My Profitable Zcash Trading Strategy: Trading The Private Challenge
Zcash is one of the Anonymous or Private Cryptocurrencies. They are a group of coins created as an answer to the fear that Bitcoin wouldn’t be as private as people expected at the start.
The result is the birth of coins like Monero and our current topic, Zcash.
Zcash is one of the most reputable coins among them, and it makes for a nice trading opportunity, albeit not an easy one.
However, since diversifying a portfolio is always a good idea, here we’ll discuss and teach you how to trade Zcash:
The Difficulties Of Trading Zcash
The issue with Zcash is that, despite its fame, liquidity can be somewhat low from time to time.
Here’s a graph for Zcash, to illustrate this point:
The chart is a 5-minute chart for Zcash. The sudden jumps and empty spaces (gaps) may make you feel uneasy about trading this cryptocurrency; I’ve been there as well.
Nevertheless, you really don’t need to fret. I’ve found a way to trade it!
How To Trade Zcash
The first thing you need to do is understanding that those charts make Zcash too uncertain and unreadable for scalpers to predict where it’s going. You can indeed spot patterns, but the gaps are too sudden for you to know what’s coming.
But, let’s look at a 30-minute chart:
Behold! It’s readable!
Not only that, but it actually shows an opportunity I took for a very nice trade!
You can see I went short 124.00 and exited at 122.50 for a nice 1.50 profit, but how did I know how to do it?
Well, I used an Exponential Moving Average (EMA) and a Simple Moving Average (SMA) to measure recent movements against wider ranges. This is great to measure upcoming breakouts against current trends. But of course, this is only for confirmation and to make trading more comfortable. I would be able to take this opportunity on a pure Price Action basis as well.
Note that when the moving averages cross each other - the Price Action was clearly bearish (no upside wicks and the market closed always on its low). Also, the market tried to continue the upside moves but wasn´t able to break through the previous high and the bearish candles broke previous higher low. This is called simply swing analysis and it confirmed the upcoming bearish trend as well. So this is a simple way how I would enter based on pure Price Action, but take a look at how I had this further confirmed thanks to the indicators.
Also when I use indicators to confirm my expectations, I still primarily watch Price Action to see what is really happening on the market.
Have a look at it:
Here, you can see how the crossover successfully predicted the change in trend. But again, it´s not profitable to blindly trade all crossovers of moving averages. Trust me, this has been tested by a lot of traders and it isn´t the way to profits.
However, when you read the context and see here how this trade was confirmed by multiple techniques, this is what makes my trading highly probable.
In the middle of the trend, you can see how a crossover occurred between the MAs, yet the trend continued. Here I kept my trade still open - I´ll show you below why.
Let’s break down the trade:
- I spot the crossover signaled by the black arrow, the market was below the moving averages and I had this confirmed by Price Action and the swing analysis (as described above), so I place a SELL order as soon as I see a third candle forming on the same direction, further confirming the reversal.
- I continue to ride the trend without worries until I spot the first big green candle (with the big upper wick) that shows a spike in an upward movement that made me fear the trend would end.
- After the first green candle formed, I see that my moving averages started to converge, and this increased the probabilities of the trend dying.
- Most traders would immediately close their trade around 122.50, but I still kept the trade open. Why? Take a look at the Price Action! Both green candles are bullish, but their upside wicks are much bigger than the body of the candles. Also, I like using moving averages as moving support/resistance levels and as you can see the market wasn´t able to close above the moving averages. These were the signs that we are still in a downtrend!
- And I am sure that you can see the exit point for yourself. Yes, you are correct - it was when the first clear green bullish candle closed above the moving averages. Also, the candle has no down wick and it closed right on its high - this was a clear bullish sign and the best time to exit the trade.
As you can see here, trading can be very simple. You don´t need a lot of indicators and a complicated analysis. Simply watch Price Action, swings and you can also have the trades further confirmed by simple indicators. And this is what proved to me to work the best. Also as I wrote, I would be able to take all my trades on a pure Price Action basis - without using indicators at all - and this is one of my keys as well - the ability to read the context of the price moves and what the market is actually telling us.
Take care and trade well!