A Guide to Trading Cryptocurrency, Part 2: Ichimoku Kinko Hyo
A Guide to Trading Cryptocurrency, Part 2: Ichimoku Kinko Hyo
The Strategy - Ichimoku Kinko Hyo and more von ramsay09 ...
Ichimoku Kinko Hyo: Simple yet Effective by Ash Saga ...
5 Great Ichimoku Strategies - Coin Clarity
Ichimoku Cloud Settings for Tradingview - cryptobulls.info
A Physicist's Bitcoin Trading Strategy. No leverage, no going short, just spot trading. Total cumulative outperformance 2011-2020: 13,000,000%.
https://www.tradingview.com/script/4J5psNDo-A-Physicist-s-Bitcoin-Trading-Strategy/ 3. Backtest Results Backtest results demonstrate significant outperformance over buy-and-hold . The default parameters of the strategy/indicator have been set by the author to achieve maximum (or, close to maximum) outperformance on backtests executed on the BTCUSD ( Bitcoin ) chart. However, significant outperformance over buy-and-hold is still easily achievable using non-default parameters. Basically, as long as the parameters are set to adequately capture the full character of the market, significant outperformance on backtests is achievable and is quite easy. In fact, after some experimentation, it seems as if underperformance hardly achievable and requires deliberately setting the parameters illogically (e.g. setting one parameter of the slow indicator faster than the fast indicator). In the interest of providing a quality product to the user, suggestions and guidelines for parameter settings are provided in section (6). Finally, some metrics of the strategy's outperformance on the BTCUSD chart are listed below, both for the default (optimal) parameters as well as for a random sample of parameter settings that adhere to the guidelines set forth in section (6). Using the default parameters, relative to buy-and-hold strategy, backtested from August 2011 to August 2020,
Total cumulative outperformance (total return of strategy minus total return of buy-n-hold): 13,000,000%.
Rolling 1-year outperformance: mean 318%, median 84%, 1st quartile 55%, 3rd quartile, 430%.
Rolling 1-month outperformance: mean 2.8% (annualized, 39%), median -2.1%, 1st quartile -7.7%, 3rd quartile 13.2%, 10th percentile -13.9%, 90th percentile 24.5%.
Using the default parameters, relative to buy-and-hold strategy, during specific periods,
Cumulative outperformance during the past year (August 2019-August 2020): 37%.
12/17/2016 - 12/17/2017 (2017 bull market) absolute performance of 2563% vs buy-n-hold absolute performance of 2385%
11/29/2012 - 11/29/2013 (2013 bull market) absolute performance of 14033% vs buy-n-hold absolute performance of 9247%
Using a random sample (n=20) of combinations of parameter settings that adhere to the guidelines outlined in section (6), relative to buy-and-hold strategy, backtested from August 2011 to August 2020,
Average total cumulative outperformance, from August 2011 to August 2020: 2,000,000%.
Median total cumulative outperformance, from August 2011 to August 2020: 1,000,000%.
EDIT (because apparently not everybody bothers to read the strategy's description): 7. General Remarks About the Indicator Other than some exponential moving averages, no traditional technical indicators or technical analysis tools are employed in this strategy. No MACD , no RSI , no CMF , no Bollinger bands , parabolic SARs, Ichimoku clouds , hoosawatsits, XYZs, ABCs, whatarethese. No tea leaves can be found in this strategy, only mathematics. It is in the nature of the underlying math formula, from which the indicator is produced, to quickly identify trend changes. 8. Remarks About Expectations of Future Results and About Backtesting 8.1. In General As it's been stated in many prospectuses and marketing literature, "past performance is no guarantee of future results." Backtest results are retrospective, and hindsight is 20/20. Therefore, no guarantee can, nor should, be expressed by me or anybody else who is selling a financial product (unless you have a money printer, like the Federal Reserve does). 8.2. Regarding This Strategy No guarantee of future results using this strategy is expressed by the author, not now nor at any time in the future. With that written, the author is free to express his own expectations and opinions based on his intimate knowledge of how the indicator works, and the author will take that liberty by writing the following: As described in section (7), this trading strategy does not include any traditional technical indicators or TA tools (other than smoothing EMAs). Instead, this strategy is based on a principle that does not change, it employs a complex indicator that is based on a math formula that does not change, and it places trades based on five simple rules that do not change. And, as described in section (2.1), the indicator is designed to capture the full character of the market, from a macro/global scope down to a micro/local scope. Additionally, as described in section (3), outperformance of the market for which this strategy was intended during backtesting does not depend on luckily setting the parameters "just right." In fact, all random combinations of parameter settings that followed the guidelines outperformed the intended market in backtests. Additionally, no parameters are included within the underlying math formula from which the indicator is produced; it is not as if the formula contains a "5" and future outperformance would depend on that "5" being a "6" instead. And, again as described, it is in the nature of the formula to quickly identify trend changes. Therefore, it is the opinion of the author that the outperformance of this strategy in backtesting is directly attributable to the fundamental nature of the math formula from which the indicator is produced. As such, it is also the opinion of the author that continued outperformance by using this strategy, applied to the crypto ( Bitcoin ) market, is likely, given that the parameter settings are set reasonably and in accordance with the guidelines. The author does not, however, expect future outperformance of this strategy to match or exceed the outperformance observed in backtests using the default parameters, i.e. it probably won't outperform by anything close to 13,000,000% during the next 9 years. Additionally, based on the rolling 1-month outperformance data listed in section (3), expectations of short-term outperformance should be kept low; the median 1-month outperformance was -2%, so it's basically a 50/50 chance that any significant outperformance is seen in any given month. The true strength of this strategy is to be out of the market during large, sharp declines and capitalizing on the opportunities presented at the bottom of those declines by buying the dip. Given that such price action does not happen every month, outperformance in the initial months of use is approximately as likely as underperformance.
The Ichimoku cloud indicator is a technical indicator of Japanese origin and was a proprietary indicator with its Japanese formulator for around 30 years. It involves calculating five lines of short to medium duration on the high, low and close of a security’s prices and plotting an area, between two of these five lines, better known as Ichimoku cloud. These lines help in determining the direction, momentum and support-resistance levels for the time series data. The Ichimoku cloud indicator also generates buy and sell trading signals and is usually plotted along with candlestick to enable better decision making and clearer plots. Calculations for the lines are simple and the time period chosen is somewhat arbitrary:
Tenkan Sen or Conversion Line: (20-period-high + 20-period-low)/2
Kijun Sen or Base Line: (60-period-high + 60-period-low)/2
Senkou Sen A or Leading Span A: (Base Line + Conversion Line)/2
Senkou Sen B or Leading Span B: (120-period-high + 120-period-low)/2
Chikou Span or Lagging Span: (Close of 30 periods ago)
The Direction Of The Price Action The Ichimoku cloud is formed between the Leading Span A and Leading Span B and helps in determining the strength and direction of the price action. For example, the direction or trend of the price action is up when the prices are above the Ichimoku cloud. Similarly, the direction of the price action is down when prices are below the Ichimoku cloud and the direction is flat when the prices are somewhere in the Ichimoku cloud. The Strength Of The Price Action The Strength can be estimated using the difference between the Leading Span A and B lines. When the Leading Span A is increasing and above the other span line, the increase in the difference signifies strength in the uptrend. It also means that the Ichimoku cloud is getting thicker. Similarly, the growth of the Leading span B over the other span line signifies strength in the downtrend and the thickness of the Ichimoku cloud increases again though in the opposite direction. Python Code And Trading Strategy The Python code below loads the OHLC data for a cryptocurrency named Bitcoin. It then calculates, plots the various components and the Ichimoku cloud using the pandas and matplotlib functionality. 1234567891011121314151617181920212223242526272829303132333435363738394041
## import packages import pandas as pd import matplotlib.pyplot as plt # read the excel; set ‘date’ column as index; rename the columns; #discard columns other than Date and OHLC df = pd.read_excel( 'BTC.xlsx' ,index_col = 'Date' ,names = [ 'Open' , 'High' , 'Low' , 'Close' ], usecols = range ( 5 )) df.sort_index(inplace = True ) ## Sort in chronological order or as earlier dates first df = df.loc[ '2016-10-01' : '2018-9-30' ] ##Select some data using pandas’ .loc indexing # set values for the time periods to be used later # becomes easier this way to change the time period values later to customise the calculations CL_period = 20 # length of Tenkan Sen or Conversion Line BL_period = 60 # length of Kijun Sen or Base Line Lead_span_B_period = 120 # length of Senkou Sen B or Leading Span B Lag_span_period = 30 # length of Chikou Span or Lagging Span # add to the dataframe, different components of the Ichimoku # use shift function to shift a time series forward by the given value df[ 'Conv_line' ] = (df.High.shift(CL_period) + df.Low.shift(CL_period)) / 2 df[ 'Base_line' ] = (df.High.shift(BL_period) + df.Low.shift(BL_period)) / 2 df[ 'Lead_span_A' ] = (df[ 'Conv_line' ] + df[ 'Base_line' ]) / 2 df[ 'Lead_span_B' ] = (df.High.shift(Lead_span_B_period) + df.Low.shift(Lead_span_B_period)) / 2 df[ 'Lagging_span' ] = df.Close.shift(Lag_span_period) df.dropna(inplace = True ) # drop NA values from Dataframe # plot the data using matplotlib's functionality #add figure and axis objects fig,ax = plt.subplots( 1 , 1 ,sharex = True ,figsize = ( 20 , 9 )) #share x axis and set a figure size ax.plot(df.index, df.Close,linewidth = 4 ) # plot Close with index on x-axis with a line thickness of 4 ax.plot(df.index, df.Lead_span_A) # plot Lead Span A with index on the shared x-axis ax.plot(df.index, df.Lead_span_B) # plot Lead Span B with index on the sahred x-axis # use the fill_between call of ax object to specify where to fill the chosen color # pay attention to the conditions specified in the fill_between call ax.fill_between(df.index,df.Lead_span_A,df.Lead_span_B,where = df.Lead_span_A > = df.Lead_span_B, color = 'lightgreen' ) ax.fill_between(df.index,df.Lead_span_A,df.Lead_span_B,where = df.Lead_span_A < df.Lead_span_B, color = 'lightcoral' ) plt.legend(loc = 0 ) #Let matplotlib choose best location for legend plt.grid() # display the major grid plt.show() # Finally display the plot
Conclusion Ichimoku cloud is also known as Ichimoku Kinko Hyo. Ichimoku cloud is a technical indicator to gauge momentum, trend and strength of the price action using five lines and a cloud. The indicator has crossover points, just like MACD, to determine buy and sell signals. Other classic momentum indicators can also be used in conjunction with the Ichimoku cloud to produce clearer buy and sell signals. We have successfully applied the Ichimoku Cloud combined with RSI to generate trading signals in our course on Cryptocurrency trading.
