Topic: How To Trade Crypto: Full Guide With Trading Strategy (Read 203 times)
Yes, for you to actually succeed in trading, you must have the knowledge of technical and fundamentals issues around the particular asset or coins you are analyzing for the purpose of investment. However, many traders are not following most of the trading principle outline by the opp.
I'm sure you will Nicster 
. I'll try to get the next lesson finished over the weekend.
. I'll try to get the next lesson finished over the weekend.
I will likely to wait for your teaching about trading cryptocurrencies. And I hope that I will have a lot of discoveries from you.
Here's the first lesson guys, enjoy.
Lesson 1: Overview Of Technical Analysis
So I think the best way to start this all off is to go over technical analysis.
As some of you already know, technical analysis is a method of analysis you can (and should) use to determine when there's an opportunity to make money buying and selling Cryptocurrency.
It's based on a very simple idea.....
Because the price of a Cryptocurrency reflects what everyone's opinion about the price will be in the future, by analyzing the price it's possible to determine when the price will rise or fall, and in turn figure out when it's a good time to buy and sell.
I guess the question now is "how does someone using TA look at the price?"
The answer is simple:
By using a price chart.
A price chart (I'll go into lots of detail on these in lesson 2) shows information on how the price of a Crypto is changing right now and has changed in the past. A trader using TA analyzes this information using different tools (technical indicators they're called) and techniques to figure out when and where the price is likely to rise and fall in the future.
If, from analysis, the trader determine the price of a Crypto is about to rise, he might buy some in an attempt to make a profit.
Conversely, if a trader had already bought some Crypto and saw from his analysis the price was about to fall, he might decide to sell the Crypto to make a profit, saving himself from the loss that would occur from the price falling.
The 3 Assumptions Of Technical Analysis
Technical analysis is based on three assumptions that describe how the Cryptocurrency market works.
These assumptions are really principals (you'll probably know a couple of them already) but since they can't objectively be proven as true they have to be classed as assumptions.
Here's a quick overview of each one.
The Price Moves In Trends
This assumptions is based on the idea that because people will often start doing something just because they know or believe a large number of other people are doing something (the bandwagon effect it's called in psychology), there will be times when the price of a Cryptocurrency moves predominantly in one direction over the over.
When this happens the price is said to be in a trend.
There are two type of trend that occur in Crypto market:
Uptrends - Caused by the price continually rising without many severe drops taking place.
And downtrends - Created by the price continuously falling without many big rises occurring.
The huge rise we saw last year and the big decline seen this year are two obvious, large scale examples of trends, but they take place all the time and across all different timescales.
For example, the rise seen on Bitcoin from the 1th to the 26th is classed as a trend (an uptrend) as is the decline seen earlier in the year, which is a downtrend. These trends obviously aren't as big as the huge rise and decline we saw this year/last year but they are still trends because they follow the same principal.
The Market Discounts All Known Information
Have you noticed how much news comes out about Cryptocurrency?
Crazy, isn't it?
It seems like everyday a new piece of news is released or some analysts says Bitcoin will reach (insert huge number here) in X amount of time.
As important as it may seem to analyze and keep track of all this news, TA says that it's ultimately a pointless en-devour; because the market discounts all known information.
What this means is that because the people who, for lack of a better term, control the Crypto market - the whale traders they're called - know that a piece of news is being released, they buy and sell their Crypto in accordance with what they think the news means for the price way before it comes out.
So when a piece of news does come out, although there will often be a change in the short term direction (the price may rise or fall slightly) long term the direction won't change, as the whale traders have already taken the news into account when they bought or sold their coin.
History Repeats Itself
Humans, when faced with a situation similar too or the same as what they've been in before, will almost always react in a the same way.
Because of this, Technical Analysis says that things that have happened in the past will at some point happen again in the future, and that, as a result, will cause certain patterns or structures to form that can predict whether the price will rise or fall.
Technical Vs Fundamental: Which Ones Better?
Technical analysis is the best know method of analyzing Cryptocurrency, but there's another type that's also popular.....
Fundamental analysis.
