Basic Of Trading ( Part 2)
Hello all
I am feeling very happy by being able to share this most important thing of Trading with you all.
Actually this is the basic. We hear this regularly,but we don't know about them. For them my today's blog is this. Hope you all will get benefit from it. So, let's check the last and 2nd part of this.
Bag holder:
A trader holding a big position of a coin for a long time.
Volatility-
Volatility is the percentage change in the price of an asset. Traders check the daily
volatility of a coin before opening a short or long position.
ROE:
Return-on-Equity. ROE is calculated by the actual margin used in a position.
Altcoin- All coins except Bitcoin are known as altcoins or Alts.
####Whale:
A person that has a big bag of a given coin.
####Bull trap-
The price of a coin will increase suddenly and the retails traders start buying it. The
price of the coin will come down after a fake out on the chart and many long positions will be
liquidated.
Bear trap is just the opposite of the bull trap.
Ask/Bid:
Sell orders are asks and Buy orders are Bids.
Spread-
Spread is the difference between the buy and sell orders. Basically, exchanges with
high volume have low spreads and vice versa.
Support and resistance-
Support zone/line is where the price of coin bounced back many times.
Resistance zone/line is from where the price of coin retraced many times.
Walls:
Large orders at a specific price are known as walls. There are buy walls and sell walls.
Stop-Loss:
Stop-loss is the price where the traders want to cut the losses. If you bought a
coin at 100 and put a stop loss at 90 means your position will be closed if the price drops
10%. Stop-loss is a necessary thing in trading to counter the wild moves.
Liquidity- Liquidity is the measure of how actively the coin is traded on the exchange.
High liquidity means there are more buyer and seller on the exchange. High liquidity also means
that the spreads will be low and orders will be filled easily.
Uptrend-
The price is said to be in uptrend if it makes higher high (HH) and Higher lows
(HL) in the given time frames.
Downtrend-
Opposite of uptrend, the prices here make lower highs (LH) and lower lows (LL).
Consolidation-
A price range where the price of coins will trade after a rally or sell-off. The
market will be volatile after breaking the consolidation zone.
Correction-
A correction is a fall in price after making a new peak or an upwards rally. In the
Crypto market, we see a 20-30% drop in price after reaching an all-time high.
Sell off- Traders will start booking profits after a rally, this will trigger a sell-off and the price of the
coin will decrease.
Rally-
Rally means an immediate increase in price of a coin.
Pattern-
A chart pattern is a predefined shape that has been historically studied by technicians.
Traders try to use these previous performance statistics to predict future price movements.
Limit Order:
Order will execute at a predefined price if the market reaches that price.
Market Order: An order to buy or sell at the current price level, executed immediately.
Time Period/ Time Frame-
Time period is the difference between the
formation of candles on the chart. Common time periods are 5
min,15min,30 min, 1Hour, 4 Hour, Daily, Weekly, and Monthly.
ATH-
All-time highs prices.
Average Down:
Trying to lower the average entry cost of a position by slowly buying the asset
at reducing rates.
Initial Coin Offering (ICO):
A type of crowdfunding using cryptocurrencies as a means of raising capital for early-stage
companies.
Liquidation-
A condition where the positions are closed because there is not enough
margin available in the account.
Arbitrage:
A trading method to buy coins from an exchange that have low price and sell it to
another exchange that have high price.
E.g. If Bitcoin is trading at $5000 on Bitstamp and $5000 on Bitfinex, People will buy from
Bitstamp and sell on Bitfinex.
Pump-and-dump:
Pump means a sudden increase in price because of a news or a
group promoting the coin. Dump means a sudden decrease in price due to a negative
news or heavy sell-off.
Everyone wants to increase the amount of Bitcoin one is holding. Trading will help you to
increase the amount of Bitcoin or Fiat (whatever you prefer).
There are many opportunities in the crypto world to double (or even more) the amount
you holding. You must look and grab the opportunity at the right time. Trading Altcoins is
also another option to earn bitcoin from trading.
Trading needs times and efforts. A good trader can make 6-8 successful trades out of
- A trader must know how the market works and how market reacts on different
situations.
I will continue to share trading related knowledge free of cost. Many telegram channel
and groups cost from $100 to $500 monthly for learning basis of trading.
I will be releasing more such articles over-time to help you learn to
trade. Feel free to contact me in case you’d need any help. Thanks all.