As we search for mediums to make money, a lot of people with little or no knowledge are tripping into the crypto market claiming to be professional traders. At the end of the day, they end up being liquidated. Some end up saying Crypto trading is manipulated. In this way they fail to realize what the market is all about.
In this article we are going to discuss what traders fail to look out for before trading coins.
This topic will be grouped in to three.
- What the market is actually doing
- Where to Buy
- Where to Sell
- Making good use of market consolidations
What the market is doing
Most people fail to realize what the market is actually telling us. There are basically two types of markets.
A trending and a ranging market.
A trending market is noticed when there is an impulse move either in the upward or downward direction. We can easily classified it as an upward trend and a down trend market.
Uptrend market; This is also called bullish trend. It is when the market is buying.
Downward market; This also called a bearish trend. It is when the market is selling.
In a trending market there is always an impulse move either to the upside or the downward side followed by a correction, mitigation or retracement.
So, what most trader fails to realize is that, market moves from one liquidity zones to another liquidity zone.
A liquidity zone can be seen as the fuel that moves the market. It is also called a zone of supply and demand.
For an uptrend market(buying market) the market is buying from one demand zone to another demand zone or supply zone.
Meanwhile, for a downtrend market(selling market) the market is selling from one supply zone to another supply zone or demand zone.
Ranging Market: Unlike the Trending market, the ranging market has no feasible direction. In this setting the market moves back and forth in a zone with no direction.
It is also seen as a point of accumulation where liquidity or momentum is being gathered to move the market to the next zone of demand or supply. Most traders also call it a consolidating market.
After understanding what the market is doing, what people fail to realize is where to buy, where to sell and also where not buy(leave the market for good).
Where to buy
In an uptrend market, the market appears to be showing series of higher highs and higher lows which is also known as an expansion or an impulse move followed by a retracement or mitigation to the upward side.
So when the market is buying, you will be looking to buy when the market is retracing not when the market is making the impulse move or expansion. In other words, its good to buy when the market has done a higher low.
Where to sell
In a downward market, the market appears to be showing series of lower lows and lower highs which is also known as expansion or an impulse move followed by a retracement or mitigation to the downward side.
So when the market is selling, you will be looking to sell when the market a retracement not when the market is making the expansion. In other words, its good to sell when the market has done a lower high.
Where to leave the market
This is a very serious mistake most traders make, because they fail to realize when the market is neither buying nor selling. This is when the market is ranging or consolidating. So it is advisable to stay off the market during a ranging phase because the market is neither buying or selling.
Making use of consolidation in trading(buying or selling)
Trading is about choosing a strategy then building and working on it. Consolidation is a time where the market is indecisive and a time to leave the market as said previously, but it can also be used for your own good with 80percent profit rate.
When markets starts consolidating, it has a visible resistance and support at the consolidation planes. Sometimes it is not always accurate but viewing it technically, you would see the respected places up and down.
So if it is located, make use of horizontal lines to draw lines closing the consolidation resistance and supports. These two drawn lines will act as a trigger option to buy or sell. It will also act to detect the point of breaking impulse or momentum.
After drawing the lines, with patience wait for a line breakout either from the consolidation resistance line or consolidation support line. If the breakout happens on the resistance, its a buy signal trigger. and if the breakout happens on the consolidation support line, then its a sell trigger signal. Mind you, this strategy is not always sure, so when buying or selling always set a stop loss point, so incase trade goes against you there will be no liquidation.
From the image below, all the consolidation points where marked with the red horizontal lines, so after watching the breaking out from the support, the market obeyed the consolidation strategy to finally hit TP, the green line below.
As said earlier, always set your stop loss(SL) to avoid huge losses in the crypto market. Even if the market shows analysis confluence, never assume or conclude its accuracy, still make use of stop losses because news can come up anytime and crypto is volatile, so its movement cannot be fully guaranteed.
Having discussed the above crypto trading secrets, it is always good to notice and identify the movement of the market because it will always show you what the market is actually doing. For every movement or impulse there is always a correction, so never jump on a moving train when you don’t know where its going to stop(correction, retracement).
However, the market either buys, sells or consolidates(ranges).