Volume trading strategy that works great for the Bitcoin
In this lecture, I will show you a Volume Trading strategy for Bitcoin, which I use on an hourly timeframe, and I call it the VAM. I have 3 Indicators as entry rules, I have 1 Indicator as an exit rule, and I have a Stop Loss and a Take Profit.
So I will start with the 1st one. I will open a new chat window.
I will right-click and go to Template, and I will select a Black background.
Then I will change it to the hourly chart. The 1st Indicator that I will insert on the chart is the Volumes indicator.
I go to the Volumes group, and the last one is just Volumes. Click on it.
And as levels, I will add a level of 5300 and I click on OK.
You will see the Volumes indicator below the trading chart, and you can see the level of 5300.
So the entry condition to buy is when we see the Volumes crossing the level line upwards.
For example, you see below that it is crossing it.
After that, again, it crosses it upwards and this is our entry-level or simply when the Volume increases. But we have an exact rule using the 5300 level and we have 2 Indicators as confirmation.
The confirmation for the Volume Trading strategy
The 1st one is a Moving Average. I go to Trend, and I go to Moving Average.
I will set a period of 31 and I click on OK.
Here it is.
We want to see the Moving Average rising to have the confirmation. So when the Moving Average is falling like the case seen below,
if we have the break as seen, we have the Volumes crossing the level line, but already the Moving Average is falling down.
So we don’t have confirmation to buy. For this Volume Trading strategy the 3rd Indicator is the Awesome Oscillator, which needs to be rising again. Indicators, and I go to Awesome Oscillator.
I click on OK.
It doesn’t have any levels or parameters. It’s formed by red and green bars that are going above and below the 0 line. Alright, so the confirmation here is that we need to see the Awesome Oscillator rises.
So, one more time, we Buy when the Volumes crosses the level line upwards. But at the same time, we need to see the Moving Average rises and we need to see the Awesome Oscillator rises.
It doesn’t matter if it is below or above the 0 line. For example, at the current moment, we don’t have it crossing the level line and it just stopped. We don’t have the entry. I will go back through the chart, and now we are on H1.
Every strategy has losing trades at some point. So this Volume Trading strategy for Bitcoin.
Make sure you follow the first 2 strategies on M15, and the 3rd one is on the H1 chart. I will try to see some examples with confirmations and as well I will try to see some examples of losing trades because, with every strategy, we have losing trades as well, Keep that in mind. This is very normal.
But obviously, I include in my courses the strategies that have more profitable trades than losing trades or overall, they have profitable equity lines for the moment. And I think we would have the confirmation.
When the Volumes crosses the level line, we have the confirmation. The 1st crosses, and then we have another one. But at this time, the Oscillator is already falling. I will zoom it in so we can see a little bit better.
The 1st time we have the cross is at this bar shown below, the Volumes crosses the level line upward.
On the opening of the next bar, we are taking the trade because the Awesome Oscillator rises as well as the Moving Average. Again, we take the trade when the new bar opens.
Stop Loss and Take Profit in this Volume Trading strategy
When this bar is closed and the new one opens, we see that we have a cross and on the opening of the next one, we take the trades. What you need to keep in mind here is that when the new bar comes, the Volumes start from the ground.
So if I go to the current moment, you will see that the bar opened about 8 minutes ago and it starts to increase the Volumes. When the new bar opens, it starts from 0. And then according to the Volumes that we have, it will increase. Below is the entry.
This is the cross. And on the opening of the next one, we take the trade. We don’t know if on this current trade there will be Volumes higher than the level line. The signal is with the previous candlestick. This is very important to note.
At the same time, we have the Moving Average rising and we have the Awesome Oscillator rising. So we have 2 confirmations to buy. For this Volume Trading strategy, we have a Stop Loss of 215 USD and a Take Profit of 240 USD. Let me put the lines exactly.
The entry is 10 362 and Take Profit of 240, which will make it 10 602.
