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*THE CONTENTS HEREINE ARE FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSIDERED FINANCIAL INVESTMENT ADVICE. THE INFORMATION PRESENTED IS BASED ON THE EXPERIENCE OF THE AUTHOR AND BASED ON PAST PERFORMANCE. THIS DOES NOT GURANTEE FUTURE RESULTS. THE TEXT IS A COMPILATION OF TWEETS PREVIOUSLY PUBLISHED ON TWITTER. COPYRIGHT LIES SOLELY WITH THE AUTHOR.
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TRADING MANUAL
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INTRODUCTION.
This is a sincere attempt to share the little knowledge of trading that I have. I have tried to explain everything that I've learned in the simplest and complete form. I hope you like the work and use it to its full advantage. I will forever be here to help you when needed. Love, EmperorBTC.
BEFORE YOU START.
I have been trading for about a decade. I have been liquidated, profitable, bankrupt several times. Here are the RULES that you MUST follow to survive in the market long term. Learn from history or perish. Here are my best trading lessons.
1. HOW MUCH TO INVEST. Don't invest at the cost of ruining your life. Your investment should always be an almost insignificant amount. If you lose it, it should hurt a bit but not ruin your life. Don't go all in. EVER. Don't invest more than you can afford to lose. 2. TRADE SPOT. THEN FUTURES. Practice a lot BEFORE trading. Watch live charts, draw your levels, then paper trade. After you're comfortable with this, trade spot for some time and ONLY THEN move to leverage/futures. Using leverage without spot experience is a crime. 3. TWO SAVIOURS. You cannot and will not survive in the long term without following the two tools of capital preservation. i. Stop Loss. ii. Risk Management. Both these tools are FAR more complicated than they sound. Read, understand and ONLY then trade. 4. DON'T BE A HERO TO FIGHT THE TREND. Don't try making quick trades by fighting the trend. Use the weekly time frame and the 50 day moving average to find the trend and trade only in the direction of the market. 5. NO GOOD ASSETS. There are no good and bad assets. Don't get attached to a coin or a stock. Your aim is to make profits, to buy low and sell high.
Keep your logics, attachments and emotions away and TRADE THE CHART. Eg. Cardano is shit but I made good money there.
6. EXIT AT THE FIRST SIGHT OF BEARISHNESS. Don't pray for a trade to go right. Don't hope. Your aim is to leave the market ASAP. Once the trade goes the opposite direction, don't give control to the market and keep hoping. EXIT. Start afresh. Cut your losses. Keep them small.. 7. PLAN. Don't trade if you don't have a planned entry, exit and invalidation point. Listening to opinions of others will always get you rekt. Don't even listen to me. YOU have to plan your entry, position size and invalidation points. 8. IT'S SIMPLE YET MOST DIFFICULT. Trading is easy, you don't need complicated tools and 5 monitors. My mentor still trades with S/R lines & volume, on his laptop. The catch is, you need a plan.
- Manage position size.
- Pre-determined entries.
- Exit on invalidation.
- Cut losses. 9. TRADE MORE. When learning, trade a lot. A LOT. Trade with the trend, as many times a possible. Your methods need real market testing. Trade more, let the market give you feedback, as much as possible. The only way to get better at free-throws is to keep practicing. 10. LEARN. LEARN. LEARN. Trading is the most rewarding profession, ever. You can't expect it to be easy. Journalise all trade. Take notes and keep learning. I have made tutorials for all topics here. It works. It's free.
INTRODUCTION TO TECHNICAL ANALYSIS
TRADING BITCOIN MASTERCLASS
PART 1
INTRODUCTION
In the next few days, we are going to learn to trade Bitcoin for profits. I will keep in mind to
- Keep it as short as possible.
- Making it completely comprehensible for extreme beginners. TERMINOLOGY Before you learn to trade, we MUST know the true meaning of a few terms. I have written down the most important terms and tried to explain them in the simplest manner possible. If you're a new trader, please go through them. People who already trade can refresh their understanding. WHERE CAN I SEE THE CHARTS? There are several websites, I use tradingview.com Simple, easy and offers everything most people need. You don’t need a paid version. The basic free version is enough. 1 Bitcoin = 100 Million satoshis 1 Million Bits Exchange - In terms of Crypto, a marketplace which allows buying and selling of Bitcoin or other coins. Eg.Bybit,Bitmex. FOMO - Fear Of Missing Out a trade. All beginners do it; they enter a trade without enough research in the fear of missing out profits. Total supply - The amount limit of coins that will ever exist. Supply limit of Bitcoin is 21 million. Bull is someone expecting the price to go higher, and bear is the opposite
Bull market - A market where the prices are seeing a continuous uptrend, leading to new highs being created. Generally, happens when new investors enter the market. Bear market - A period where the prices are seeing a long term down trend leading to a sell off. See the chart below Note- A Bull market can have many bearish cycles and vise versa as shown below. Market Cap : The market capitalisation of an Asset calculated by current supply of coins multiplied by CMP of one coin.
ROE : Return-on-Equity. This is calculated by the actual capital employed in a trade and not through leverage. OHLC : Open, high, low and close Altcoin - All coins except Bitcoin. Bull trap - A technique used by market makers to buy a huge amount suddenly, spiking the price. This makes everyone else that this is a Breakout and everyone buys. They market makers then sell enormous amounts, pushing the prices down, in turn liquidation everyone else that had bought, producing a cascading effect of liquidations. Bear trap is just the opposite of the above for making the prices go higher in the end. Ask/Bid : Sell orders are asks and Buy orders are Bids. Spread - The difference between what the sellers are ready to sell at and what the buyers are ready to buy at. There always exists a small spread on all exchange, the Higher the liquidity, the lower the spread. E.g. In the below situation, the spread is 10 dollars. See pic Below of an order book explaining the above terms.
