Bitcoin & Cryptocurrency Guides 101

What Are Fundamentals? Beginner’s Guide

While trading in the cryptocurrency market, investors and traders tend to use different analytical methods to get an idea of whether the price of digital currency is expensive or cheap. This is what helps them to predict whether the price of an asset will go up or down. Some traders use technical indicators such as Nitros bull. Other traders prefer to use what they refer to as “Fundamentals.”

What Are Fundamentals?

Fundamentals analysis focuses on the well-being of the underlying asset. Think of it as a reality check, traders and investors will disregard the price action and just focus on what’s real about the asset. In cryptocurrencies – that helps us understand the valuation of these assets. While fundamental analysis can be a very useful tool, it is always recommended to use it in combination with other technical analysis to have a clearer picture of the price of a digital asset.

By using fundamentals, users can have clear information on whether a specific asset or cryptocurrency presents a good investment opportunity or not.

Let’s have a clear and practical example. Let’s suppose you are trading cows. Yes, cows. What would you look for to understand whether cows are overvalued or undervalued? Suppose cows are trading at $10 each for the last 3 years, it’s safe to assume that the price of cows will not change much as the demand for milk and meat is somewhat constant.

Now, imagine the world experiences an outbreak. A viral disease that is deadly across the world. Two months later, we find that milk is a cure for this disease. This would lead to an increase in demand for milk, but also a decrease in the supply of meat since most farmers would be reluctant to kill their cows for meat if they can sell milk.

As a trader, this would be a good signal to buy cows because their value would increase tremendously. It’s obvious that most traders would be doing the same which would cause a mania. As a result, the cows would end up being overpriced after a while. You as a trader would then have to decide when to sell your cows before the price starts going down again. This is just an example that would help you understand what we need to look for when analyzing fundamentals.

Which Fundamentals Can I Use?

You can use a wide range of fundamentals to understand the cryptocurrency market. You can start incorporating technical analysis and, valuable data related to quantitative and qualitative information you can find. The good thing about the cryptocurrency market is that most of the information to do basic and intermediate fundamental analysis is publicly available on websites such as TradingView, CoinMarketCap and many others.

Take into consideration that sentiment and news could also be used to perform fundamentals analysis. When positive or negative news hit the market, you could use them to trade an asset. Sometimes, you will have breaking news affecting the price of an asset. You can follow the Crypto University blog that has been sharing daily news on a regular basis for several months.

When Bitcoin was banned in China back in 2017, the market immediately crashed. Those who were fast enough to short BTC at that time were able to get some juicy profits.

General Crypto Fundamentals

We need to understand that the fundamentals change according to the asset you are analyzing. Thus, Bitcoin is going to have its own fundamentals. Interestingly, as each digital asset offers different solutions and has been developed with diverse features, we could find unique measurements for each coin.

Generally speaking, for a publicly trading company, we would use profitability, revenue and the assets they hold as information to perform our fundamental analysis. For cryptocurrencies, this does not apply. This is why we can use the information that is available related to development, transactions or usage.

Bitcoin Fundamentals

Bitcoin has some unique fundamentals that other assets do not have. For example, we could analyze the number of transactions processed by the Bitcoin network, speed of transactions or regulations in major parts of the world. This information can be found in pages such as Blockchain.com or Bitinfocharts.

In addition, we can certainly analyze the fees users have to pay when processing a transaction, the hash rate of the network (which will show the level of security of Bitcoin), the difficulty rate, the market capitalization in comparison with other assets and many others.

Other expert analysts use the Stock-to-Flow (S2F) model applied to Bitcoin, the number of BTC that are withdrawn from, or deposited into exchanges, or the amount of BTC that have not been moved in several years. Additionally, on-chain transactions to price could also be a good way to understand the level of transactions performed by Bitcoin in comparison to the price it has.

What is Trading?

Trading is an economic activity you do when you buy and sell different assets and services. When you purchase Bitcoin (BTC) you are already trading the asset, in this case, from the demand side of the market. You will be offering an asset if you expect a buyer to purchase it from you.

There are different styles of trading that would allow you to profit from buying and selling both assets and services. In this guide, we are going to focus on cryptocurrency styles of trading.

Which are the main Styles of Trading?

There are different styles of trading that would be suitable for different traders. Some of these styles of trading include arbitrage trading, spot trading, derivatives trading, day trading, swing trading and more. In the next sections, we are going to explain them to you. 

Arbitrage Trading

Arbitrage trading would allow investors and traders to profit from an asset that trades at different prices in multiple markets. Currently, the price of Bitcoin in Nigeria is 17% more expensive than in the United States, Europe and other parts of the world. Let’s suppose you bought Bitcoin at $10,000 on Binance but in Bittrex users are paying for the same BTC $10,100.

You can acquire BTC in Binance, send it to Bittrex, sell it, and make a profit of $100. Although this is just an example, it allows you to understand the dynamics behind arbitrage trading. Take into consideration that price differences between markets do not include transfer fees or commissions paid for executing an order in each of these platforms. Moreover, there is a risk that while you are transferring an asset, the price could fluctuate and make the trade unprofitable.