https://preview.redd.it/6in97egosnx31.png?width=800&format=png&auto=webp&s=d2e4d1b052b295cb3da49f604fab7a6113321210 I wrote this lecture on the methodology of successful trading, and more specifically on tactics, strategies, subtleties and recommendations, based on 2 years of work on Bitmex, Binance, Gate, Okex bitcoin cryptocurrency exchanges in real combat conditions. Guided by this technique, I managed to earn 500% in excess of the deposit for 7 days of trading (i.e. I increased the deposit amount by 5 times!). These are not fairy tales, but reality, that is, confirming statistics of exchange transactions on the account of the crypto-exchange.
I believethat the knowledge provided in this course will help a beginner tomaster successful tradingonly if the course is not only read, but also outlined. It will be important to follow punctually, commenting on your actions in your notes.
In separate consultations, I could give personal instructions on the nuances of technical analysis on various timeframes, signals on entry points, information on trade automation software (algorithmic trading robots), and other tools useful in the work of a trader. But, despite a lot of additional software, my experience has shown that the most effective speculation model on the cryptocurrency and stock exchange, which everyone chooses for themselves based on practical experience, is directly in the online trading mode on exchange terminals. Each exchange is good in its own way, but also has its drawbacks. I chose the best solution for myself and am sure that this is temporary. Perhaps in the future there will be more progressive decentralized exchanges with good liquidity and they will replace the existing platforms managed by market leaders. Various digital designations, such as: — in what percentage of the deposit do you enter into a particular transaction; — where to put stop limit or market (Market) (market) orders (and whether to place them at all), where to exit the transaction and how. Again, I note that all the selected values are usually individual and depend both on the time trading intervals (TimeFrame) (1m 3m 15m 1h 3h 4h 6h 1 d 1w 1m) and on the deductible amount of the bet in % percentage of the amount of your deposit. It is important to remember that trading in the cryptocurrency market is a high-risk investment activity that everyone chooses and carries out at their own risk. Remember that with a big bet on the whole, as they say, a patty, and even with 100x-500x leverage, you risk losing your entire deposit right away. An exchange machine or a well-tuned and trained professional broker robot does not cost anything to go against the trend with a tidbit — easy prey. Do not be hamsters i.e. naive simpletons — do not merge the deposit into zero due to elementary greed, incontinence, ardor and other factors that contradict the qualities that a professional trader needs to succeed in trading, namely: cold-bloodedness, endurance, accuracy, punctuality, tact, quick reaction , the ability to quickly enter numbers and timely press the desired buttons.
You ask me: “Hey … guy, you are so smart … I wonder how much you earned from trading or how much you earn or why you don’t do it yourself … why do you need competitors?” — I will answer you: it is no secret that AI (artificial intelligence) has been working on the exchange for a long time and it is constantly improving, but this still does not prevent a person from continuing to beat him. I hope that in the future this trend will not stop otherwise — we have disappeared. And as regards competition — do not worry so much for me, because there is still a trading idea, program or terminal that I have not yet implemented and not reported in this guide after its publication and, perhaps, it will not deprive me of future trading opportunities.
So, the instructions that I follow in the process of trading cryptocurrencies on the exchange terminal in online mode.
It is necessary to wait for the moment of the entry point. You need to enter the deal only then, you feel it and foreseen it in advance according to the levels of the daily period.
It is necessary to carefully weigh their capabilities, ie to consider funds, understanding that futures trading (with leverage) leads to greater risks of liquidation / margin call (MarginCall).
During growth, you need to fix profit and try to sell at a pullback. It is always possible to re-enter a deal, but it is unlikely to return lost profits, instead, you can get several hours of dead weight in the price movement opposite from the planned direction.
It is very important to have cost control, namely, the timely Stop Limit (stop trade order) + sliding Stop Loss (the same thing, only with insurance against a sharp price movement).
It is easy to understand the wave component and accept the movement by levels — press exit buttons in time at 2% and + 10% according to the 1 to 5 principle (we risk one part of the deposit against 5). The Pareto effect has not been canceled: 20% activity, gives 80% effectiveness.
To work with Japanese candles, the ability to draw support levels and resistance lines is enough, but this is not enough for a professional, because the presence of modern advanced indicators, such as MACD, SRSI, Ichimoku Cloud / Signal, horizontal and vertical volume indicator and so on, is very important. Everyone chooses for themselves the indicator that brings more profit to a certain trading range. But remember — the main criterion for success is an understanding of the laws of the market and trade by market. Perhaps this applies to the field of extrasensory perception, metaphysics, and other obscure and hard to prove phenomena and sciences, but one way or another — intuition is clear and has a place to be.
In no case should you enter into short-term breakthrough deals on minute trading with market uncertainty. The situation where minute fluctuations may seem like reversal movements is often quite misleading. If you are in a pose (bull — for growth / long or bear — for fall / short) do not retreat and the market will not slow you to please you with profit. Often, a stock price feed / the same chart manipulates the minds of players, displaying false breakdowns and minute movements, on the basis of which you can not rely on a trend change (this lie is especially evident in minute time intervals / timeframes). In such cases, make decisions only at fundamental levels. On the hourly chart you will see a more truthful picture, because globally, on markets other than minute timeframes, the market is less susceptible to momentary manipulations. This knowledge will give you firmness in the intention and decision-making to remain in the chosen position and not to respond to minor market manipulations. During the day, you may repeatedly wish to unreasonably enter into such transactions, but remember that in this case you will be guaranteed to drain the deposit. Remember — the market from the middle of the trend will go up up or down and hit the stop limit order placed by you (if you play with a large leverage not for your money), after which it will go in the right direction you have chosen. Although in general the situation is banal — you are led by the nose like thousands as well as you. The only true method is to use common sense and avoid uncertainty when trying to enter a pose. A historical analysis of prices, the frequency of ranges (delta) of ups and downs, the degree of volatility and fundamental approaches — to help you. I also want to add that success is in your hands and it consists in the realization of the need not to merge a deposit under any circumstances.
You cannot leave the market unattended, the alarm of the price change alarm is not in your favor or without a stop limit at a reliable exchange platform (broker).
Once again I repeat, you must be prepared in advance for the fact that the market is deceiving and unexpected movements can often occur and your task is to secure your funds with a stop on the market or to fix profit by a floating stop or a fixed stop limit.
