Basics to trade cryptocurrencies correctly. | Part 1- Crypto Academy / S6W1 - Homework post for nane15.
Hello steemains, i welcome everyone to this new season of the steemit cryptoacademy which is the season 6 week 1. Am so glad to be part of this great lecture by professor @nane15. The lecture was well detailed and was explain in simple words which is understandable. Below is my homeowork post for professor @nane15. Lets dive in!!
Q1. WHAT DO YOU UNDERSTAND BY TRADING? EXPLAIN YOUR UNDERSTANDING IN YOUR OWN WORDS..
Well, trading is just easy to understand and am going to explain in a simple way. Trading is just the means of buying and selling things. For example, there strategies in which a trader can make gain while trading which is going long. We might buy and asset at a low price and then keep it because you have hope that it would rise more than the amount you bought it in times to come. So eventually when it rise and you sell it off, then you make your profit.
In a better understanding, we can say that trading is when goods and services are being exchanged in a given period. Trades are mostly performed in the market, where we can see different people both buyers and sellers purchasing and selling different kinds of goods. Same as crypto market, we normally buy and sell crypto assets, in order to make profits. We buy in a low price and sell in higher price and this how we normally make our profits while trading on crypto market
Furthermore, trading is a process whereby buyers and sellers come to together, interact and make purchases i.e when both parties agreed on the price, the buyer will successfully purchase the goods from the seller.
Q2. WHAT ARE THE STRONG AND WEAK HANDS IN THE MARKET? BE GRAPHIC AND PROVIDE A FULL EXPLANATION.
It really matters to know the owner of assets traders trades on. So we will look into the strong and weak hand in the market.
Strong Hands
This is seen when many people are interested in a particular assets due to the fact that they need to make better profit from that particular assets as fast as they can. This is mostly when news are being spread online or social media platforms, so people will love to purchase on that asset in order to make money from it i.e looking out for a short term profit.
This is mostly traded by people who have larger funds or capital to invest on a particular assets for a long time investments. This are what we call a strong hands. This investors are traders who have a better experience in crypto market and they know the perfect time to invest on crypto asset and the best time to sell and make their profit. This investors with large capital or funds are mostly companies or institutions.
Weak hands
Like i stated based one strong hands in the market. The weak hands is just the opposite of it, whereby traders or investors trade with small amount of funds or capital in order to make profit. This weaks hands usually exit the market in a short time when they see the market going against their decison. Also, they exit the market whenever they hear news about the particular coin they invested is going down. Sometimes the weak hand purchases an asset in a higher value and end up selling it in a lower price due to fear.
Q3. WHICH DO YOU THINK IS THE BETTER IDEA: THINK LIKE THE PACK OR LIKE A PRO?
We know how the market is, i.e its volatility. Also there are many people spreading news on social media about an asset, some of this news are fake and can put fear on ones mind, this may lead to the trader selling off all his or her assets due to the fear of loosing money and this might cause them selling in a lower price.
So, my suggestion in this is that, as a trader, we must investigate very well first before making any decision. This investigation includes, fundamental analysis and technical analysis. A trader should always be thinking like a professional. Another thing is that, traders need to be patient, yes the market is highly volatile and this could not make us to loose our money because of fear. Traders should learn how to control their emotions when it comes to crypto trading.
Q4. DEMONSTRATE YOUR UNDERSTANDING OF TREND TRADING. (USE CRYPTOCURRENCY CHART SCREENSHOTS.)
When talking about trend, it helps traders to know the current state or movement of the market either bearish movement or bullish movement. Trend is also an important thing a trader needs to understand.
Now, professor @nane15 taught about impulsive where by we can be able to identify the trend and know when to enter a position and when to exit. If a trader can be able to recognise this pattern, the trader can predict what movement the market will take next or the next movement of the market. There are 5 repeating waves in the market. The first, the third and the fifth usually affect the trend of the market i.e when the market is going in a bullish trend, the three waves which is the first, the third and the fifth wave will also trends up. Now the remaining two waves which is the second and the fourth wave is seen as counter trend waves for example, when the market is trending up, this waves which is the second and fourth wave will be trending downwards.
I will list below the most important rules for this waves and we need to know these rules.
The second wave must not pass after the start of wave 1
The third wave should not be the smallest wave
The fourth wave should not be the same price as the wave 1 .
The screenshot below explains this waves. As we can see with the waves, we can be able to identify the trend. First was a bearish trend, then later retraced and start trending upwards.
Q5. SHOW HOW TO IDENTIFY THE FIRST AND LAST IMPULSE WAVES IN A TREND, PLUS EXPLAIN THE IMPORTANCE OF THIS. (USE CRYPTOCURRENCY CHART SCREENSHOTS)
It is very essential for traders to know how to spot or identify the first and and the last impulse in the market. This also guide traders to know or predict the next move in the market and also know the best time to take entry and exit. I will show an explain the first and the last impulse.
I will explain the first impulse making use of Elliot wave system of trend. Looking at the chart i provided above, we can see the 5 waves which i drew, whereby every single line will be lower more than the former one when it comes to bearish movement. After the 5 waves, we have to highlight or spot the a b c area so that we will be waiting for reversal to occurs. Looking at the chart below, we can see that the point c goes more higher than the other line i drew. When we identify this, it signals that we should take a long position in the market.
The last impulsive, also contains 5 waves which i have metioned above. This aslo the same pattern movement but at the last pattern, it drop and started bearishing. See screenshot i provided below.
Q6. SHOW HOW TO IDENTIFY A GOOD POINT TO SET A BUY AND SELL ORDER. (USE CRYPTOCURRENCY CHART SCREENSHOTS)
Its important for a trader to be able to identify a perfect point in order to set a buy and sell position in the market. Using the explanation i made in question no.5, i will show us how to identify a good point to set a buy and sell order. Lets see
screenshot below.
We can see how the market was moving upwards, creating higher highs and higher lows. Now, when reach at the first impulse, the market also goes more higher, than the previous high. So when its crosses the previous high, that is when i took my entry and then set my take profit and stoploss.
Now we can also see that the market was going up, creating higher highs and higher lows, till it reaches the last impulse, then the market was not able to create another high and this leads to downtrend, then i took my entry immediately the market shows a reversal signal.
Q7. EXPLAIN THE RELATIONSHIP OF ELLIOTT WAVE THEORY WITH THE EXPLAINED METHOD. BE GRAPHIC WHEN EXPLAINING
Elliot wave helps us to know the particular time to take outr entry point and exit point and also make maximum profit with minimum losses. When the 5 waves are being formed, this helps us to know the next trend the market is going to take and then we can take our entry. We can identify this 5 waves with lines. See screenshot below.
CONCLUSION
This basics are very important for a trader to master and make use of it in order to make a good trading decision, knowing when to enter the market and when to exit the market. Also making profits from it. I really appreciate professor @nane15 for this wonderful lecture.
Cc- professor @nane15