Then we have a Stop Loss. I will make the Stop Loss red and I will drag it 215 USD lower. We have the entry at 10 362 minus 215. This is 10 147 if I’m not wrong.
I’m trying to put it exactly, but it’s hard because I am on the hourly chart, so it’s 10 147. I’m not calculating the cents, just the USD. But as I’ve said, if you are doing actual trading, you need to calculate it, obviously.
So this is the entry. This is an aggressive move and the price hits the Take Profit of 215 USD very quickly. And we are out after 3-4 hours with a great profit. So this strategy indicates the volatility or the volume, and it uses the Volumes indicator and it uses confirmation of Moving Average and the Awesome Oscillator.
It’s a really great strategy. Now, we have an exit condition as well. This is with the Envelopes. I will put the Envelopes.With the other strategy, we had the Envelopes as an entry, but here there is an exit and I will keep them both aqua color.
The exit rule
But here I have a period of 24 and a deviation of 0.8 and I click on OK.
You will see the Envelopes going upwards together with the price in this case.
And the exit rule here is that we need to see the bar opens below the upper band after opening above it. It’s pretty much the same thing.
We want to see the price outside the band. And when it gets inside, we see a bar opening. This is our exit. We enter, the price goes outside the Envelopes, and on the 1st bar that opens inside the Envelopes, we take the profit or we close the position, even if it is a loss.
But with this example, we had the Take Profit hit first. It’s very important to note that we are selling with the opposite confirmation from the Awesome Oscillator and from the Moving Average, but the Volume stays the same. When we Sell, I will remove all of the lines from this example.
When we sell, we use the Volumes, again, crosses the level line upwards because we are looking for the volatility no matter whether we are buying or selling. But for the selling, we need to see that Awesome Oscillator falls and as well the Moving Average falls. I think below we have a great example of a sell trade.
You will get used to the Volume Trading strategy in due time
Let me put the mouse on that right here. OK, I’m used to the strategy, so I see it very quickly, but I’m sure after some time you will get used to it. And here is the first cross. OK, you can see the Volumes. The value is 5503 on the closing of that bar. On the opening of the next one, we should take the trade.
And in this case, we are Selling because the Moving Average starts to fall. If I put the mouse on the Moving Average, you can see that on this bar, the value of the Moving Average is 10 924.80. And on this bar, it is already 10 922.97. OK, it’s a smaller value. Same thing with the Awesome Oscillator.
Tthe value is 23 979 and here it is 9207. OK, it’s falling and this is a Sell trade. You can see very obviously we would make a great profit 1st with the Take Profit and 2nd with the exit condition from the Envelope. So the 1st bar that opens inside I think is this one.
We could be taking our profit if we use the exit condition. But first, I’m pretty sure that the Take Profit would be 240 USD lower. So the entry is at 10 995 minuses 240, that would be 10 655.
I have tested the strategies over a long period of time
But these strategies that I’m showing you, I have tested for quite a long time and they have so far more profits than losses and I always improve them if it is needed accordingly to the market conditions.
Proper money management is required
OK, so if it happens that you have losing trades and it will happen no matter you trade manually the strategies or automatically with the Expert Advisors, don’t panic. This is normal. The strategies have their losing periods. But as I’ve said so far, they have more profits than losses.
And this is why it is very important to have good money management and to risk a small amount of your account. But this is something that I will be talking about at the end of the course. All right, guys, so this is the VAM strategy.
This is how I call this Volume Trading strategy for Bitcoin because I use Volumes, Moving Average, and also Awesome Oscillator. So it is VAM. This is how I have named it because of the 3 entry Indicators that I’ve been using and I have Envelopes as an exit Indicator. All right. You will find this PDF attached to this lecture and as well for the others.
And one more time, when you are taking this course, the values could be different because the market changes. So the strategies change and I do my best to improve them all the time.
Thank you for reading. And I will see you in the next one where I will be showing you another strategy for the Bitcoin for H1 chart.
See you there.