Starting Crypto Trading - Steemit Crypto Academy |S6W1 - Homework Post for Professor @pelon53
Hello everyone. The wait is over and the new season of steemit crypto academy has been started. I welcome you all in the first week of the 6th week. This week, professor @pelon53 has taught us "Starting Crypto Trading". After reading the lecture, i am going to respond th my assignment.
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Introduction
The values of the assets keep changing time to time. A lot of factors are there which effect the crypto prices. The traders buy the coin when price is low. If the market goes in the expected direction, the traders can earn huge benefit. If the market start moving in unexpected direction, the traders may lose all their money. So before stepping down into the crypto market, the traders need to analyze the market very carefully before making any trading decision. The trader can analyze the market through technical analysis or fundamental analysis.
Question 1
In your own words, what is fundamental analysis? Do you think it is important for a trader? Justify the answer.
- Fundamental Analysis
The fundamental analysis if a way to analyze the crypto market. The traders can perform the fundamental analysis to predict the market future and then they can decide whether they should make an investment or not.
Fundamental Analysis is the key method to analyze the crypto market. This method is focus on the financial and economic events to analyze the market. A lot of the other factors like the project goals, the team objective, the government policies related to the crypto coins are also matter. The traders analyze the crypto market by focusing on all the above mentioned factors.
The Fundamental analysis is very important and popular type of the analysis which identify which direction, the market will move. The traders study the financial news, the GDP, the government policies to perform the fundamental analysis because all these factors effect the demand and supply of the coins.
By studying these factors, the traders can decide whether they should make an entry into the market or not. This analysis identify what will be the future of the crypto market. Initially, the fundamental analysis was used greatly in the financial trading. It is mostly used by the institutes and whales who use the economic data to predict the market future. The Fundamental analysis is really helpful to analyze the market which have high volatility.
he Fundamental analysis refer to study the project of the coin deeply in order to take any trading decision. We can use multiple methods to analyze the market through fundamental analysis.
White paper
We can analyze the market through white paper in fundamental analysis. The White paper give you all the information about the coin which you need to know. Then you can make the decision easily whether o invest in the coin or not. You can study every thing about the coin from the white paper.
Team Goal
Second way to analyze the market fundamental way is to study about how the team is managing the coin . This will help to get what are the goals of the team and how they are planning to accomplish them. The skills of the team will tell you a lot about the coin. This will help to predict where the coin will move next. The abilities, capabilities, passion and the hard work of the team can lead the coin upward. By studying about the working of the team in past and their achievements, the traders can predict the future of coin.
News
The news about the crypto coins are really helpful to predict the future market. By studying about the news which relate to the crypto coin, we can predict where the market will move next.
Government Policies
The Government policies also effect the crypto coins. There are some countries who have banned the crypto coins. Some charge heavy text on the coin trading. So by studying the government policies, we can also analyze the crypto market.
Advantages of the Fundamental Analysis
The Fundamental analysis is the most useful way to analyze the market
This help to predict the market future. Thus enable the traders to decide whether to invest or not
The Fundamental analysis is best for the long term traders
The whales can analyze the market quit well using the fundamental analysis
One who cannot analyze the market through the technical way, can predict market future by performing the fundamental analysis.
It is easy and simple way to analyze the market. We do not need to study the historical price data, but only by considering some important factors oike market cap, team goals, white paper, etc, we can analyze the market very well.
This is best to analyze the market which have high volatility
Question 2
Explain what you understand by technical analysis and show the differences with fundamental analysis.
The technical analysis is also very popular way to analyze the crypto market. In the technical analysis, instead of suing on the financial and economic events, the traders use the price history to predict the future market.
The technical analysis is perform by believing on the fact that the the history repeat itself. What happen in past will happen again in future. The market price fluctuate because traders trade using emotions and sentiments. The traders repeat their attitude. By believing on this phenomenon, the traders perform technical analysis. They use the historical data of price to predict the market future direction.
This refer to the graphical tools to analyze the market. A lot of the technical analysis tools are available like chart, graph, market action, market structure, price movement, indicators, etc. All these tools can use to study the price history and to predict the future.
The technical analysis not just predict the future, but also help the traders to get the best entry and exit spots. The traders can identify the best price point to enter into the market and to exit from the market. In this way, the enter and leave market at appropriate time and earn more profit. The fundamental analysis do not give information about the entry and exit spots.
In the beginning, the technical analysis was not this much reliable and trust worthy. The traders preferred the fundamental analysis on technical analysis. But later on, the technical analysis gained much attention. The research prove that technical analysis is also best way to analyze the market. A lot of tools and indicators are being introduced which help much to get the best entry point exit point and also predict what will happen next in market.
The traders can use the technical indicator to determine the market trend, future trend, future price, etc. These tools also helpful to provide the trend reversal signal. The technical analysis is best for short term and long term trading. Any one can analyze the market accoridng to their trading plans and trading strategies.
Advantages of Technical Analysis.
- This type of analysis is really helpful to predict the market future.
- There are a lot of tools to perform technical analysis. One can use which is suitable for him.
- The technical analysis is so simple and easy to perform. The charts, graph give the more clear and graphical representation of market.