Spot Trading

Spot trading is perhaps the most common type of trading activity in the cryptocurrency market. Investors will be purchasing (or selling) a virtual currency at a specified price and settling the transaction immediately after. There are no waiting times.

Traders will be able to receive the cryptocurrency they purchased at the price at which the market was offering the asset. Currently, most crypto exchanges are offering spot trading and some others have also added derivatives trading.

If you are a spot trader, your strategy would be to buy a virtual currency at a price and expect to sell it at a higher price in the future. You can do it in just a few hours, days, weeks or even months. If you want to bet on the price of Bitcoin going down, then the best thing you can do is to trade using derivatives.

Derivatives Trading

Derivatives trading is one of the styles of trading we are going to be analysing in this section. Derivatives are contracts signed between parties that would help traders speculate on the fluctuations of the price of an underlying asset such as a cryptocurrency or a commodity, among others.

There are different derivatives such as swaps, forwards and futures contracts. In the cryptocurrency market, futures contracts are expanding fast. Binance, BitMex and Bybit are some of the cryptocurrency exchanges offering investors the possibility to trade cryptocurrency futures contracts.

Futures contracts allow investors to trade an asset at a specific time in the future for a predetermined price. This can also help companies reduce their risk to price fluctuations and improve their financial stability.

While trading futures in the cryptocurrency market, you will be able to go long or short. That means that you are betting on the price of a cryptocurrency moving higher or lower. In addition to it, you can use leverage to increase your exposure to the crypto market and also to these price fluctuations.

In short, the practice of trading futures itself is like gambling. You bet on the price going up or down. If you go short (betting the price of Bitcoin going down), it means the lower the price of the asset goes, the more money you make. If the market goes against your bet, you lose money. If you go long, you profit from the price of an asset moving higher.

Swing Trading

Swing trading is one of the different styles of trading that would allow investors and traders to buy virtual currencies – or any other asset – focusing on short-term profits. In Cryptocurrency, traders take advantage of the sharp ups and downs of the market. Buying low when it crashes and selling high when it pumps.

In order to reduce losses, traders should set tight stop-loss orders. This would reduce the losses and increase the chances of having a profitable trade. Stop-loss orders will allow you to reduce your exposure to a trade. A stop-loss order would close your position if it is moving into the contrary direction you were expecting.

While day traders close their positions in just one or two days, swing traders can wait for longer periods of time. However, swing traders tend to keep their positions opened between days and a few weeks, but not longer.

Holding

Although holding is not strictly trading, this investment strategy for the cryptocurrency market has attracted many users. If you do not consider yourself a good trader or you just do not want to risk your funds, the best thing you can do is to hold an asset for a longer period of time.

Say, you bought 1 Bitcoin in March, 2017 at a price of $900. In 2020, that 1 Bitcoin is now worth $10,000 meaning that you have made a profit of $9100. This is the ultimate buy low, sell high.

If you bought Bitcoin for $20,000 in December 2017, then you would not want to sell it at a loss. A good strategy could be to hold it until its price would be as close as possible to $20,000 or even higher before selling.

Peer-to-Peer Trading Strategy

You can also start profiting from Bitcoin and cryptocurrencies by using secondary or peer-to-peer markets. While in some regions you can buy and sell cryptocurrencies using traditional exchanges such as Binance or Coinbase, other regions have fewer exchanges and possibilities for investors to acquire Bitcoin. This is where peer-to-peer platforms such as Paxful can be of help.

Generally speaking, the Bitcoin price in these peer-to-peer platforms tends to be higher. If you have access to traditional exchanges, you can buy Bitcoin (or other virtual currencies), send them to the Peer-to-Peer platform and make a profit.

OTC Trading

Over-the-counter (OTC) trading could also be a good way to generate income for traders. You can buy or sell Bitcoin using OTC markets. These markets are great for investors that want to trade larger amounts of Bitcoin and cannot do it through an exchange because they will completely eat the liquidity of traditional exchanges. Furthermore, OTC trades can be also helpful to protect your privacy while gaining exposure to digital assets.

You can profit with OTC by buying BTC in a traditional crypto spot exchange and then selling it in OTC markets. You could search for countries where crypto exchanges are not really offering good services but there is still a consistent demand for Bitcoin. These buyers are willing to pay a higher price for your BTC. The funds you receive can then be used to acquire more BTC in traditional exchanges.

Cryptocurrency Exchanges Explained

Cryptocurrency exchanges are platforms that help investors trade (buy/sell) virtual currencies. There are dozens of exchanges all over the world and each of them have different features for traders. These platforms will be very useful if you want to buy cryptocurrencies or trade in this exciting market. 


Coinbase Exchange

Coinbase is one of the largest and most recognized cryptocurrency exchanges in the world. The platform has been operating for several years now and it is one of the best for newcomers that want to get access to virtual currencies. This is due to their user-friendly interface and worldwide availability. 

Coinbase will allow you to transfer money to the platform using a bank account in USD, EUR or GBP. In addition to it, you will be able to use Coinbase as a wallet to store your virtual currency funds. Nonetheless, take into consideration that Coinbase is going to be the custodian of your coins. 

Coinbase has been known to be a user-friendly wallet and basic exchange but now they launched Coinbase Pro which is meant for advanced traders.


