The Best Tools For Trading Crypto | Swing Trading & More...

Key Takeaways

  • Don’t overcomplicate things
  • Stick to 2-5 indicators
  • Each indicator has a different time and place
  • A lot of indicators are rubbish

The Best Tools For Trading Crypto Explained

Day trading and swing trading cryptocurrencies is like jumping straight into the deep end of the pool without learning how to swim if you don’t have the right tools and indicators for trading.

In this article I am going to go over the ONLY indicators that you need to start successfully day or swing trading crypto. A big mistake I see a lot of beginners make is over complicating things and having hundreds of indicators on their chart.

Keep it simple.

How to use S&R lines/zones to trade

Support and Resistance zones/lines is one of the most basic yet one of the most powerful trading tools you can use. Some of the most successful traders I know use just S&R to trade.

S&R lines are great for not only finding entries and stop losses for your trades but also giving you a good spot to place your take profits. Buy at the support and sell at the resistances.

I will show you examples of where to place your S&R lines and also show you some trades I have taken based on these. In this write up I will be placing them by reading the chart however a great Indicator you can use to place them is called “Pivot Points Standard”. 

When using this indicator be sure to change the settings to base the lines off the Fibonacci model.

In this chart you can see where the price has reached the zone multiple times and has been rejected, this is a resistance. Another way you can look at it is as a supply zone, where there are a lot of sell orders causing a higher supply of the token making it harder to break through this price. 

As there is a high amount of sell orders in this zone there are not enough buy orders to push the price through it.

As you can see this zone eventually gets flipped so the resistance is now a support. Towards the end of the chart you can see the zone is now being revisited and is acting as a support or a demand zone. 

There are now more buy orders at this price than sell orders therefore stopping the price from dropping below this zone.

Now how can you use these zones to trade?

As the price comes back down to the respected zone you would buy in at the top of the zone or nearby and place your stop loss just below it. If the price drops out of this zone then the zone is no longer a support so the trade is invalid, always use a stop loss.

Taking profits is super important when trading but how would I use S&R to decide where to take profit?

Place resistance lines and use these as targets to take profit. As you can see on the chart above there is a pretty clear resistance which I would use to take 25% profit of the table, at the next resistance I would take another 25% and so on. 

As you can see once it breaks past the resistance it then revisits it and bounces flipping the resistance into a support. I highly recommend moving your stoploss to either break even or a little bit in profit once you hit this first take profit target, this makes your trade now risk free.

Personally I like to leave 25% in as a “moon bag” and just keep moving my stop loss further and further into profit.

How to use the MACD indicator to find entries

The MACD is one of my favorite indicators to use and I have it open on my charts a majority of the time. 

When pairing the MACD with the RSI it is perfect for finding entries and also exits for your trades, I will talk more about the RSI in another write up.

So what is the MACD?

MACD stands for moving average convergence divergence (bit of a tongue twister) and it shows the relationship between two different moving averages, the 26 period ema (exponential moving average) and the 12 period ema. 

The MACD is generally used to signal a change in direction of the price action.

There is a formula for how this is calculated if you want to get into the nitty gritty however I won't explain it here. If you want to read more on it head over to this article.

How to use the MACD to find entries on your trades?

The MACD is made up of two different lines, one being blue and one being orange. Simply put, when the blue crosses above the orange this is a buy signal and when the blue crosses below the orange this is a sell signal. 

This is a great way to find reversals in trends. 

When looking for swing trades I like to check the MACD on both the 4H and the 1D charts to see where it is at. If the MACD looks healthy on the 4H chart and is just about to cross on the 1D chart I will consider an entry.

As you can see on the chart above the MACD is getting closer and is about to cross, paired with the price also sitting on a strong support I saw this was a good entry and took a position.

How to spot and sell the top

Knowing how to spot the top can be the hardest part of trading, not only is it crucial for taking profits but it is also crucial for spotting pullbacks/dumps before they happen.

To spot the top or close to the top on Bitcoin I use two indicators, one being the MACD which I have spoken about in another article and the other is using divergences on the RSI.

A divergence occurs when the price action goes against a divergence indicator such as the RSI, there are both bullish and bearish divergences. To spot the top we are looking for a bearish divergence.

We will use the MACD to look for a bearish crossover and we use the RSI to spot when the price reaches the “overbought” territory. We also use the RSI to spot bearish divergences against the price.

To spot a bearish divergence you are looking for two higher highs on the chart and two lower lows on the RSI.

This can also be used in the opposite way to signal when the bottom may be in. 

Best Indicators For Swing Trading

When it comes to charting with indicators I very much agree with the saying “less is more”. All too often I see charts with 10 indicators layered over it making it look fancy however how telling you anything worth knowing.

