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Crypto Markets Tutorial 2020

Cryptocurrencies are virtual (or digital) currencies that can be traded seamlessly across national borders and use cryptography as the basis for transactional security.  Cryptocurrencies also utilize decentralized technology systems that operate via blockchain networks, which are distributed financial ledgers verified by a broad network of disparate computer systems.

Perhaps the single most self-defining feature of the cryptocurrency environment is the organic nature by which it grows.  Cryptocurrencies do not have inherent value: They do not produce earnings (in ways similar to publicly traded companies) or generate a Gross Domestic Product (in ways similar to the nations associated with fiat currencies).  Cryptocurrencies are not issued by centralized banking authorities and they trade based on nothing more than the supply/demand dynamics visible in the market.  As a result, cryptocurrencies operate as a purely financial instrument that is fully capable of changing the world economy in its current form.

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Pivot Point Trading Tutorial

Strategies

The first question is what is a pivot? A pivot point is a technical analysis indicator, or calculations, used to determine the overall trend of the market over multiple time frames. The pivot point itself is simply the average of the high, low and closing prices from previous trading sessions. Once a pivot point has…

guide social trading 3

MACD divergence trading strategy

Strategies

Beginner traders often make the mistake in thinking that the more indicators they have the better their results will be, but this is not the case. Using too many indicators, or not knowing which indicators to use in combination with each other, can cause sensory overload, confusion and generate false signals. This guide will hopefully…

TD Line Breakout Strategy

Strategies

The difficulty in determining a pivot point in sentiment was accomplished by DeMark in creating an objective way to measure breakouts and breakdowns. DeMark created objective trend lines which can be used to create breakouts which will help determine if demand or supply is advancing. The proper construction of trend lines is the basis for…

Aktienanalyse

Connors RSI Trading Tutorial

Strategies

As a result, the Connors RSI can be a valuable tool which can be used to construct intra-day strategies with a high probability of success. Trading signals are generated based on indicator readings that fall between the values of 0 and 100. In general terms, indicator readings below 5 suggest asset prices are oversold (a…

guide forex 2

Momentum ‌Trading‌ ‌Tutorial‌

Strategies

First, traders must understand what the word “momentum” actually means in practical terms. For these purposes, a straightforward definition of the concept can be interpreted as follows: Momentum = Underlying Trend Strength Let’s consider the market price activity that’s visible in three different examples: In our first example, we can see a market showing positive…

guide cfd 1

Swing Trading Tutorial

Strategies

In many cases, swing traders will utilize fundamental analysis techniques in addition to their assessments of market trends and technical chart price patterns. However, swing traders tend to base their investment decisions on technical analysis strategies that identify new trading opportunities while they are still in their developing phases. Swing Trading Position Stances Swing trading…

Bollinger Bands Trading Tutorial

Strategies

Of course, these specific price measurements can be adjusted to fit the requirements of each person’s unique trading style. However, these are the defined parameters which were used when John Bollinger first made these tools available to the public in the 1980s. In the chart depicted above, Bollinger Bands can be seen bracketing a 20-period…

Ichimoku Trading Tutorial

Strategies

Designed by Goichi Hosoda in Japan in the 1960s, the Ichimoku system provides traders with additional data points when compared to traditional candlestick charts. At first glance, the Ichimoku Cloud (and the signal lines which make up its component parts) might seem like an overly complex piece of abstract art. However, once traders develop experience…

EMA Crossover Strategy

Strategies

What is important to understand about the EMA is that it does not work all the time. Asset prices trend only 30% of the time. Your risk management will play an important function in the success of an EMA crossover trading strategy. The goal, when using a trading strategy such as the EMA, is to…

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Day Trading Tutorial

Strategies

Successful day trading strategies aim to capitalize on the small price moves which characterize intraday trends. However, day trading can also pose many risks for those without a tested, though-out strategy. This is why it’s particularly important for investors to gain a deeper understanding of the common principles of day trading. In this article, we…

Relative Strength Index (RSI) Tutorial 2020

Strategies

In its most traditional applications, values below 30 are interpreted as undervalued (or “oversold”) while RSI values above 70 are considered overvalued (or “overbought”). These informative readings can be used to design trading strategies and alert traders to potential price reversals or corrective pullbacks within a larger market trend. Basics of RSI RSI is one…

Breakout Trading Strategy Tutorial

Strategies

When many people hear the term “breakout trading,” the first thing that comes to mind is a stock trend that rallies higher. However, these ideas can just as easily be applied to negative market scenarios (i.e. downside or bearish price breakouts) that can be accurately identified before establishing short-sell positions. Additionally, the technical analysis concepts…

Gap Trading Strategy Tutorial

Strategies

Expert traders are often able to interpret the true meaning behind these price gaps and capitalize on their occurrences as opportunities for investment. When used properly, price gaps offer favorable trade set-ups for experienced investors and open the door to substantial profit potential for those interested in active trading. For some background, it’s important to…

