Why combine stocks and crypto?

Stocks and crypto move on overlapping market psychology — liquidity, news flow, macro cycles — but differ in volatility and session hours. Combining lessons from both markets expands your toolkit: use the structured discipline of stock technicals and the fast-reacting setups common in crypto.

1. Core profit & loss mindset

• Define risk per trade: risk no more than 1–2% of capital on any single trade.
• Positive expectancy: aim for systems where average win × win-rate > average loss × loss-rate.
• Trade journal: record entry, exit, stop, position size, rationale, and emotions — review weekly.

2. Trend identification — the foundation

Trends can be identified across timeframes. Use a top-down approach:

1. Higher timeframe trend: check daily/4H for direction (up, down, sideways).
2. Lower timeframe confirmation: use 15m/1h for entries aligned with higher timeframe trend.
3. Tools to help: moving averages (50/100/200 EMA), higher-highs / higher-lows, trendlines, ADX for trend strength.

Rule of thumb: trade with the trend — countertrend trades need tighter stops and smaller size.

3. Breakout vs Breakdown — definitions & signals

Breakout = price closing and sustaining above a resistance zone (bullish).

Breakdown = price closing and sustaining below a support zone (bearish).

Key confirmation signals

• Increased volume on breakout/breakdown — better conviction.
• Retest of the broken level (now support/resistance) with a clean bounce/rejection.
• Momentum confirmation — RSI/ROC turning in direction of move, or MACD crossover.
• Market structure — higher timeframe must not contradict the move.

4. Entry and exit recipes (practical)

A. Momentum breakout entry

1. Identify consolidation (range, wedge, flag) on 1H+ chart.
2. Wait for a daily or 1H close above resistance with volume > average volume of consolidation.
3. Enter on close or on a retest pullback with a stop below the breakout zone.
4. Target: measured move (height of pattern) or use trailing ATR-based stop.

B. Safe breakdown short

1. Confirm breakdown below support with increased volume and failure to reclaim level.
2. Enter on pullback into former support (now resistance) that rejects.
3. Use wider stop for low-liquidity crypto pairs; reduce size accordingly.

5. Position sizing & stops — survival rules

Calculate position size from risk amount and stop distance:

// simple formula (example) risk_per_trade = capital * 0.01 stop_distance = entry_price - stop_price position_size = risk_per_trade / stop_distance 

Always convert stop distance into the same units as capital (e.g., points or %). For volatile crypto use smaller risk% or wider stop expressed via ATR multiples (e.g., 1.5× ATR).

6. Technical strategy ideas

• Trend-follow EMA crossover: 20 EMA crossing 50 EMA on higher timeframe + RSI > 50 for entries.
• Breakout with volume spike: breakout above range with volume 1.5× average; enter on retest.
• Pullback to VWAP/MA: buy dips to VWAP in intraday bullish market.
• False-break trap: fade quick false breakouts that close back into range within the same candle (requires tight stops).

7. Practical checklist before every trade

1. Is the higher timeframe trend aligned?
2. Is volume confirming the move?
3. Where is the nearest support/resistance and news risk?
4. Position size and exact stop defined?
5. Is the reward-to-risk >= 1.5:1 (preferably >= 2:1)?

8. Examples — quick scenarios

Example 1 — Stock breakout

Stock consolidates for 3 weeks. Daily close above resistance with 2× average volume. Wait for small pullback to previous resistance; enter with stop below that zone. Target = height of consolidation added to breakout point.

Example 2 — Crypto breakdown

Crypto pair forms rising wedge and breaks down on big candle during thin liquidity hours. Avoid entering immediately on low-volume breakdown. Wait for retest during higher liquidity, confirm with volume and RSI <= 40, then enter short with reduced size.

9. Risk & psychological management

Emotions are the biggest leak in P&L. Use automation where possible (limit orders, pre-set stops), and enforce rules: one loss doesn’t mean you chase. Review losing trades for process errors, not destiny.

10. How to track profit & loss (simple ledger)

Create a spreadsheet with columns:

• Date, Market (stock/crypto), Symbol
• Entry, Exit, Size, Fee
• Gross P/L, Net P/L (after fees), R multiple (profit / risk)
• Setup type, Mistake? Emotional state

Summarize weekly P&L and compute expectancy: Expectancy = (Avg Win x Win Rate) - (Avg Loss x Loss Rate). If negative — fix the process.