RE: Dynamic Risk Management In Crypto Trading.

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Dynamic Risk Management In Crypto Trading.

in hive-108451 •  2 months ago 

I am glad that you can relate to my personal experience.. the fact that you were able to apply risk management shows that you know the importance of the principles.

Bollinger band consist of three lines which are the middle, lower and upper bands and to set it up, if you are using TradingView site, you can just click on the indicator icon on the top bar of the dashboard and search for it. Then to set it to the coin you want to trade, it involves a simple maths or you can use a python code to set it up if you are good with coding. But then i will just give you the manual setting steps.

First, you need to chose your lookback period, it can be 15-20 days.
Next, you need to calculate your simple moving average (SMA) which is the total sum of the price of your coins over the period you set, divided by the period you set.
Next, you want to compute the standard deviation over the same period you are working with.
Finally, with all you have above, you can calculate your upper and lower bands. Which is:
Upper band = SMA + k x Standard Deviation
Lower band = SMA - k x Standard Deviation
Where k is usually 2.

For TMA, which is triangle moving average is a double smoothed simple moving average. You can set it up same way you searched for the Bollinger bands. The steps setting it up is as follows:

First, calculate the SMA of the price of your coin.
Next, you want to apply another SMA to the result you got from the first step, so that the double smoothing can create the triangular shape.
Lastly, You can now set the period (which is usually odd) to 9 or 21. This helps to center the weights properly.

Inconclusion, You can use both indicators in the same trade, Bollinger bands will assist you to detect the volatility of price of the market while TMA can work as a smoother trend indicator. Overlaying both on your price chart will help analyse trends and possible breakouts.

I hope this was helpful.

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  ·  2 months ago (edited)

This mathematics is hard oo and am confused along the way. Okay let's try this, am using a mex exchange in trading, how would I do the correct set-up? Thank you for taking your time to explain to me. Please it is possible to show it with an image?