The Heikin-Ashi technique is simply another form of looking at charts that traders can use to spot trading opportunities. This new revolutionary way to look at charts can be applied to any time frames. So, no matter of our trading style (daytrading, swing trading, trend following) you can implement this trading method into your trading cryptocurrency strategy.
You can put to use the Heikin-Ashi charts to many markets even though they initially were designed for and stock market price; it has the same kind of success on Forex currency pairs as well as on cryptocurrencies.
Heikin – Ashi in Japanese means average bar and are a type of different than the typical Japanese that you encounter when learning how to trade. However, we’ve found that the Heikin – Ashi are much more accurate in helping us determine Bitcoin Gold price movements.
There are two primary trade signals that we can identify through the Heikin Ashi candlestick:
with no wicks or very small wicks indicate a strong uptrend and good buying Bitcoin Gold opportunities.
Small characterized by a small body and big upper and lower wicks signal a potential reversal.
Note* The same rule can be applied in reverse for Heikin Ashi .
Step #1: Identify three consecutive candles that have no lower wicks.
After you switch to the Heikin Ashi chart on your trading platform, the first step is to identify three consecutive candles.
It’s mandatory that all the three Heikin Ashi have NO lower wicks.
Remember that with no wicks indicate a strong uptrend and further increase in Bitcoin Gold price.
We also have to make sure that these three consecutive are placed at the right location.
Step #2: Before the three consecutive candles we need to have no more than 5 consecutive candles
Location, location, location is the key word and a fundamental concept if you want to improve your trading instantly.
So, prior to the three candles spotted earlier, we need the location of this pattern to be located in such a way that behind it we can’t count more than five consecutive candles.
Identifying trends and opportunities to buy Bitcoin Gold are much easier now that we have a trade setup with a good location.
Step #3: Buy at the market at the opening of the next 4th candle
When to buy Bitcoin Gold is very easy to understand.
To initiate a position, wait for the opening of the 4th candle after the three consecutive candles.
Preferably, after you spotted the three candle trade setup, you need to get ready to pull the trigger.
Step #4: Place protective Stop Loss below the most recent swing low
There is a very obvious predictability in our approach to the stop loss strategy.
We hide our protective stop loss few pips below the most recent swing low. Alternatively, you can place your stop loss below the three pattern, but you risk to be taken out prematurely when we’re in a trading range.
So, you need to adapt your stop loss strategy to the current market conditions.
Step #5: Take Profit equals 2 x risk or 3 x risk
Depending on how strong the Bitcoin Gold trend is, you want your take profit target to be two or three times more than your stop loss. This is a simple exit strategy that potentially can reward you with a positive risk to reward ratio.
For take profits, you can also cash out at regular trading intervals partial profits.
Note** the above was an example of a BUY trade using the Bitcoin Gold cryptocurrency trading strategy. Use the same rules for a SELL trade – but in reverse.
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