Basics to Trade Cryptocurrency Correctly - Steemit Crypto Academy | S6W1 |- Homework Post for Professor @nane15

in SteemitCryptoAcademylast year (edited)

I am glad we are at the long awaited season 6 is finally here and it was a beautiful lecture delivered by @nane15 on Basics to Trade Cryptocurrency Correctly which I have read an understood and I will be writing based on my understanding of the lecture.

without wasting much time, let's dive into the homework post for the week.

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designed by me in photoshop

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What do you understand by trading? Explain your understanding in your own words.

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Everyone of us has heard the word trading at one point in time or another. it is no new word to us, the word trading implies the act of buying and selling assets or securities with the aim of making profit. every trade has the mindset that the speculated price is intended to fall or rise and is always conscious not to make a loss. in the crypto game, the trader uses exchanges to trade with ease.

Technical analysis is very important in trading cryptocurrencies. This is because cryptocurrency exchanges provide a variety of tools for analyzing the market before entering a position. After the user executes a trade, they pay a trading fee to execute a trade. Basic trading in today's market has become easy because traders can make trades 24/7 with a simple click.

To be a successful trader, a variety of factors need to be considered. The emotions of the person having access to a trade, as well as economic and market factors, can all determine how much money is made or lost on positions involved in the trade. Liquidity within platforms is important for traders looking to make trades without issues. These include major crypto exchange desks such as Binance followed by Houbi and Kucoin, which provide liquidity that is key for high volume trading tactics. A trader must look.

The crypto market has traders with different investment styles. Long-term long investors look for assets that will appreciate over time, and base their investment decisions on fundamental and economic factors in the asset, such as supply and weight capital in relation to others in the industry. Some moral investors will include team missions and deflation policies in their consideration.

There are several different strategies to trade cryptocurrency - either long-term or short-term. While some traders buy and sell assets to make profits on price fluctuations, others use technical analysis to predict the direction of price movement. Technical analysts depend on historical price data to make trading decisions, which relies on the assumption that price movement is determined by traders who constantly repeat themselves in the market.

Platforms like the exchange provides liquidity and also highly technical tools to help traders make trades quickly. The trader has to find success by utilizing the appropriate information the is available.

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What are the strong and weak hands in the market? Be graphic and provide a full explanation.

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before I go into this, let me ask a rhetorical question, What's really happening in the financial market?
The investment perspective is that "the big players" manipulate the market to turn a profit from time to times at the expense of other investors. This situation along with volatility has been said by other traders from the crypto market.

There are two types of traders in the market. New traders generally make a profit from predicting the price direction. However, strong hands go for this kind of trading, hunting weak hands to generate liquidity for their own gains. Let's look at these two sides separately.

The Strong Hands:
This category consists of pseudo-executives and investment funds in the crypto field. They make up the supervisory team and high volumes of trade, with heavy influence on price. This means they can manipulate prices in any direction to generate liquidity for their positions.

Strong hands make purchases for assets incrementally during an accumulation period like the one seen in the bottom chart. During this time, the price will slow down due to the ranging market, but retail traders stay skeptical of bulls. Once prices hit rock bottom with bullish sentiment, there is a lot of emotion-driven action on the buy side amongst traders. At this point, strong hands have already purchased assets before retail traders can take advantage of market opportunities during an uptrend.

Smart traders wait for the market to move up before closing their positions, then use this short-term cycle to stay competitive. The market has two different phases - demand and distribution. Liquidation happens to retail traders who buy at the highs before the strong hands sell them down. The cycle repeats itself through bull and bear trends.

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Weak hands
The difference between weak hands and strong hands is that the weak hands lose money in the markets usually by falling for the tricks of the strong hands. The best advice is to collect as much information as possible on price movement and never act out of emotions if it falls. Strong hands don't operate emotionally against their trading, rather hitting stop losses when market moves downwards just like they would do upwards.

With weak hands constantly buying to trade cryptocurrencies, strong hands find it easier to take advantage of the stop losses to make money. This results is the strong hands making profit, while weak hands lose money

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Which do you think is the better idea: think like the pack or like a pro?

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Trading decisions shouldn’t be made on market sentiment from news or major crypto influencers. Though, some people believe that this is a profitable investment decision for retail traders. They assert that you should invest what influencer say because of their years of experience within the cryptocurrency industry or their large platforms.

New traders are often faced with the pressure of making trades based on sentiment alone, rather than looking objectively at market data. Often, emotional traders find themselves regretful when emotional decision-making leads them to make trades based on information they are unfit to analyze for cold hard facts. Influencers sometimes take advantage of this desire for knowledge by pricing false signals into the market before positioning the herd just before it collapses.

One of the key habits for successful trading is to avoid following your emotions. Seeing others flock to a cryptocurrency after an event, then believing you must also invest is wrong. Become aware of big investors who are circling alts with wicks on each buy or sell candle.

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Using emotion control, the best way for jackals to trade cryptocurrency is to buy at low prices and sell at high prices. Even if it is difficult to know what the pros are doing, following these principles will help you to be collected when making trades. Therefore I suggest we think like pros

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Demonstrate your understanding of trend trading. (Use cryptocurrency chart screenshots.)

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Trend identification is the most important task when trading cryptocurrency. In order for a trader to understand the direction of the market, they should look for positions either in an uptrend or downtrend. Not following the direction of the trend is called counter-trading and is very risky.