Luno Exchange

Luno is one of the largest platforms to buy and sell cryptocurrencies offering services mostly in the African and Asian continents. The platform is offering services to users in countries where other traditional or popular platforms do not operate, this is why Luno became so popular. 

This platform will allow you to deposit fiat or cryptocurrencies. You can use Instant EFT with PayU, which will transfer the funds immediately. If you use a bank transfer, then you will have to wait longer. 

The trading experience is going to be very easy with both the smartphone or the web version. 


Binance Exchange

Binance is one of the best platforms to trade and handle virtual currencies. The exchange became popular after the 2017 bull run in the cryptocurrency market and it is now one of the largest in terms of trading volume. 

The exchange offers users the possibility to get access to a wide range of tokens, trading pairs, services and products. Indeed, the platform is currently among the most advanced and complete in terms of solutions offered to users. 

Binance allows traders to save in virtual currencies, handle stablecoins, request a debit card and participate from Initial Exchange Offerings (IEOs). In addition, the exchange is also offering a futures trading platform for more advanced traders.


Paxful Peer-to-Peer Marketplace

Paxful is a peer-to-peer marketplace rather than a traditional cryptocurrency exchange. This platform will allow you to buy and sell virtual currencies to people all over the world in just a few minutes. 

On the buy page, you can select bank transfer or a wide range of other solutions available in your region. You will then have to select your currency and enter the number of cryptocurrencies you want to buy. Several offers will appear that you can select to confirm the transfer.

You will get the banking information about the seller if you are buying crypto. Once you send the transaction, the seller will confirm he received the funds and the digital assets will be released. Trades can take just a few minutes. 


Altcoin Trader

Altcoin trader is one of the largest exchanges in South Africa. The main feature of this platform is the large number of coins that they are offering to traders. While most exchanges offer Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC), this platform gives access to investors to a wide range of tokens. 

In this platform, you will be able to deposit fiat currencies and start trading virtual currencies. The exchange offers a clear dashboard and a more advanced trading interface. Additionally, you can buy other kinds of assets such as Gold and get it delivered to your home. 


Okex

Okex is one of the most-used crypto exchanges in the world. The platform offers a large number of trading pairs and it tends to be among the exchanges with the largest trading volumes. 

In the last few years, Okex has been expanding and offering new services and solutions in the cryptocurrency space. Nowadays, Okex is the first choice of newcomers that want to get access to the crypto market. 

JustSwap

JustSwap is one of the so-called decentralized exchanges. This platform is based on top of the TRON network and it helps traders exchanging TRC20 tokens. Investors can exchange TRC20 tokens based on a sophisticated system price.

All the fees collected in each of the trades will be collected to liquidity providers of the protocol. This ensures decentralization and the security of the network. 


Uniswap

Uniswap is one of the most advanced exchanges in terms of functionalities. The platform works as a decentralized exchange that handles smart contracts on top of the Ethereum (ETH) blockchain. Users can easily swap ERC20 tokens and Ether (ETH). 

In the last few months, this platform attracted several users due to the expansion of the DeFi market and the possibility to get access to new and unique tokens. 

Derivatives

Derivatives are an important part of the cryptocurrency market. One of the most popular derivatives is futures trading. Investors use futures in order to profit not only with the price of a virtual currency going up, but also with the price of a digital asset falling. Furthermore, futures trading allows traders to use leverage to gain more exposure to the market. 


What Are Derivatives And Futures?

Derivatives are financial products or contracts that derive their price from other assets. As you can see, the word “derivative” comes from the world “derive,” which means that the financial products are simply contracts that are based on a certain asset.

Imagine you and your friends are trading the price of gold in a market. A month later, an outbreak makes it impossible to travel and attend the market. Since you still want to trade the price of gold, your broker tells you that we can make a financial product called Xgold. 

Xgold will be a contract agreement that states that 1 Xgold will be equal to 1 ounce of gold. This will mean that Xgold will be pegged to the price of gold, it goes up and down based on the price of gold. 

Now, instead of having to go to the market and buy and sell the gold physically, you can simply buy the Xgold contract and still be exposed to the price of gold. Should you decide to buy the actual gold in the future, you can simply swap it or convert to cash then buy gold. 

Traditionally, financial assets make you profit when they go up in price. With derivatives, you can also make money when the price goes down. 


Futures Contracts

Futures are just one of the different derivatives currently available in the market. However, trading futures can be defined as gambling at its best. 

Traders of futures markets are not handling the digital currency they have acquired, but instead, they are handling contracts. These contracts can have a quarterly expiration period or they could simply be perpetual contracts that can be bought and sold at any moment in time.

Futures allow traders to long or short the price of the underlying asset, for example, Bitcoin. 


Shorting & Longing

Shorting an asset means a trader is going to be betting against the price of an asset going up. Short positions will be profitable if the price of a cryptocurrency falls. 

For example, if you believe that Bitcoin is going to be moving downwards in the next 24 hours, you can open a short position. If the market moves down, then you will be profiting from it. This is one of the best things about futures markets, traders can profit from both markets moving higher and also lower. 