Scalping Trading Tutorial

Strategies

Scalpers typically employ technical analysis strategies as a way to identify potential trading setups. Some of the most common technical indicator tools used by expert scalpers include: Support and Resistance Levels Stochastic Oscillators Bollinger Bands Moving Averages Parabolic SAR Trend Analysis Since scalpers primarily focus on market prices, technical indicators will contain a high level…

Turtle Trading Tutorial

Strategies

Essentially, Dennis believed anybody could be taught to master the futures markets but Eckhardt was much more skeptical. Instead, Eckhardt argued that Dennis had years of training and experience that enabled him to beat the market and profit from his approach to trading. As a result, Dennis devised an experiment that could be used to…

Dividend Capture Strategy Tutorial

Strategies

The capture strategy is a two-trade system that is solely designed to allow investors to benefit from a stock’s dividend without encountering the risks involved when holding shares for an extended period of time. In any market investment, the longer an asset is held, the greater the potential it has to fall in value. This…

Growth Investing Tutorial

Strategies

The ability to successfully buy into a young company in its earliest stages of growth is a skill that can generate impressive returns if the business is able to deliver on its expectations. This central reason growth investing is particularly interesting for many investors. However, many of these companies are new and untested, so there…

Dividend Stock Investment Tutorial

Strategies

When investors are able to focus on solid and stable companies capable of making regular dividend hikes, the magic of compounding gains can turn a relatively small investment into a substantial nest egg over the long term: Unfortunately, many beginner investors lack a basic understanding of what a dividend actually is —and what it isn’t. …

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Cryptocurrencies By Market Cap

Bitcoin was the first cryptocurrency based on blockchain technology, which is the primary reason its popularity and commanding market share continues to impress investors:

Today, crypto investors can literally choose from more than 1,000 alternate cryptocurrencies (or “altcoins”) which are all composed of their own functions and specifications.  Other popular cryptocurrencies include: Ethereum (ETH), XRP (XRP), Litecoin (LTC), Tether (USDT), EOS (EOS), Binance Coin (BNB), and Stellar (XLM).

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A few alternative offerings are actually Bitcoin clones or “forks,” which involve a phenomenon that forces divergences in a crypto blockchain that result in a spin-off coin offering.  Nonetheless, Bitcoin continues to reign supreme in the world of cryptocurrency and we can visualize the size of its relative market share using the global crypto market chart shown below.

Cryptocurrencies: Pros and Cons

For bullish traders, a lot of rising on the positive benefits of cryptocurrency as an asset class.  Proponents of the space contend that cryptocurrency contains the ability to “remove the middle man” that is generally required in most consumer market transactions.  Here, the reference is made to third party entities that have amassed long-term trust within the financial system (i.e. credit card companies, private banks, or the government bodies that issue fiat currencies).  Overall, this can have the effect of lowering transaction costs and raising adoption levels within the broader market.

For crypto investors, this suggests cryptocurrencies may have much further to run before the current bull trend is complete.  Of course, this is a longer-term perspective but there are clear benefits for short-term traders, as well.  Assuming that the market believes the dominant trajectory will be higher, the positive outlook makes positioning stances using a “buy on tips” mentality likely to prosper.

On the downside, one of the criticisms that are often directed toward the cryptocurrency space is a perceived lack of stability.  Fortunately, some of these criticisms have been eroded now that the market share of cryptocurrency exchanges has become more highly diversified (see chart above).  This reduces the potential for price manipulation and can help to instill confidence in cryptocurrency as an asset class.

That said, many common investor concerns remain with respect to the level of price volatility that has already characterized most of the trends in the major coin offerings.  This type of outlook is often associated with greater levels of price volatility and this can be a major turn-off for many participants in the financial markets.  However, what tends to be missed in this part of the discussion is the fact that volatility can be a positive just as much as it can be a negative.

In other words, without price volatility, it would be impossible to make any money trading in the market.  By most accounts, cryptocurrency assets have plenty of price volatility to go around.  The key to successful trading in the cryptocurrency markets is to learn which macroeconomic factors are most likely to send prices in a specific direction (either upward or downward.  In the following section, we will cover some of these factors in greater detail.

Pivot Point Trading Tutorial

Pivot Point Trading Tutorial

General

Your goal as a trader is to acquire equity in the market at a price that you can exchange in the future with another market participant at a profit. In trading the goal is to be able to pre-determi [...]

MACD divergence trading strategy

MACD divergence trading strategy

General

One of the most popular indicators available to traders today is the MACD, which stands for Moving Average Convergence Divergence. In this trading guide, I will show you how the MACD can greatly im [...]

Factors Influencing Crypto Prices

Since the first commercial cryptocurrency transactions began in 2010, cryptocurrencies have unlocked many opportunities for consumers when it comes to making, managing, and securing transactions.  For crypto traders, different types of opportunities have developed as trends in speculative positioning have outperformed traditional asset classes (i.e. stocks and bonds) by a substantial margin.

