Basics to trade cryptocurrencies correctly. | Part 1- Crypto Academy / S6W1 - Homework post for nane15.
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Q1: What do you understand by trading? Explain your understanding in your own words.
Trading in cryptocurrency claims to be a decentralized network that allows for the exchange of any virtual asset using blockchain technology and peer-to-peer technologies.
The exchange allows users to exchange digital assets using bitcoin, and other cryptocurrenices such as ether, ripple, and litecoin.
How does it work?
Users buy and sell digital assets on the exchange platform, thus allowing the platform to make trades.
What the trading process involves is that users register on the exchange to open an account. The account is funded through the purchase of bitcoin or another cryptocurrency.
Users are also required to buy a special type of “tokens” that can only be sold on the exchange if the user sells the cryptocurrency and receives bitcoin as payment. The tokens themselves are not tradable like the real currencies, they have no intrinsic value, and all the value is dependent on the exchange. The token also has other important functions that make it tradable
Meaning of trading is that we buy something from you, you buy something from us, and we both think it was a good exchange
Q2: What are the strong and weak hands in the market? Be graphic and provide a full explanation.
Strong hands:
Strong hands are the individuals, institutions and organizations with huge capital or investment. This people with such enormous amount controls the markets meaning, they can influence the market for their favour.
They are also referred as the market makers, where they decide on the direction of the market movement.
They are sometimes called “Market Guru” and “Index Trader l”
These are of all the highly influential players in the world, they use as well as promote certain cryptocurrency, also use investment instruments. For example, cryptocurrencies, and the Chinese exchanges that have closed their doors to the US as a result of anti-trust violations.
Q3: Which do you think is the better idea: think like the pack or like a pro?
The best idea for cryptocurrency is always the pro. A professional trader will always know how to place his trade in all market condition because of the fast experience in the cryptocurrency market. Just like any other currency trader, a a professional has done his/ her homework to know all the secret to win on cryptocurrency. The trader has taken the determination to win.
We are talking about people who know how to read the charts, basic programming, price calculation, ways to win and use margin to make big profit. So, if you have this kind of person on your side, you will never feel let down by your trades. Those are the main reasons to think like a pro.
Q4: Demonstrate your understanding of trend trading. (Use cryptocurrency chart screenshots.)
Trend trading is a type of trading. You buy when the trend is moving up, and you sell when the trend is moving down.
Trend trading is the art of buying low and selling high (below). The 'trend' is that your position should be in a stronger market so that you can profit on the opposite side.
It's best not to go too long in one direction, because the trend may change. If you position yourself for a long position, you want to have the lowest possible risk in the downside (lower than a standard average, below).
If the trend changes from up to down, you're a trend trader, and if the trend changes from down to up, you're a trend trader or side ways
Positioning for a Long Position
A simple way to position yourself for a long position is to buy a cryptocurrency asset at it's low.
You want to buy it when it's relatively cheap, so that when it goes up, you've just entered into a trend trader position.
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If you look at the chart, the price trend goes up when you're buying it, and goes down when you're selling it. But the truth is, you only look at what you've bought and what you haven't bought. You don't look at what you bought the day before and sell the day before, because you're still within the trend.
Short and sidewys position
If the trend is sideways, you could also be a trend trader shorting. It's difficult to know when you can short a trend. But sometimes you can get some indication of a change in trend.
If you look at the chart above, it just made a big move up, a big drop in price, or no movement at all, then you could be able to see that the trend is going to change, that they've just made a change in direction.
Both longs and shorts can be very profitable.
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In summary, trend trading is a type of trading. You buy when the trend is moving up, and you sell when the trend is moving down.
Q5: Show how to identify the first and last impulse waves in a trend, plus explain the importance of this. (Use cryptocurrency chart screenshots)
Impulsive moves takes place in the market during a high impact news and how to identify it in the market is the appearance of
- long candlestick:
This candlestick would cover upto three to four separate candlestick and it tends to standout.
The faster formation:
The Candlestick forms with a high speed marketing a park in the market.The Larger
The Candlestick appears to be very large and huge.The importance of this impulsive moves are
The market will give the trader on the right side of the move a huge profit.
It shows a clear difference that a speach or an event took place which made it to appear.
Impulsive moves is important because it gives a higher profit margin.
To buy and sell is best done on support and resistance points. I will be using the images below to explain in.Q6: Show how to identify a good point to set a buy and sell order. (Use cryptocurrency chart screenshots)
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Q7: Explain the relationship of Elliott Wave Theory with the explained method. Be graphic when explaining.
The relationship between the two are
- The pattern formation at the top and bottom.
- It's wave move on entry and exit are likely the same.
- It's rules and guidance on trading are the same.
Q8: conclusion
trading cryptocurrencies is an added advantage
Today, the new developments in the field of Blockchain technology has given way to a new kind of investment process: “asset trading”. It's not restricted to large corporations, the equity of private enterprises and government bonds, but also includes all types of cryptocurrencies – Bitcoin, Ethereum and Litecoin. Trading cryptocurrencies is a quick, efficient, and efficient process. Especially if we take into consideration that the average speed of transactions between exchanges is 99.95%.