The same can be done when we open a long position in the market. The main difference is that instead of profiting when the market falls, the trader will receive the profits once the virtual currency they are trading moves higher. 

If you believe Bitcoin is going to be moving higher in the next hours, then you can open a long position. This long position will be opened as long as you desire if the price of Bitcoin moves higher. By opening this long position you will be profiting with the price of Bitcoin moving higher. 


Trading With Leverage

Futures trading allows users to trade with leverage. Basically, you are going to be borrowing funds in order to increase your exposure to a specific trade. When you open a leveraged position, you will need collateral to keep the position open. 

For example, if you have 100 USDT, you can trade with 10,000 USDT (100x leverage), which will make it much more profitable if you properly understand where the market is moving (if higher or lower). If you use a 50x leverage, then you will have 5,000 USDT to trade with your collateral being only 100 USDT. 

Exchanges such as Binance allow you to trade with a wide range of assets and digital currencies. You can improve your trading skills and profits by using different virtual currencies according to your needs. 

Leverage trading can be very risky considering that the crypto market is very volatile. This is why it is important to use stop-loss orders to reduce your risk of being liquidated. 

If you are using 100x leverage, then you can be liquidated in just seconds. If Bitcoin’s price moves only $1 (in this example), then your position will be closed and you will lose all your funds. 

The lower the leverage, the lower will be your chances of avoiding liquidation. As we mentioned before, the best thing to do would be to have a tight stop-loss order to protect your funds and avoid being liquidated. 


Limit Orders

Limit orders are one of the most used orders in the cryptocurrency market. You can define the price at which you want to buy or sell Bitcoin or any other virtual currency. Let’s say you want to open a long position in Bitcoin only if the price hits $10,000. If the market falls to $10,000, then your limit order will be filed and you will have the Bitcoin contract you wanted to buy. The contrary will happen if you short the market. You can select the amount of BTC you want to short and you can select the price at which you want the order to be executed. 


Market Orders

Market orders will allow traders to buy or sell a contract immediately and at the best price available in the market. No matter if you go long or short, the order will get filled immediately at the market price at that moment. You will not have to wait before it gets executed like the limit order. 


Stop Limit And Stop Market Order

Stop limit orders are a mixture of a trigger condition and a limit order. This feature is for risk management. Traders will be combining a stop and a limit order. 

Let’s say that you have an open long position in the market. If you want to reduce your risk and manage it better, you can select a price at which your position will get automatically closed. This would reduce your losses and help you maximize your earnings. 

If we were longing Bitcoin at $10k, then we can open a stop-limit order at $9,500. If the price falls to $9,500, then your position will get closed and you will not continue losing money. The contrary will happen in a short position. If we shorted at $10k, we can set up a stop-limit order at $10,500 to reduce our risk if the market moves in the contrary direction. 

The difference between the stop-limit order and the stop market order is related to the price at which the order you opened will get executed. 

While the stop-limit order will get executed at a specific price you decide, the stop market order will be executed at the best available price once the price trigger you selected is reached. The best available price makes reference to the price at which the asset is being traded at the time of executing the order. Order books in large exchanges have large liquidity and tight spreads.

That means that market orders are going to be more accurate than in exchanges and platforms with lower liquidity. If you want to sell 1 BTC in a market with enough liquidity, then the BTC you sell will be valued at the best available buying offer waiting in the order book. The same will happen if you want to buy 1 BTC; you will pay the lowest price offered by a Bitcoin seller in the order book. 


Trailing Stop Loss

Trailing stop loss is a great tool for traders that do not want to lose momentum in the cryptocurrency market. Traders will be able to select a percentage of loss once a certain price is reached. 

The trailing starts making effect once a specific price set by the trader is reached. If we are long and the market continues moving higher, the trailing stop loss will rise in our favor and the stop price will also be updated. Once the price reverses, then the stop will remain open and it will get executed if the market reaches that price.

 
How To Find Easy Shorts?

Traders want to search for opportunities in the market. This is why we have created a course at Crypto University for that. One of the best ways to find short opportunities in the market is by looking at the coins that have been very bullish in the last few hours or days. 

You can go to CoinMarketCap, check the coins that have grown the most and search for them on your futures trading platform. It can be Binance or any other exchange that offers crypto derivatives. Binance itself is also showing the top gainers and losers in the last 1 hour and also in the last 24 hours. 

 

Must Know Terms in DeFi: DeFi Vocabulary Toolkit

DeFi is leading the cryptocurrency market this year, and is one of the main reasons for the bullish sentiment of Ethereum. How do you understand all the words being thrown around in the space? Well, we have got you covered with a comprehensive list of DeFi terms.

 

API: Application Program Interface. An intermediary device/software between two or more software that helps them interact with each other.


APY: This refers to the Annual Percentage Yield, which is the actual return on an investment after one year whilst taking into account the effect of compounding interest.

 

APR: Annual Percentage Rate. This is the effective flat yearly rate that is charged to borrowers and paid to investors; this unlike APY does not take into account the effect of a compounding interest rate. 

 

Arbitrage: Profiting by trading an asset between different markets and thus reducing the risk. This is because the price may be different in different markets, for example purchasing crypto in a low regulation region and selling it to ma market with high regulations.

