Should you trade based on your own trading TA (technical analysis) strategies or simply use signals?
WARNING! NOT ALL SIGNAL SERVICES ARE WHAT THEY CLAIM TO BE
Pump & Dump Signals
If the signal service is free there’s a chance it’s a pump & dump scheme.
Basically, it works as follows, a core group of people wants to make money the easy way by driving prices up aka a pump, they attract (paid) members who are in on the scheme but who will get inside information about what coins are going to be pumped in return for their membership fee.
First, the core group loads up on a low volume coin, then right before the pump is going to happen, the paid members are informed creating buying pressure, then shortly after the “signal” is sent out to the masses via e.g. free Telegram channels.
As you can guess a spike in the price will occur from the sudden influx of money into the particular coin. The core members get out at this point and the paid members too if they’re lucky. The rest will probably not be able to get out in time before the price collapses and will get stuck with the coin at a huge loss.
AVOID PUMP & DUMP SIGNAL SERVICES AT ALL COST
Reliable signalling services
Does this mean all signal services are pump & dump schemes? No, there are signal services that provide signals based on research of the market. The quality of the signals varies from service to service and usually, they are or can be integrated with trading bots.
To test the performance of signals I’ve picked Zignaly as my bot. The reason for this choice is simple it’s affordable ($9/month) and as you can tell from the name it’s a bot geared towards signal trading. What’s also nice is that it supports unlimited coin pairs and positions.
Other bots like Cryptohopper, 3commas, CryptoPHP also have support for signals. The difference, of course, will be in the signal services that are integrated (and price of the bot), although some have cross-platform support such as Crypto Quality Signals and MiningHamster Signals. I specifically picked those two as you can run them also on the above-mentioned bots without needing Zignaly.
I ran both signals of CQS and MiningHamster the last couple of days and one signaller called Crypto Base Scanner that sends out signals based on the QFL method.
You can run CQS signals on Cryptohopper, 3commas, CryptoPHP & Zignaly.
MiningHamster signals can be run on CryptoPHP, Zignaly & Cryptohopper.
And QFL method can be used on 3commas as it’s built-in, Crypto Base Scanner can be used as QFL signaller on Zignaly.
As you can see from the picture above not all were successful but ZEN/ETH was caused by me selling manually and Zignaly uses “market sell” when you sell manually. Something you should keep in mind! This caused it to sell at a loss.
The other red position RVN/BTC is from another Signaller called Ping. I noticed that this one is in usually good but has more hit and misses than the rest so I stopped using Ping. If we could filter by volume increase, Ping could be good, unfortunately, the way it’s set up now doesn’t allow this.
I also had a few red positions with Mining Hamster, I find that Mining Hamster is very good when it goes green because it usually ends up over 2% but every now and then it’s a hit and miss and your stop-loss will be hit.
The results from CQS were overall good no major issues so far but they can take longer to turn green. I tried both their paid premium service and their free scalping one.
Crypto Base Scanner was actually remarkably good but it’s also one of the more expensive ones. This is because it comes with a complete trading platform built around the QFL method*, it allows you to finetune the QFL signals and place trades directly from their app.
*QLF: https://steemit.com/@quickfingersluc
For more info check their site.
1. Mining Hamster
Mining Hamster can send Sell Signals so you don’t have to figure out when to sell the coin.
2. Crypto Quality Signals
Crypto Quality Signals is definitely the most customizable and most automated signal provider. You can have everything configured by the signaller from stop loss, to take profits, sell signals. You can even filter further by term and risk.
3. Crypto Base Scanner
This one only has a term filter.
How do you set it up?
Under Settings, you can set up a general config for all your signal providers.
https://zignaly.com/app/settings
However, should you want to set up specific settings for each signal provider that’s also possible, every signal provider has its own settings, these override the general settings.
I’ve had some issues with the general settings not being “seen” by the signal provider, so I advise to set them directly on the signal provider should you run into the same issues. The individual Settings for each provider you can find here:
Signals > Provider > update or connect > SettingsTips
1. Split targets
You could use a trailing stop and try to get the maximum out of your signal but I advise to take profit when you can. Split targets allow you to sell off a part of your position when a target is reached. You can combine trailing stop and take profit.
You could sell
- 30% at 1% another
- 30% at 3%
- and the remaining 40% at 10%
If you do this Zignaly places orders for these targets immediately on the exchange as limit orders.
When you set a trailing stop that starts at 3.1% with a distance of 1.5 the trailing stop will become activated when it reaches 3.1% and trail the price up and can dip 1.5% before selling. If 10% is reached it will sell-off the remaining 40% if it’s not reached the trailing stop will sell once it drops 1.5%.
Please keep in mind that in order to do split targets you need to make sure that the individual percentages you set results in orders that are larger than the minimum order size.
2. DCA
Use small orders for your initial buy this allows you to double down if the position keeps on dropping, this way you can lower the average buy price.
3. Minimum Volume
Use minimum volume to exclude low volume coins that gain a lot but are impossible to sell due to low volume.
4. Black List
Add coins to the blacklist to avoid crappy coins being bought.
Conclusion
Signals are certainly a good way to make decent trades however you have to keep in mind that some signals will fail. Another thing to keep in mind is that if you place a stop-loss at say -5% and you take profit at 1%, you need to have a ratio of at least 5 good signals vs 1 failure to break-even. Putting a smaller stop-loss would solve this but then it might also trigger too quickly. You need to experiment to find the right balance. DCA, however, can help to get your ratio wins vs fails up by lowering your entry price and turning more signals into wins.
The above references an opinion and is for information purposes only. It is not intended to be investment advice and may contain affiliate links. Seek a duly licensed professional for investment advice.