Whereas technical analysis is based on analyzing past and current information about the price of a cryptocurrency, fundamental analysis focuses on analyzing news events, events that are fundamental (hence the name) to the future price.
To highlight the difference between the two, consider how a trader using TA and a trader using Fundamental Analysis would have approached the hard fork that occurred on Bitcoin last year.
Technical Analysis says "the market discounts all information" so someone using TA would not have bothered analyzing what affect the hard fork may have on the price, because they know the whale traders - the people who control the market - have already factored it into their decisions, meaning it's not going to change the long term direction whatever the outcome.
Now a trader using Fundamental Analysis would have done the opposite.
They would have been analyzing the hard fork and the news around it intently, trying to figure out how people are going to react to it and what it means for the future of bitcoin.
If they determined the hard fork gave Bitcoin a better chance of being accepted as a currency (which it didn't) and the price dropped after the hard fork took place, they would have seen it as an great opportunity to buy (which it was, not because it increased the chance it would be accepted, but because the market was a boom phase).
If they though it gave it a lower chance of being accepted and the price went up after the hard fork took place, they would have seen it as a good opportunity to sell, because in their minds Bitcoin is now not likely to end up as a means of exchange, thus it will probably fall in the near future.
So that's how Fundamental and Technical Analysis differ from one another.
Why Fundamental Analysis Doesn't Work On Crypto
After reading the above you might think "Hmm, fundamental analysis sounds kind of cool, I might try that" but that would be a really big mistake, because fundamental analysis doesn't work on Crypto.
People say that it does, and that they use it successfully, but it's not true.
The reason why is because Cryptocurrency DOES NOT have an true value.
In other words, no Cryptocurrency has a determined, real world value. Their current prices are based on speculation, not on their actual puprose - because they don't have an accepted purpose yet.
The core idea behind Fundamental analysis is that by analyzing the factors that are fundamental to the value of an asset (Crypto in our case) you can determine what it's real value is, and thus, whether it's current price is lower or higher than it's true value.
But here's the problem:
Because Crypto doesn't have a true value (as it has no defined purpose) there's NOTHING you can analyze to determine what it's true value could be.
So all the different events that traders using fundamental analyze to make decisions, like the hard fork, important announcements, influential people giving their opinion etc, none of these have any bearing on whether Bitcoin or any other Crypto will fulfill their expected purpose, making it useless to analyzing them.
Summary
Well, there you have it, the first lesson.
Lesson 2, which will cover price charts and their use in trading, will be ready either at the end of the this week or at sometime during the weekend. I can't say when as I'm not sure how big it will be, but it will be sometimes around then.
Lesson 1: Overview Of Technical Analysis
So I think the best way to start this all off is to go over technical analysis.
As some of you already know, technical analysis is a method of analysis you can (and should) use to determine when there's an opportunity to make money buying and selling Cryptocurrency.
It's based on a very simple idea.....
Because the price of a Cryptocurrency reflects what everyone's opinion about the price will be in the future, by analyzing the price it's possible to determine when the price will rise or fall, and in turn figure out when it's a good time to buy and sell.
I guess the question now is "how does someone using TA look at the price?"
The answer is simple:
By using a price chart.
A price chart (I'll go into lots of detail on these in lesson 2) shows information on how the price of a Crypto is changing right now and has changed in the past. A trader using TA analyzes this information using different tools (technical indicators they're called) and techniques to figure out when and where the price is likely to rise and fall in the future.
If, from analysis, the trader determine the price of a Crypto is about to rise, he might buy some in an attempt to make a profit.
Conversely, if a trader had already bought some Crypto and saw from his analysis the price was about to fall, he might decide to sell the Crypto to make a profit, saving himself from the loss that would occur from the price falling.
The 3 Assumptions Of Technical Analysis
Technical analysis is based on three assumptions that describe how the Cryptocurrency market works.
These assumptions are really principals (you'll probably know a couple of them already) but since they can't objectively be proven as true they have to be classed as assumptions.
Here's a quick overview of each one.