 

ATH: All Time High. The highest price ever reached by an asset.

 

ATL: All Time Low. Refers to the lowest price an asset has ever reached.


Atomic Swap: This is an activity in the crypto space which allows users to exchange an asset directly into other assets. Without the use of a centralized exchange such as Binance, an example of this is UniSwap.

 

Bag Holder: Informal term to describe someone holding a crypto asset for a long period of time.

 

Block: A digital file that can be penetrated/ manipulated that stores information regarding any and all activity on the network it represents.

 

Block Height: Numerical representation explaining the current number of the block being hashed. 

 

Block Reward: The reward given to miners/ nodes for being part of the block being hashed.

 

Confirmation: Validation of a transaction. 

 

Curve: An exchange liquidity pool on Ethereum designed for stablecoin trading. It is designed to be low risk and a supplemental income exchange for users. To follow future developments and learn more about Curve we suggest following their Twitter and joining their Telegram group. If you want to get a more in-depth look into how Curve works, please check out their Github.

Centralized: This is when something is controlled by one single entity/person; such as the Binance exchange; its ownership and control can be tracked to one single entity or owner.

 


CeFi: Centralized finance. This is when people earn interest on their crypto holdings by lending/ borrowing through a centralized institution; with examples being Binance, Coinbase and Crypto.com. Read more

 

ChainLink: A cryptocurrency that helps to solve the link between smart contracts and physical objects that are outside of the blockchain sphere. It is therefore, called an oracle network, meaning it is a linkage between the two spheres through smart contracts. Read more


DAPP: A decentralized application.

 

Decentralized: Not owned by a single entity. Ownership is spread out to whoever wants to be a part of it. 

 

DeFi: Decentralized Finance. This is finance in the cryptocurrency world; it is not controlled by a single entity nor is it owned by a single entity; but handled by smart contracts.

 

ERC-20: The most common token protocol for use on the Ethereum blockchain, which is abbreviation “Ethereum Request For Comments-20”. 

 

ERC-233- An updated version of the ERC-20 protocol.

 

FOMO: Fear Of Missing Out. When people psychologically feel that they are missing out on something that everyone is benefiting from such as not having a position in a bull market.

 

Fork: A network split, this usually happens when there is a necessary network update for a token.

 

FUD: Fear Uncertainty Doubt. An abbreviation to explain when the market sentiment for a particular asset is negative.

 

Hash: A fixed length string representing input data. 

 

Hash Rate: The unique measurement of a network’s processing power.

 

Liquidity: This refers to the ability of an asset to be reverted to cash or an equivalent. For an exchange to function, they would need liquidity to cover the buying and selling of their assets.

 

Liquidity mining: This is similar to yield farming, however, you get your rewards for providing liquidity in a certain asset by getting another asset in return. An example of this is  receiving a Sushi Token for providing liquidity to SushiSwap. Read more

 

Liquidity pool: This is where a predetermined set of parameters are matched with traders’ buy/sell orders with the use of smart contracts. This means it eliminates the need for the order book where there is a need for a taker for each sell order and vice versa. Read more

 

LP Token: Can be compared to owning shares in an index fund, in that they are collective aggregate of a certain liquidity pool of tokens. They can also be used as a gauge or proof of liquidity.

 

Smart Contract/ Self Executing Contract: Algorithms that facilitate and enforce obligations of a certain software/service without any outside intervention from a Human for example.

 

Token Protocol/ Token: A programming framework that merges the digital and physical realms of value, for example creating a digital equivalent of a piece of art so that it easily manageable in the digital world.

 

Uniswap: A collective set of programs that run on the Ethereum network that allow for decentralized token swaps. When you conduct a token swap on Uniswap, you don’t have to trust anyone with your money. You can also lend money to these liquidity pools and earn money for providing them money. To summarise, it is an automated liquidity protocol that is open source.

 

White Paper: The Crypto world equivalent of a business plan/model. Its aim is to inform the public of a project’s specifications and goals.

 

SushiSwap: This is a fork of Uniswap. It adds to the functionality of the SUSHItoken, which allows users to control a certain percentage of the program running and pays some fees to users.

 

Stablecoin: These are cryptocurrencies that attempt to offer price stability and are backed by a reserve asset. Their main aim is to minimize volatility.

 

Yield Farming: This is where depositors of crypto tokens earn money by providing assets to a decentralized institution such as Compound.

 

Part 1   |  

How to Use the Volume Indicator

The volume indicator shows you how an underlying asset is being traded. This indicator will be shown below the chart with green or red bars indicating the volume for a specific candle of the asset you are trading. 

In the image below, you can see the volume indicator displayed in the chart. 

Red bars mean traders are selling and green bars show buying momentum. The higher the bar, the larger the volume. You can also use the volume indicator to understand the strength of a price movement. 

If the price of Bitcoin moves higher massively (several percentage points) with low volume or just a small increase in volume, it could show this is a weak bullish trend and it could eventually reverse. 

Breakouts and False Breakouts Trading Strategy

Some traders tend to trade what we call breakouts. This is why it is certainly important to understand what breakouts are and how to spot them in the market. Breakouts make reference to price movements above or below key support and resistance levels. 

