Abstracted from my blog post. Read the Full Post at: http://alunacrypto.blogspot.nl/2014/03/how-to-bitcoin-altcoins-daytrading-fundamental-technical-analysis-profitable-trading-strategy.html. Follow me on Twitter for my latest Bitcoin/Altcoin trading advice @onemanatatime (https://twitter.com/onemanatatime). Fundamental Analysis
I believe that for an Altcoin to be worth anything at all, it MUST first have technical aspects which are built with the future in mind. This is what solely determines if a cryptocurrency has the potential for the mid to long term. Even with 5 new altcoins launching everyday, you barely see 1 a month that can last even the mid-term.
Then, after that I judge the coins based on 7 mediating factors; developers, community, branding/marketing, popularity/virality, novelty, infrastructure, and liquidity. For more about fundamental analysis and an explanation of these factors, read up on the first few sections in my previous post about picking and trading the next profitable altcoin. In this post, I will focus more on technical analysis and trading strategies instead.
With so many coins out there, I like to use these above factors to weed out all the weaker shitcoins, and focus on altcoins which are substantially different from others, and more importantly, provide more value than other cryptocurrencies. After which, I use Technical Analysis to judge entry/exit positions for trading them.
What else do you think makes a cryptocurrency fundamentally better than another, and more sustainable as a currency? Technical Analysis
Many will probably agree when I say that the Altcoins market is akin to the "penny stocks" of cryptocurrencies. In this sense, most altcoin markets have much lower liquidity, but have much higher volatility. Since there are over 200 different cryptocurrency markets to date, I prefer to narrow down my list of altcoins to a small handful, and buy under-valued coins or trade the breakouts. You're going to find it really tough to be watching more than 5 altcoins at the same time, so I highly suggest keeping your list small, and adapt your watchlist to the fast changing markets.
If you're new to technical analysis, here's a really good beginner's video on daytrading Penny Stocks, which also explains the basics of chart reading and an introduction to basic trading jargon that I'll be using throughout this post. The important concepts to take note of are resistances & supports, breakouts that coincide with high volume, and the general idea that "what goes up must come down". See video here: http://www.youtube.com/watch?v=HYK2a77TjvU
So after you get the basics sorted out, you should be ready to learn how to trade! I'm gonna break this intermediate technical analysis tutorial down into five main portions, and have compiled videos from other trading experts to give even beginners a better overall idea, and teach you all you need to know to devise your own Bitcoin & Altcoins trading strategy. 1. Top Down Analysis
Firstly, lets look at the top down analysis method of reading charts. I always begin by trying to understand the market from a bird eye's view. Compare both charts from a long term period (e.g. 1d) against one from a shorter period (e.g. 15m) to get a holistic view of the market. This will help give you a general perspective of market trends, while peaks & troughs give you an idea of market resistances & supports.
Use these basic resistance & support levels to judge entry/exit prices. In general, previous high and low points are new resistances or support depending on where the price is, and points where u can see big breakouts will be the new short term resistance/support. To get a better idea of what I mean, watch these videos by Jason Stapleton who explains top down analysis, resistances & supports, and structure. http://www.youtube.com/watch?v=M9yCc7lD21Q https://www.youtube.com/watch?v=tJmMU-8yicM 2. Retracements
The concept of retracements is, in my opinion, the most important one that any trading enthusiast must grasp in order to understand how the markets flow. In essence, a retracement is a temporary price movement against the established trend, and helps us understand that the markets move in wave patterns as highlighted by the Elliott Wave Theory. One way to look at it, as highlighted by this video below, is that most price-actions follow a pullback rule to fibonacci retracement levels (38%, 50%, 62%). http://www.youtube.com/watch?v=7VSWqM0jfIQ
The most important concept to take away from this is "what goes up must come down"; that price movements in one direction are always followed by retracements in the opposite direction. Of course, not all movements will follow the same pullbacks, and these levels should only be used as a guide. Here's another video: "Understanding Fibonacci retracement lines: https://www.youtube.com/watch?v=KzHjxPxGzMw
So the question then is, how will we know if this counter-movement price action is a retracement or a reversal? There is no way to say for certain...
Read the full post on my blog at: http://alunacrypto.blogspot.nl/2014/03/how-to-bitcoin-altcoins-daytrading-fundamental-technical-analysis-profitable-trading-strategy.html. 3. Trading on Volume
Another important concept you need to understand is that large price movements almost always coincide with high trading volume.
With this in mind, this is where the liquidity of an altcoin also comes into play; the higher the trade volume of an altcoin, the lower the spreads, and the more likely you will be able to make some profitable trades from it. In general, the trade volume is a good indicator of, and is proportional to the popularity of the altcoin at the current time.
Apart from the actual trading volume itself, another good indicator is the change in volume over time; if you realize that the trading volume of an altcoin has been steadily increasing over the last few days, it could be an indication that a big price movement is coming up. 4. Breakout Patterns
The last concept I want to share is breakout patterns. Although most people are familiar with this concept, many do not know how to profit from them. This is one of the best tools to use for planning your entry positions, while there are various ways to do so, which are highlighted by these first two videos below: https://www.youtube.com/watch?v=6YZ4ORz-UJ0 http://www.youtube.com/watch?v=3gN-6D8nH0E 5. Advanced Trading Strategies
Now comes the fun part: how can we take all that we've learnt so far and put into good use for trading Bitcoin/Altcoins? Here are some pointers for you:
- What we've learnt is more of a tool to make better entry and exit positions.
