Introduction to Cryptocurrency
Duration: 20 hrs Tuition: $1920
1. (A) Bars: Bar patterns are nifty short-term patterns that are useful for timing trades and finding logical stop-loss points. No price action trader can do without learning about bar patterns. 10 Price Action Bar Patterns You Must Know • Reversal Bar. • Key Reversal Bar. • Exhaustion Bar. • Pinocchio Bar. • Two-Bar Reversal. • Three-Bar Reversal. • Three Bar Pullback. Volatility Bar Patterns. • Inside Bar. (B) MA50 ( support and resistance): The moving average (MA) is a simple technical analysis tool that smooths out price data by creating a constantly updated average price. The average is taken over a specific period of time, like 10 days, 20 minutes, 30 weeks or any time period the trader chooses. There are advantages to using a moving average in your trading, as well as options on what type of moving average to use. Moving average strategies are also popular and can be tailored to any time frame, suiting both long-term investors and short-term traders. • A moving average (MA) is a widely used technical indicator that smooths out price trends by filtering out the “noise” from random short-term price fluctuations. • Moving averages can be constructed in several different ways, and employ different numbers of days for the averaging interval. • The most common applications of moving averages are to identify trend direction and to determine support and resistance levels. • When asset prices cross over their moving averages, it may generate a trading signal for technical traders. • While moving averages are useful enough on their own, they also form the basis for other technical indicators such as the moving average convergence divergence (MACD).
2. Stochastic: A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result. It is used to generate overbought and oversold trading signals, utilizing a 0–100 bounded range of values. • A stochastic oscillator is a popular technical indicator for generating overbought and oversold signals. • It is a popular momentum indicator, first developed in the 1950s. • Stochastic oscillators tend to vary around some mean price level since they rely on an asset’s price history.
3. Divergence vs Convergence: There are numerous trends and tools in the world of economics and finance. Some of them describe opposing forces, such as divergence and convergence. Divergence generally means two things are moving apart while convergence implies that two forces are moving together. In the world of economics, finance, and trading, divergence and convergence are terms used to describe the directional relationship of two trends, prices, or indicators. But as the general definitions imply, these two terms refer to how these relationships move. Divergence indicates that two trends move further away from each other while convergence indicates how they move closer together. • Divergence occurs when the price of an asset and an indicator move away from each other. • Convergence happens when the price of an asset and an indicator move toward each other. • Divergence can be either positive or negative. • Convergence occurs because an efficient market won’t allow something to trade for two prices at the same time • Technical traders are more interested in divergence as a signal to trade while the absence of convergence is an opportunity for arbitrage.
4. Fractal Indicator: The fractal indicator is based on a simple price pattern that is frequently seen in financial markets. Outside of trading, a fractal is a recurring geometric pattern that is repeated on all time frames. From this concept, the fractal indicator was devised. The indicator isolates potential turning points on a price chart. It then draws arrows to indicate the existence of a pattern. The bullish fractal pattern signals the price could move higher. A bearish fractal signals the price could move lower. Bullish fractals are marked by a down arrow, and bearish fractals are marked by an up arrow. • A bullish fractal occurs when there is a low point with two higher low bars/ candles on each side of it. • A bearish fractal occurs when there is a high point with two lower high bars/candles on each side of it. • An up arrow marks the location of a bearish fractal, while a down arrow marks the location of a bullish fractal. • Arrows are drawn above or below the middle bar (high or low point), even though the pattern is five bars. There is no way a trader could enter a trade at the arrow because the arrow only occurs if the next two bars create the pattern. • If someone were to trade fractal signals, the entry would be the open price of the third bar after the arrow.
5. Scalp trading: Scalping is a trading style that specializes in profiting off of small price changes and making a fast profit off reselling. In day trading, scalping is a term for a strategy to prioritize making high volumes of small profits. Scalping requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains the trader worked to obtain. Thus, having the right tools—such as a live feed, a direct-access broker, and the stamina to place many trades—is required for this strategy to be successful. • Scalping is a trading style that specializes in profiting off of small price changes and making a fast profit off reselling. • Scalping requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains the trader worked to obtain. • Having the right tools—such as a live feed, a direct-access broker, and the stamina to place many trades—is required for this strategy to be successful. • A successful stock scalper will have a much higher ratio of winning trades versus losing ones while keeping profits roughly equal or slightly bigger than losses. • A pure scalper will make a number of trades each day—perhaps in the hundreds
6. Cherry picking: Cherry picking is the process of choosing investments and trades by following other investors and institutions that are considered reliable and successful over the long term. Cherry-picking is done by both professional and retail investors alike. Typically, cherry-picking doesn’t involve research but instead, involves using the research of other reliable sources. Although the process of cherry-picking can lead to choosing top securities, it can also lead to investors overlooking the broader market metrics. Cherry-picking can also be referred to as the fraudulent practise of allocating profitable or unprofitable trades by investment managers and their staff to certain accounts preferentially. • Cherry picking involves choosing investments by following other investors and institutions that are considered reliable and successful. • Cherry picking doesn’t involve research but instead, involves using the research of other reliable sources. • Cherry picking is also defined as the fraudulent practice of investment managers allocating winning trades to their personal accounts or to favoured clients.
7. MACD: Moving average convergence divergence (MACD), invented in 1979 by Gerald Appel, is one of the most popular technical indicators in trading. The MACD is appreciated by traders the world over for its simplicity and flexibility, as it can be used either as a trend or momentum indicator. Trading divergence is a popular way to use the MACD histogram, using a divergence signal as a forecasting tool is questionable. A divergence trade is not as accurate as it appears in hindsight because past data will only include successful divergence signals. A visual inspection of past chart data won’t reveal the failed divergences because they no longer appear as a divergence. • Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. • Traders use the MACD to identify when bullish or bearish momentum is high in order to identify entry and exit points for trades. • MACD is used by technical traders in stocks, bonds, commodities, and FX markets. • Here we give an overview of how to use the MACD indicator.
8. Stoploss: With so many things to consider when deciding whether or not to buy a stock, it’s easy to omit some important considerations. The stop-loss order may be one of those factors. When used appropriately, a stop-loss order can make a world of a difference. And just about everybody can benefit from this tool. • Most investors can benefit from implementing a stop-loss order. • A stop-loss is designed to limit an investor’s loss on a security position that makes an unfavourable move. • One key advantage of using a stop-loss order is you don’t need to monitor your holdings daily. • A disadvantage is that a short-term price fluctuation could activate the stop and trigger an unnecessary sale.
9. Cycle: A cyclic pattern exists when data exhibit rises and falls that are not of the fixed period. The duration of these fluctuations is usually at least 2 years. Think of business cycles that usually last several years, but where the length of the current cycle is unknown beforehand. Many people confuse cyclic behaviour with seasonal behaviour, but they are really quite different. If the fluctuations are not of the fixed period then they are cyclic; if the period is unchanging and associated with some aspect of the calendar, then the pattern is seasonal. In general, the average length of cycles is longer than the length of a seasonal pattern, and the magnitude of cycles tends to be more variable than the magnitude of seasonal patterns.
10. Paper Trade: What is paper trading? What is the definition of paper trading? What does the term “paper trading” mean? Paper trading is when trades are simulated instead of actually being executed. Paper trading is when you make imaginary trades without any real money is on the line. Paper trading is a great way to test out a new trading idea or theory without actually risking any real money on the transaction. Example: You have identified what you think is a profitable trading pattern for companies that have just reported their earnings.