Risk management — the basis of success in trading when trading with leverage (margin trading). It is usually recommended to go into a deal at 2% of the deposit with x leverage and stop from profit in the ratio of 1 to 5. What does this mean and why is this risk / profit sharing technique so important?It is necessary to clearly calculate probabilistic lumbago in order to avoid elimination. I recommend you not to rush into bets, but to take a sheet of paper and bargain virtually in order to understand whether your calculations were correct. A virtual game is worth nothing, but it will save you money and keep the deposit safe and sound.
The wave theory assumes entry into the transaction after completion and a clear change in the previous trend based on signals and the news background, incl. experience of the current subject of trade — the operator pushing the buttons. For example, in the absence of price movement in the direction of the RSI indicator, analysis of all time frames with indicators, fibonacci levels, correction degree phase, time of day in time zones, stock and commodity market readings.
It is important, before starting trading, test the presence of a manipulator on the market using the method of high rates. If you are looking for an entry into a major deal in a few weeks, keep in mind that a stop with a loss can be a significant amount in the money equivalent that you are ready to lose, and if the deal does not take place in your favor, you must set yourself up in advance for what it should be. Because a successful trader is not one who regularly guesses successful transactions, but one who successfully completes one out of five transactions according to risk management and the calculation of the leverage calculator in accordance with the chosen strategy.
A lost position can be closed without waiting for the reverse restoration of the bidding process, thus manually participating in the balance adjustment or by setting a stop limit order in advance or after the bid in case of further decline or growth.
There is an assumption that at the end of the working day, with a likely depreciation, traders convert stocks into fiat (money), which contributes to a depreciation, but this is not accurate)
Incorrect entry into the transaction. How important is it to exit an unsuccessful transaction as early as possible or at the first rollback to change the direction of the trend or wait to determine a new entry point.
The presence of two accounts on the exchange terminal is possibleand desirable in order to be able to remain in a winning position regardless of the success of the initially selected trading direction (a technique requiring careful verification by personal experience with a clear definition of the margin leverage and % of the entry into the transaction from the deposit balance to minimize the risk of loss).Successful trading does not consist in the ability to conclude as many successful trades as possible, but in minimizing losses.
Technology is improving and strategies are changing. Before entering a transaction, it is necessary to carefully analyze the current market situation using a comparative analysis, studying the general news background (guided by the ***“buy for expectations — sell on the news”***postulate), detecting a flat (sideways), determining the level of instrument volatility (gold, oil, funds , bitcoins / cryptocurrencies — digital coins, etc.)
Immediately put a stop — is a guarantee of success or a drain of the deposit? After all, how to cope with their own feelings and not get into anxiety about a successful or unsuccessful transaction? The gradual entry scheme works well.
Coins. We look at the trading delta with the help of a robot scanner and make a decision based on all the above criteria in the course. It has been noticed that amateurs buy coins in the hope of growth. Remember, the market for altcoins is not growing now.
A favorable time for earning is at the time of a flat, which usually occurs after the rising flag or the implementation of a bull pennant figure, etc. It will be more clear to observe the schedule in real mode and make the required notes in your own mind.
On the cryptocurrency market, some laptop microprocessors are heated and the fan turns on at peak times. This indicates the beginning of a sharp movement and is a signal to enter the deal. Therefore, you can not only observe the behavior of the market, but now also listen (this is my personal note, it is unlikely that you will find such information somewhere else, as they say — an exclusive / VIP signal;)).
You can still write a lot about time, how much can or should be spent on the monitor, on which timeframes to trade and which strategies to follow, but everyone should choose this independently and preferably, under the guidance of a specialist, because what is applicable to one is to the other — contraindicated.
In fact, any market situation should be beneficial for you due to successful risk management*!*For successful online trading, it is very important to use candlestick and technical analysis*, which help to more accurately determine the entry point to the transaction (purchase or sale).*You cannot act at random when the market is hard to predict and often ready to follow your footsteps.If you lose, then I do not recommend immediately going to recoup*, because trade should ultimately be break even. In ardor, you are likely to enter into an unsuccessful deal and lose even more than before. This situation will make you very sad, so do not make this mistake. She is famous.*Use amodern powerful laptop or desktop computer with a convenient side numeric keypad, a large screen and a convenient manipulator (mouse)so that when you press the buttons you have as little physical braking and stops as possible.Practice in advance to work in the browser on the exchange terminal without making a deposit on futures trading from the exchange wallet. This training practice will reduce your losses.
Hello from Ukraine, Kramatorsk city ( “War is peace / freedom is slavery [and] ignorance is strength.”) Reslav Cryptotrader (if you need find me look around — me be i near ;). To be continued… http://twitter.com/reslav1 P.S.: Nowadays, money strives to be counted more and more. Using the information technology of databases with indexes, it has become possible to automatically and instantly capture and display the information that was previously collected by entire departments of the state within a month and after manual entry was displayed on the screens of industrial monitors and public television. The era of the Internet has come, the time of the accessibility and decentralization of information. Today we see stock chart quotes of stock prices of leading world companies online. Everyone has the opportunity to invest their money in these stocks and earn on the difference in exchange rates of their value. A speculative market was formed on this basis, where leaders appeared who were able to act most efficiently and, accordingly, earn money. Many specialists are studying the nature of success in speculative markets. Many works on methods of achieving success in trading are morally obsolete due to the emergence of new technologies for calculating and controlling the money supply, for example, such as Bitcoin. After all, back in 2009 for 1309.03 BTC they gave 1 dollar. Today 1 BTC costs $ 9,000. This is due to the fact that since the appearance of bitcoin has never been hacked and the technology has shown its reliability and consistency, as a measure of the money invested in it. I will not go into the details and subtleties of Bitcoin technology, but I will note one thing — this is cryptographic software that was used in the banking sector as Swift payments, but transformed into a P2P peer-to-peer network of private computers, as a result, like Bittorent, it became public, hard controlled, commons. Bitcoin provides for a complexity bomb, which complicates each year, and therefore makes it more expensive, its limited production, and this is one of the main reasons for its rise in price. As well as the fact that Bitcoin is convenient for storing funds, as it is liquid and it can be easily sent without quantity restrictions and with high transaction (transfer) speed. All details about Bitcoin are available in open sources and you can find out everything about it on the Internet, as well as the alternative coin market (altcoins / coins), such as Ethereum, USDT (dollar tokens confirmed by a US company with real dollars in bank accounts) etc. Around this market of bitcoin cryptocurrencies, the same speculative matrix (network / exchange) arose as around ordinary currencies and created such a strong competition for traditional assets that many governments adopted it and began to use and implement technologies that arose in their turn base. Cryptocurrencies or blockchain (cryptographic chain / blocks / chain) began to be introduced in public sectors of the economy for calculating and controlling public commons, such as electricity, land, etc. Further, on the basis of this market, the need for regulation arose and the US authorities were very worried about the uncontrolled development of technology, on the basis of which a news background (negative or positive) arose, which powerfully affects cryptocurrency rates. In the era of information, this network began to act as a money pump, skillfully pumping money from the hands of inept speculators into the pockets of experienced traders. As a result of reading a lot of books, watching various telecasts in the industry of bitcoin trading analytics, I came to the conclusion that successfully trading cryptocurrencies is akin to art and as statistics have shown, only 20% in 2–3 years are able to consistently earn money, and of which, in turn, only 2 -3% become billionaires. I bring to your attention a technique by which you can enter the ranks of these 20% successful traders and possibly, jointly, open the door to those notorious 2–3% successful traders who are fortunate enough to touch the notorious golden fleece and discover the world of unlimited financial opportunities. All knowledge is available in open sources and collected by me in the book “Basics of Bitcoin Trading from Reslav” (2019), most of them are available.