The Price Moves In Trends
This assumptions is based on the idea that because people will often start doing something just because they know or believe a large number of other people are doing something (the bandwagon effect it's called in psychology), there will be times when the price of a Cryptocurrency moves predominantly in one direction over the over.
When this happens the price is said to be in a trend.
There are two type of trend that occur in Crypto market:
Uptrends - Caused by the price continually rising without many severe drops taking place.
And downtrends - Created by the price continuously falling without many big rises occurring.
The huge rise we saw last year and the big decline seen this year are two obvious, large scale examples of trends, but they take place all the time and across all different timescales.
For example, the rise seen on Bitcoin from the 1th to the 26th is classed as a trend (an uptrend) as is the decline seen earlier in the year, which is a downtrend. These trends obviously aren't as big as the huge rise and decline we saw this year/last year but they are still trends because they follow the same principal.
The Market Discounts All Known Information
Have you noticed how much news comes out about Cryptocurrency?
Crazy, isn't it?
It seems like everyday a new piece of news is released or some analysts says Bitcoin will reach (insert huge number here) in X amount of time.
As important as it may seem to analyze and keep track of all this news, TA says that it's ultimately a pointless en-devour; because the market discounts all known information.
What this means is that because the people who, for lack of a better term, control the Crypto market - the whale traders they're called - know that a piece of news is being released, they buy and sell their Crypto in accordance with what they think the news means for the price way before it comes out.
So when a piece of news does come out, although there will often be a change in the short term direction (the price may rise or fall slightly) long term the direction won't change, as the whale traders have already taken the news into account when they bought or sold their coin.
History Repeats Itself
Humans, when faced with a situation similar too or the same as what they've been in before, will almost always react in a the same way.
Because of this, Technical Analysis says that things that have happened in the past will at some point happen again in the future, and that, as a result, will cause certain patterns or structures to form that can predict whether the price will rise or fall.
Technical Vs Fundamental: Which Ones Better?
Technical analysis is the best know method of analyzing Cryptocurrency, but there's another type that's also popular.....
Fundamental analysis.
Whereas technical analysis is based on analyzing past and current information about the price of a cryptocurrency, fundamental analysis focuses on analyzing news events, events that are fundamental (hence the name) to the future price.
To highlight the difference between the two, consider how a trader using TA and a trader using Fundamental Analysis would have approached the hard fork that occurred on Bitcoin last year.
Technical Analysis says "the market discounts all information" so someone using TA would not have bothered analyzing what affect the hard fork may have on the price, because they know the whale traders - the people who control the market - have already factored it into their decisions, meaning it's not going to change the long term direction whatever the outcome.
Now a trader using Fundamental Analysis would have done the opposite.
They would have been analyzing the hard fork and the news around it intently, trying to figure out how people are going to react to it and what it means for the future of bitcoin.
If they determined the hard fork gave Bitcoin a better chance of being accepted as a currency (which it didn't) and the price dropped after the hard fork took place, they would have seen it as an great opportunity to buy (which it was, not because it increased the chance it would be accepted, but because the market was a boom phase).
If they though it gave it a lower chance of being accepted and the price went up after the hard fork took place, they would have seen it as a good opportunity to sell, because in their minds Bitcoin is now not likely to end up as a means of exchange, thus it will probably fall in the near future.
So that's how Fundamental and Technical Analysis differ from one another.
Why Fundamental Analysis Doesn't Work On Crypto
After reading the above you might think "Hmm, fundamental analysis sounds kind of cool, I might try that" but that would be a really big mistake, because fundamental analysis doesn't work on Crypto.
People say that it does, and that they use it successfully, but it's not true.
The reason why is because Cryptocurrency DOES NOT have an true value.
In other words, no Cryptocurrency has a determined, real world value. Their current prices are based on speculation, not on their actual puprose - because they don't have an accepted purpose yet.
The core idea behind Fundamental analysis is that by analyzing the factors that are fundamental to the value of an asset (Crypto in our case) you can determine what it's real value is, and thus, whether it's current price is lower or higher than it's true value.
But here's the problem:
Because Crypto doesn't have a true value (as it has no defined purpose) there's NOTHING you can analyze to determine what it's true value could be.