Support and resistance - A support is a zone/line where we can expect the price to bounce back up. Resistance is a line/zone where we can expect the price to rebound downwards. We will study this in the next lessons Walls : Extremely large orders at a range. Demand Zone - A zone with huge buy orders. This is determined through the heat map. Supply Zone - A zone with huge sell orders. This is determined through the heat map. Stop-Loss: Order that is triggered when the price goes below this point. Used to cut losses. Support/Resistance: Liquidity - The measure of how actively the coin is being traded in the market. A high liquidity coin/exchange has many buyers and sellers at the same time, making it easier to acquire or sell the coin at any time. Uptrend - A price is said to be in an uptrend when it's making higher highs and higher lows. It can be confined in a channel. Channel, uptrend and Higher High and Higher lows are shown in the chart below. The Chart below showcases an Uptrend, an Uptrend channel and Higher highs and Higher lows Downtrend --Opposite of uptrend, the prices here make lower highs and lower lows. Consolidation - A period where the price is ranging in a well-defined region. This is a period of indecision and generally leads to a volatile movement in either directions. Correction - A correction is a fall in price after making a new peak or an upwards rally. Many authors define the correction as 10% drop from all time high but its arbitrary.
PREMISE OF TECHNICAL ANALYSIS
Now that we've completely understood a few important trading jargons, let's begin with Technical Analysis. Technical Analysis is the use of charting techniques to predict future price movement.
- It uses previous human reactions to a similar situation to predict future price movements.
- Only price movement it taken into consideration while using technical analysis. All other information (like news, earnings) is not taken into consideration. It might come as a surprise to all new traders that news is disregarded while studying charts. Murphy in his Book on technical analysis explains in detail why it is so. To keep it short, the price discounts everything. Market price of an asset already has taken into consideration all the fundamental news. News, information and other analysis available in the public already have affected the price and hence the price is an amalgamation of all the fundamental information. Technical Analysis is the study of price; hence by studying price, ALL the fundamentals have already been taking into consideration. Hence, we can conclude that all the fundamentals affect the price. Since the technical analysis is the study of price movement it automatically takes all the fundamentals into consideration
CANDLESTICKS
Technical analysis starts and ends with Candlesticks. A clear understanding of candlestick is a must to trade. While the subject of Candlesticks is really vast, there are only a few basics you need to understand. The candlestick is used instead of a line chart because a simple line chart doesn't tell the movement at a given period of time whereas a candlestick tells you the high, low, open and close at a given time period. There are 100s of kinds of Candlestick and it’s an unending study but to start with I want to explain two important candles, hammer the Engulfing. Hammer- In simple terms, it’s a bottom reversal candle with a short body and long wick. This can be spotted at potential bottoms.
Adding the above two we can conclude that a candle with a short body and with both a long upper wick and a long lower wick is a candle denoting indecision and confusion in the market. It might denote a reversal or could act as a warning for an end of a trend In this tutorial we will learn to identify the supply and demands zone on the chart for entering high probability trade before learning anything else this the topic to master after reading this tutorial please open a live chart and try to identify the supplies and demand zones USING CANDLESTICKS TO FIND DEMAND AND SUPPLY Apart from using candlesticks to identify price momentum in a certain time period, candlesticks can be used to identify the demand and supplies ZONES (demand and supply zone is different from support and resistance) Using candlesticks to find the demand and supply zone is a high probability method to find a profitable entry since in the demand and supply zone there can be multiple entry triggers. The aim after identifying demand and supply zones is to enter at a point which has multiple entry triggers at one point. FINDING SUPPLY AND DEMAND PRESSURE USING CANDLESTICKS. Candlesticks can be used to find supply and demand pressure, especially in intra-day trading. I hope this changes how you view and use candlesticks on a daily basis Candlesticks with a long tail wick, about 2-3 times their body have overcome a big supply zone. This means that below that candle existed a huge supply order which was absorbed. This is generally bullish, means the demand in that zone was able to overcome the supply.
At this zone, traders could look for a safe long entry.
- Look for candles with a long tail.
- It should have bounced off of a previous resistance now turned support. (WE WILL LEARN MORE ABOUT SUPPORT AND RESISTANCE IN THE NEXT LESSON, FOR NOW ONLY CONCENTRATE ON DEMAND AND SUPPLY ZONE)
- Wait for the price to break a resistance above. The same principle is applicable with candles with a long overhead wick. This implies that the candle was not able to absorb all the supply above itself, which is generally bearish. We should look for signs of reversal at this level
How to find a short entry after a supply zone:
- Long overhead wick candles generally denote supply.
- Wait for them to close at same level.
- Find new support.
- Wait for it to break.
- Wait for support to turn into resistance.
- Enter short trade upon confirmation.
So, in this tutorial we have learned the concept of supply and demand and how to identify on chart. To reiterate, the use of supply and demand once mastered is the MOST useful tool to find high probability trade entry. Most beginners learn it very late hence are unable to identify high probability entry zones. It must be noted that supply and demand zone is not a tool for entering a trade but a tool for identifying the zones and areas of interest for high probability high profit trade. Instead of spending too much time to identify the kind of candle stick that has been printed on a chart, we should rather concentrate on what the candle is trying to say about the demand and candle structure. As a trader our soul aim is to identify the trend (whether the demand and supply is more and enter it) Please read this tutorial several times and try to identify the zones on your own on historical charts.DO NOT WORRY ABOUT FINDING THE ENTERY POINTS RIGHT NOW. Only try to identify the zones finding entries will be taught in the next lessons. I hope this tutorial was useful. This is the first trading lesson, don’t worry or give up if you didn’t understand a few concepts. Always here to help. Love, EmperorBTC
