Stellar Cryptocurrency Strategy in 5 Simple Steps
We’ve got a lot of requests recently about writing a Stellar Cryptocurrency Strategy. Stellar is considered to be the future of banking, and Stellar Lumens price is expected to rise in the coming years.
Our team at Trading Strategy Guides is working hard to put together the most comprehensive guide for cryptocurrency trading strategies.
Previously, we covered the Monero Trading for beginners guide which, if you’re concerned about your privacy and being completely anonymous then the biggest privacy coin deserves a place in your crypto portfolio. We also discussed another great privacy cryptocurrency in How to Buy ZCash.
Stellar Cryptocurrency Strategy: The Future of Banking
Stellar is different than any other coin, so we’re going to outline a very unique trading approach to read the Stellar XLM chart.
We’re going to talk about what powers the Stellar Lumens price, what is stellar and ultimately we’re going to outline a swing trading guide to trade XLM coin. Here is how to identify the right swing to boost your profit.
Every human is built differently. Some traders don’t have the necessary patience to HODL cryptocurrencies. For those traders, swing trading may be a good alternative to reading the Stellar XLM chart.
Swing trading cryptocurrencies will allow you to hold positions for at least one day and up to 3 weeks. You don’t have to use any particular indicators all you need is to identify a chart pattern and important support and resistance levels.
What is Stellar Lumens (XLM)?
Stellar is a platform that is trying to execute very fast payments with very low fees. The key advantage of Stellar is that it has between 3 and 5 seconds confirmation time and it supports thousands of transactions per second.
Stellar has been around for a while, since 2014. And it was started through the Stellar Foundation, which was created by Jed McCaleb and Joyce Kim. Initially, Stellar was merely a fork of the Ripple protocol, and that’s because the creator of Stellar was also the co-founder of Ripple.
Stellar actually completely re-architected the Ripple base code.
Currently, XLM coin is among the biggest cryptocurrencies ranking in the top 10 coins.
Stellar Lumens price is below the $1 and trading at only a few cents, which makes XLM a top cryptocurrency under $1. Our team at Trading Strategy Guides believes that Stellar is one of the best cryptocurrencies to invest in for 2019.
You can take advantage of the imminent Stellar price increase by following our Stellar cryptocurrency strategy.
Stellar Cryptocurrency Strategy: Best Places to Buy Stellar
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Stellar Cryptocurrency Strategy
Let’s first start by talking about what price pattern we need to profit from swing trading Stellar XLM.
All we need for swing trading cryptocurrency is the Double Bar Low Higher Close pattern also known as the DBLHC pattern.
It’s quite easy to identify this price pattern because the DBLHC is a double bar chart pattern.
Check out our other popular crypto strategy on How to Trade Bitcoin for Profit here.
All you need to do is to look for two bars that have equal lows or near the same price level. The second condition that needs to be satisfied for a valid DBLHC is that the second candle needs to close a lot higher than the first candle (see chart above).
Usually, the bar tails are tiny, but the candlestick body is large.
Now, let’s see how the same DBLHC pattern looks on the Stellar XLM chart.
See below:
Now, before we go any further, we always recommend grabbing a piece of paper and a pen and note down the rules of this cryptocurrency trading strategy. For this example, we’re going to take a look at the buy side.
Stellar Cryptocurrency Strategy Step #1: Find a bullish trend or wait until the market develops a swing low
The double bar low higher close can be found at the end of a bearish trend and the start of a new bullish trend acting as a reversal bullish pattern. However, at the same time, the DBLHC is also a continuation pattern that can develop at any stage during a bullish trend. We also have training for Forex Basket Trading Strategy.
Having a prior trend already established increases the probabilities of the DBLHC pattern to work.
The DBLHC can produce the same kind of results even when the market is only in the process of establishing a market swing low. If a DBLHC develops right after a swing low is created that’s the confirmation we need that the institutional money is buying low.
The above Stellar XLM chart displays a market swing low that is in the process of developing.
Step two is when the DBLHC pattern comes into play.
Stellar Cryptocurrency Strategy Step #2: Wait until the DBLHC chart pattern develops on the Stellar XLM Chart
Now that you’re familiarized with the DBLHC pattern, it should come easily to spot this powerful chart pattern on the Stellar chart.
The DBLHC pattern has two identical lows and the second candle close is way higher than the high of the first candle.
In most of the cases, the first candle will be bearish, followed by a second bullish candle. But as we can see here the Stellar price action is developing a DBLHC where the first candle is also bullish. This doesn’t invalidate the DBLHC chart pattern as in our books. It’s still a very tradable chart pattern.
The Stellar coin satisfies both of our trading conditions which means that we can move forward and outline what the trigger condition for our entry strategy is.
See below:
Stellar Cryptocurrency Strategy Step #3: Buy at the market at the opening of the next candle after the DBLHC pattern
When to buy Stellar is quite easy. As per the DBLHC pattern rules, we need to enter immediately at the market when the DBLHC has formed. Alternatively, we can place a buy limit order above the high of the second candle.
Buying Stellar with our cryptocurrency buy strategy will offer you a high risk to reward ratio.
The second advantage you have is that you’re buying Stellar right when the bullish momentum is starting to build up. Technically, this means that the price should never look back, which means that the drawdown should be minimal.
The next important thing we need to establish for our cryptocurrency trading strategy is where to place our protective stop loss.
See below …
Stellar Cryptocurrency Strategy Step #4: Place protective Stop Loss below the DBLHC low
The DBLHC chart pattern also provides us with a great spot to hide your protective stop loss.
Trading without a stop loss is the number one mistake that traders make. Make sure you always trade with a stop loss to protect your account balance.
After you bought XLM coin, the protective stop loss can be placed below the DBLHC low.
Last but not least, we also need to define a take profit level for buying Stellar XLM.
See below …
Stellar Cryptocurrency Strategy Step #5: Take Profit when we break below the up-sloping trend line that connects the swing low points
If you want to cash out some of your profits after trading Stellar, the first thing you need to do is to draw an up-sloping trend line starting from the swing low you identified in Step #1. The next step is to connect all the swing low points that are part of this new uptrend.
As soon as the price breaks and closes below the upward trend line you take profits.
This take profit strategy will maximize your trading profits and it will keep you as long as the bullish momentum is strong.
Note** the above was an example of a BUY trade using the Stellar cryptocurrency 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 – Stellar Lumens Price
Stellar XLM is standing out from other coins, and it’s among our favorite cryptocurrencies. Stellar Lumens is one of the most interesting and promising coins. Stellar also has some serious partnerships of huge payment processors and they really have an inclusive vision of how to start a currency system that works for everybody. Also, read how to apply technical analysis step by step.
Our Stellar strategy combines both momentum and chart patterns to provide you with the best cryptocurrency strategy. The DBLHC remains a very powerful chart pattern which in the right chart location can produce substantial trading results.
Thank you for reading!
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