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EOS Cryptocurrency Trading Strategy – Turtle Soup Pattern
The EOS cryptocurrency trading strategy probably uses one of the most classical chart trading patterns used by hedge fund managers. The Turtle Soup pattern is a volatile price action pattern that is more suitable for swing trading.
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There is a fantastic story behind the Turtle Soup chart pattern which will make you better understand why this pattern works so well.Also read our best fractal trading strategy.
In 1983 professional commodity trader Richard Dennis set-up the turtle experiment so he can demonstrate that anyone can learn how to trade. The Turtle system taught by Richard Dennis was a simple trend following strategy based on a 20-day breakout of the price.
Although, in the long run, the Turtle strategy can yield significant profits if traded across multiple markets (commodity, stocks, Forex currency, cryptocurrency, ETF), it also tends to produce a high number of false breakouts, and it has a low win rate.
If you have a win low rate strategy, you can simply do the opposite of that strategy and turn something negative into something positive.
This is how the Turtle Soup pattern comes to life.
Moving forward, we’ll give you some more clues of how the turtle soup pattern is constructed, what is EOS coin and how trading EOS tokens really works. Here is an approach to currencies by Warren Buffett.
What is EOS coin?
Cryptocurrency EOS is a new type of platform that supports decentralized Apps. It’s designed to be a very easy way for developers to create decentralized Apps.
This new blockchain technology has been getting a bunch of attention which is the reason why we have compiled this EOS guide.
The cryptocurrency EOS was launched in June 2017, and at its one year anniversary, it stands as the world’s 5th most valuable coins in the world. The total EOS market cap is more than $12 billion, which is 3.5 less valuable than Tesla.
Because Tesla is looking to have a partnership with cryptocurrency EOS, which is a big deal.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of the EOS cryptocurrency trading strategy. For this demonstration, we’re going to look at the buy side. Here is another strategy called Time-Based Trading Strategy.
EOS Cryptocurrency Trading Strategy
During this section, you’ll learn an effective way of trading EOS tokens, and you’ll be given a step-by-step guide on how to buy EOS at the right time.
Our cryptocurrency strategy looks to identify when those 20-day false breakouts happen and to capitalize on the potential trend reversal. Usually, if we have a strong recovery in the EOS price right after the 20-day false breakout occurs, then we should expect, more often than not, a new trend to emerge from this pattern.
Note* The Turtle Soup system was designed for the daily chart. That’s the reason why we use the 20-day low for reference. However, you can use the same trading concepts on any time frame and simply count 20-bars instead of 20-days.
Like with all our trading strategies we’re going to give you first the trading rules by going through an actual live trade example.
Step #1: EOS coin price must make a new 20-bars low
You have to wait until cryptocurrency EOS makes a new 20-bars low.
This is essential because we want to make sure that the prevailing trend is “well established.”
The only reason why we trade against the original 20-bar rule is because we know that the original Turtle system has a very low win rate. So, you can make a failed pattern work for you if you do the exact opposite thing of what the initial pattern was supposed to do.
Now, let’s move forward, and outline the next essential feature of the Turtle Soup pattern.
Step #2: The 20-bar low must have occurred at least 4 bars earlier than the current low
The second rule that needs to be satisfied before pulling our trigger is that the current 20-bar low must happen at least 4 bars earlier than the current low.
Basically, this trading rule is trying to point out that we need the EOS price to have a sharp move when it does the 20-day low.
Why do we need the EOS price to have an abrupt move?
If you’re an avid reader of our TSG blog, you probably know through our teachings that the more reliable reversal happens after a trend ends with a sharp move.
The Turtle Soup reversal pattern satisfies all trading conditions outlined above which mean that we can move forward and describe how to buy EOS coin.
Step #3: How to buy EOS: After the market drops below the 20-bar low, place a buy order above the prior 20-bar high
Now, the original Turtle Soup pattern uses a slightly different entry method. Instead of buying at the prior 20-bar low we buy at the previous 20-bar high.
This entry strategy ensures that we’re getting into the market while the market has stopped falling and it’s starting to get traction on the upside. This is one way we’re going to capture the potential trend reversal.
Important note* If the buy EOS order is not triggered during the same day you must cancel the order
Secondly, when trading EOS tokens with our strategy, your entry will be not too far from the low, which means that you’ll be able to use a very tight stop loss.
This brings us to the next important thing that we need to establish for the EOS cryptocurrency trading strategy, which is where to place our protective stop loss.
See below …
Step #4: Place your protective Stop Loss below the current swing low
After the buy EOS order is triggered, you have to place your initial stop loss below the current swing low. If the EOS price makes a new low, then we want to get out of our trade because the Turtle Soup pattern got invalidated.
This cryptocurrency strategy allows us to maintain a very low risk profile on all of our trades. Professional traders and hedge fund managers always look first to protect their capital and this trading strategy enable you to accomplish that for yourself.
Last but not least, we also need to define where we take profits when trading EOS tokens.
Step #5: Take profit when you can count 20 bars from the 20-bar low
Again, our exit strategy is slightly different than the original Turtle Soup system. We take profits after the market has advanced at least 20 bars from the 20-bar low.
Alternatively, you can use the initial exit strategy which requires for you to trail your stop loss. Due to the volatility of this reversal pattern your trade will last on average between 4 hours and a few days, so trade with caution.
Note** the above was an example of a BUY trade using our EOS cryptocurrency 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 - Trading EOS Tokens
EOS is being called by many the Ethereum killer, which is the world’s second largest cryptocurrency. Some cryptocurrency enthusiasts even believe that EOS can be the best investment of our lifetime, but truth to be told, it’s very hard to make such a strong claim. You can also trade with the Gartley Pattern.
Learning how to buy EOS with our crypto strategy can lead to spectacular gains if you put enough time and effort to understand the power of the Turtle Soup reversal pattern.
Thank you for reading!
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