The use of multiple methods can help pinpoint major trends in the cryptocurrency dynamics. If you are new, Elliot Wave analysis are an example of how to figure out what is best.

Trading cryptocurrency requires the ability to analyze market patterns, repetitive trends, individual trader psychology, and other indicators.

The impulse wave can help to spot the overall market sentiment which in turn gives traders an opportunity to trade with the trend. The corrective wave moves in the opposite direction of impulse waves, which can signal that a trend reversal or stop-loss point is on the horizon.

Conditions for the Elliot wave

  • In order for an asset wave move to be considered an impulse wave, 5 waves must be published. Waves 1-2-3 in the direction of the trend while waves 2&4 are retracements. In order for a completed Elliot Wave formation, Five or more completed waves in the direction of the trend is one factor.

  • The first step is understanding that waves 1 and 3 are identical, as well as waves 2 and 4 (with each undulation higher than the one before it).

  • The second step is that wave 5 should retrace to wave 3's previous low. However, it should not retrace lower than the first low; this would indicate a trend change. Wave 3, which should take about twice as long as any other waves.

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Once prices have reached the terminal high, it is likely that markets are in a corrective phase. The corrective wave occurs after wave 5. Traders can utilize this information to close their positions and take profits in order to continue in the new trend or to take profit in the event that it reverses at the end of five waves.

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Show how to identify the first and last impulse waves in a trend, plus explain the importance of this. (Use cryptocurrency chart screenshots)

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After the 5 waves, the first impulse wave can be found by the corrective wave formation showing a possible trade reversal. From the chart below, we can see that the corrective waves which are b &c formed a new low peak which can be traced to waves 5 & a. there after, we can see a new higher peak is created which is lower than the higher peak of c. Also, the higher peak of c is seen to be lower than the higher peak of a. there after a new lower peak of c is formed, the new trend is the first impulse of the elliot wave.

It's important for traders to act quickly. This means they'll enter trades at a lower price, which helps to avoid larger players who might be taking advantage of hype surrounding the currency. When reacting quickly, traders can control their emotions and decisions in order to keep big players from manipulating the currency, which will also protect them from risk weighing on the currency.

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More specifically, the last impulse wave reveals a price adjustment after it goes back to Elliot wave theory. The Max point wave of an impulse is typically Wave 5 in the Elliot pattern. After the pattern, the highest point in this current pattern rises to reach new highs; this points towards exhaustion in the current uptrend.

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Critical analysis of the forex markets is essential when trading with cryptocurrency. To make sure that trades are successful, traders must know when to exit their trades based on current price ranges, eventual trends in the market, and using analytical tools. When looking at certain predictive points on the chart above, traders can see that the wave formation was registered in a , b , and c waves that follow high-to-low patterns. price couldn't go higher than the previous high peak. The last impulse wave before reversal signals which shows a new bearish trend.

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Show how to identify a good point to set a buy and sell order. (Use cryptocurrency chart screenshots)

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This first section has explained Elliot Waves and also how buyers should catch trends early. Next, let's look at opportunities for trade. Using corrective waves, you should be able to tell whether the trend will extend further. Just remember! All rules can be broken!

FOR A SELL ORDER
Just like we have discussed earlier. immediately the 5th wave is formed followed by the corrective waves, we wait for the price action to break the support which happens to be the former low. then a trade is initiated placing our stop loss and take profit at a 1:1 RRR. although this can be altered to suit the style of the trader

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FOR A BUY ORDER
just like I explained above for a sell order, a buy order is just a reverse of the case. after the 5th wave is formed and we proceed to the correction waves, we wait for the price action to break the resistance which happens to be the former high. the trade is initiated placing our stop loss and take profit at a 1:2 RRR, although this can be altered to suit the style of the trader.

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Explain the relationship of Elliott Wave Theory with the explained method. Be graphic when explaining.

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The way to trade cryptocurrency or any other market is different during accumulation phases and distribution phases. We can use the Elliot Wave Theory to identify these two periods in advance so you can know which way to push the market.

Looking at the chart, we can see how pro traders take advantage of the accumulation phase. There are two types of phases in this phase. The first phase is the long phase or stretching out phase which can be identified using Elliot Wave theory. After the initiation of the new trend, there will be corrections for this phase. Take note that strong hands are closing their positions which can cause huge interruptions for this market movement.

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Traditionally, retail traders use Elliot wave theory to help them identify when the strong hands are pushing price up and also when to close their positions in order to avoid getting faked out and talking for the price manipulation by the strong hands.

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CONCLUSION

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Trading involves discipline, knowledge, and experience with multiple facets to do well. Retail traders often must keep up with both the fundamentals of the market as well as technical analysis in order to be successful traders. You need to know key pieces that apply to your trading, or else you are at the mercy of the larger players who have different intentions for you.

The best way to trade cryptocurrency are by timing the low price periods and selling at high prices to control your emotions. It takes a strong hand tempered with emotion, but playing intelligently leads to better trades.

In order to trade cryptocurrency successfully, it is important to understand not only when an upsurge in price will happen, but also when a downswing may come. systems such as the Elliott Wave can help investors identify these forms of momentum.

It is important that we put stop loss in every trade and have an end-of-trade strategy to take our profits when it goes in our favor, also known as a 'win.'

Thank you professor @nane15 for this insightful lecture

IMAGE REFERENCE WWW.TRADINGVIEW.COM

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