Crypto forex 101


crypto forex 101

Trading, Programming, and Merrily Blowing Bubbles. Pages Home Crypto-Forex High volatility meaning the deviation is high, and low volatility meaning the deviation is low. When finding a suitable exchange there's a number of things to consider, and you'll find as you become more experienced your needs will become more complex. Newer traders should look for an exchange with a simple interface and high volume. High volume is a significant consideration for newbies because it can mitigate confounding variables like slippage.

Getting funds on your exchange: Using BTC as an example after you've created your account click on profile in the upper right hand part of the screen then click funds to bring up the funds menu. After that find the currency you want to deposit, Bitcoin in this example, and click deposit.

After you click deposit a new area will pop up at the bottom of the page with a newly generated Bitcoin address and QR code for your account. Copy this deposit address and use it to send funds from your wallet to the exchange, or to have your mining pool deposit directly to your exchange account. I've heard of this taking an hour or two sometimes, but any longer and you should contact support at your exchange.

Anatomy of An Exchange. All exchanges of any financial instrument adhere to the same basic format. There is some kind of account summary page displaying all your current balances, like the one pictures above, a ticker showing the last market price and some information about market volume, and finally the trading area.

At BTC-e you place an crypto by going to the section that says "Buy BTC" and type in the amount of Bitcoin you'd like to buy. When 101 click the "Calculate" button it will return how much Bitcoin you will actually get and how much Bitcoin will go to the exchange to cover fees. Selling is done in a nearly identical manner. The section below the orders section is where we really start to get into the "nitty gritty" of forex, the "Orderbooks".

The orderbooks are a log of all the current buy and sell orders still pending execution. Placing an order from A to Z: This is where we get into the mistake a lot of newbies make when conceptualizing how an order works. Placing an order at an exchange is not like buying something from a retail store, just because you put the cash in doesn't mean you'll forex get what you want. Everyone sell trying to sell at what they think the financial instrument is worth, or whatever they think is the maximum they can get out of the particular financial instrument.

When you decide what you think Bitcoin in this example is worth and place an order, unless you place a market order the order will not be immediately executed, it will go to the orderbook and you'll have to sit and wait with everyone else in the orderbook. Being in the orderbook is a little bit like waiting in line, which can be a good or bad thing depending on your trading strategy, everybody with a better offer is served before you and be prepared for people to cut in line.

Finally when your order comes up as the best buy or sell price the next person to place a market order will be buying or selling to you. Considerations when placing an order: Market orders and limit orders forex have advantages and disadvantages. Neither is better or worse then the other.

Market orders are executed immediately - in a rapidly declining market, this can help you exit a market quickly preventing further loses in a rallying market this can help you hop on the band wagon quickly and take advantage of increasing prices during a later sell. The main disadvantage to market orders is slippage.

Sometimes when you place a market order you expect to buy or sell at a certain price, maybe the ticker price, but the market all of a sudden slips one way or the other and you end up buying for more or selling for less than you expected.

If you have a carefully planned strategy for your investment this can be a wonderful thing. Graphs and Some Basic Analysis. Using Bitcoinwisdom as our reference market graphs at first can be overwhelming, but don't panic its a lot easier then you might think.

My first suggestion is to navigate to the setting menu and change the chart style to "Candle Stick", this is the most common and informational type of graph for traders. So what the hell is a "Candlestick"? These rectangles are called "candles" and the lines extending below or above them are called "wicks". The body of each candle tells you at what price the market opened on the particular interval of time and at which price the market closed during that particular interval of time.

On the green candles or "bull" candles, the bottom of the candle signifies the price at which the market opened and the top of the candle signifies the price at which the market closed. On the red candles or "bear" candles 101 top of the candle signifies at which price the market opened on the bottom of the candle tells you at which price the market closed.

Basically the wicks are the outliers, they are a graphical representation of the people who bought or sold Bitcoin outside of the average buy or sell during that interval.

On that first big red candle in the picture above you can see the candle wick extended far crypto the candle body, this means people were panicking and weren't very optimistic about the market during the next interval so they often sold much lower then the price at which most people were selling.

On the green candle after those two big red candles you can see a wick extending far above the candle body, this generally means people were very optimistic about the market during that interval and were willing to buy far above the average price during that interval.