The first thing you need to do is recognize resistance and support levels. If you are trading in the market, then you should also be able to recognize fake breakouts. A fake breakout will take place when the price of an asset moves above a resistance level or below a support level but the price retraces immediately after. 

If you are trading breakouts, then you should always use other indicators that would confirm the breakout. You can select a percentage point above a resistance level or below a support level to set up your entry order. 

For example,  if you found a resistance level, you can create a limit order to enter the market at 1% above that resistance level. This would give you space to avoid fake breakouts and also the possibility to enter the market if a breakout is confirmed. 

MACD Indicator

This is also one of the most used indicators in the cryptocurrency market. The MACD should be understood as the Moving Average Convergence Divergence. This shows momentum indicator and it follows the evolution of different Moving Averages. 

The MACD indicator will have two main lines: the MACD and the MACD Signal. These two lines work together. The MACD Signal is a smoothed version of the MACD. You will also see a histogram as well that helps the trader understand the distance between the MACD and the MACD Signal. 

Traders should pay close attention to the crosses between the MACD and the MACD Signal lines. When they cross, they will be indicating a change in the markets. However, the MACD is not good when the market is going sideways. 

Sideways trading means the market is not moving in a clear direction. That means that the price of an asset is not falling or growing. It remains traded between two clear price levels without allowing traders to open long or short positions. Let’s suppose Bitcoin has been traded between $10,000 and $10,300 for three months. Then we could assume Bitcoin has been trading sideways for several months. 

With this indicator, you will be able to find changes in the trend of the price of a cryptocurrency. Thus, it can be very useful if the market experiences higher volatility rather than trading sideways for several days, weeks or months. 

 

Part 2   |  

Understanding Trading View

Trading View is one of the best platforms for traders to trade digital assets, stocks, currencies and also to perform technical analysis. This is an easy-to-use and intuitive platform that can be used by novice traders and experts to understand the markets, share your views and understand the trading ideas published by other users. 

The platform will be providing real-time data from thousands of stocks, cryptocurrencies, currencies and commodities. Everything can be used on the official site of Trading View without any installation or even registration. 

In addition to it, Trading View is also going to be adding technical tools to the charts. For example, you can start using the Fibonacci retracement, the MACD, the RSI and many other indicators. 

Relative Strength Index (RSI)

The RSI (Relative Strength Index) is an analytical tool used in technical analysis that can be very helpful to understand momentum in the market. This tool can be added to any technical chart at the bottom of the graphic and it will provide valuable information about the asset you are trading. 

There are two key levels for the RSI, the 70% and 30%. When the RSI is above 70%, then the market is in an overbought condition. If it falls below 30%, then the asset you are trading would be in an oversold condition. 

For example, if you are trading Bitcoin, you can make profits with an RSI strategy. You can buy the asset when the RSI hits the 30% level (and the price of Bitcoin is moving higher). This will be your entry point. You will try to exit the market once the RSI hits 70%. This is going to be the exit point. 

Mastering this strategy could be very profitable in the long term after having several profitable trades.

Fibonacci Retracement

The Fibonacci retracement tool is one of the most useful tools to trade digital currencies. The Fibonacci retracement tool was created based on the Fibonacci sequence, which will unveil the golden ratio. 

The Fibonacci retracement tool can help you find support and resistance levels. This can be very useful for traders to find entry and exit points in the market. The most useful Fibonacci retracement levels include the 23.6%, the 38.2%, the 50%, the 61.8% and the 78.6%. The most used Fibonacci levels include the 38.2%, the 50% and the 61.8%. 

Let’s go to a basic example. If you are trading Bitcoin, you will have to find a time-frame in which Bitcoin made a local bottom and a local top. Once you find the local bottom, then you need to place your mouse on the lowest part of the chart, click, and click once again on the highest part of the chart.

This will show you the levels we have mentioned before. The price of Bitcoin could certainly retrace to 38.2% at a certain point in time. 

If you consider that this is a bull market, then entering at the 38.2% could be a good move. Entering at 50% retracement would be a much stronger confirmation the market is expected to bounce at these levels. The 61.8% level would give heavy confirmation about a possible retracement level. 

 

Part 3   |  

How to trade the “Head and Shoulders” Pattern?

The Head and Shoulders (H&S) pattern is one of the most popular patterns, not only in the cryptocurrency market, but also in stocks and other financial markets. 

The H&S pattern consists of three different parts: a left shoulder, a head and a right shoulder. They also include a neckline that works as support and resistance levels. Shoulders refer to price movements. The left shoulder indicates a price increase/decrease that will test the neckline and will give place to the creation of the “head” of this pattern. The head refers to a higher high (or lower low) that will be the top (or bottom) of the pattern. Finally, there will be another shoulder that will give place to a breakout (in the case of an inverse head and shoulders) or a sell-off as you can see in the image below. 

You can see an example of a head and shoulders pattern in the following image:

If you see an H&S pattern you have higher possibilities of a breakout or a sell-off but we cannot be 100% sure this will happen. Analyzing patterns is not an exact science. Thus, take this into consideration while trading. 

Finding a Buying Opportunity in the Market

Finding a buying opportunity is not an easy thing to do. However, it is possible for day-traders to make money with price fluctuations in the cryptocurrency space. 