Background analysis from 4 days ago TL;DR: I expect $12k around March 6, when the daily cloud will kumo twist. This presents an opportunity for trend reversal to the upside. Update (3/3 4pm ET): It looks like we're starting to feel the effects of the daily kijun resistance (as discussed below) bitfinex: https://i.imgur.com/Zy9hJ5J.png coinbase: https://i.imgur.com/wJmN81b.png On the 4 hour timeframe, we've got A Tale of Two Falling Wedges playing out. I personally don't use pattern price targets much, but nonetheless, an approximate price target for the larger falling wedge would be ~$12.5k to ~$13.5k, as determined by the vertical height of the breakout from $9k to $11.8k and the 1.618 fib level from that breakout. On the 12h, we seem to be at the neckline for the iHS (log scale). The volume profile is a bit messy, but hopefully we can break through with volume. Again, I don't give much weight to price targets, but an approximate target would be ~$15k to ~$17k. The Ichimoku Cloud on the 12h is also of note. I use the doubled crypto settings (20/60/120/30). The edge-to-edge trade I mentioned in my background analysis comment is continuing to play out, with a price target of ~$11.6k to ~$12.5k. The daily is where I've been the most focused on. A great benefit of trading on the daily is that you can go on with your life and focus on large-scale trends 😎(who am I kidding--I'm glued to the charts and the discussion threads 24/7. Please send help. 😞) Again, here I use the Ichimoku Cloud with the doubled crypto settings. Right now, price is below the cloud, the future cloud is bearish, and the TK line is below the KJ line. We're above the TK line, but have overhead KJ resistance coming up at $11.6k. Since we're below the cloud, we have that as resistance as well--the last time price hit cloud resistance at ~$11.8k we were decisively rejected. Overall, the cloud is bearish on the daily. However, the upcoming kumo twist on ~March 6 is imho the best chance for recovery in the near future. The kumo twist is period of low resistance and can act as a "magnet" for price movement. This sets up a price target of ~$12k on March 6. On the weekly, the trend still seems to be bullish; price is above the EMA50 and EMA200, price is above the cloud, the TK line is above the KJ line (although it's heading for a negative cross), and the future cloud is bullish. Price is currently at the weekly kijun resistance. Hopefully we can close above it! Here, I'm using the singled crypto settings (10/30/60/30) for faster signals on this high timeframe. Moving on to the monthly, February has closed as a doji, or, as I like to call it, a Jesus Christ Cross ✝️. Pray that the Jesus Christ Cross will deliver us and save us from our sins. Finally, here's a pitchfork with anchor points in Jan 2017, June 2017, and July 2017: https://i.imgur.com/q9hBB0c.png It predicts a price of ~$25k-$35k in July. I don't know how effective the pitchfork is, but I like it because it tells me that I will make money and because it is colorful. Interestingly, the iHS, 12h e2e, pitchfork mean, and daily twist all seem to line up. So, I present to you: The Ultimate Chart on Hopium My general strategy these past few days has more or less been "trade less, make more" to avoid getting caught up in the chop. Overall, I'm leaning (cautiously) bullish. Of course, this is all just my personal opinion and is not advice. Trade responsibly!
How to Trade Bitcoin Part 1: Getting Ready to Trade
The first part of our bitcoin trading guide series explains the basics of bitcoin and trading terminology. Instructions are also provided for buying bitcoin and getting ready to trade on BTC.sx. We originally produced the first part of this guide for our own traders to get started with our platform. However, after some really good feedback we thought we should share it publicly too. So please bear with us if it is quite orientated to our own platform. Future parts will be much more applicable to trading in general. Here is what we have planned for the series: 1) Getting ready to trade (this post) 2) Making your first trade
How to read a chart (candle sticks, volume, log vs linear scales)
How to spot a trend (moving averages)
How to open and close a position
3) Basics of technical analysis
Assumptions / theory behind TA
Classic support / resistance patterns e.g. head and shoulders
4) Advanced TA
5) Developing a sustainable strategy
Timing entry and exit points
Managing multiple open positions
Avoiding emotional trading
Please let us know if there are any topics you would like specifically covered and whether or not articles are the best format for learning. Why should you listen to what we have to say? Our CEO turned $100 into $200k by trading bitcoin, our COO previosuly worked at senior management level at Deutsche Bank and UBS, and one of our advisers has a Wall Street background as a Portfolio Manager and is a Chartered Market Technician. http://i.imgur.com/G06P306.png This article begins with an overview of bitcoin, how to buy bitcoin and how to manage risk. The remainder of the article focuses on understanding trading terminology and creating a bitcoin trading account on BTC.sx. What is bitcoin? Bitcoin is a digital currency that uses encryption, rules of mathematics and a decentralized network to control the creation of more bitcoins and verify transactions. Bitcoin was designed to operate as ‘digital gold’ — it resembles a commodity but can be used as a currency. Bitcoin can be traded for fiat currency, like dollars or pounds, creating opportunities to profit from trading price fluctuations. http://i.imgur.com/hNnKxGE.png Why is bitcoin so volatile? Compared to the price of gold, the price of bitcoin has exhibited much larger price swings. Typically the price of gold will change by just a few percent each week, but bitcoin’s price often changes by 10% or more — even in a ‘flat’ market. Volatility is generally considered a good thing by bitcoin traders because it creates opportunities to buy lower and sell higher than flat markets. The primary reason why bitcoin is volatile is because it has a small market cap and low trading volume. Market cap is the number of units (bitcoin here) in circulation multiplied by the value (bitcoin price here). For example, bitcoin has a market cap of about $3 billion vs $31 billion for the a gold ETF (GLD is the most popular American gold investment vehicle). Additionally, the daily average trading volume for bitcoin is about $12 million vs approximately $939 million for the gold ETF. The result of this small market cap and low trading volume is that less trading less money is required to make a large difference in supply and demand. For instance, if a trader wants to buy $3 million worth of bitcoin this represents 33% of the daily trading volume and would push the price up approximately 14%, at the time of writing. However, buying $3 million worth of the gold ETF is just 0.3% of the daily trading volume and is nothing compared to the hundreds of millions of trades that influence gold’s price. http://i.imgur.com/NLtgVrX.png Further information The information we have provided about bitcoin is only the bare essentials a trader needs to know. If you are completely new to bitcoin, also consider exploring these external resources: We Use Coins Bitcoin.org Bitcoin Wiki 2. How to Manage Risk Risk of buying bitcoin As discussed above, bitcoin is an extremely volatile asset. Besides increasing in value, bitcoin’s price can also dramatically fall. When buying bitcoin, never invest more than you can afford to lose. You cannot lose more than you put in, so don’t put in more than you can afford to lose and you’ll be all right, even in the most negative case. - Rpietila, Bitcoin and commodity investor Risk of trading bitcoin Furthermore, investing more than one can afford to lose reduces a trader’s ability to make good decisions. In particular, there is a risk of ‘panic selling’ when the market declines slightly. Instead of holding throughout a market dip, someone who is over-invested may panic and sell-off their holdings for a low price — attempting to cut their losses. This tends to lead to losing more money when the market recovers and the trader buys back at a higher price. http://i.imgur.com/yrQbCsI.png Simply, the best way to manage your risk is to not invest more than you can afford to lose. At BTC.sx, losses cannot exceed your deposit — so simply make sure this is a comfortable amount for you to trade with. 3. Understand Basic Bitcoin Trading Terminology Trading Trading is the act of buying, selling or exchanging one asset for another. Exchanging Bitcoin for US dollars, for instance, is trading. Position A position is similar a trade, which can either be long (buying bitcoin) or short (selling bitcoin). Like a trade you profit from a long/buy position when the price rises; and you profit from a short/sell position when the price falls. Unlike a trade, a position has an open and close. At BTC.sx you begin by depositing bitcoin. Then you may acquire more bitcoin or US dollars by opening a position. When the position is closed you are left with just more or less bitcoin than the value deposited — this depends on how profitable your position was. Trading platform A trading platform, like BTC.sx, is a place where traders go to enter positions. Unlike an exchange, it is uncommon for to use platforms for exchanging one asset for another. Typically trading platforms also include more advanced features, such as leverage. Leverage http://i.imgur.com/Aik56aI.jpg Leverage is borrowing assets for the purposes of increasing potential trading returns. This is also known as margin trading. Trading with 10x leverage on BTC.sx, allows you to deposit 1 bitcoin and trade with 10 bitcoins. When you are done trading (closing a position) you return the 10 bitcoin and keep any profits made. For example, let’s say your trading has been going well and you are consistently making a 10% return each week. Trading with 1 bitcoin, your profit is 0.1 bitcoin. However, with 10 bitcoins your profit is 1 bitcoin — this is the power of leverage when used correctly. Although leverage does also increase trading risk exposure, your losses can never exceed your deposit at BTC.sx. Furthermore, your risk of an exchange failure is reduced because you are trading with 9 bitcoins that belong to BTC.sx and only 1 bitcoin of your own. Exchange Unlike trading platforms, investors use exchanges to swap an asset for another. For example, Bitstamp allows investors to trade their local currency for Bitcoin, or vice versa. Exchanges are the main determinants of bitcoin’s price because they contain an order book. At an exchange you can either be a market maker or a market taker. Market maker A market maker sets the price they wish to buy or sell at and waits for a market taker who agrees to that price. Market taker A market taker finds a market maker that is offering a desirable price and quantity then immediately trades with them. Order book An order book is a list investors wanting to buy and sell an asset at specified quantities and prices. These are the market makers. Below is an annotated explanation of a bitcoin exchange order book. Picture the order book as a very hectic auction and the