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The Dow theory is a theory that says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high and is accompanied or followed by a similar advance in the other average. For example, if the Dow Jones Industrial Average (DJIA) climbs to an intermediate high, the Dow Jones Transportation Average (DJTA) is expected to follow suit within a reasonable period of time. The Dow theory is an approach to trading developed by Charles H. Dow who, with Edward Jones and Charles Bergstresser, founded Dow Jones & Company, Inc. and developed the DJIA. Dow fleshed out the theory in a series of editorials in the Wall Street Journal , which he co-founded. Charles Dow died in 1902, and due to his death, he never published his complete theory on the markets, but several followers and associates have published works that have expanded on the editorials. Dow believed that the stock market as a whole was a reliable measure o...

Dark pools are an ominous-sounding term for private exchanges or forums for securities trading . However, unlike stock exchanges, dark pools are not accessible by the investing public. Also known as “dark pools of liquidity,” these exchanges are so named for their complete lack of transparency. Dark pools came about primarily to facilitate block trading by institutional investors who did not wish to impact the markets with their large orders and obtain adverse prices for their trades. Dark pools were cast in an unfavorable light in Michael Lewis’ bestseller Flash Boys: A Wall Street Revolt , but the reality is that they do serve a purpose. However, their lack of transparency makes them vulnerable to potential conflicts of interest by their owners and predatory trading practices by some high-frequency traders. Why Use a Dark Pool? Contrast this with the present-day situation, where an institutional investor uses a dark pool to sell a one million share block. The lac...

Lagging indicators use past price data to provide entry and exit signals, while leading indicators provide traders with an indication of future price movements, while also using past price data. When faced with the dilemma of leading vs lagging indicators, which should traders choose? The answer to this question ultimately comes down to individual preference after understanding the advantages and limitations of each. Lagging indictors Lagging indicators are tools used by traders to analyse the market using an average of previous price action data. Lagging indicators, as the name implies, lag the market. This entails that traders can witness a move before the indicator confirms it — meaning that the trader could lose out on a number of pips at the start of the move. Many consider this as a necessary cost in order to confirm to see if the move gathers momentum. Others view this as a lost opportunity as traders forgo getting into a trade at the very start of a move. L...

One of the most helpful tools I’ve discovered for trading is The Wyckoff Method , created by Richard Demille Wyckoff, a pioneer in the studies of technical analysis, and one of the five “titans” of TA, along-side Gann (Gann Fans/Squares), Dow (Dow Theory), Merrill, and Elliot (Elliott Wave Theory). Below is a summation of what I’ve gathered and factored into my trading. The Wyckoff avoidance method means to trade only the best assets in the leading market sectors. Crypto is an emerging asset class, but there are already ways of determining which cryptocurrency has fundamental value. Focusing on the opportunities in those markets makes your decisions process much clearer: You want to buy/hold a fundamentally valuable asset when its price is not reflecting its value yet. You want to take profits and abandon an asset that is appreciating in the short term because of things like tiny market inefficiency or news hype. FINDING THE MARKET WEAKNESS You can use any of your fa...

Ichimoku Kinko Hyo translates as “one look equilibrium chart”. It was designed specifically for quick and easy decision making. Ichimoku Kinko Hyo is a gauge that looks compound to traders with 5 seconds attention spans. Once you know what it does, it makes your crypto trading choices way faster though. Mastering Ichimoku Cloud transaction really brings you one step closer to the actually realistic goal of crypto trading : Creating high-probability verdicts without costing you your whole day inspecting your Trading View charts. Ichimoku Cloud Lines Explained The Senkou and The Kumo “Senkou span” is the name for the borders of the filled cloud, or “Kumo cloud”. The span is filled with green color in case the market is bullish. It will turn red in bearish markets, when the two spans swap. Senkou lines are major support/resistance areas - they attract the price. Traders set their entries, exits and stops around them - usually leverag...

To understand how game theory works within the sphere of Cryptocurrency we need to get through the basics first. To know more about game theory and how it’s used in cryptoeconomics keep reading on. Let’s first get a feel for Game theory . It is essentially the study of logical decision making made by players within the clear parameters of a classification (game, scenario, etc). It uses mathematical models and can be applied to economics, psychology, logic, computer science, distributed systems, and more. Game theory can be seen as a microcosm of human behaviour under set conditions wherein certain inducement structures and mechanisms can lead to predictable and honest behaviour by players. In a archetypal game theory scenario, there are 3 primary components: Players, Strategies, Outcomes. Players are the users that make decisions. Strategies are the manoeuvres that players make while simultaneously taking into account possible strategies of other players. The conclusi...