So all the different events that traders using fundamental analyze to make decisions, like the hard fork, important announcements, influential people giving their opinion etc, none of these have any bearing on whether Bitcoin or any other Crypto will fulfill their expected purpose, making it useless to analyzing them.
Summary
Well, there you have it, the first lesson.
Lesson 2, which will cover price charts and their use in trading, will be ready either at the end of the this week or at sometime during the weekend. I can't say when as I'm not sure how big it will be, but it will be sometimes around then.
Hello traders, I'm Liam.
I've been active on this forum for a few weeks now, pitching in, giving advice (hopefully some good advice).
But one thing I've noticed from my short time on here is that there are lots of people who don't know how to trade Cryptocurrency and who don't currently have a trading strategy (at least, not one that works).
If this is you, buckle up......
Because over the next few weeks I'm going to give you a full run-down on how to trade Cryptocurrency and detail a profitable trading strategy you can use to make money.
Here's how it's going to work:
Later on today I'm going to upload a post to this thread called "Lesson 1: Overview Of Technical Analysis".
This post will be the first of 10 lessons about Cryptocurrency trading (and investing) that I'll be uploading over the next few weeks.
The first four lessons (including today's) will cover the basics of trading, like what Technical Analysis is, the different types of chart you can use, how to understand the information charts give about the price, what Technical Indicators are (including an indicator you can use to spot when a dip will begin and end) plus more.
Note: You can find a list of all the lessons below as well as a small overview of what each one will contain.
In the 5th lesson I'll detail the trading strategy and walk you through step-by-step of how it works, so you know exactly when the strategy gives a signal to buy, to sell, and where to place a stop loss order.
The remaining 5 lessons will go into detail on topics that aren't essential for understanding or using the strategy (as the first four are), but are still very useful and important for you to know as a trader or investor, like how the Whale Traders operate for instance.
With that out of the way, here's a brief overview of each lesson.....
Lesson 1: Overview Of Technical Analysis
Lesson 2: Understanding Price Charts
Lesson 3: How To Read A Candlestick Chart
Lesson 4: All You Need To Know About Technical Indicators
Lesson 5: A Simple Trading Strategy For Beginners
Lesson 6: Understanding The Whale Traders
Lesson 7: The Four Trading Styles
Lesson 8: Compounding: How Small Consistent Profits Can Turn Into Big Gains
Lesson 9: Risk To Reward Ratio
Lesson 10: Why You Should Only Trade Bitcoin Or Etherium
Have A Question?
By the way, if you have any questions about trading (or investing, for that matter) that you'd like answering feel free to the post them.
I started trading Crypto, Bitcoin specifically, at the beginning of this year (just before it crashed, unfortunately), but for the previous 3 years I've been trading the Forex Exchange market (Forex, as it's more commonly known) which, besides being about trading normal Currencies, is identical to trading Crypto, so I have a huge amount of knowledge on all things trading and investing.
I can answer questions on everything from Technical Analysis, charts, candlesticks, Technical Indicators, chart or price patterns, psychology, managing emotions, whale traders, how and why the price moves up and down etc - I think you get the picture.
If you don't want to ask a question on the forum you can always send it via private message, or, if you don't have an account on the forum, email it to me at [email protected]
I'll try to get back to you right away but obviously that won't always be possible, so give me two - three days to respond. If I haven't replied after 3 days send the email again, as it's likely I might have missed it.
And that's pretty much it, guys.
I hope you find the information in this thread useful and I look forward to hearing from you over the next few weeks.
Regards, Liam.
I've been active on this forum for a few weeks now, pitching in, giving advice (hopefully some good advice).
But one thing I've noticed from my short time on here is that there are lots of people who don't know how to trade Cryptocurrency and who don't currently have a trading strategy (at least, not one that works).
If this is you, buckle up......
Because over the next few weeks I'm going to give you a full run-down on how to trade Cryptocurrency and detail a profitable trading strategy you can use to make money.
Here's how it's going to work:
Later on today I'm going to upload a post to this thread called "Lesson 1: Overview Of Technical Analysis".
