How to Trade the Monero Cryptocurrency

Good afternoon, friends!

Many consider the main feature of the Bitcoin cryptocurrency to be complete payment anonymity. And although this is partly true, the anonymity of cryptocurrency is much weaker than traditional cash settlement. The Monero project has gone much further in developing the idea of anonymous blockchain transactions, which the community sees as the main value of the new currency.

The active growth of the currency's rate makes it attractive for investment and trading - in 2017, Monero grew 25 times. The increased volatility of this instrument provides high earning potential and room for applying various trading strategies, even the simplest ones. That is what we will talk about today.

The Monero cryptocurrency is based on the CryptoNote protocol, which was first implemented in the ByteCoin project. The launch of Monero dates to April 2014, the date the ByteCoin fork was created. Today it is the best-known attempt to anonymize the blockchain - the team places the speed and efficiency of the protocol in second place, leaving room for security and anonymity.

The Bitcoin blockchain is structured in such a way that by knowing only a wallet address, you can view its balance and the full history of transactions being made. That is, a complete lack of data confidentiality.

Monero uses a built-in transaction mixer, which radically complicates attempts by third parties to determine the source of a transfer. At the moment, the cryptocurrency is in the top ten by market capitalization, and this value is constantly growing.

At the moment, the ability to trade Monero through CFD is provided by the brokers AMarkets and Forex Club.

At AMarkets, the size of a standard contract (1 lot) equals 100 XMR coins, and the minimum lot is 0.1, that is, 10 coins. Leverage is 1:3, which means the minimum margin requirement at the current rate is a little more than 1000 USD.

Forex Club offers more "people-friendly" conditions. 1 lot equals 1 XMR. Leverage is 1 to 2, while margin is calculated for hedged and unhedged positions. For example, if you open 1 lot to buy and 1 lot to sell, the margin size will correspond to 1 lot.

To open the chart of the XMRUSD pair, right-click in the market overview window and select "Symbols".

The pair will be located in the Cryptopairs section. Double-click it to add the currency to the market overview.

It is best to view the chart of the currency itself on the TradingView service. Here you can see XMRUSD quotes from different cryptocurrency exchanges, as well as Monero paired with other cryptocurrencies. The platform itself provides advanced analysis capabilities: drawing tools, indicators, and as many as 11 chart display types, including Japanese candlesticks, Renko, and point and figure.

On a global scale, the Monero rate is rising. At the same time, the growth occurs not linearly but as a series of advances and corrections. If you are familiar with technical analysis, then you know that each new peak is an important resistance level. If the price breaks the previous high, it means the market has growth potential.

Given the high volatility of cryptocurrencies, a level breakout does not necessarily have to occur in one stage. First, draw two lines: one at the lowest point of the peak, the other at its top. Let me remind you that we always draw lines by candle bodies.

Thus, we get a resistance zone, inside which the price is in an uncertain state. Our main task now is to wait for confirmation - a candle close above the upper line. At this point, the resistance zone can be considered broken, so you can enter a buy trade immediately at market. In this case, the stop-loss should be placed below the lower line of the marked zone. That is, you need to take into account that the price may still return to the support level, or it may continue moving without stopping.

Also useful are Fibonacci levels, which make it convenient to determine the completion of a correction in an upward trend. As a rule, the correction ends at 61.8% of the previous move. Having reached this level, you can assume that the price will no longer fall lower and that it is time to look for a signal to enter the market.

The task is to determine a reversal of the short-term trend (the main correction). To do this, add the Parabolic SAR indicator to the chart. The Parabolic dots follow the price until it breaks through them - at that moment, we enter the market.

In this case, the price bounced off the 61.8% level, after which the Parabolic moved below the price level (vertical line) - a signal to enter buys. After opening the position, we place the stop-loss at the Parabolic level plus a small filter. To lock in profit, we use the previous price high from which we laid out the Fibonacci grid, or a trailing stop.

Open the hourly chart of XMRUSD and enable period separators (day division) with the Ctrl + Y keyboard shortcut. Interestingly, the direction of movement that begins at the start of the day almost always remains in place until it ends.

It is best to trade on the H4-D1 timeframes, since the high intraday volatility makes technical analysis hardly applicable and risky. For example, in a day the currency can move about 20% relative to the current rate, and during periods of peak activity even more than that.

All current news about the project is published in the official blog on the cryptocurrency website. The main task is to determine how much the released news item will affect the cryptocurrency rate, or at least how strong the changes expected for the project are. Conservative investors should treat released news with caution and exit the position in time: the community's perception of changes can be ambiguous, and sharp price drops have occurred in the past more than once.

Oddly enough, Monero correlates most strongly with Bitcoin and much less with other altcoins. It turns out that despite their different ideology, the investor groups of these two projects largely overlap.

This opens up amazing opportunities for trading the Monero / Bitcoin cross. Thanks to the strong relationship, when the currencies diverge they almost always converge to some average, which makes it possible to carry out arbitrage operations.

We need to determine the moment of spread expansion and enter in the opposite direction, for narrowing. We will trade the XMRBTC cross, but you can also trade XMRUSD and BTCUSD separately. In that case, to buy the spread you need to buy XMR and sell BTC, and to sell it, the opposite. When the price of the XMRBTC pair rises, it means the value of Monero is rising relative to Bitcoin. If the opposite is true, the price falls.

For this kind of trading, it is enough to add two simple moving averages to the chart, one with a period of 14 and the second with a period of 180. The essence of the trading is simple:

Take profit when MA 180 is reached. It is better to place the stop loss behind the local extremum.

Monero is a very promising altcoin whose growth potential has not yet been exhausted. At the moment, even simple strategies can generate profit when trading this cryptocurrency; it is enough to use any ready-made working trading system from the Forex market. The main thing is not to try to trade on small TFs, where the high volatility of the rate will lead to frequent triggering of stop orders.

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Best regards, Alexey Vergunov
TradeLikeaPro.ru