> For the complete documentation index, see [llms.txt](https://vexar.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vexar.gitbook.io/docs/trading-guide/trading-strategies.md).

# Trading Strategies

### Risk Management

#### Position Sizing

Never risk more than 1-2% of your total capital on a single trade.

**Example:**

* Account Balance: $10,000
* Risk Per Trade: 1% = $100
* Stop Loss: 2%
* Position Size: $100 / 0.02 = $5,000

#### Stop Loss Orders

Always use stop-loss orders to limit potential losses:

```javascript
// Example: Setting a stop loss at 2% below entry
const entryPrice = 45000;
const stopLoss = entryPrice * 0.98; // 44100
```

#### Leverage Guidelines

* **Beginners:** 2-5x leverage maximum
* **Intermediate:** 5-10x leverage
* **Advanced:** 10-20x leverage
* **Professional:** 20x+ (extreme caution required)

### Trading Strategies

#### 1. Trend Following

Trade in the direction of the prevailing trend.

**Indicators:**

* Moving Averages (50, 100, 200 EMA)
* MACD
* ADX

**Entry Rules:**

* Price above 200 EMA = Uptrend
* MACD bullish crossover
* Enter on pullback to support

**Exit Rules:**

* Price closes below 50 EMA
* MACD bearish crossover
* Take profit at resistance levels

#### 2. Range Trading

Profit from price oscillations within a defined range.

**Setup:**

* Identify clear support and resistance levels
* Trade only in sideways markets
* Buy near support, sell near resistance

**Indicators:**

* RSI (oversold < 30, overbought > 70)
* Bollinger Bands
* Volume profile

**Risk:** Stop loss beyond range boundaries

#### 3. Breakout Trading

Capture momentum when price breaks key levels.

**Entry Signals:**

* Price breaks above resistance with high volume
* Consolidation pattern breakout (triangle, wedge)
* New all-time high or multi-month high

**Confirmation:**

* Volume 2x average
* Strong candle close above breakout level
* Retest of broken level as support

**Stop Loss:** Below the breakout level

#### 4. Scalping

Short-term trading for small, quick profits.

**Requirements:**

* Low trading fees
* Fast execution
* High liquidity markets
* Tight spreads

**Timeframes:** 1-5 minute charts

**Typical Targets:**

* 0.1% - 0.5% per trade
* 10-50 trades per day
* High win rate (60%+) required

**Tools:**

* Level 2 order book
* Volume analysis
* Time & Sales data

#### 5. Swing Trading

Hold positions for days to weeks.

**Timeframes:** 4H, Daily charts

**Entry Strategy:**

* Wait for pullback in uptrend
* Fibonacci retracement levels (38.2%, 50%, 61.8%)
* Confluence with support zones

**Position Management:**

* Scale in: Add to winners
* Scale out: Take partial profits at targets
* Trail stop loss as position becomes profitable

### Technical Analysis

#### Key Support & Resistance

Identify important price levels:

* Previous highs/lows
* Round numbers (e.g., $50,000)
* Moving averages
* Fibonacci levels

#### Volume Analysis

**High Volume = Strength**

* Breakouts with high volume are more reliable
* Price moves with low volume are suspect

**Volume Confirmation:**

* Rising prices + rising volume = healthy uptrend
* Rising prices + falling volume = potential reversal

#### Candlestick Patterns

**Bullish:**

* Hammer
* Bullish engulfing
* Morning star

**Bearish:**

* Shooting star
* Bearish engulfing
* Evening star

### Perpetual Trading Strategies

#### Funding Rate Arbitrage

Profit from funding rate payments.

**Strategy:**

* Long position when funding rate is negative (you receive payments)
* Short position when funding rate is positive (counterparties pay you)
* Hedge on spot market to remain market neutral

#### Long/Short Ratio Analysis

Use crowd sentiment as a contrarian indicator:

* Extremely high long/short ratio (>3) = potential short opportunity
* Extremely low long/short ratio (<0.5) = potential long opportunity

### Spot Trading Strategies

#### Dollar-Cost Averaging (DCA)

Reduce timing risk by investing fixed amounts regularly.

**Example:**

* Invest $500 every week regardless of price
* Average out entry price over time
* Best for long-term holders

#### Grid Trading

Automate buy low, sell high strategy.

**Setup:**

* Set price range (e.g., $40,000 - $50,000)
* Create grid with 10 levels
* Place buy orders every $1,000 down
* Place sell orders every $1,000 up

**Profit:** From each up-and-down price movement

### Psychology & Discipline

#### Trading Rules

1. **Never trade emotionally** - Stick to your plan
2. **Accept losses** - They're part of trading
3. **Don't revenge trade** - Take a break after big losses
4. **Keep a trading journal** - Review and improve
5. **Don't overtrade** - Quality over quantity

#### Common Mistakes to Avoid

* ❌ Trading without a stop loss
* ❌ Using too much leverage
* ❌ Chasing pumps (FOMO)
* ❌ Holding losing positions too long
* ❌ Taking profits too early
* ❌ Not having a trading plan

### Resources

* Core Features - Platform capabilities
* API Reference - Automated trading
* Support - Get help

**Disclaimer:** Trading cryptocurrencies involves substantial risk. Past performance does not guarantee future results. Only trade with capital you can afford to lose.


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