- Keep in mind trading the bitcoin & altcoin markets as you watch the rest of these more advanced videos, and I hope you'll be able to gain some insights to build up your Bitcoins & Altcoins trading strategy.
- Granted, forex & equities trading is much different from bitcoin or altcoin markets. However, the fundamentals are the same, and you should learn to draw lessons from the strategies talked about in the videos to supplement your bitcoin/altcoins trading strategy.
In the next videos, more advanced trading strategies and chart patterns will be shared. These strategies may seem very specific, but my goal is to give you better understanding of how these analysis tools are used, and to give you an idea of how different tools can be used to develop a single trading setup. The specifics are not important; what I hope to achieve is to open up your minds to new ideas, expand your trading knowledge, and ultimately encourage you to explore a diverse variety of trading strategies.
Read up more on some of the main ideas discussed:
- Fibonacci Analysis
- Fibonacci Extensions vs Retracements
- Elliott Wave Theory
- Harmonic moves/pattern
- Cryptocurrency Portfolio
- My Trading strategy
- More trading Tips
Read the full post on my blog at: http://alunacrypto.blogspot.nl/2014/03/how-to-bitcoin-altcoins-daytrading-fundamental-technical-analysis-profitable-trading-strategy.html. If you'd like to discuss any ideas or have burning questions, feel free to email me at alvinlee133(at)gmail.com or hit me up on twitter @onemanatatime.
P.S. If you're new here, make sure to check out my previous posts about Bitcoin & Altcoins daytrading: http://alunacrypto.blogspot.nl/2014/02/how-to-pick-trade-next-profitable-altcoin-bitcoin-daytrading.html http://alunacrypto.blogspot.nl/2014/01/beginners-guide-margin-trading-bitfinex-exchange.html http://alunacrypto.blogspot.nl/2014/01/embarking-on-my-bitcoin-trading-journey.html
P.P.S. If this post helped you, feel free to buy me a cup of coffee!
Cryptsy Trade Key: 9c1e289981a685bf0b8a4e48bc00b35eb1380afa
I started with forex trading recently, ( demo account, <2% per trade, log all trades into excel, testing, etc...). When i read about technical analysis, there`s minimum strict rules and almost all indicators are recommended to try because all other people believe they are useful in some situation. submitted by
does anybody backtested all those indicators, should we blindly believe and try all indicators in our strategy ? I know that majority of people is using them but are there actually any proofs that those indicators really helps you ?
Moving averages are not rocket science, but what i should think about fibonacci or SAR ? I was like WTF when i was reading about these...
All traders say don't trade just because of "good feeling" but we do actually trade just because "blue indicator" is near or "red indicator" - that`s just naive approach.
I know that technical analysis is just one part of complex forex world ,but i believe we all should backtest automatically basic indicators to see when they really helps, this would greatly help people to develop better strategies.
Do you know any papers/studies or blogs of forex people with more engineering approach to forex ?
I really liked traits-of-successful-traders-guide from fxcm, its not technical analysis but they are telling you about basics facts e.g. best hours, success of sample strategies, effective leverage - thats how tutorial for beginners should look like. Babypips.com are maybe informative but very very naive, not explaning numbers much.
FOREX TRADING – Main Rules of Trading Forex for Beginners! Trump doctor says he incorrectly used terms ’72 hours’ and ’48 hours’ UK trade minister Truss says will work with whoever is in the White House on a Brexit trade deal This Forex Fibonacci strategy involves opening a trade at the end of the correction. How to plot Fibonacci levels correctly in the chart: Wait for the trend to start. Wait for the start of the first correction, apply the grid. The starting point is the low for an uptrend and high for an uptrend. Follow the correction. It should end before the ... Fibonacci Tutorial : This SPX weekly chart frames the Fibonacci retracement levels between the 1553 top and 769 bottom. You can see that the .236RT to 1553 of 954 was a major obstacle. The first rally from 776 reached 965, but didn't close above it. From 965, the SPX declined to the 769 bottom (A) and then rallied to 954, right at the .236RT level, but failed to close above 954. The next leg ... Dynamic Fibonacci Grid software tutorial. The L1 indicator also known as … Share on Facebook. Share on Twitter. Share on Google+. Share on Pinterest. Share on LinkedIn. Products You May Like. Articles You May Like. Free Forex Trading System Simple Forex Indicator Discover Simple Forex Trading System. Forex Trading Strategy Using The Pro-Trading System. 8 Lessons Discovered After 10,000 ... In these two examples, we see that price found some temporary forex support or resistance at Fibonacci retracement levels. Because of all the people who use the Fibonacci tool, those levels become self-fulfilling support and resistance levels. If enough market participants believe that a retracement will occur near a Fibonacci retracement level and are waiting to open a position when the price ... This Fibonacci Forex tutorial video provides you with those techniques. Whether you’re trading Fibonacci retracements or Fibonacci extensions, this video will show you how to use Forex Fibonacci numbers that work in real life. Enjoy this tutorial about Fibonacci Forex trading strategies that work. SORRY: You’ll notice some “clicking” sounds in the video, but the information is worth ... Previous part of tutorial: Pivot Points in Forex trading Next part of tutorial: Trailing stop in Forex There are many tools based on Fibonacci numbers. Below short overview. Fibonacci retracement Fibonacci retracement is the most popular tool used by traders who are trading with Fibonacci. It helps you to predict where correction might end. Do …
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