Creating a Bitcoin Trading System: Technical Indicator Based Bitcoin Trading System

A Bitcoin System refers to a set of bitcoin rules that you follow to manage your Crypto trades. These bitcoin rules will determine when you open a Crypto trade & when you will exit. A Crypto trade system is created by combining 2 or more technical indicators.

For example, the Stochastic Oscillator can be combined with other indicators to form a cryptocurrency trading system. For this example stochastics can be combined with the indicators below to come up with the following cryptocurrency trading system.

• RSI
• MACD
• Moving Averages BTCUSD Trading Technical Indicator

Example

Creating a Bitcoin System - Bitcoin Trading System Examples Template

So the question is how can one create a bitcoin systems that works and how does one write its rules? Follow the steps below:

Seven steps to creating an technical indicator based trading system

To come up with these set of rules for bitcoin we use the following seven steps.

1. Choose your Bitcoin Time-frame

This first step depends on how many hours you want to dedicate to bitcoin trading. Whether you prefer sitting in front of the Desktop computer constantly for several hours analyzing short Bitcoin Trading time frames OR you prefer setting up your crypto charts using bigger Bitcoin Trading time frames once or twice a day. Choosing a crypto charts timeframe will mainly depend on what type of Bitcoin trader you are.

Chart Time Frames in MT4 - MT4 Bitcoin Platform

While testing your new bitcoin trading system you may want to find out about its performance on different Bitcoin chart time frames and then choose the most accurate & profitable Bitcoin chart time frame for you.

2. Select technical indicators to identify a new trend

The goal of a trader is to get into the Crypto trade as early as possible and take maximum advantage of bitcoin trading price moves.

One of the common ways to spot a new Bitcoin trend as fast as possible is to use Moving Averages Indicator. A simple strategy is to use a moving average crossover system that will identify a new cryptocurrency setup opportunity at its earliest stage.

Moving Average Crossover Technique - Bitcoin Trading System

Bitcoin Sell signal & Bitcoin Buy signal Generated by Moving Average Crossover Technique

3. Choose additional indicators to confirm the Bitcoin Trading market trend

Once we find a new Bitcoin trend we need to use additional bitcoin technical technical indicators that will confirm the Bitcoin Trading entry signals and give either a green light for action or save a trader from fake outs.

To confirm the signals we use RSI & Stochastic Oscillator.

RSI & Stochastic Oscillator Bitcoin Indicator Trading System

4. Finding entry and exit points

Once indicators are chosen so that one indicator gives the signal & another confirms the signal, it is time to enter a Crypto trade.

A trader should enter as soon as a signal is generated and confirmed after a candlestick closes.

Aggressive Bitcoin traders enter a transaction immediately without waiting for the current bitcoin trading price bar to close.

Other Bitcoin traders wait until the current bitcoin trading price bar is closed and then enter the transaction if the Crypto trade setup has not changed and the signal remains valid. This method is more considerate and prevents additional false entries and whipsaws.

Generating Crypto Trading Signals

Generating Trade Signals

For exits, one can either set an amount he wants to earn per trade or use technical tools that help to set profit goals like Fibonacci Expansion Indicator or set a protective stop loss depending on the Bitcoin Trading market volatility at any given time. Alternatively one can exit when the crypto indicators give an opposite signal.

When opening a new Crypto trade transaction it's always important to calculate in advance how much you are willing to lose if the Bitcoin Trading transaction goes against you. Although the goal is to create the best bitcoin system in the globe, losses are inevitable and therefore being ready to tell where you'll give up and cut your losses before starting a Crypto trade is very important.

5. Calculate risks in each Crypto trade setup

In Bitcoin Trading you must calculate your risk for each Crypto trade. Serious Bitcoin traders will only enter look to open an order it the risk to reward ratio is 2:1 or more.

If you use a high risk to reward ratio like 2:1, you significantly increase your chances of becoming profitable when trading Bitcoin Trading in the long run.

The Risk to Reward Chart below shows you how:

Bitcoin Trading Money Management Reward Risk Chart - Bitcoin Trading

In the first examples of Risk to Reward Ratio, you can see that even if your trading system only won 50% of your open Crypto trades, you would still make profit of $10,000. Read more on this course: Here BTCUSD Trading Money Management Rules and Bitcoin Money Management Methods.

Before opening a new Crypto trade, a trader should define the point at which he will close the open Crypto trade if it turns to be a losing one. Some traders use Bitcoin Trading Fibonacci Retracement Levels and support and resistance levels. Others just use a pre-determined stop loss to set stop loss bitcoin order once they have opened a Crypto trade transaction.

6. Write down the systems bitcoin trading rules and follow them

A Bitcoin Trade System refers to a set of bitcoin trading rules that you follow to manage your Crypto trades.

The keyword is A SET OF Bitcoin TRADING RULES which you must follow. If you do not follow the rules then you do not even have a bitcoin system in the first place.

The next bitcoin trading systems lesson shows you an example of how to use the above steps to come up with your own Bitcoin Trading online bitcoin trading system:

Next Lesson: Example of Writing Trading Systems Rules

7. Practice on a Bitcoin Trading Demo Account

Without enough Crypto trades, you will not be able to realize the true profitability of your cryptocurrency trading system.

Once you have your bitcoin trading system rules written, it's time to test and improve your Crypto trade system by using it on a Bitcoin demo trading account.

Open a free practice cryptocurrency trading practice account and trade Bitcoin Trading your system to see how well it will respond.

It is strongly recommended to start with a practice cryptocurrency account and practice for at least for 1 or 2 months so as to gain some practice and experience how the btcusd trading market works.

Once you start making some decent profit on your Bitcoin Trading demo cryptocurrency trading account you can then try opening a live cryptocurrency trading account and start bitcoin trading with real money.