One of the best things you can do to find a buying opportunity in crypto is to follow crypto trading signals such as the Nitros Bull indicator. These signals are provided by analysts and trading experts for investors that want to make profits trading digital assets. This could be a good way for newcomers and expert traders to have information about the best moments to enter and exit the market. 

Another way to find a buying opportunity is to use the Fibonacci retracement tool. We can use this tool in different time-frames. As we explained in our previous guide, the Fibonacci retracement tool will give us valuable information about support and resistance levels. 

Suppose you are now trading the 2019 bear market that started at the end of June 2019, you will see that BTC/USD is making new lower lows and lower highs. Thus, this confirms the price of the digital currency could continue falling. 

This is the situation during the second half of 2019 for the BTC/USDT trading pair. 

We can easily draw a Fibonacci retracement graphic on top of the Bitcoin price between the low in December 2018 and the high in June 2019. This will provide you with clear information about the possible levels at which BTC could retrace to from its highest point. 

Some analysts believe it could be a good strategy to consider the range between the 0.618 and the 0.786. retracement levels a buying region. Although it is not possible to have information about when the market will reach these levels, we can have clear data about where to enter the market. 

Remember to use other indicators to always confirm the entry point so you can be sure about the direction in which the market is going. 

 

Part 4   |  

Drawing Trendlines

Trendlines are lines that investors use in order to understand where the market is moving. These are very simple lines that would provide valuable information about the trend in which the market is currently moving, whether it is going upwards or downwards. 

Using trendlines is very easy. You can start drawing trendlines using Trading View in just a few seconds with the “Trend Line” tool that will be available in the left menu. A good strategy to start drawing trendlines is by searching a trend and placing one line that will support the price and another line that will be working as a resistance for the price of the asset. 

In the image below you can see an example of trendlines:

The two blue lines you see are going to be working as trendlines. As you can see in this example, these trendlines are showing an upward channel. These trendlines are showing support and resistance levels you can use to trade. Combining trendlines with other indicators could be a great way to get valuable information about the market. This can be very helpful for you to open or exit trades. 

As you can see in the example above, we use trendlines and also volume information. If you see that the trendline is broken and there is a spike in the volume (no matter which direction), then we could be experiencing a breakout (bullish) or a sell-off (bearish).

Ichimoku Cloud

The Ichimoku Cloud is a technical analysis indicator that helps traders and investors identify the strength of a trend and momentum in the market. This tool can be very useful for users that follow breakout strategies. The Ichimoku Cloud is also helpful for traders to identify support and resistance levels. 

When you will be using Trading View, you can set up the Ichimoku Cloud to trade. The red line in the bottom will be indicating support levels. When Bitcoin or a digital asset breaks support, then the market is showing a bearish signal. Furthermore, you will see that the “cloud” in the middle will have a red or green colour. Red colors indicate we are in a bear market and green colors show we are in a bull market. Thus, the Ichimoku Cloud will help us understand whether we are in a bull or bear trend. For example, if we are in a bear trend, the cloud will be above the price of the cryptocurrency and it will work as resistance. If we are in a bull trend, the cloud will be green and it will show a support region. 

The Ichimoku Cloud has two more lines that is similar to Moving Averages. When the blue line goes above the red line, then this could be a signal that the market is changing its trend (if we were in a bear market). Instead, if the blue line falls below the red line, then it could signal that a bearish period is coming. 

 

Best Exchanges to buy or sell Cryptocurrencies with Cash

Coinbase: https://www.coinbase.com/join/580beab974462c332874e6f0 (US, Canada,  Europe, North America)

Luno: https://bit.ly/3b7vLQg  (UK, South Africa, Nigeria, Zambia)

Binance: https://www.binance.com/?ref=16626703 (Worldwide)

Paxful: https://paxful.com/?r=zGMkybbRwQW (Worldwide)

Valr: https://www.valr.com/invite/VAURZWMT (South Africa)

 

 

Buy Crypto With Credit Card

Crypto: http://platinum.crypto.com/r/hardcorecrypto

Bitcoin.com: https://local.bitcoin.com/r/ninja265 (Worldwide)

Binance: https://www.binance.com/?ref=16626703

 

Best Professional Trading Platforms For Derivatives; futures, margin etc)

Kumex: https://www.kumex.com?rcode=2N2Qece (USA residents)

Binance: https://www.binance.com/?ref=16626703 (Worldwide)

Huobi: https://www.huobi.io/en-us/topic/invited/?invite_code=hpm35 (Worldwide)

Bitmex:https://www.bitmex.com/register/u09AVc (Worldwide except for the USA)

 

Buy or sell cryptocurrencies using your local payment methods. Peer-to-peer exchanges:

Paxful: https://paxful.com/?r=zGMkybbRwQW

Bitcoin local:  https://local.bitcoin.com/r/ninja265

 

Buy or Sell Bitcoin with Gift Cards

Bitcoin local:  https://local.bitcoin.com/r/ninja265

Paxful: https://paxful.com/?r=zGMkybbRwQW

 

Recommended Wallets (Make Sure To Back Up)

 