Every chart is going to be different and may require different indicators or sometimes none at all. I see indicators as a way of confirming your ideas developed from reading the chart, placing your trend lines and your S&R lines.

I recommend learning how to use each of the indicators and then practicing with them to develop a strategy and to learn in what situations to use what indicator.

My top 5 indicators are:

RSI

MACD

Pivot Points
3x Linear Regression 

Visible Range

RSI:

The RSI is great to see when the asset is either oversold or overbought. When overbought you can expect for the to be a pull back soon and when oversold you can start looking for formation of a reversal or bottom. 

The RSI pairs with the MACD very well. The RSI is also great for finding bullish or bearish divergences to signal tops and bottom.

MACD:

The MACD is one of my favorite indicators to use and I have it open on my charts a majority of the time. When pairing the MACD with the RSI it is perfect for finding entries and also exits for your trades.

The MACD is made up of two different lines, one being blue and one being orange. Simply put, when the blue crosses above the orange this is a buy signal and when the blue crosses below the orange this is a sell signal. This is a great way to find reversals in trends. 

When looking for swing trades I like to check the MACD on both the 4H and the 1D charts to see where it is at. If the MACD looks healthy on the 4H chart and is just about to cross on the 1D chart I will consider an entry.

Pivot Points:

Pivot points are great to use as a confirmation of where to place your support and resistance lines. Pivot points are lines placed on our chart based on the Fibonacci model.

When placing support and resistance lines I will flick on the pivot points to see how they line up with my S&R lines and also to get a “suggestion” of where I should place them.

The pivot points indicator can be great if you are struggling to find S&R’s

3x Linear Regression:

This is one that I don’t use all the time, however I will flick it on if I am looking at entering a trade on an asset as the linear regression channel can be a great way of showing if the price action is near the top or the bottom of the current range that it is trading in.

There is a complicated equation on how it works that to be honest I don’t understand, however once you use the indicator enough you will learn your own strategy of how to use it. The linear regression channel can also be a great indicator of the current trend.

Long story short, long the bottom of the range and short the top of the range. 

Volume profile:

Volume Profile is a graph on the side of your chart that shows the volume at different prices. This is different from your standard volume bars as it shows the volume at certain prices rather than the volume during the given time as the standard volume bars do.

This is great for finding key prices that people are interested in, price action will generally gravitate towards these high volume prices.

Key Takeaways

  • Don’t overcomplicate things
  • Stick to 2-5 indicators
  • Each indicator has a different time and place
  • A lot of indicators are rubbish

The Best Tools For Trading Crypto Explained

Day trading and swing trading cryptocurrencies is like jumping straight into the deep end of the pool without learning how to swim if you don’t have the right tools and indicators for trading.

In this article I am going to go over the ONLY indicators that you need to start successfully day or swing trading crypto. A big mistake I see a lot of beginners make is over complicating things and having hundreds of indicators on their chart.

Keep it simple.

How to use S&R lines/zones to trade

Support and Resistance zones/lines is one of the most basic yet one of the most powerful trading tools you can use. Some of the most successful traders I know use just S&R to trade.

S&R lines are great for not only finding entries and stop losses for your trades but also giving you a good spot to place your take profits. Buy at the support and sell at the resistances.

I will show you examples of where to place your S&R lines and also show you some trades I have taken based on these. In this write up I will be placing them by reading the chart however a great Indicator you can use to place them is called “Pivot Points Standard”. 

When using this indicator be sure to change the settings to base the lines off the Fibonacci model.

In this chart you can see where the price has reached the zone multiple times and has been rejected, this is a resistance. Another way you can look at it is as a supply zone, where there are a lot of sell orders causing a higher supply of the token making it harder to break through this price. 

As there is a high amount of sell orders in this zone there are not enough buy orders to push the price through it.

As you can see this zone eventually gets flipped so the resistance is now a support. Towards the end of the chart you can see the zone is now being revisited and is acting as a support or a demand zone. 

There are now more buy orders at this price than sell orders therefore stopping the price from dropping below this zone.

Now how can you use these zones to trade?

As the price comes back down to the respected zone you would buy in at the top of the zone or nearby and place your stop loss just below it. If the price drops out of this zone then the zone is no longer a support so the trade is invalid, always use a stop loss.

Taking profits is super important when trading but how would I use S&R to decide where to take profit?

Place resistance lines and use these as targets to take profit. As you can see on the chart above there is a pretty clear resistance which I would use to take 25% profit of the table, at the next resistance I would take another 25% and so on. 

As you can see once it breaks past the resistance it then revisits it and bounces flipping the resistance into a support. I highly recommend moving your stoploss to either break even or a little bit in profit once you hit this first take profit target, this makes your trade now risk free.

