Greetings. In the current video, I will touch on several different topics – GAP, locking (hedging) of positions, and the Gann technique in cryptocurrencies. I will give a few rules and features of each element of trading, which will be useful for both beginners and experienced traders. Begin!
GAP in cryptocurrencies
GAP is one of the charting models in the technical analysis of stocks, forex, and cryptocurrencies. It is a price gap in an uptrend or downtrend. And if the gap can often be found in the stock market and forex, then in digital money this model is rare. GAP is a price gap or a window between Japanese candlesticks is one of the most powerful reversal patterns.
GAP is rare in cryptocurrencies, mainly on Bitcoin and Ethereum on the CME charts. It is most convenient to view everything through TradingView – the btc1 index. However, GAP analysis for Bitcoin will help you plan your altcoin trades as well. In a bearish trend, yesterday’s session low (end of the lower shadow) is above the top of today’s upper shadow.
During a gap in a bullish trend, the top of yesterday’s upper shadow should be below today’s low of today’s lower shadow. GAP does not always have to work itself out and close itself. But in most cases, this model works and will allow you to find the right entry and exit points in the crypto market.
And one more rule – the GAP should work at the moment on the support and resistance lines, and not after a long time. Developing a GAP is when the price returns to its bottom and bounces off. Upward GAP confirmation: the price closes above the bullish window after the rollback. Downward confirmation: after the bounce, the price closes below the bearish window.
Locking positions in cryptocurrencies
One of the methods for limiting losses in cryptocurrencies, in addition to Stop Loss and averaging in 3commas, is position locking (hedging). If at Stop Loss the trader immediately fixes a loss when the price moves in the opposite direction, then locking allows you to postpone fixing the loss or avoid it altogether.
Locking is the opening of two transactions at the same time, for buying and selling, or opening a second opposite transaction after the first. If the trader is not sure in which direction the token price will go further, he can just wait it out. Its main task is to get out of locking correctly in the future. If you act correctly, you will even be able to exit with a profit.
This method of limiting losses is extended to Binance Futures, where it is called hedging and is presented as a separate instrument. There are two ways to exit locked positions in the crypto market. The first is to close a profitable trade after some time and wait for the closing of a losing trade. The second is the opening of the third trade with the trend.
The first way is the easiest. It is important to determine the levels of resistance and support in order to have time to jump out of a profitable and then unprofitable trade with minimal losses or even profit. We are waiting for the price to reach the required level, make sure that the level has not been broken, and wait for a reversal.
Opening a trade following a trend is just averaging, an additional buy or sell order so that the profit from two trades covers the loss on one unprofitable trade. However, if the opposite trade continues to go negative, the loss may become even greater. Therefore, the hedging method, especially in the futures market, should be used with caution.
Gann method in cryptocurrencies
The Gann method is one of the most effective, but more complex and less well-known methods of trading cryptocurrencies, in contrast to the Fibonacci levels and Elliott waves. This method was developed in the middle of the 20th century by trader William Gann for the stock market, but it still remains profitable and relevant, including for the digital money market.
There is only one principle in the Gann method – there is a certain balance between time and price changes. The laws of geometry, astronomy, and astrology are applied to obtain information about changes in the price of cryptocurrencies both on higher timeframes (from 1 day to 1 month) and for lower timeframes (from 5 minutes to 4 hours).
William Gunna believed that the psychology of the market and its price movement is based on the psychology of its players. And usually, almost all traders and investors repeat their actions to buy or sell coins. In this regard, Gann’s theory consists of the following principles. The first is the Price Corridor. The analysis of support and resistance levels is done. Around these levels, the behavior of traders changes, therefore, the direction of the trend also changes.
The second is the study of historical data, where there are situations that are likely to repeat again in the future. Third – Trading plan for thorough analysis. Be sure to take into account any factors that can affect the price change. All options for trading actions are created for one or another cryptocurrency trading algorithm.
For trading according to the Gann method, instruments from TradingView are used. These are Gann Grid, Gann Line and Gann Fan. In addition, it is possible to connect signals to 3commas using this technique via TradingView. To learn more about how to use the Gann method in your trading strategy, study the relevant literature on cryptocurrency trading.
The video about the GAP, locking (hedging) of positions, and the Gann technique in cryptocurrencies is completed. You learned how to open positions on GAP when to hedge your trades and how to get out of locking, as well as the features of the Gann method and what tools should be used. If you want to receive high-quality crypto signals for trading and investing, join the closed group botcryptotrade.com