Trading the decentralization of the financial system

Promising Cryptocurrency ProjectsThese are some important cryptocurrency projects most of them are platforms: Strong Pros: √ Cost per transaction is only 0.00003 USD √ High speed of tran

«TRADING THE DECENTRALIZATION OF THE FINANCIAL SYS EM»

For Beginners & Advanced

Cryptocurrency Traders

Cryptocur enc Tradin Guide © Apri 2 1

George M Proto otarios © -Al rig ts re erv d

Exp rtSig al.com Distrib tio by Qexp rt com

Exper Signal.com

CRYPTOCURRENCY TRADING GUIDE

«TRADING THE DECENTRALIZATION OF THE FINANCIAL SYST M »

«The New Decent al zed Financial Era»

- The Shor History of Crypto

- Cryptocur ency FAQ

- Cryptocur ency Wal ets

- Tax tion

- Ev luating Cryptocur encies

- Promising Projects

 RIP LE | EOS | IOTA | ETHEREUM | STEL AR | NEM

 CARDANO | NEO | TRON | BITCOIN | LITECOIN

«Ke Technical Analysis Theories»

- El ot Wa e Theory

- Six (6) Phases of Dow Theory

- Harmonic Pat erns

CHAPTER-5: TRADING PLATFORMS .

- Onl ne Cryptocur ency Plat orms

- MT4/MT5 Plat orms

- CFD Ac ounts

«Technical Analysis Indicators»

- Creating Custom Indicators

- MACD

- Moving Av rages

«The Impor ance of an Ef ectiv Money Management System»

- The Two Basic Questions for Suc es ful Trading

- Trading L v rage & Formula

There are many academics considering cryptocurrencies as a bubble ready to burst,paying a lifetime lesson to everyone involved These academics simply cannotunderstand the magnitude of the financial revolution emerging from cryptography Itshould be irrelevant for academics if the price of Bitcoin moves from $20,000 to

$3,000 and then back to $20,000 What really matters is the technology behind thecryptocurrency ecosystem

Actually, cryptocurrencies themselves are just a simple application of the Blockchaintechnology, just the top of the iceberg Cryptography, Scalable Blockchain, SmartContracts, Smart Assets, Decentralized Apps, Directed Acyclic Graph, and othertechnologies are here to stay, and promise to change our financial universe for good

Nevertheless, from a trader’s point of view, price matters, and this ebook includes awide variety of useful resources and tips in order to help traders understand thebehavior of the cryptocurrency market and explain the extreme fluctuations ofcryptocurrency asset prices

Graph-1: Currency is only the top of Iceberg

As in the case of every other major revolution, there are many scammers in thecrypto industry, who are trying to take advantage of the lack of regulation and makemoney by deceiving the public The World Wide Web includes a great variety ofwebsite resources and especially forums (APPENDIX) that may help cryptocurrencytraders to avoid these scammers

George M Protonotarios, Athens

Financial Analyst -Msc in“Int Banking & Finance”Salford, UK

Linkedin: » https://www.linkedin.com/in/qexpert/

Chapter-1: Introduction to Cryptocurrencies

The New Decentralized Financial Era

Cryptocurrencies are virtual currencies operating as a decentralized network, using cryptography for security, and a public ledger (the Blockchain) to record all transactions Cryptography is an encryption method that uses advanced techniques

to verify and secure transactions, the Blockchain refers to a database that records all coin transfers.

The History of Crypto at a Glance

Bitcoin is the first decentralized peer-to-peer payment network The first ever Bitcoinstarted in a cryptography mailing list sent by the nickname Satoshi Nakamoto in

2009 This is the short history of cryptocurrencies:

□ 1983:

The American cryptographer David Chaum conceived an anonymouscryptographic electronic money called eCash

□ 1995:

The implementation of Digicash, an early form of cryptographic electronicpayment requiring user software and encrypted keys in order to withdrawnotes from a bank

□ 1996:

Laurie Law, Susan Sabett, and Jerry Solinas (NSA Cryptology Division)published a paper entitled “How to Make a Mint: the Cryptography ofAnonymous Electronic Cash”, describing a Cryptocurrency system

Cryptocurrency FAQ

What are Altcoins and Forks?

Altcoins are all cryptocurrencies alternative to Bitcoin Most altcoins are Forks ofBitcoin A Bitcoin Fork is a crypto-coin built on Bitcoin’s open-sourced protocol (i.e.Litecoin) There are also cryptocurrencies that have built their own protocolsincluding Ethereum, Ripple, Waves, and many more

How Many Cryptocurrencies are there?

Today, there are more than 1,500 cryptocurrencies available over the internet

What is the Blockchain?