concept should be easier to understand. http://i.imgur.com/DuRYrnx.png Sell orders: “Asks” This part of the order book lists the prices and quantities investors wish to sell bitcoin at. Here the cheapest seller is offering 2.3467 bitcoin at a price of $244.58. As these investors are asking for a price to sell at, these are called asks. Buy orders: “Bids” This part of the order book lists the prices and quantities investors wish to buy bitcoin at. Here the most expensive buyer is willing to purchase 0.5 bitcoin at a price of $244.43. As these investors are bidding for a price to buy at, these are called bids. Current bitcoin price This is the last price at which bitcoin was exchanged for US dollars. Given that buyers will fulfill the cheapest ask, and sellers will fulfill the most expensive bid, the price will always fall between the the cheapest ask and most expensive bid. In this example, the price is $244.39 — the same as the most expensive bid. This means that the last bitcoin trade was a market taker selling to a market maker. This is also a demonstration of a seller always wanting to sell to the highest bidder. Order book depth This depth graph visualizes the amount of asks and bids at various prices. The more bitcoins that are available at a price, the ‘deeper’ the graph is. Naturally, as sellers do not want to ask for cheap prices and buyers do not want to buy for expensive prices, the graph is normally shallow in the middle. If the chart is one-sided, it suggests that the market may be feeling bullish or bearish. In the above example, a lot of investors want to sell at $245 which would make it difficult for the price to rise beyond that. Conversely, the shallow graph on the bid side shows not many people want to buy bitcoin at these prices. This is typical of a bearish market. Order book execution An important feature of BTC.sx is that the positions our users open/close make buys and sells on exchange order books. In practice, when our users click buy, US dollars is used to buy bitcoin from the order book bids. Conversely, when our users click sell, bitcoin is sold for US dollars from the order book asks. http://i.imgur.com/1Dk8G0t.jpg Why is this important? Firstly, when you trade on BTC.sx you do so with leverage. This means you can have a larger impact in the market and move the price in your favour. In the above example using just 1.3 bitcoin at 10x leverage would create buy 13 bitcoin from the asks. This helps drives the price up because now the cheapest ask is $244.61. If the market sees this as a bullish sign then others may follow, sparking a price rally. Secondly, order book execution means that BTC.sx does not trade against our users. Trading platforms that do not offer this execution are acting as market makers and stand to profit from their traders losing money. At BTC.sx we want our traders to be profitable so they can keep trading. *4. How to Buy Bitcoin * As a bitcoin-only trading platform, BTC.sx only accepts bitcoin deposits. This allows you to begin trading in minutes and without verifying your identity. If you do not yet own any bitcoin there are a number of places that bitcoin can be bought from, including: Circle Coinbase LocalBitcoins Click here to see other ways to buy bitcoin in each region of the world. To store your bitcoin you will also need a wallet, such as MultiBit or Blockchain.info. 5. Create an Account on BTC.sx Once you have bitcoin, you are ready to start trading. Head over to BTC.sx to begin the registration process. 1. Click ‘Sign Up’ http://i.imgur.com/Fikj8Nd.png 2. Enter your details and read and agree with the terms of service http://i.imgur.com/AjnKzRY.png 3. Click on the email activation code http://i.imgur.com/lz5yBqK.png 4. Login to your account http://i.imgur.com/P6VJ0xm.png 5. Visit trade screen http://i.imgur.com/WjGockR.png 6. Send a deposit to BTC.sx You are now one step away from being ready to trade bitcoin. All that is required is to send a deposit by following these instructions: 1. Click on ‘Deposit’ in the trading screen http://i.imgur.com/1TxpgUh.png 2. Send bitcoin to your wallet address http://i.imgur.com/cTZim5t.png If you do not know how to send bitcoin please contact your wallet provider for assistance. Conclusion** ** You should now be in a position where you understand the basics of bitcoin, trading terminology and have an account on BTC.sx to begin trading. In part 2 we will be covering fundamental analysis, the basics of technical analysis and how to make your first trade. Like us on Facebook or follow us on Twitter for future updates. If you have not yet signed up for an account on BTC.sx click here. The registration process takes just two minutes and does not require any identity verification documents
If you were to write a BTC/LTC trading bot, what features, strategies, and architecture would you use?
Security and how it affects Architecture and Platform(s)
I know it's a bad idea to put your API key and secret in a file. Is it safe to have them submitted in a form as long as it's over HTTPS, say if I had a bot script hosted on my web server? Or, would it be better to have them only as environment variables? How would I go about doing that if I'm not a sysadmin? Does this mean I should be running the bot only on my local system?
Features (and avoiding feature creep)
At its focus, I would like this bot to be able to make small amounts of money off of LTC/BTC price differences and the smaller, more predictable fluctuations of the bid/ask spread within a single currency. What features am I going to need to effectively manage this type of strategy, and what sort of features would be overkill or lead me down paths of very little productivity or profit?
Technical Analysis and Indicators
I am not good with math. I barely understand trig, can't do calculus to save my life. What indicators would you use that I could be able to understand the math behind enough to program checks and rules into a bot? I have been watching StochRSI at various time periods, and it seems to be a fairly accurate predictor of some trends, but there's an awful lot of noise as well. 10/21 EMA crossings seem to be even noisier. They happen all the time on the shorter period charts, and often will cross multiple times in a day, even on the 1h chart. What indicators would you use if you were writing a bot for low-risk trading? What simple rules would you put in place to make the basic trades, and what rules would you write in order to act as checks and balances against other stupid bot rules? How would you avoid being manipulated by other bots?
Should I even bother?
Is this a fool's errand? Should I just download someone else's bot code, or use an Ichimoku bot on cryptotrader.org? I don't want to be a fish and just use a bot that someone else is going to manipulate, and I don't want to get a trojan or have all my bitcoins stolen, or pick a buggy or malicious bot that trades me into $0 immediately. So, I still think I may want to try writing one myself, but my attempts so far have been poor. I can't even seem to get the authentication working to read from the BTC-E API when I copy and paste the code from their own site. If this really is a bad idea for a self-driven noob software project, let me know, and then I'll just Buy & Hold and do other stuff with my free time :) Otherwise, I would appreciate some advice in choosing my path, or perhaps a collaborator who would want to work on a bot together.
How to Trade Bitcoin Part 3: Beginner’s Technical Analysis
The third part of our how to trade bitcoin series covers the basics of technical analysis. The post begins with the theory and principles of technical analysis, then covers support and resistance patterns. Introduction What You Should Already Know Before embarking into the world of Technical Analysis (TA) you should be familiar with the basics of trading that have already been covered in our how to trade bitcoin series. Part 1: Getting Ready to Trade Bitcoin The first part covered the basics of Bitcoin, trading terminology and how exchanges work. Part 2: Making Your First Trade The second part covered how to read charts, how to spot trends using moving averages and the MACD, and lastly how to place a trade. It is recommended that you are familiar with these topics before continue to learn more about technical analysis. Key Terms Explained Technical analysis — the process of analysing a financial assets’ price, volume and volatility data and patterns with the objective of predicting future trends. Fundamental analysis — the process of analysing a financial assets’ non-chart based data. This would include data such as a company’s revenue, price-to-earnings ratio and business strategy. For bitcoin, fundamental analysis would be studying adoption rates and the health of the ecosystem. Blockchain.info’s charts are great for a fundamental analysis of bitcoin. Support — a specific price or a price range that a financial asset rarely falls below. Below is an example of current support lines for bitcoin. Generally, the more a support line is tested, the stronger support at that level becomes. http://i.imgur.com/VfwsE8Z.png Resistance — a specific price or a price range that a financial asset rarely rises above. Below is an example of current resistance lines for bitcoin. Generally, the more a resistance line is tested, the stronger resistance at that level becomes. http://i.imgur.com/jyUq7DC.png What is Technical Analysis? Theory and Assumptions of Technical Analysis Technical analysis is founded on the belief that a price is determined by every piece of relevant information that is known about a financial asset. This makes price, and its historical trends, the most important piece of information for traders. By conducting technical analysis to make price predictions, traders make two key assumptions. Firstly, it is assumed that prices follow trends. These trends are driven by the human psychology of traders. One theory is that technical analysis works as a self-fulfilling prophecy: if enough traders spot a signal that suggests the price will rise, everyone will begin to buy, causing that predicted price rise. Secondly, it is assumed that history tends to repeat itself. That is, if the price of bitcoin is currently falling it is assumed the likelihood of a further price decline is more likely than a price rise. When this is not the case, it is normally attributed to a ‘trend reversal’. Why Bitcoin Traders Care About Technical Analysis Technical analysis is by far the most popular form of analysis conducted by bitcoin traders. This is primarily because the price of bitcoin tends to be driven by cycles of fear and greed. Consequently, the people trading bitcoin create price patterns which can be studied through technical analysis. The aim of every trader is to be one step ahead of the crowd. http://i.imgur.com/nlOvbhg.png Conversely, there is a lack of information for fundamental analysis of bitcoin. Unlike companies, there are no income statements, balance sheets, business strategies or management team to consider. This places greater importance on technical analysis for traders. Limitations of Technical Analysis As with any investment strategy, there are risks and limitations. There are two alternative theories