This post will be the first of 10 lessons about Cryptocurrency trading (and investing) that I'll be uploading over the next few weeks.
The first four lessons (including today's) will cover the basics of trading, like what Technical Analysis is, the different types of chart you can use, how to understand the information charts give about the price, what Technical Indicators are (including an indicator you can use to spot when a dip will begin and end) plus more.
Note: You can find a list of all the lessons below as well as a small overview of what each one will contain.
In the 5th lesson I'll detail the trading strategy and walk you through step-by-step of how it works, so you know exactly when the strategy gives a signal to buy, to sell, and where to place a stop loss order.
The remaining 5 lessons will go into detail on topics that aren't essential for understanding or using the strategy (as the first four are), but are still very useful and important for you to know as a trader or investor, like how the Whale Traders operate for instance.
With that out of the way, here's a brief overview of each lesson.....
Lesson 1: Overview Of Technical Analysis
- What Is Technical Analysis?
- Understanding The Three Principals Behind Technical Analysis.
- The Difference Between Technical Analysis And Fundamental Analysis.
- Why Fundamental Analysis Doesn't Work On Crypto (this might rattle a few heads)
Lesson 2: Understanding Price Charts
- What Is A Price Chart?
- Why You Need To Use A Price Chart.
- The Three Different Types Of Chart You Can Use When Trading.
- Which Type Of Chart You Should Always Use.
Lesson 3: How To Read A Candlestick Chart
- Bullish And Bearish: What Do They Mean?
- The 4 Different Features Of A Candlestick.
- Understanding The Information Each Feature Gives About The Price (With Examples)
Lesson 4: All You Need To Know About Technical Indicators
- What Are Technical Indicators?
- How Do Indicators Work?
- A Technical Indicator You Can Use To Figure Out When A Dip Will End (And Begin).
Lesson 5: A Simple Trading Strategy For Beginners
- Overview Of The Strategy.
- How To Set The Charts And Indicators Up.
- Step By Step Instructions On How (And When) To Buy, Sell And Place Stop Loss Orders (Including Trade Examples).
Lesson 6: Understanding The Whale Traders
- Who Are The Whales?
- How The Whale Traders Buy And Sell Crypto.
- Why The Whales Can Only Buy/Sell At Specific Points And Times.
- How To Find Out Where The Whales Have Bought And Sold Crypto.
Lesson 7: The Four Trading Styles
- What Is A Trading Style?
- Overview Of The Four Styles.
- Which Style Is Best For You.
Lesson 8: Compounding: How Small Consistent Profits Can Turn Into Big Gains
- What Is Compounding?
- Why You Don't Need To Make 5%,10% 15% etc A Day To Be Successful.
Lesson 9: Risk To Reward Ratio
- What Is Risk To Reward Ratio?
- How The Ratio Is Calculated.
- Why You Don't Need To Win Every Trade To Be Successful.
Lesson 10: Why You Should Only Trade Bitcoin Or Etherium
- The Secret Differences Between Trading Crypto's.
- The Dangers Of Trading Low Market Cap Cryptocurrencies.
Have A Question?
By the way, if you have any questions about trading (or investing, for that matter) that you'd like answering feel free to the post them.
I started trading Crypto, Bitcoin specifically, at the beginning of this year (just before it crashed, unfortunately), but for the previous 3 years I've been trading the Forex Exchange market (Forex, as it's more commonly known) which, besides being about trading normal Currencies, is identical to trading Crypto, so I have a huge amount of knowledge on all things trading and investing.
I can answer questions on everything from Technical Analysis, charts, candlesticks, Technical Indicators, chart or price patterns, psychology, managing emotions, whale traders, how and why the price moves up and down etc - I think you get the picture.
If you don't want to ask a question on the forum you can always send it via private message, or, if you don't have an account on the forum, email it to me at [email protected]
I'll try to get back to you right away but obviously that won't always be possible, so give me two - three days to respond. If I haven't replied after 3 days send the email again, as it's likely I might have missed it.
And that's pretty much it, guys.
I hope you find the information in this thread useful and I look forward to hearing from you over the next few weeks.
Regards, Liam.
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