- The technical analysis is mostly suitable for short term traders. But long term traders can also perform the technical analysis for their trading .
- The Technical analysis also provide the best entry and exit signals.
Difference Between Fundamental analysis and Technical Analysis
| Fundamental Analysis | Technical Analysis |
|---|---|
| The Financial and economic events are use in the fundamental analysis. | The history of the asset's price is use to perform technical analysis. |
| This is more appropriate and suitable for long term traders | The technical analysis is best for short term traders |
| The Fundamental analysis do not give the best entry and exit spots | The technical analysis give us the best entry and exit spots. |
| The past and the present price dat is use to perform the fundamental analysis. | The price history is use to perform the technical analysis. |
| The Fundamental analysis is use for making the investments. | The Technical analysis is use for performing the trades. |
| The investors can perform the fundamental analysis by reading white paper, team goal, news about the coins. | The graphical tools like chart, graph, indicators are use to perform the technical analysis. |
| Best for long term traders | Best for short term trading. |
Executing a Sell Order in the Cyprocuurency Market Using Support and Resistance
- Support level
The support is an area where the price stop decreasing up further, the selling pressure expected to pause and price is expected to bounce back. At this level, the selling pressure get exhausted and the buyers enter into the market and stop price decreasing more, a lot of pending buying orders get executed because of which, price start moving in upward direction and trend get reverse. This is the level where the selling pressure pause, the buying pressure increase which prevent the price to move further in downward direction.
- Resistance Level
The resistance level is an area where the price stop increasing up further, the buying pressure expected to pause and price is expected to bounce back. At this level, the sellers enter into the market and stop price increasing more, a lot of pending selling orders get executed because of which, price start moving in opposite direction and trend get reverse. This is the level where the buying pressure pause, the selling pressure increase which prevent the price to move further in upward direction. Because of consolidation of a large number of selling orders at the resistance level, the price bounce back resulting in trend reversal.
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- Steem/USD Sell Order
The best time to sell a coin when there is uptrend in the market. The below is the BTC/USDT chart where the price was increasing. When the demand and supply change in huge volume, the resistance and the support levels are formed. I have marked the support and resistance level. After hitting the supporting level, price started rising. Currently, price was almost at the resistance level. After the resistance, price is expected to bounce back. So i identified this point best to place the sell order.
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Question 4
In a demo account, execute a buy order in the cryptocurrency market, placing the support and resistance lines in time frames of 1 day and 4 hours.
- BTC/USD
The best time to buy a coin is when the price is low. In the below chart, we can see that there are multiple support and resistance points. I have identified them. When the demand and supply change in huge volume, the resistance and the support levels are formed. The price has been break the support level, After breaking the of support level, price is expected to move in upward direction. Expecting the bullish trend, i identified it a good buying spot. I placed the buy order by setting the stop lose and take profit
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- Hanging Man Candlestick Pattern
The Hanging man candle stick is the bearish reversal which is form at the end of the uptrend. This candlestick has short body with long lower wick. It has the long lower shadow and after forming this candlestick, the trend reverse from bullish to bearish. This candlestick show the struggle of buyers and sellers to control the market price. This indicate that the selling pressure is high and buying pressure is diminishing. The sellers then control the market and price then start declining.
When the hanging man is formed at the top of the uptrend, the traders should wait for another confirmation signal and then should exit from the market because the coin is expected to decline and to safe from lose, the traders should sell their coins after forming the hanging man candlestick pattern.
This work on the fact that at the top of the uptrend, the sellers enter into the market with high selling pressure. The coin start falling down. Then the buyers again enter into the market and finally closes at the opening of the candles.
This candle indicate that the selling pressure is higher than the buying pressure. Because of high selling pressure, the trend reverse from bullish to bearish.
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- Shooting Star Candlestick pattern
The shooting star candle stick is the bearish reversal which is form at the end of the uptrend. This candlestick has short body with long upper wick. It has the long upper shadow and after forming this candlestick, the trend reverse from bullish to bearish. This candlestick show the struggle of buyers and sellers to control the market price. This indicate that the selling pressure is high and buying pressure is diminishing. The sellers then control the market and price then start declining.
When the hanging man is formed at the top of the uptrend, the traders should wait for another confirmation signal and then should exit from the market because the coin is expected to decline and to safe from lose, the traders should sell their coins after forming the hanging man candlestick pattern.
The shooting's psychology is that the candle opened with a bullish momentum, pushing price higher. Then, sellers enter into the market and the selling pressure get increase. This result into decline into the price. This indicates a selling pressure, indicating that a reversal is imminent.
This candle indicate that the selling pressure is higher than the buying pressure. Because of high selling pressure, the trend reverse from bullish to bearish.
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Conclusion
Fundamental analysis is very popular way to analyze the market. The traders use the economic and financial events to predict market future. The technical analysis is also very useful and use the price historical data to predict where the market will move in future. The shooting star candle is form at the top of uptrend and has long upper wick. It indicate the bearish reversal. The Hanging Man candle is form at the top of uptrend and has long lower wick. It also indicate the bearish reversal.
I am very thankful to professor @pelon53 for delivering this informative lecture with us.