Bitcoin.com wallet: https://bit.ly/3bXcEcf

Blockchain wallet: https://bit.ly/2LU7H9e

 

Hardware Wallet

Ledger Nano X: https://www.ledgerwallet.com/r/c1ec

Here’s a video showing you how to set it up: https://youtu.be/bjvFCydBj4g

 

 

How to Earn Cryptocurrency

 

Go to https://www.cryptouniversity.co.za/earn/

A Beginner’s Guide To Bitcoin

This guide will help you get started with Bitcoin and other cryptocurrencies. I will go straight to the point. No BS. Let me make a few things clear:

  • Bitcoin is not an earning program
  • Anyone who claims to trade for you is a scammer. There is no such thing as an “Account manager” in cryptocurrency. They are scammers
  • Bitcoin mining is not for you if you are not a millionaire. All the online mining websites are scams or pyramid schemes
  • Cryptocurrency is not a get-rich-quick scheme. If you are looking for shortcuts, you surely will get scammed
  • If you want to be successful in Crypto, invest in yourself by educating yourself first, before you invest in any coin 
  • Anyone who promises you easy money is lying to you

What Is Bitcoin?

Bitcoin is simply a digital currency. Also referred to as a cryptocurrency, bitcoin is the first of its kind. It is digital because it is not tangible, you can’t touch it. Normal currency is like notes, coins, and gold that you can touch and see. You cannot touch bitcoin.  

Fiat currency is married to a state. A certain country can claim to own a certain currency. USD is for the USA, GBP is for the UK, Rand for South Africa, and so on. No state can lay a claim on bitcoin. It is used as a world currency. 

Who Created Bitcoin?

This is a question that is still a mystery in the minds of many people. It is not known exactly who created the technology.
However, it is assumed that a person or group of people that go by the pseudonym Satoshi Nakamoto is responsible for the currency. Today, his own bitcoins are still untouched as he has remained anonymous.

The aim behind the creation of bitcoin was something totally different. Satoshi wanted to find a way to bring peer-to-peer network functionality into transactions. That goal became what is now the most impressive technology.

Bitcoin first came into the market in 2008 when Satoshi anonymously published a paper announcing his break-through. But that was not the first time such an attempt had been made. In the late 90s, many scientists had tried to find a way into a decentralized system to bring blockchain technology into financial functionality without success. When the paper was published, therefore, it was a breakthrough of the century. 

What Makes Bitcoin So Special?

Bitcoin is money for the people. Bitcoin cannot be printed out of thin air like the normal currencies. With Bitcoin, you become your own bank. Nobody has the power to freeze or confiscate your Bitcoin. Bitcoin does not see borders, it’s accepted everywhere. But that is not all. It has other special features that make it worthwhile.

How Do You Get Rich Off Bitcoin?

This is what attracts a lot of people into Bitcoin, I know you’ve heard of people making lots of money through Bitcoin and now whenever you hear “Bitcoin or Cryptocurrency”, you think about getting rich overnight. The truth is, almost 99% of people who got rich off Bitcoin were early investors in the coin. They bought it when it was low and over time, the price of BTC has gone up tremendously. In 2012, the price of 1 Bitcoin was $22 and as of this writing in 2020, 1 Bitcoin is traded at $9200. Meaning that if you had bought 10 Bitcoins which would have cost you $220, you would sell them for $92000 today.

In the investment world, that kind of ROI is unimaginable and Bitcoin has been the best performing asset for the last 10 years. This narrative attracts a lot of people into the world of cryptocurrencies looking for the same gain except they want to “get rich quick” which is impossible and unreasonable. Cryptocurrency still offers a great opportunity for everyone around the world and it’s best days are yet to come, what’s more important is to take action and get started.

Strategies For Really Getting Rich With Crypto

Here is a list of what works:

  1. Buy and Hold – This means that you buy Bitcoin, store it safely in your wallet and wait for its dollar value to grow over time. This is proven to be the best, hassle-free and safest way to make money from cryptocurrencies. I have a step by step guide to becoming a successful cryptocurrency investor. You can enroll here.
  2. Trade Cryptocurrency – This is by far the most profitable but most risky. Cryptocurrencies are volatile in nature when compared to other asset classes. This makes them very attractive for trading. This strategy requires expertise which I teach in my course on Crypto University
  3. Earn Cryptocurrency – Bitcoin is money just like any other currency out there. For example; if you want to earn US Dollars, you either have to work for a company that pays you in Bitcoin or if you have a business, you can start accepting Bitcoin as a form of payment. But also, you can participate in bounties, competitions or micro tasks and earn crypto without having to buy them. One of the platforms that allows you to participate in microtasks is Coinbase Earn. Make sure you sign up and get verified.
  4. Bitcoin Mining – This is the most expensive way to do it. Don’t bother if you’re not a millionaire except if you are doing it for experimental purposes. Mining is expensive, it is not something you do online, it requires computer hardware, electricity and an internet connection. Ignore any website that promises to mine for you. They are usually pyramid schemes.

What’s The Minimum Amount Required To Get Started

There’s no set minimum amount for investing in Cryptocurrency, you can buy Bitcoin for as little as $5. The golden rule is that; don’t invest more than you are willing to lose.