You should never wait for additional growth or decline, if this is not convincingly predicted, it is better to be safe and stop in time, or enter the existing conditions without waiting for the ideal option. Patience is the guarantee of profit. It concerns both maintenance of open positions and waiting for more convincing signals to enter. This simple thesis will allow you to understand how to trade the cryptocurrency, avoiding unnecessary impulsive inputs and outputs while waiting for a strong movement. It is very important to always control the glass with the quotation list. The glass is the main source of information for the exchange. Volume and capitalization for markets are key factors reflecting the mood of other players. Therefore, only by knowing these characteristics, you can clearly predict the quotes behavior.
Market Dictionary of Crypto Currency
Fiat is a designation of national and world currencies familiar to many people (USD, RUR, EUR, etc.).
Bulls - a designation for market participants who raise the rate with their purchases.
Bears - a symbol for market participants who reduce the rate with their sales.
Trend - direction of the general price movement. The moment when each subsequent extremum is higher than the previous one (uptrend) or lower (downtrend). A sideways trend or flat shows a balanced market state. Growth is a convincing rate increase.
Drain - a sharp drop in the rate. Wall - an order or a group of orders that may have a significant impact on the price movement. In other words, the expected level of resistance or support.
Glass (Exchange Glass, List of Quotes) - table with orders from market participants, which offer the price close to the current one.
Hamster - a newcomer to the Exchange, which has little understanding of the situation, makes decisions and trades without taking into account even the main features of the market, analysis and forecasting. Keith is a professional and experienced market participant.
Haircut - determining the situation when funds from hamsters are transferred to more experienced players. Often, the definition applies to situations where the hamster funds are drained, which led to a provocation, a false price movement.
Pump - a provocative filling of the market with volume transactions aimed at forced reaction of less knowledgeable players to enter the market and support the movement. Pump - a collapse of the rate, justified by the directed trade of individual market participants.
Short - short positions that are designed to make a profit when it is decided to trade on small time periods and sharp movements of the rate.
Long - long positions, profit is expected in a long period of time (week, month, etc.)
Volatility - sharp price movements with large amplitude.
Vang, Vang - predict important levels from which it is profitable to trade, a forecast with a high degree of realization.
U-turn - a situation when a pair movement changes direction. For example, the crypto currency grew and after reaching some level of resistance began to decrease.
The basics of technical analysis in cryptocurrency
TA trading are technical analysis. It is used to analyze market history (and its psychology) to predict the future. It is believed that TA in cryptocurrency is more important than in a regular market.
The reason is that this system is quite young compared to the same Forex.
Since market capitalization is not yet great, the cryptocurrency is more volatile and fluctuates more strongly. Mom & pop traders have much more influence on the market than stocks and FX. There is also a new wave of traders who are very young and inexperienced. Many are very young and have not yet changed the third ten. When they get to the exchange, all they have is Google and from there the TA basis. Accordingly, when we have a lot of people with TA basics, the market will work well on these basic principles. I always try to use basic concepts and not to go too deep into advanced indicators and patterns.
The three main elements of the technical analysis
Trend Line(support, resistance level)
RSI (Relative Strength Index)
Figures (flags, double bottom/top, head and shoulders, etc.)
If you can learn these basics and apply them correctly, I will tell you directly: you will be the market winner. Trend lines are basically just lines that connect the highest points (ceiling/resistance) and the lowest points (support/ floor). Example: The trend lines are mainly just lines that connect the highest points (ceiling/resistance) and the lowest points (support/sex): When a new high then appears and then a lower high, it becomes a new trend ceiling. The same goes for support. Note that every time the chart reaches a point on the line, it either bounces (goes backwards) or shrinks.
For example let us check holochain price prediction trends to understand these meanings.
When two points intersect, a breakout point is created. This is where "bears and bulls" fight and "bet" on whether the market will be bullish (price rising) or bearish (price falling). There are many indicators that help you find out which trend is coming: Look at how strong the support / resistance is. You can understand this by seeing how many times the price touches each of the lines. If there are 7 touches of the ceiling and only 3 floors, the price is likely to go down rather than up. Use other indicators such as RSI / Ishimoku clouds. I personally prefer RSI.
Although Ishimoku is also very powerful and gives many good signals. With regard to trend lines and support, I want to say: move the chart away! You think you're approaching a breakout point, but it can be a false indicator, because there may be a strong resistance a month ago. One of the biggest mistakes I see in the markets is that people analyze a small section / part of the market and don't take a step back to see the full picture. That's what I called the market "bearish" for Bitcoin when it was 2500-2600.
While everyone was looking at the bullish indicators for the last month or so, I took the time to look at the 1 week candle chart which clearly showed that the price was far from organic support.
See the screenshot: If you look at this chart (yes, here I reached the price of $6.50), you will see that the previous rise was high from the support line and should trigger a correction. This support line was repeated in all stock charts. As a rule, history repeats itself. But there is a mad growth catalyst from outside.
BTC became the mainstream, and institutional money was pouring into it. If there is no such, epic, catalyst ... do not expect history to repeat itself, and bitcoin will soon grow to 1 million dollars. Anyway, here's the lesson - study the graph! Another important thing to learn is models. The main ones are flags, pennants, head and shoulders, and wedges. Flags are a bullish indicator. They look the same as small flags.
