading Ethereum(buy trade):

  1. Wait until the MFI drops below the 20 level.

When MFI reading is below 20 level, it is considered bullish and oversold. However, it is advisable to check it against other technical indicators such as MACD.
 

  1. Wait for MACD histogram to break.

When MACD histogram turns positives, it confirms that the bullish momentum has started to build up.

 

  1. Buy after MFI also breaks above the 50 level.

MFI reading above the 50 level represents an inflow of money into the cryptocurrency which is the time when smart money is stepping into the market.

 

  1. Place a protective stop loss below the previous swing low.

The ideal place to hide the stop loss is just below the previous swing low. You can add a buffer to protect yourself in case of a false breakout.
 

  1. Take profits when MFI enters the overbought

MFI reading above the 80 level is considered bearish and overbought which shows that the market is about to turn against us thus the need to take profits.

 
The same rules apply for the sell trade but in reverse.
 
References:

  1. (Trading Heroes, n.d.)
  2. (Day Trading, n.d.)
  3. (Medium Corporation, n.d.)

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