Personally I like to leave 25% in as a “moon bag” and just keep moving my stop loss further and further into profit.

How to use the MACD indicator to find entries

The MACD is one of my favorite indicators to use and I have it open on my charts a majority of the time. 

When pairing the MACD with the RSI it is perfect for finding entries and also exits for your trades, I will talk more about the RSI in another write up.

So what is the MACD?

MACD stands for moving average convergence divergence (bit of a tongue twister) and it shows the relationship between two different moving averages, the 26 period ema (exponential moving average) and the 12 period ema. 

The MACD is generally used to signal a change in direction of the price action.

There is a formula for how this is calculated if you want to get into the nitty gritty however I won't explain it here. If you want to read more on it head over to this article.

How to use the MACD to find entries on your trades?

The MACD is made up of two different lines, one being blue and one being orange. Simply put, when the blue crosses above the orange this is a buy signal and when the blue crosses below the orange this is a sell signal. 

This is a great way to find reversals in trends. 

When looking for swing trades I like to check the MACD on both the 4H and the 1D charts to see where it is at. If the MACD looks healthy on the 4H chart and is just about to cross on the 1D chart I will consider an entry.

As you can see on the chart above the MACD is getting closer and is about to cross, paired with the price also sitting on a strong support I saw this was a good entry and took a position.

How to spot and sell the top

Knowing how to spot the top can be the hardest part of trading, not only is it crucial for taking profits but it is also crucial for spotting pullbacks/dumps before they happen.

To spot the top or close to the top on Bitcoin I use two indicators, one being the MACD which I have spoken about in another article and the other is using divergences on the RSI.

A divergence occurs when the price action goes against a divergence indicator such as the RSI, there are both bullish and bearish divergences. To spot the top we are looking for a bearish divergence.

We will use the MACD to look for a bearish crossover and we use the RSI to spot when the price reaches the “overbought” territory. We also use the RSI to spot bearish divergences against the price.

To spot a bearish divergence you are looking for two higher highs on the chart and two lower lows on the RSI.

This can also be used in the opposite way to signal when the bottom may be in. 

Best Indicators For Swing Trading

When it comes to charting with indicators I very much agree with the saying “less is more”. All too often I see charts with 10 indicators layered over it making it look fancy however how telling you anything worth knowing.

Every chart is going to be different and may require different indicators or sometimes none at all. I see indicators as a way of confirming your ideas developed from reading the chart, placing your trend lines and your S&R lines.

I recommend learning how to use each of the indicators and then practicing with them to develop a strategy and to learn in what situations to use what indicator.

My top 5 indicators are:

RSI

MACD

Pivot Points
3x Linear Regression 

Visible Range

RSI:

The RSI is great to see when the asset is either oversold or overbought. When overbought you can expect for the to be a pull back soon and when oversold you can start looking for formation of a reversal or bottom. 

The RSI pairs with the MACD very well. The RSI is also great for finding bullish or bearish divergences to signal tops and bottom.

MACD:

The MACD is one of my favorite indicators to use and I have it open on my charts a majority of the time. When pairing the MACD with the RSI it is perfect for finding entries and also exits for your trades.

The MACD is made up of two different lines, one being blue and one being orange. Simply put, when the blue crosses above the orange this is a buy signal and when the blue crosses below the orange this is a sell signal. This is a great way to find reversals in trends. 

When looking for swing trades I like to check the MACD on both the 4H and the 1D charts to see where it is at. If the MACD looks healthy on the 4H chart and is just about to cross on the 1D chart I will consider an entry.

Pivot Points:

Pivot points are great to use as a confirmation of where to place your support and resistance lines. Pivot points are lines placed on our chart based on the Fibonacci model.

When placing support and resistance lines I will flick on the pivot points to see how they line up with my S&R lines and also to get a “suggestion” of where I should place them.

The pivot points indicator can be great if you are struggling to find S&R’s

3x Linear Regression:

This is one that I don’t use all the time, however I will flick it on if I am looking at entering a trade on an asset as the linear regression channel can be a great way of showing if the price action is near the top or the bottom of the current range that it is trading in.

There is a complicated equation on how it works that to be honest I don’t understand, however once you use the indicator enough you will learn your own strategy of how to use it. The linear regression channel can also be a great indicator of the current trend.

Long story short, long the bottom of the range and short the top of the range. 

Volume profile:

Volume Profile is a graph on the side of your chart that shows the volume at different prices. This is different from your standard volume bars as it shows the volume at certain prices rather than the volume during the given time as the standard volume bars do.

This is great for finding key prices that people are interested in, price action will generally gravitate towards these high volume prices.

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