that infer technical analysis is not a legitimate method for predicting future prices. Efficient market hypothesis claims that it is impossible to beat the market — or in other words, be one step ahead of other traders. This because not only do prices reflect all relevant information, they instantly change as more information is revealed. The end result of this is that a financial asset can never be under or over valued. Therefore, price data is not useful for traders. Random walk hypothesis claims that prices of financial assets move randomly. Hence, if there is no real trend, technical analysis has no strong evidence to make forecasts from. Support and Resistance How Support or Resistance is Formed There are numerous factors that can cause support and resistance to be formed. Let’s take a look at some practical examples that have occured with bitcoin. Psychological price points As markets are made up of people buying and selling, prices tend to converge around round numbers or meaningful numbers. The below graph shows the resistance bitcoin has faced when attempting to break above $400 and $300. http://i.imgur.com/NaiG9o7.png Interestingly, a lot of bitcoin traders have observed how the price used to become ‘sticky’ around to $666. This is a good example of retail traders acting irrationally and deliberately setting buys and sells at the number of the devil. http://i.imgur.com/CgWY1kq.png Multiple Highs When a price reaches a high multiple times, resistance is formed when traders develop the belief that the price will continue to fail to break that price or resistance line. This can be seen in the 2014 bear market, where the price followed a series of downtrends that eventually became weaker over time. http://i.imgur.com/2NxInj9.png Multiple Lows Similarly, when the price reaches a low several times traders begin to expect the price to continue to fail to fall below that price. This can be seen throughout 2014 at three key resistance levels. http://i.imgur.com/MZyXBzO.png Former Resistance Becomes Support (or vice versa) When a support or resistance line is broken, it is possible for the influence of that line to be reversed. In the below example the price encounter resistance at $280 during the April 2013 rally. This then acted as support in October 2014. But once this support was broken in December 2014, this price has been acting as resistance. It is quite likely that the peak of the April 2013 rally has a lot of physiological influence over traders. http://i.imgur.com/tSCTmin.png How Support or Resistance Influences Future Price Patterns It is normally the combination of support and resistance which influences future prices. When both support and resistance are in effect, which is nearly always, the price is said to be inside a ‘trading zone’. These trading zones are monitored very closely by bitcoin traders. Let’s take a look at the current trading zone influencing bitcoin’s price. http://i.imgur.com/qIxVIg9.png After rallying to $300, the price of bitcoin is currently correcting. The support the bottom support established in January and June has not yet been tested. Hence we can expect the price to trade within the two support and resistance lines between now and October. If the price breaks above the resistance line, this would be a bullish signal. If the price falls below the support line, this would be a bearish signal. Eventually the support and resistance lines converge, this tells us that we can expect a bullish or bearish price movement to occur sometime before or at this point. How to Draw Support or Resistance Lines Now is a great time to try and draw your own lines. Simply follow the below instructions to get started on BTC.sx. 1) Click on the small arrow at the edge of the chart. http://i.imgur.com/rBB5Wlt.png 2) Click on the line tool, which is the second from the top. http://i.imgur.com/SdalLdh.png 3) Click once on the graph to start the line, and click again to end the line. http://i.imgur.com/lW29ayh.png Additional tips: Hold shift when drawing the line to make it straight. Draw your lines following the ‘line’ part of the candlesticks. These are known as wicks and represent the highest and lowest price traded within the candlestick’s time period. Support and Resistance Patterns Now we have covered the basics of support and resistance, we will now look at more advanced support and resistance patterns. These are generally combinations of support, resistance and trading ranges. Tops and Bottoms Double top A double top is considered to be a bearish indicator. This was observed during the December 2013 rally. A double top gives traders the opportunity to go short, which is possible on BTC.sx, at two key moments. Firstly, when the price fails to break upper resistance on the second attempt. Secondly, when the price falls below the first layer of support after the second top. These shorting opportunities are indicated by the yellow circles. http://i.imgur.com/luUJXz9.png Double bottom A double bottom is considered to be a bullish indicator. Bitcoin has never recorded a double bottom, but the downtrend during the Fall of 2014 is a close representation. A double bottom gives traders to go long at two key moments. Firstly, when the price fails to fall below on support the second attempt. Secondly, when the price breaks above the first layer of resistance after the second bottom. These opportunities to go long are indicated by the yellow circles. http://i.imgur.com/e6sPaiP.png Head and Shoulders The head and shoulders pattern is a bearish signal. This can be spotted when a peak is preceded and succeeded by two smaller peaks. This gives the formation a ‘head and shoulders’ resemblance. The neckline is the level of support formed between the first and second shoulder. http://i.imgur.com/ykVhxDs.png In the above example, traders have two opportunities to go short. This is firstly at the second shoulder. This is to profit from an incoming drop that is normally equal or greater than the distance between the head and neck line. The second opportunity to go short is at the neck line. This to profit from the recently formed downward price trend. Cup and Handle As the name suggests, this is where the price follows the formation of a cup and handle. This considered to be a bullish indicator — a great opportunity to go long. An important consideration when looking for this signal is that the ‘cup’ part of the pattern should not be a V shape. Ideally, the cup should have a round or flat bottom. http://i.imgur.com/ROnysWo.png A trader should go long at the point at which the price leaves the cup and begins to follow the handle. This area has been marked by the yellow circle. The length of the rally after the price leaves the cup can be hard to predict. However, if the price leaves the cup with high volume, it should give a trader that a sustained rally is likely. The lack of volume in the above example explains why the handle rally did not last too long. Flags The flag is a short-term indicator which occurs when the price experiences a vertical price rise, followed by a period of consolidation. The flag indicator is used to predict the continuation of a trend — not the reversal of a trend. The vertical price movement is considered to be the flag pole, and the consolidation period the flag. The flag pole should be recorded with high volume and the consolidation period should experience low volume. Additionally, the flag should be slopping slightly downwards. http://i.imgur.com/aEfpJeJ.png A flag can provide a bullish buy signal in the right circumstances. This is when the price remains inside the flag for 8–20 candlesticks then exits at the top after low volume. This is demonstrated in the above example — a trader should be going long at the yellow circle. Pennant A pennant is very similar to a flag. The only difference is that the consolidation period follows the shape of triangle, instead of a rectangle. The triangle shape is typically formed by traders taking profits after a price rally. http://imgur.com/udP0JFL Like the flag, a trader can profit from the continuation of a bullish trend by going long when the price leaves the top of the pennant. This area has been indicated with a yellow circle. Wedges Wedges are common price patterns and they can be used to spot bullish and bearish trend reversals and continuations. The two main types of wedges are rising wedges and falling wedges. Rising wedge A rising wedge is formed when the price consolidates between two upward sloping support and resistance lines. This is bearish signal — it indicates an uptrend is about to reverse or a downtrend will continue. It is important to check that the support line is rising steeper than the resistance line. This is a key requirement for the wedge-shaped indicator to be drawn accurately. http://i.imgur.com/BHVhGQY.png In the above example, we have a wedge indicate a trend reversal. Traders should have gone short on BTC.sx after the price fell out of the wedge. Interestingly, we could have also drawn a bearish pennant immediately after this wedge, which would have further validated a decision to go short. Falling wedge A rising wedge is formed when the price consolidates between two downward sloping support and resistance lines. This is bullish signal — it indicates a downtrend is about to reverse or an uptrend will continue. Opposite to the rising wedge, the resistance line should be falling more aggressively than the support line. http://i.imgur.com/fLcCLNp.png The recent Grexit rally was a great example of wedges in action. Firstly, two falling wedges developed. This should have given traders confidence that the rally still had steam while traders took profits. However, towards the end of the rally, a rising wedge developed. This signalled that the rally was beginning to lose its pace and that a trend reversal was likely. Conclusion You should now be familiar with spotting common chart patterns and drawing them. It can be difficult spotting your own signals to begin with, but overtime it will become second-nature. If you want to learn more about technical analysis, make sure to look out for our next post on advanced indicators. This will include indicators, such as Ichimoku Clouds, RSI and Bollinger Bands. Make sure to follow us on Twitter and like us on Facebook for future updates. Written by Joe Lee, BTC.sx / Magnr CEO. Joe first discovered Bitcoin in 2011 and built his own trading bots turning an initial $100 investment into $200k. He then turned his attention to building trading infrastructure and BTC.sx was born. After gaining rapid traction, Joe left his investment banking job to focus on BTC.sx. If you want to use the power of leverage / margin trading to increase your potential returns, check out BTC.sx. We offer up to 10x leverage and direct market access to Bitfinex, Bitstamp and itBit. Alternatively, if you prefer more passive investments, check out Magnr. We provide interest-bearing investment accounts for bitcoin, with a promotional interest rate of 2.18% AER. BTC.sx / Magnr is not a financial advisor. The information contained in this article is for educational purposes only. Trading bitcoin carries high level of risk and BTC.sx / Magnr accepts no responsibility for any losses incurred.
