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Smart Money Trading: “Channels with Negative Volume Index Strategy”
The cryptocurrency market is notoriously unpredictable, often dictated by the moves of secret, large-scale investors known as “smart money.”
Recognizing the significant impact of adopting the right approach, we’re excited to showcase our strategy that harnesses both volume and price data to pinpoint what smart money players might be doing.
If you are searching for tools and indicators that offer an edge in crypto trading, you’ve come to the right place.
We’ve made the “Channels with Negative Volume Index Strategy” available at no cost on TradingView. Click here to gain access. Please support us by following us and boosting our indicators on TradingView to have more free indicators like this.
What is the Negative Volume Index (NVI)?
Our strategy incorporates two major indicators to detect smart money entries and exits, starting with the Negative Volume Index (NVI). NVI is a lesser-known but potent indicator that focuses on candlesticks where the volume diminishes from the previous session.
This pattern suggests that on quieter days, smart money is actively trading and potentially making moves that presage further trends.
This is to identify days where the price increases but volume lags — an indicator that smart money might be accumulating positions before the wider retail market.
When paired with a moving average, like the 200-day EMA, the NVI can effectively signal possible upward trajectories in price.
Channel Indicators As Confirmation: Keltner Channels & Bollinger Bands
To determine if we are still ahead of a trend, we use channel indicators to spot undervalued opportunities. Channel indicators are to identify potential buy and sell points along defined price paths. We offer two channel indicator options:
1. Bollinger Bands — These bands adjust based on market conditions tied to the volatility derived from standard deviations of price movements, helping assess if prices are relatively high or low.
2. Keltner Channels — These channels use the average true range (ATR) to set the channel distance from the central moving average, offering a smoother analysis less affected by abrupt large price moves.
Both options are efficient in pinpointing overbought or oversold conditions, identifying potential volatility shifts and confirming if a trend is just beginning.
Combining Indicators for Optimal Results
The unique aspect of this strategy is the use of NVI alongside the 200-day EMA. Adjusting channel settings like length and multiplier allows customization based on user preference.
A potent buy signal is generated when the price is low below the lower channel while the NVI is above the 200 EMA, indicating potential smart money activity.
Features and How to Access
This long-only strategy does not merely identify entry points but also allows the setting of customized profit targets and stop-loss margins, tailoring it to different trading styles and risk thresholds.
Essentially, it has achieved a stellar 54% return over the last 2 months specifically on Ethereum. Gain access and subscribe to this strategy for free using this link to TradingView.
Conclusion
Like any trading indicator, the “Channels with Negative Volume Index Strategy” provides crucial insights, enabling users to capitalize on smart money movements effectively.
However, it’s still important to understand that performance may vary across different market conditions and assets. Always manage your risks prudently
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Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Trading involves risk, and it is important to conduct thorough research and seek professional guidance before making any investment decisions. Prospective investors are encouraged to perform their own due diligence or consult a financial advisor before making investment decisions.
