Trading Strategies for Stellar
Stellar is an open platform specifically meant to build financial products that connect people everywhere using blockchain technology. The tokens used in this network are called Stellar Lumens also referred to as XLM, which is its ticker symbol. A transaction using Lumens costs 0.0001 XLM. Today, XLM has a market cap of $7.5 billion, making it listed in the top 10 cryptocurrencies worldwide by the total market cap.
One can place exchange orders on the public ledger to sell other currencies or buy them at will. The rates are determined by the person placing the order before any transaction is made.
On the trading approach, swing trading may be considered as a good alternative when reading the Stellar chart more so by traders who don’t have the patience to hold cryptocurrencies. Swing trading cryptocurrency will allow you to hold positions up to 3 weeks. There is no need to use a particular indicator, but it is important to have the ability to identify a chart pattern and major support and resistance levels. Here, all we need is a Double Bar Low Higher Close (DBLHC) pattern. To identify it, look for two bars that have equal lows or near the same price level. Also, the 2nd candle should be way higher than the 1st one.
Steps to consider when trading Stellar (buy trade):
- Find a bullish trend or wait until the market develops a swing low.
The DBLHC can be found at the end of a bearish trend and the start of a new bullish trend acting as a reversal bullish pattern. However, the pattern can develop at any stage during a bullish trend. Having a prior established trend increases the chances of the pattern to work. If it develops right after a swing low is created then we already have a confirmation that the institutional money is buying low.
- Wait until the DBLHC chart pattern develops on the Stellar XLM chart.
It will now be easy to spot a DBLHC pattern as we have discussed it earlier. It has two identical lows, and the 2nd candle is way higher than the 1st.
- Enter the market.
You can choose to enter the market either immediately the DBLHC pattern has been formed or by placing a buy limit order above the high of the 2nd candle.
- Place a protective stop loss below the DBLHC low.
After buying the XLM coin, the protective stop loss can be placed below the DBLHC low.
- Define a take profit level for buying XLM.
Take profits as soon as the Stellar XLM price breaks and closes below the upward trend line.
The same rules apply for the sell trade but in reverse.
- (Forex Trading, n.d.)
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