How to Trade Bitcoin Part 4: Advanced Technical Analysis
Introduction What You Should Already Know Before learning the advanced indicators covered in this article, you should be familiar with the basics of trading that have already been covered in our how to trade bitcoin series. Part 1: Getting Ready to Trade Bitcoin The first part covered the basics of Bitcoin, trading terminology and how exchanges work. Part 2: Making Your First Trade The second part covered how to read charts, how to spot trends using moving averages and the MACD, and lastly how to place a trade. Part 3: Beginner’s Technical Analysis The third part introduced the benefits and limitations of technical analysis, and then common price patterns. It is recommended that you are familiar with these topics, particularly beginner’s technical analysis, before learning more advanced technical indicators. Key Terms Explained Ichimoku Cloud — an indicator that is used for identifying support, resistance and momentum. There are four key components to the Ichimoku cloud: Kijun Sen (blue line), Tenkan Sen (red line), Chikou Span (green line) and the Senkou Span (clouds). The purposes of these lines will be covered shortly. These lines are annotated on the chart below. http://i.imgur.com/b1DWsDt.png Relative Strength Index (RSI) — you will be happy to hear that the RSI is a much simpler indicator. The RSI identifies over-bought or over-sold conditions. It can also be used to identify the current market trend. An application of the RSI can be seen below. http://i.imgur.com/txZtE54.png Bollinger Bands — this indicator is used to gauge market volatility and support or resistance levels. Tighter bands mean flatter markets, while looser bands signal more volatile markets. As the price tends to gravitate towards the middle of the two bands, Bollinger Bands can also indicate support and resistance levels. This can be seen below. http://i.imgur.com/0sAxQWw.png Parabolic Stop and Reversal (SAR) — another simple indicator, the Parabolic SAR is used to identify the start and end of market trends. This is indicated by small dots; dots above the candlesticks shows a down trend, and dots below the candlesticks shows an up trend. http://i.imgur.com/rHhamIT.png How to Trade Technical Indicators Ichimoku Cloud http://i.imgur.com/SNjGuKT.png It is important not to be overwhelmed with the amount of information provided by the Ichimoku Cloud. Let’s examine each component part individually to become more familiar with how the indicator works. The ‘Span’ indicators are slightly more long-term components of the Ichimoku Cloud. They are useful for monitoring wider market trends. Senkou Span (Clouds) — this simplest part of the indicator shows current and future support and resistance levels. When the price is below the cloud, the lower and upper edges of the cloud both act as resistance. When the price is above the cloud, the upper and lower edges act as support. Chikou Span (Green Line) — this line follows the current price, but is plotted 26 candlesticks behind. This makes it a lagging indicator of market trends. When this lagging line rises above the candlesticks, this is an indication of an uptrend. Conversely, when this line falls below the candlesticks, it is indicative of a downtrend. The ‘Sen’ indicators are more for current and near-future price trends. Tenkan Sen (Red Line) — this line shows the current market trend. As you would expect: a rising line indicates an uptrend, a falling line indicates a downtrend and a flat line indicates a flat market. Kijun Sen (Blue Line) — this is arguably the most important line because it indicates the next direction the price is likely to move in. If the price rises above the line, the price is likely to continue to rise. On the other hand, if the price falls below the line, the price is likely to continue to fall. All of these ‘mini-indicators’ have their own unique trading strategies, which will now be explained. Senkou Span (Clouds) The main Senkou Span (Clouds) trading strategies are support/resistance levels and crossovers. Firstly, we will look at support and resistance strategies. Like traditional support and resistance lines, trades can be executed when the price ‘bounces-off’ the cloud or ‘pierces’ the cloud. This is demonstrated on the chart below — opportunities to go short have been highlighted by the yellow circles. http://i.imgur.com/lrmml5d.png The Senkou Span (clouds) are telling us that there have been several opportunities to go short on bitcoin. The first yellow circle represents an opportunity to go short after the price fell through the Senkou Span (clouds). This suggests that support at $282 has been broken and further price declines can be expected. The second and third yellow circles show opportunities to go short when the price fails to break through the clouds, which is acting as resistance. This tells us that the downtrend is still strong and the market is not ready for a trend reversal. Now let’s look at trading crossovers. Similar to moving average crossovers, the clouds can change their sentiment based on price behaviour. These crossovers are identified on the chart below. http://i.imgur.com/vdG2aGz.png The first yellow circle highlights a bearish crossover — the red edge of the cloud has risen above the green edge of the cloud. Therefore a trader should go short at the time of this crossover. The second yellow circle highlights a bullish crossover — the green edge of the cloud has risen above the red edge. Although this should be a indication to buy, a trader doing so would have lost money. It is important to recognise that technical analysis indicators will never be right 100% of the time. Lastly, the third yellow circle shows another successful opportunity to go short during a bearish crossover. Given the following drop to $260, this was a great opportunity to place a highly profitable trade. Chikou Span (Green Line) The Chikou Span (green line) is known as a lagging indicator. This is because the line is plotted 26 periods behind the current price. Traders can spot both bullish and bearish signals from the Chikou Span (green line). A bullish crossover occurs when the Chikou Span (green line) rises above the candlesticks. An example of this is the yellow circles on the chart below. The left yellow circle indicates the moment the Chikou Span (green line) moves above the candlesticks; the right yellow circle indicates the point at which a trader would buy. http://i.imgur.com/SbWijmR.png The orange, blue and pink circles show bearish crossovers and the respective positions at which traders would sell. If we focus on the pink circles, we can see that the Chikou Span (green line), sharply fell below the candlesticks. The pink circle on the right shows the point at which this happened in real-time (26 candlesticks in front of the Chikou Span). Evidently, selling at this point would have been a profitable trade. Kijun Sen (Blue Line) Kijun Sen (blue line) will occasionally crossover the candlesticks. These crossovers can be traded in a similar fashion to Senkou Span (clouds) crossovers or moving average crossovers. http://i.imgur.com/Y3KAEWK.png The above chart depicts both bullish and bearish crossovers. Traders should aim to place trades at the same time as the crossover. A bullish crossover is where the candlesticks rise above the Kijun Sen (blue line). This means that a trader should buy in this situation. A bearish crossover is where the candlesticks fall below the Kijun Sen (blue line). This means that a trader should sell in this situation. The Senkou Span (clouds) can also provide additional insight to traders using Kijun Sen (blue line) crossovers. Above the Senkou Span (clouds), bullish crossovers become stronger buy signals, and bearish crossovers become weaker sell signals. Conversely, below the Senkou Span (clouds), bullish crossovers become weaker buy signals, and bearish crossovers become stronger sell signals. Relative Strength Index http://i.imgur.com/kz8UK7X.png In stark contrast to the Ichimoku Cloud, the RSI uses just 1 line for trading signals. This line is plotted below the price chart on a scale of 0–100. As the chart above demonstrates, the RSI can provide traders the following signals: Overbought — when the RSI is above 70, the price is likely to have a sharp downwards correction. Uptrend — when the RSI is above 50, the price is considered to be in an uptrend. Traders could go profit from either buying or selling depending on other indicators. Downtrend— when the RSI is below 50, the price is considered to be in a downtrend. Traders could go profit from either buying or selling depending on other indicators. Oversold— when the RSI is below 30, the price is likely to have a sharp upwards correction. The two most important signals for traders are the overbought and oversold indicators. Instead of simply selling at overbought and buying at oversold, traders should aim to profit from reverals. Bullish Reversal — this occurs when the price moves from an RSI of under 30 to above 30. This is indicative of the end of a downtrend and the start of a new uptrend. Hence traders should aim to buy at this point. http://i.imgur.com/lYQt2ni.png Bearish Reversal — this occurs when the price moves from an RSI of above 70 to under 70. This is indicative of the end of an uptrend and the start of a new downtrend. Hence traders should aim to sell at this point. http://i.imgur.com/cC2SGG9.png Bollinger Bands Bollinger Bands indicate market volatility and support or resistance levels. The indicator overlays two bands above and below the candlesticks, with an average line in the middle. http://i.imgur.com/79OQUYo.png There are two main ways to trade Bollinger Bands: support /resistance levels and squeezes. Bollinger Bands: Support and Resistance Similar to traditional support and resistance patterns, the lower part of