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Why Cardano ADA Deserves your Attention – Cardano Cryptocurrency Strategy
Right now there are countless of cryptocurrencies that you can buy. However, there is one coin, the Cardano ADA cryptocurrency that deserves your attention more. Also called the Ethereum of Japan, ADA coin is one of the most undervalued top 10 cryptocurrencies.
Our team at Trading Strategy Guides is working hard to put together the most comprehensive PDF guide to different cryptocurrency strategies. Previously, we have covered the Monero privacy coin which is the world’s biggest cryptocurrency that offers you anonymity.
Why is Cardano ADA so popular all of a sudden?
Cardano is a promising cryptocurrency that seeks to improve all the problems with Ethereum. What makes Cardano different from other cryptocurrencies is the level of technical competency in this new blockchain technology.
Even the most successful cryptocurrencies right now aren’t able to handle the level of transactions that are done through Visa and MasterCard, but ADA coin is getting close to handle thousands of transactions per second. Bitcoin and Ethereum can’t even get a fraction of that but Cardano can.
Moving forward, we’re going to discuss what is the Cardano coin and how to make money with our Cardano cryptocurrency strategy. Here is an approach to currencies by Warren Buffett.
What is Cardano Coin?
Cardano is a new cryptocurrency coin that was launched in September 2017 after more than two years of development. The Cardano ADA claims to be a 3rd generation cryptocurrency. Ada coin was developed by Charles Hoskinson one of the co-founders of Ethereum, so this is kind of a big deal.
Cardano is blockchain protocols that handle cryptocurrency transactions and a computing layer built to handle smart contracts.
The first generation of cryptocurrencies was bitcoin which was used to transfer and store virtual money. The second generation was Ethereum which brought smart contracts.
The third generation of cryptocurrencies wants to improve the first two generations.
Currently, ADA coin is ranked as the 8th biggest cryptocurrency based on the market capital. Cardano is now only worth $0.16 and at this price is a steal.
Like any other market the cryptocurrency market is also a zero sum game, so in order to capture some profits, you need to understand how the game and secondly, you need to be able to interpret the price action.
Our Cardano cryptocurrency strategy will help you properly read the Cardano price action.
We’re going to use some of the best technical tools available for daytrading the market.
The Cardano cryptocurrency strategy uses the 200-day moving average in combination with volume to predict were ADA price would be in the near future.
The 200-day moving average is one of the most powerful moving averages out there.
Paul Tudor Jones one of the most successful hedge fund managers once said:
“My metric for everything I look at is the 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: “How do I keep from losing everything?” If you use the 200-day moving average rule, then you get out. You play defense, and you get out.”
If one of the most successful traders says something like this about the 200 EMA, then it’s worth to pay attention.
In simple terms, when the Cardano price trades above the 200 moving average, it creates a bullish trend. Inversely, when Cardano price trades below the 200 moving average, it establishes a bearish trend.
Because so many traders use it, the 200 moving average is like a self-fulfilling prophecy that creates unique trading opportunities.
Secondly, we use the Volume indicator as an extra layer of confirmation. We use the volume indicator to assess the health of the Cardano trend. When we combine the Ada buying and selling pressure with the price action, you have a powerful technical indicator that will help you to make a profit in the markets.
Volume can only be used in conjunction with the price action.
Here it is how Volume works.
If Cardano price trades below the 200-day moving average and you see an increase of volume that supports the bearish trend, then that is a sell signal. Conversely, if Ada price trades above the 200 moving average the opposite will be true.
Cardano Cryptocurrency Strategy
Now, it’s time to outline our step by step guide to trade Cardano Ada on any time frame.
As always, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the Cardano cryptocurrency trading strategy. For this demonstration, we’re going to look at the buy side.
Step #1: Cardano ADA price needs to trade above the 200-day moving average
The first condition that Cardano requires to satisfy is to trade above the 200-day moving average.
When price trades above the 200-day moving average we know we have a strong premise for a bullish trend to be put in place.
The more time Cardano price spends above the 200-day moving average and the biggest the distance between the Ada price and the 200-day moving average the stronger the trend is.
Next, we need to shift our focus and interpret the data coming out from the Volume indicator.
Step #2: Volume needs to be above average and twice as much volume compared with previous volume bars needs to come in
We need to look for instances when the volume bars are above the average volume (the red moving average). But this is not all; we also need the buying volume to be twice as much as previous volume bars.
In the below Cardano chart we can note two instances where the volume was not just above average, but it was also double as the previous volume bars. In this case, we’re dealing with two possible buying levels.
Wait for trading situations where the buying volume is increasing considerably. This really shows institutional buying that has the power to move the Ada coin price.
Once these two trade conditions are satisfied, we now have our triggers for our entry strategy.
Step #3: After volume has increased, buy at the opening of the next candle
When to buy Cardano ADA is quite intuitive if you have followed this cryptocurrency step-by-step guide.
The moment we see institutional buying presence we want to be sure we’re not left out. In this regard, after the volume has increased, we buy at the opening of the next candle preceding the big volume candle. Here is an example of master candle setup.
Usually, you’ll be buying right after the first bullish candle that often is the starting point of a new trend. Don’t be afraid to buy on the way up as this will pay handsomely in the long run.
The next important thing we need to establish for our Cardano strategy is where to place our protective stop loss.
See below …
Step #4: Place protective Stop Loss below the 200-day moving average
Hide your protective stop loss below the 200-day moving average.
A market that has a strong bullish trend should not drop below the most powerful moving average aka the 200-day moving average. By hiding your stop loss below the 200 moving average, we’re minimizing risk as much as possible.
Note* as the trend progresses you can also trail your stop loss below the 200-day MA.
Last but not least, we also need to define a take profit level for buying Cardano.
See below …
Step #5: Take Profit when we break and close below the 200-day Moving Average
The 200-day moving average can serve us as a significant trigger for our exit strategy.
When we break below the 200 moving average, that’s the first sign that the trend is about to change the tide. When these happen make sure you take profits.
Note** the above was an example of a BUY trade using the Cardano trading strategy. Use the same rules for a SELL trade – but in reverse. In the figure below, you can see an actual SELL trade example.
Conclusion – Cardano Cryptocurrency Strategy
The Cardano Ada coin wants to become a governance model where the code has become law, and no group of people should have complete power over the cryptocurrency. A top 10 cryptocurrency like Cardano Ada deserves a place in your crypto portfolio. Here is how to apply technical analysis step by step.
With this cryptocurrency trading strategy, we can capture the sentiment of big players and with this the opportunity to make big profits. The key remains in following the 200-day moving average and the volume instruction presented in this cryptocurrency guide.
Thank you for reading!
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