Whenever there is a big splash from something like a triangle breakthrough, there will be a consolidation point (remember, the upper and lower lines converge into one). Example: This is an example of a bull staircase. It consists of several flags placed above each other, which tend upwards. Note: Flags can also be in a consolidation tunnel, not as a triangle, but as a canvas of the flag. Head and shoulders (or inverted head and shoulders) are another base pattern. The more H&S, the more likely it is that it will be the right shape.
H&S is an indicator/signal that the market is changing the trend. An ordinary head and shoulders is a bearish market. The head is the highest point, and the right shoulder indicates a turn to the downtrend. The inverted head and shoulders are the exact opposite of what happened recently with Bitcoin (also notice the flag at the top of the chart). The wedges are the other signs of reversal. They can be used both for a small gap, and in the longer term. I personally like to track them in tunnels for short positions. Example: a small wedge. You can see how the market moves and creates a wedge.
If I traded during the day, I would sell near the top of the wedge and buy a little lower. People are usually wrong about wedges as a powerful trend reversal pattern. This is wrong, most of the time the fall would be quite small. However, if you bet a lot of these small bets, your winnings would be a significant amount.
I try to do it during a bullish trend to accumulate more and more coins before I go out. A falling wedge is just the opposite wedge. It is a great way to buy currency at a low level.
Strategies based on technical analysis
The use of a mathematical approach in trading on exchanges is still a subject of heated debate. Some traders believe that they do not apply to crypto currencies, while others argue that this is where they have found their true application. The simplest strategy is to use so-called moving averages, which help to determine the average value of the price at given intervals of time. If the price, according to the chart, is higher than the moving average, then the price rises, if lower, then falls. Moving averages, however, are not the best tool for trading bitcoins and other currencies. Crypto currency trading strategies such as rollback trading, impulse trading, and breakout trading are considered to be the best ones today. Based on these strategies, you can even write a little manual: "Trading on the Exchange CryptoCurrency for Dummies". They give you almost guaranteed profits. The use of a tool called "Japanese Candlesticks" is also a mechanism that can be called one of the best in terms of how it has proven itself in trading since its inception.
Let's consider seven simple but very important and fundamental rules for trading on the Bitcoin and other cryptocurrency markets, which will help beginners to avoid losses. On a wave of explosive growth in the popularity of cryptocurrencies and abundance of news in the world media related to digital money, the stock exchanges have a lot of people willing to play and earn millions. However, most of them suffer losses simply because they do not follow the basic rules of a very risky game. It is possible to play at the stock exchange only with the money that is not sorry to lose. In no case should you invest in the cryptocurrency all your savings or take credits, which, sooner or later, you will have to give back. Playing for the last money cannot be calm, confident and long-term.
So it leads to hasty decisions and inevitable losses. You only need to buy cryptocurrency when you fall, and sell it on growth. As in life on the cryptocurrencies exchanges "behind the whole planet" the crowd moves. In the long term, against the background of thinking independent people, the crowd always loses.
Therefore, one should buy even before the beginning of growth, in case of short or long term fall, otherwise one can fall into the trap of manipulators. And assets should be sold accordingly, when the price reaches the second half of the expected peak. In this case, being a beginner, you should not try to play actively on the rebounds. As a rule, this ends with the lost profit after an unsuccessful sale or losses, if an unsuccessful moment is chosen for rebuying. It is not worth trying to catch only the minimum and maximum quotes.
The rate is managed by the so-called manipulators, whose assets allow raising or lowering the price by several tens of percents in just twenty minutes of active trading. They can also sow panic in the rows of beginners and control the level of falling and rising quotes. The maximum level of rise or fall in the price of the cryptocurrency depends on the major players, but even they can not guess the strength of panic or positive mood in the rows of the general masses at certain points.
Therefore, there is no need to wait for the minimum point of decline and dream of immediate growth to specific heights. Being a beginner, it is better to fix the profit at the level "above average", otherwise you may not have time to sell BTC at all. You can't play on short distances with low trading volumes, when there is a lack of volatility. Measured trading volumes show that nobody plays except bots.
The so-called short-distance shortstory players watch from the outside, waiting for a convenient moment. In such situations, when it is not clear what will happen next and even a relatively minimal purchase can adjust the rate, it is better not to be included in the mid-term game. It is strictly prohibited to play in one direction for the whole bank. Buying for the whole available amount will immediately withdraw from the game. Since the exchange rate is controlled by manipulators with millions of dollars rather than a crowd and the medium-term trend of the rate is poorly "technically analyzed", buying assets for the whole bank will easily turn the player into a long-term investor.
For absolutely win-win trading on the stock exchanges, it is worth dividing the bank into 4-8 different directions. It can be Bitcoin, Litecoin, forks, pairs or different monetary units. In this case, it is best to place orders for no more than 2-3% of the amount allocated for each position. In case of an unexpected dump, a drop in the rate, it will allow you to get back small purchases on the plum even in case of an initial purchase at the highest values. For example, if you have $1,000 in your account and the Bitcoin exchange rate fluctuates at $1,000 per 1BTC, then a maximum of $250 can go to the game on the BTC/USD pair. Let's assume that the manipulators purposefully inflated the BTC price to a thousand dollars and at the most unsuccessful peak