The real question is whether or not this trend can continue, and this is why crypto investors must understand the underlying factors which generally cause digital currencies to rise and fall in value.  Next, we will look at five critical factors that can significantly affect the price trends of the cryptocurrencies as they trade in the market:

  • Supply and Demand: The balance between supply and demand is the major and most crucial factor determining the price of any cryptocurrency. It’s important to note that the supply of cryptocurrencies is limited.  So, when the demand for a cryptocurrency is high, market forces suggest the price will naturally increase.  However, the reverse scenario also applies when market prices are high:  Assets tend to become less popular and more difficult to purchase (so the incentive is to sell).
  • Mining Difficulty: Another aspect determining the value of cryptocurrency centers around the difficulties required in mining.  Ultimately this refers to the difficulty of looking for a hash below the given target on the network and this will often act as a counterbalancing mechanism in controlling the price of cryptocurrencies.  When the level of mining participation rises, the level of mining difficulty becomes more intense.  Conversely, when mining participation is lower, these difficulties will also decline in strength.
  • Perceived Utility: Additional factors that influence the price volatility of cryptocurrencies can be found in generalized market sentiment the varying perceptions of its value.  In other words, what market thinks of the viability of cryptocurrency is highly critical.  Unlike government-issued fiat currencies, price fluctuations in the crypto markets are influenced by perceived utility (or the ability to act as a store of value).  This concept refers to the sustainable functions of a crypto asset, enabling it to be used in consumer transactions or saved as an investment for a considerable time.  Can investors expect a cryptocurrency’s value to be greater once it is cashed-in at a later date?  If the answer is no, market prices are likely to decline.
  • Mass Media Hype: Just many other products in the market, price volatility in cryptocurrency is largely dependent on networking the individual news headlines that are devoted to the topic.  Generally, media reports about rapid increases in coin adoption are likely to drive prices higher while negative reports (i.e. security hacks in the network) could result in a massive drop without much warning.  Aside from the financial news, personal posts and trends in social media can also influence market sentiment.  Essentially, social media posts can inculcate eagerness and happiness but also instill fear and distrust.  Overall, purchasing pressure tends to increase when people are hearing about these instruments for the first time or when a social media influencer helps others discovering the advantages of cryptocurrency.
  • Improvements in Technology: Last, but not least, are the technological aspects that can have the effect of driving demand in the market.  Just like any other product or service, system improvements and the introduction of platforms with new advancements can pique the interest of both consumers and investors.  These events can even encourage new adopters of a certain crypto coin.  Widely publicized improvements in technology are often highly beneficial for those thinking about buying or using a digital currency, and this often inspires crypto traders to push market prices higher.

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Technical Chart Analysis

As a set of general rules, these factors help traders conduct a fundamental analysis of any cryptocurrency.  However, expert traders will often turn to technical strategies that are based on price chart histories when structuring individual trade ideas.  Essentially, technical analysis of the crypto markets can help traders to better understand dominant trends in price and valuation.  Some of the common approaches technical analysis expert traders use in the crypto markets include:

  • Trend Analysis
  • Moving Averages
  • Elliott Wave Theory
  • Harmonic Patterns
  • Fibonacci Retracements
  • Pivot Points
  • Ichimoku Analysis
  • Parabolic SAR
  • Indicators and Oscillators

Expert crypto traders often combine multiple techniques as a way of improving objectivity (and making more accurate price predictions before placing trades).  Many different examples could be cited here.  However, some popular technical analysis combinations include the use of Harmonic Patterns along with indicator/oscillator readings, or the use of Pivot Points in conjunction with Fibonacci Retracements.  Possibilities for alternative combinations are without limit, so each crypto trader is given an excellent environment in which to develop a unique trading style and approach.

Conclusion:

Trader Summary: Crypto Trading Strategies

  • Cryptocurrencies are virtual currencies that can be traded seamlessly across national borders and use cryptography as the basis for transactional security.
  • Cryptocurrencies utilize decentralized technology systems that operate via verified blockchain networks (distributed financial ledgers).
  • Thus far, cryptocurrencies have had the effect of lowering transaction costs and this has helped raise adoption levels within the broader market.
  • Bitcoin was the first cryptocurrency based on blockchain technology but crypto investors can also access more than 1,000 alternate cryptocurrencies (or “altcoins”) on active trading platforms.
  • Using a brokerage account, retail traders and buy/sell cryptocurrencies and make a profit or loss from the results based on future changes in the price difference of each currency pair.
  • Several critical factors significantly affect the price trends of the cryptocurrencies as they trade in the market: supply and demand, mining difficulties, perceived utility, coverage in the mass media, and improvements in the underlying technology.
  • Traders will often use technical strategies that are based on price chart histories when structuring individual trade ideas.