Cryptocurrency and You

SpockTradez
6 min readApr 28, 2021

How to use charts to trade cryptocurrencies

The cryptocurrency craze has returned with a vengeance during the pandemic. It’s hard not to get caught up in the FOMO especially when you see crazy stats like these:

But most people are just buying amidst the frenzy with no trading plan other than, “Buy now and sell when it goes to the moon!” 🚀

Now that’s hardly an active trading strategy — it’s a basic, passive investing strategy — so if you’re itching to jump into the crypto space, let’s look at how we can use everything we learned to maximize this endeavor…

NOTE: I’m not going to into what cryptocurrency is or how the blockchain works as there are so many better resources online for that. I’m also not going to be suggesting which coins are the best to trade or invest in, as again, there’ are people (like JRNY Crypto) that know that space better than I do. I’m merely going to cover how using the Swing Trading System I use for stocks also applies to cryptocurrencies.

First Step: Get a Crypto Wallet

Sign up for Coinbase and get $10 of BTC

For dipping a toe in, Coinbase is a great place to start. It’s got an easy to use app and interface and if you use THIS LINK, you’ll get $10 in bitcoin for signing up *I’ll also get a $10 referral bonus, so it’s win-win!

So what is a wallet? It’s exactly what it sounds like — it’s where you keep you money! Since cryptocurrencies are decentralized — meaning there’s no bank or middleman — storing your “coins” is completely your responsibility. Banks are FDIC insured to protect your money. Your crypto wallet IS NOT. So if someone hacks your account or you send your coin to the wrong address it’s just GONE.

Think of it like this — if your bank gets robbed, they have insurance to protect the money in its customer’s accounts BUT if you get robbed on the street, the bank isn’t going to insure the money in your pocket. So be very careful with your passwords, word phrase keys, and 2 Step Verifications.

Coinbase is great because it’s an exchange and a wallet. Which means you can buy and store your crypto in one app.

The one downside to Coinbase is the fees are a little higher than other exchanges BUT what you can do to save yourself some money is open the free Coinbase account and get your $10 BTC then move that over to Coinbase Pro where there’s smaller fees and oddly NO membership fee. And from there on just use Coinbase Pro to do all your buying and selling — NOTE: there’s no fee to transfer between your Coinbase accounts!

TRADING CRYPTO

NOTE: This post mostly deals with a specific trading system which you can read about over multiple posts starting HERE.

There’s two ways to invest and trade cryptocurrencies. You can buy them directly on crypto exchanges or you can trade stocks and ETFs that are either directly or indirectly affiliated with crypto.

Directly means buying a fund that directly follows the coin’s price — For example to invest in Ethereum (ETH) you can trade $ETHE on the stock market for for Bitcoin (BTC) you can trade $GBTC. These are priced directly in line with the underlying coin but at a fraction of the cost. For example if the cost of 1 ETH is currently $2,743 the cost of the fund shares would be $27.43

Indirectly means trading stocks or ETFs on the market that are for companies that do blockchain related business i.e. selling computer hardware or running servers etc… Below is a list of crypto related assets:

Analyzing Crypto

$ETHE chart on Stockcharts

As you can see by looking at the chart above, technical analysis for crypto can be done the exact same way as regular stocks. There’s the same Stages of Price movement and the same signals for the breakouts like price closing above the 20 or the 5/20 Crossover. And you can use the RSI, MACD, and TMO in the exact same way too.

And as you’ll see below, you can also use Support and Resistance to set your S/L and Targets the same way you would with stocks:

And like stocks and other ETFs, you can use a 1m, 5m, Daily, or Weekly charts. It’s all fractal and can be scaled up or down in terms of time frame whether you’re Swing Trading or Day Trading.

The BIG Difference!

Where cryptocurrency differs from what most stock traders are used to is that it’s a 24hr market — unlike the stock market’s M-F 9:30a-4pm EST operating schedule.

What this means is that price can change at ANY TIME… even while you’re asleep! So you definitely have to be disciplined enough to have your stops and target order set in place when trying to swing trade crypto overnight or over multiple days. Day Traders don’t have this problem as they’ll buy and sell all in the same trading session.

A 24hr market ALSO means you’ll have to trade on charts that are giving you 24hr info as well. Most crypto traders I believe use sites like Trading View. I’ve made a chart setting for Trading View that’s setup with the 5EMA, 20SMA, and TMO (NOTE: you’re limited on indicators for free accounts but paid ones allow you to add more).

You can use my REFERRAL LINK to get us both a $30 bonus when signing up!

Since I don’t use Trading View, I only opened a free account to make this chart setup:

The same $ETHE chart but with 24hr data

Good Luck, See You on the Moon!

Hopefully this helps you up your game if you are currently trading cryptocurrencies (or decide to in the future)! Because crypto is so volatile — meaning the price moves up and down in big moves and it does it a lot — there are a lot of opportunities to swing it for some solid gains (which also means you have to pay Capital Gains Tax on your trades as well —so do you research).

🖖

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