Pro traders likely analysed price action and investor emotions by using the candlestick charting style. Although modernized in the late 1800s by journalist Charles Dow, the core principles of candlestick charting remain intact today. Both the modern and historical technical analysts who swear by the style regard price action as more important than earnings, news or any other fundamental principles. In other words, all known information is reflected in the price, which is precisely displayed in the candlestick. A candlestick represents the price activity of an asset during a specified timeframe through the use of four main components: the open, close, high and low. The “open” of a candlestick represents the price of an asset when the trading period begins whereas the “close” represents the price when the period has concluded. The “high” and the “low” represent the highest and lowest prices achieved during the same trading session. Every candlestick uses two physical ...

Crypto traders have several tools to evaluate the cryptocurrency market. One of them is a method known as Technical Analysis . Using this process, traders can get a improved understanding of the market sentiment and isolate significant trends in the market. This data can be used to make more educated predictions and wiser trades. Tech Analysis considers the history of a coin with price charts and trading volumes, no matter what the coin or project does. As opposed to technical analysis, fundamental analysis is more focused on establishing if a coin is over or under valued. To get a better idea of technical analysis, it is crucial to understand the fundamental ideas of Dow Theory that tech analysis is based on: 1)     The market considers everything in its pricing. All existing, prior, and upcoming details have already been integrated into current asset prices. With regards to Bitcoin and crypto, this would be comprised of multiple variables like current, past,...

Margin trading with cryptocurrency allows users to borrow money against their current funds to trade cryptocurrency “on margin” on an exchange. In other words, users can  leverage  their existing cryptocurrency or dollars by borrowing funds to increase their buying power (generally paying interest on the amount borrowed, but not always). For example, you put down $25 and leverage 4:1 to borrow $75 to buy $100 worth of Bitcoin . The only stipulation is that no matter what happens, you’ll have to pay back to $75 plus fees. In order to ensure they get the loaned amount back, an exchange will generally “call in” your margin trade once you hit a price where you would start losing the borrowed money (as they will let you borrow money to trade, but they don’t want you losing that money). A margin call can be avoided by putting more money into the position. A given exchange will have a range of different leveraging options (2:1, 3.33:1, 4:1, 100:1, etc.). Mar...

Whether you’re after automatic day trading strategies, or novice or into advanced tactics, you’ll need to take into reason three vital components; volatility, liquidity and volume. If you’re to make profits on tiny price movements, selecting the right stock is vital. These three essentials will help you make decisions very easily: Liquidity  – This allows you to speedily come in to and exit trades at a valuable and stable price. Liquid asset strategies, for example, will focus on gold, crude oil and natural gas. Volatility – This tells you your latent profit range. The more the volatility, the better the profit or loss you may make. The cryptocurrency marketplace is one such example well recognized for high instability. Volume  – This measurement will tell you how many times the asset has been traded within a set period of time. For day traders, this is better known as ‘average daily trading volume.’ High volume tells you there’s substantial intere...

In our previous post we have learnt and understood what crypto-trading bots do and what you as a trader should be looking for while choosing a trading bot. If you haven’t read the blog , it is advised that you do so before you read about the various trading bots mentioned below: Zignaly This is a trading bot that is still in its development stages. However, you can still use the beta version of the app for free and make great profits from using the bot. Even though it is a new contestant to the trading bots industry, it has accomplished to win over the hearts of many crypto enthusiasts. The main reason for its prevalent fame is the transparency provided by this trading bot. Unlike other trading bots whose developers don’t share many details on how to contact them, Zignaly prides on the developer’s sincerity to the community. Users of the bot can easily connect with the developers of the bot in case of any issue that they face or even provide them with suggestions to ...

Many people are now making their way into the world of cryptocurrencies . What attracts them here, simply put are the, excessive amounts of opportunities that the crypto-world has to offer (privacy to profit).   Trading beginners tend to be very inquisitive when it comes to cryptocurrency trading. Trading is a type of activity that involves work to extract profits from the trading process.   It is essential to develop specific qualities necessary for achieving high competence, particularly, a very analytical and attentive mind. Those that are new to the crypto world hoping to earn a difference in the exchange rate without putting in much efforts. However, the reality is something that is completely the opposite this makes armature traders extremely disappointed in this kind of activity. Below is a list of common mistakes to avoid while trading cryptocurrencies: 1.      Keeping yourself uninformed will be catastrophic Anyway, it is you w...