Some More Advanced Topics. Now that you know how to read a candlestick graph and place an order, you'll need to come up with some kind of strategy. If you've been using the above knowledge to do some "fly by the seat of your pants" kind of trading you've probably noticed it doesn't work so well. Although you may get lucky on a few trades, in order to reliably make money trading any financial instrument you'll need to come up with a system.

In this system you'll need predefined market condition in which you will enter a position buy and exit a position sell. When defining these conditions you'll find that a candlestick chart just isn't enough, in this section you'll be learning about all sorts of easy to read mathematical tools that will help you refine your technique and turn trading into a science. Calculated by averaging market close prices over a particular time interval.

Put simply, an average line fit for market data. Exponential Moving Average EMA - Similar to a moving average but more "weight" is given to recent market data. Put simply, a more responsive version of a moving average. Put simply, wavy lines that give you information as to whether the market is currently closer to one extreme or another. Put Simply, imagine a market is like a linebacker, when he first tries to build up speed he's too fat to do it quickly and build much momentum, but once he gets going he's unstoppable.

This technique involved trying to buy right before he's becoming unstoppable. Put simply, a measure of how overbought and oversold the market is. As you first start building up a strategy, these two indicators will probably be your home base. Next on the list is the "Chart Styles" sub-menu, but to be honest I don't plan on ever addressing the other chart types, simply because I don't believe they are useful.

Most of the time alternative charts are only used to make indicators like EMAs or MAs more visible. Candle Stick charts are by far the most widely used and informative types of charts for traders. When you do reach an experience level where indicator visibility is a concern you probably won't need me to explain what the different chart styles tell you.

The third item on the parameters menu is where we start to get to the good stuff. The real holy grail of technical analysis, indicators. Where do you start with the MACD, it is probably one of the most useful, predictive, and diverse indicators you will ever use. If you only ever learned how to the MACD I'm sure you would still see significant gains, you could spend your entire life learning how to better use just this indicator and still be a very successful trader.

The MACD indicator is a derivative of the moving average and exponential moving average indicators. It takes three parameters, the first two represent moving average values and the last one is a value for an exponential moving average.

The actual MACD is calculated by taking the difference of x and y, the two MAs, the EMA isn't actually used in the MACD calculation at all its plotted over top of the MACD and serves as a "signal line". So how do I use it?

There's infinitely many ways to use the MACD, as I mentioned before it is probably one of the most widely used and diverse indicators you will end up using. Techniques can be as simple as crossover and momentum or as complicated as matrix calculations and neural networks. In this section we'll just be covering crossovers and momentum. Crossover trading using the MACD indicator is pretty similar to crossover trading EMAs.

Wait for crypto short EMA to pass over the MACD to signal a buy, and wait for the EMA to pass under the MACD to signal a sell. This strategy is pretty reliable, and now that you've made it to the more advanced section of the tutorial were going to throw a few more considerations.

Form w,x,y,z Default 14,14,3,3 StochRSI is an extremely useful and approachable indicator for new traders. It is easy to read, predictive, and accurate. When I first started trading I almost exclusively used StochRSI and was able to turn a decent profit for myself. Sparing you the complicated math, StochRSI is a measure of how overbought or oversold the market is.

The scale used on StochRSI is a simple 0 to scale. On my graph, and the default graph on bitcoinwisdom, the orange line is meant to respond to market trends over a longer length of time, the blue line is meant to respond to market trends over a shorter length of time. So how do I use this? In general, StochRSI values of less then 20 mean the market is currently extremely oversold, so people will likely being trying to buy into the market cheaply.

This mean the market will likely see a rally shortly. StochRSI values of greater then 90 mean the market is significantly overbought, this means a lot of people are buying and holding with fewer people selling, this usually indicates an upcoming market downturn. More advanced traders will use a crossover of the blue line over top of the orange line at low StochRSI values as a signal to buy into the market, and a crossover of the orange line over the blue line at high StochRSI values as a signal to sell and exit the market.

In the next installment of the Magic School Bus you'll learn about StochRSI, and MACD indicators! Share to Twitter Share to Facebook. Topics bitcoin economy trading politics exchange litecoin cryptsy currency primecoin automotive bitfinex btce crypto dump forex programming pump trollbox. Are We Out of the Woods Yet?

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