the Bollinger Band can act as support, and the upper part of the Bollinger Band can act as resistance. http://i.imgur.com/CnJzAc7.png The above chart demonstrates how a trader should trade the support and resistance levels provided by Bollinger Bands. Simply, they should buy at the lower support and sell at the higher resistance. This strategies works best when the Bollinger Bands are tight — the chances of a breakout are lower. Bollinger Bands: Squeezes A squeeze occurs when the upper and lower bands tighten — they ‘squeeze’ the candlesticks. This tells a trader that a large movement is incoming. The large movement is typically known as a ‘breakout’, where the candlesticks briefly escape the bands. On the chart below, the first squeeze and breakout is an example of a typical price pattern. The subsequent price patterns are closer to mini-squeezes and breakouts. http://i.imgur.com/HGFev9K.png A trader should aim to trade during the first breakout after a Bollinger Band squeeze. This can be identified by the first candlestick the escapes the Bollinger Bands. If this a breakout above resistance, a trader should buy with the intention to sell when the rally continues. If this breakout is below support, a trader should sell with the intention to buy when the drop continues. Parabolic SAR This last indicator is used to identify the start and end of a market trend. The Parabolic SAR is the series of dots above and below the candlesticks. Dots above the candlestick indicate a downtrend; dots below the candlestick indicate an uptrend. http://i.imgur.com/Y6mEirq.png Unlike the previous indicators, which have focused on when to open positions, the Parabolic SAR is most useful for timing the closing of positions. Specifically, three consecutive dots indicate a trend has reversed and a profitable position should now be closed. This makes the Parabolic SAR a great indicator to use in conjunction with the other indicators outlined in this article. Let’s look at a practical example. http://i.imgur.com/uxKWAJZ.png Here a trader has gone short after seeing a bearish crossover on the RSI (movement from over 70 to under 70). The trader then profits from a substaintial price fall. However, as the price begins to drift upwards once again the trader is unsure whether or not the downtrend will continue. By checking the Parabolic SAR, 3 support dots can be seen. This verifies that the downtrend has indeed ended and the short position should be closed. How to Apply Technical Indicators at BTC.sx 1) Open up the trade screen and click the graph icon on the price chart http://i.imgur.com/LXtbC4G.png 2) Choose your preferred technical indicator from the list http://i.imgur.com/SHImlgE.png 3) Begin studying chart patterns! http://i.imgur.com/9BsJh7V.png Conclusion You should now be familiar with trading based on Ichimoku Clouds, RSI, Bollinger Bands and the Parabolic SAR. If you have followed this ‘How to Trade Bitcoin’ guide from the start, you should now be a budding trader capable of making profitable trades based on logical analysis. If you want to receive more trading tips, make sure to follow us on Twitter and like us on Facebook. If you want to use the power of leverage / margin trading to increase your potential returns, check out BTC.sx. We offer up to 10x leverage and direct market access to Bitfinex, Bitstamp and itBit. Alternatively, if you prefer more passive investments, check out Magnr. We provide interest-bearing investment accounts for bitcoin, with a promotional interest rate of 2.18% AER. Written by Joe Lee, BTC.sx / Magnr CEO. Joe first discovered Bitcoin in 2011 and built his own trading bots turning an initial $100 investment into $200k. He then turned his attention to building trading infrastructure and BTC.sx was born. After gaining rapid traction, Joe left his investment banking job to focus on BTC.sx.
I've been getting into bitcoin trading for a few weeks now, and I'm looking for some good comprehensive books/online courses/videos on trading, especially technical trading. So far I've been putting together a somewhat piecemeal self-taught curriculum, learning the basics of technical trading - support/resistance, MACD, oscillators(RSI/stochastic), and a little bit on candlestick chart patterns and Ichimoku clouds. I'm good at teaching myself, but unfortunately I don't know what I should be specifically studying, and I'm sure I'm missing some of the fundamentals. I'm looking for a good resource to learn the basic things that every technical trader should know, or even just a list of good topics to study next. I have a pretty solid foundation in math, and I'm looking for things pertaining mostly to fast active trading strategies - Long term my strategy is buy and hold, but I'd like to tap into some of the great profit potential in the little price dips. So does anyone know of a good resource? Bonus question: Any particular strategies, patterns, or indicators that you find work particularly well for bitcoin? EDIT: One more thing, good software? I'm currently using MT4 on BTC-E, it seems to be the best option so far.
INITCOIN Charts - Tool in developing process. An easy tool to analyze the Bitcoin and other crypto currencies value (cost). Our intention is to offer a professional and easy service in order to optimize your tactics (strategies) on cryptocurrency markets. Aimed to beginner traders as much as the experienced ones. Current specifications •+85 Technical (Indicators, Linear regression .. and all the power) •Multi-platform website platform and Mobile Charts •Save your layouts (technical indicators, drawing tools ..) •More than 20 Drawing tools •11 Chart types: Renko, Line Break, Point and figure... on any time frame! •Full customizable styles •Real time chart and market data .. Working on more!
Do you need a better tool? We are open to any upgrade or suggestion here: https://bitcoin-networks.com/suggestions/ Thanks all for your contribution. And here we come with some new upgrades to our INITCOIN (alpha testing) !
New technical Indicators: -Ichimoku Cloud, Volume by Price (Soon with more options there), Volume Overlay, Colored Volume Overlay, Colored MACD Histogram .. and more happines! Drawing Tools: -Fibonacci Extensions, Fibonacci Timezones, Polygon, Polyline, Trend Channel, Pitchfork, Error Channel, Raff Regression, Quadrant Lines, Tirone Levels, Speed Lines, Gann Fan, Measure Tool Theme options: *Be able to customize candle border color, Price line from last value to value axis. *Now you can save/load technical indicator templates (drawing tools coming soon) in the current session. New feature: *Click with right button into the drawing tools to see a context menu with 3 options, Settings, Clone or Delete OR simply we have built the shortcut CTRL+C / CTRL+V to copy/paste drawing tools. *Fullscreen mode instead of full window mode. Now you can use it to take all space available on your screen for the chart. *Now you can move chart series on any direction around the chart. *CSV Import DATA- experimental: You can download tick data from any market from sources like bitcoincharts.com and load into the chart module. You can select between building a tick data chart or transform it into candlestick (minute or daily). (NOTE: We are improving this function capability. You will load files with date-ohlc-volume formats from any site and any market as well) soon! Remember to feedback us a bit :) https://bitcoin-networks.com/suggestions/
If you go to Amazon and type in ‘Ichimoku’, you’ll get inundated with all the various Ichimoku books and e-books. There are some really, really horrible self-published ebook only ones on Amazon that do nothing but shill out the same crap without any really good education and 99% of them ignore the time, price and wave theories in the Ichimoku System. The price breakout above the Cloud needs to be followed by the crossover of the Conversion Line above the Base Line. Once these two conditions are fulfilled only then we can look to enter a trade. As you can notice the Ichimoku Cloud indicator is a very complex technical indicator that can be used even as a moving average crossover strategy. Ichimoku is my favorite indicator to use, as it allows me to have one indicator show me the past, the present and the future in one go. The ichimoku kinko hyo lets you get an incredible edge in determing the best moments to enter or exit the market. For that reason it is in your best interest to setup your tradingview account with visually pleasing settings in order to make better decission in ... Ichimoku in Japanese means "At One Glace" It is a trend based system founded in 1929 that removes the subjectivity and allows a trader to trade the probabilities. It can be used on any instrument and any time frame. [10, 30, 60, 30] nearly identical to OG settings on the 1D. The Ichimoku is a highly refined system, and this comes through in the inherent simplicity of the signals it generates.
Bitcoin trade price analysis using Ichimoku clouds. We break down Bitcoin on the 4 hour and daily using Ichimoku clouds to identify trend reversals in the short and mid term. ***New Public Discord ... In this video, I am showing you how to use Ichimoku along with price action trading, and support and resistance trading to understand the current bitcoin move. Understanding how to use Ichimoku ... Trading Bitcoin (BTC) With Ichimoku Trading Strategies - In this video I backtest the Ichimoku System to see how effective it would have been in trading BTC ... Today I’d like to take a look at Bitcoin’s price action and conduct an Ichimoku-based technical analysis on the daily chart. After reaching the all-time high levels close to $20,000 in ... You can use Ichimoku Cloud charts to assess the future prospects for Bitcoin and the alt coins. Daily review of what to mine with your AMD and Nvidia rigs. Ichimoku Mother Chart (20:49) https ...