Hello, rookie traders! In this article, will uncover trading crypto on margin and show an example. We’ll dive into the practical application of two powerful trading tools: Bollinger Bands and the MACD. By the end of this article, you’ll not only understand how these tools work but also see their effectiveness. So, let’s get started!
Bollinger Bands and MACD Explained
Bollinger Bands and MACD are two of the most popular technical analysis tools traders use worldwide. They help predict potential price levels and market volatility, providing valuable insights for novice and experienced traders.
What Bollinger Bands Are
Bollinger Bands, developed by John Bollinger, are a volatility indicator that creates a band of three lines — the middle line being a simple moving average (SMA) and the outer lines (the Bands) being standard deviations away from the SMA.
What MACD Indicator Is
The Moving Average Convergence Divergence (MACD), on the other hand, is a trend-following momentum indicator. It shows the relationship between two moving averages of a security’s price. The MACD triggers technical signals when it crosses its signal line above (to buy) or below (to sell).
How To Use MACD and Bollinger Bands Together
Bollinger Bands and MACD can provide a unique trading strategy when used together. Bollinger Bands can help identify periods of high or low volatility, while MACD can signal potential buy or sell opportunities.
How to Make Money in Margin Trading?
The only way to do so is to learn how to follow a trading strategy or create your own. In both ways, you need a trading setup to implement it. Let’s now look at a real-life example of Bitcoin margin trading with these two tools combined.
There are thousands of people in the world trading cryptocurrency on margin, and what we’ll do now is spy on one of them.
On this chart, we can see that the price of Bitcoin (BTC/USD) has started to decline. The MACD lines crossed each other, and the lower Bollinger Band started to curve down. Our trader has opened a leveraged short position and made a nice profit from it! How did they do it? Right after the indications appeared on the chart, a trend reversed — the price started a rally in the opposite direction. This is how a trader understood what position to open and when.
BB and MACD Success Story
Now, let’s talk money. Any trader aims to make a profit, and we can check how much our trader made.
If they opened a 1 Bitcoin short position when the price was $20,000 and closed it when it was $16,000, the profit was $4,000. An excellent trade, isn’t it? And another question is whether they had to own that Bitcoin to trade it.
Leverage in margin trading
Leverage is one of the main tools in crypto trading. Simply, it’s your trading power multiplier: x10 leverage makes your deposit 10 times bigger. Your $10 becomes $100, your $50 becomes $500, and so on.
Moreover, MyBro offers unique leverage up to x100 for crypto trading and up to x500 for other assets. If you have $10, with x100 leverage, you can open a position worth $1,000.
So, our trader could have only $200 to perform that 1 Bitcoin trade and make a $4,000 profit.
You Can Be a Margin Trader
Crypto margin trading is a journey filled with ups and downs. However, it can become a rewarding endeavor with the right tools and strategies. Bollinger Bands and MACD are just two of the many tools you can use to navigate the trading landscape. So, why not start your trading journey today?
Remember, every successful trader was once a beginner. So, don’t be afraid to take that first step. Happy trading!