The Blockchain is an open-source decentralized technology that verifies and recordsall transactions via the use of a public ledger After the completion of a certainnumber of transactions, the Blockchain generates a new block

-A block is a database entry, which stores information about the present and allprevious transactions

-Each blockchain process is executed using an ecosystem of millions of communitycomputers which store their own copy of the blockchain’s records Only if all copiesare in agreement, a block becomes a permanent link in the Blockchain

What are Tokens?

The ecosystem of cryptocurrencies includes coins and tokens Tokens are digitalprojects created through an Initial Coin Offering (ICO) and differ from coins due totheir structure Tokens operate on top of a Blockchain in order to createdecentralized applications These projects trade on cryptocurrency exchanges ascommon altcoins

Initial Coin Offerings (ICOs)

An Initial Coin Offering is the introduction of a new altcoin in the cryptocurrencyecosystem It is the same as an IPO for stocks The world’s first ICO was held byMastercoin in July 2013

Bitcoin Mining

Bitcoin mining refers to the process of verifying all Bitcoin transactions and includethem in a public ledger (Blockchain) Mining is a completely decentralized processwith miners operating in all over the world

Miners get new Bitcoins as a reward for their efforts As more miners join a network,mining becomes increasingly less profitable Note, that NOT every digital currencyrequires mining and miners

Delegated Proof of Stake (DPoS)

As mining is too wasteful of energy, a blockchain engineer (Daniel Larimer) built theDelegated Proof of Stake, or DPoS, which is an alternative to the traditional ‘Proof ofWork’ used by most cryptocurrencies DPoS can handle up to 100,000 transactionsper second, whereas Bitcoin can handle only 7 transactions and Ethereum up to 20transactions per second There are quite a few platforms that have adapted DPoSincluding EOS, Steem, Bitshares, Lisk, and Ark

What are Smart Contracts?

Smart contracts are small self-executed programs that aim to facilitate the exchange

of anything of value on the internet Smart contracts offer maximum security, asthey operate exclusively on the blockchain That means they can eliminate anyexternal interference by performing 100% as they were originally programmed

What Influences the Price of Cryptocurrencies?

As in in the case of every other financial-traded asset, the price of a cryptocurrencydepends on the general dynamics of Demand/Supply

These are all major factors affecting directly/indirectly the demand and the supplyfor a particular cryptocurrency asset:

I INTERNAL FACTORS

 Necessity of the Project

 The Team Behind

 Technological Efficiency of the Project

 Security/Vulnerability

 Programmability

 Scalability of the Project

 Management’s Ability to Achieve its Stated Goals

 Partnership with a Key Player

 Acceptance by an Important Online Merchant

 Listing in a Large Cryptocurrency Exchange

 Total Supply of Coins/Tokens (last but certainly not least)

II EXTERNAL/DIRECT FACTORS

 Legislative Changes in Key Countries (new regulation)

 Phycology of the Market (this is the subject of technical analysis)

 Existence of Alternative Projects (serving the same needs)

 New/Emerging Technologies (that can create alternative projects in thefuture)

 Extreme Hacking Activity (can affect the market in many ways)

 Bankruptcy of a Major Player (for example, of a large crypto exchange)

III EXTERNAL/INDIRECT FACTORS

 New Macroeconomic Conditions in Key Countries

 New Social and Political Conditions

 Interest Rate Risk (as cryptocurrency is an alternative investment to assetclasses paying an annual interest rate, such as Treasury Bills, Notes, andBonds)

 Extreme Volatility in other Financial Markets

• Systemic Risk (every financial asset price includes the risk that the entire system will suddenly collapse, this is called Systemic Risk)

Chapter-2: Storing Cryptocurrencies

Cryptocurrency Wallets & Taxation

Cryptocurrencies can be stored in three (3) major types of wallets (online, software, and hardware wallets).

What is a Crypto Wallet?

A Bitcoin wallet is a software/hardware solution used to store, manage, and transferBitcoins/Altcoins The coins are stored in the wallet as private keys (secret numbers).Moreover, a cryptocurrency wallet works as the essential mechanism behind everycryptocurrency transaction These are the key functions of a crypto wallet:

● Storing a Variety of Crypto in a Single Place

A cryptocurrency wallet can store multiple crypto assets in the same place

● Wallets Store Public Keys

Every record of a Blockchain includes the seller’s and buyer’s Public Keys ThePublic Key is not confidential information and works like an email address

● Wallets Store Public Keys with Security

The Private Key is a very confidential information and works like thepassword of your email If someone gest access to your Private Keys, he canalso steal your coins

● Buying/Selling Coins

A wallet can send a message to another wallet using the Public Key in order

to generate a unique transaction ID

Types of Cryptocurrency Wallets

Different types of crypto wallets offer different layers of protection The most securemethod of storing cryptocurrencies is a hardware wallet These are all the types ofcrypto wallets:

(i) PC-Based Software Wallets

(ii) Smartphone-Based Wallets (use the phone’s camera to scan QR codes)(iii) Online Wallets in Central Servers (require online accounts)

(iv) Hardware Wallets

The Cost of Owing a Wallet

Online and software wallets are free but offer limited security On the other hand, agood hardware wallet costs about $100 and offers much better security These arethe dominant hardware wallets today:

 TREZOR which costs $110 (Bitcoin, Ethereum, Dash, Zcash)

 NANO-S which costs $99 (Bitcoin, Litecoin, Ethereum, Dash, Dogecoin, Zcash,Stratis)

 KEEPKEY which costs $129 (Bitcoin, Litecoin, Ethereum, Dash, Dogecoin,Namecoin, Testnet)

Image: The three hardware wallets in the same order (as mentioned before)

Cryptocurrency Taxation

The classification of cryptocurrency assets and the taxation of gains depend entirely

on the country of residence In Europe, most countries are waiting for a common EUlegislation towards cryptocurrency taxation

Examples of Cryptocurrency Taxation in an International Level

 In the United States, the gain derived from a Bitcoin investment is taxed as

“Property” Cryptocurrencies can be classified as business, investment, orpersonal property These are some basic tips:

-Τhe best option for the American traders, is to buy and hold crypto for morethan one year (taxes are much lower for over 1 year investment)

-When you sell a cryptocurrency with a significant profit, keep your money in

US Dollars Do not convert from one cryptocurrency to another

 In the United Kingdom, cryptocurrency money is considered ‘Private Money’and no tax is paid if the capital gains don’t exceed the £11,300 threshold (this

is valid for personal income under £100,000)

 In Germany, cryptocurrency money is classified as ‘Private Money’, the sameway as foreign currencies, and enjoy tax benefits If owned more than 1 year

NO capital gain tax will be paid (if you own crypto for less than 1 year aprogressive tax may apply)

 In Russia, citizens are expected to pay 13% on their crypto-related incomes

 In Australia, crypto is classified as ‘Property’, and there is a capital gain tax

 In Canada, cryptocurrencies are classified as ‘Commodities’, and there is acapital gain tax

 In Korea, crypto trading is still tax-free but there is a timeframe for theintroduction of a crypto tax law

 In China, cryptocurrencies are classified as ‘Virtual Commodities’ and there is

no tax yet

 In Japan, cryptocurrencies are classified as a ‘Method of Payment’ and there

is a capital gain tax

 In Brazil, cryptocurrencies are classified as ‘Capital Assets’ and there is a 15%capital gain tax

Coin Mining Activity

Income from coin mining is taxable in many countries (note that the miningexpenses are deductible in the taxable year)

 Coin miners must report their income from mining at the market value of thecoin at the time it is received

 In the US, coin mining is taxable by the IRS only if the rewards emergingfrom coin mining exceeds $400 in any tax year

Crypto Tax Heavens

There are many countries where there is no tax on capital gains from cryptocurrencytransactions These are some tax heavens around the world:

 Europe (Denmark, Switzerland, Italy, Cyprus, Serbia, Belarus, and Slovenia)

 Asia (Singapore and Hong-Kong)

 Oceania (New Zeeland)

 Other (Barbados, Mauritius)

General Rules for Cryptocurrency Traders

 Get often updates regarding the tax policy of your country

 Keep a clean record of all your transactions In that way, you will be able toestimate your taxable income with accuracy in the future

 If your capital gains from cryptocurrency transactions are significant, don’thesitate to hire a specialized crypto accountant

 If your transactions look messy, don’t hesitate to hire a tax attorney

Chapter-3: Promising Crypto Projects

Evaluating Cryptocurrencies & Promising Projects

In the first part, you will find some key tips on how to evaluate cryptocurrency assets In the second part, you will find basic information and the total supply of some important crypto assets.

Evaluating Cryptocurrencies

Evaluating cryptocurrencies is almost the same as evaluating stocks The key number

to take into consideration is the Market Capitalization derived from Price times theTotal Supply of coins (NOT from the Circulating Supply) If you want to evaluate acryptocurrency project like a professional investor, you always need to consider theTotal Capitalization

These are some basic steps:

1 Calculating Total Capitalization

Before you buy anything, you must first find out how much it is really worth Totalcapitalization is derived when multiplying the current price ($) by the total number ofcoins/tokens (MAX SUPPLY)

□ Capitalization ($) = Total Supply X Current Price ($)

Keep that figure in mind because you will need it later.

2 Level of Technology and Necessity of the Project

Visit the website of the project, and try to answer the following questions:

- Why has someone created this Coin/Token?

- Is it useful for people?

- Does it solve major problems?

- Is it useful to many people, or only to a few?

- Is this project unique?

- Are there alternative projects solving the same problem?

- What is the current phase of the project according to its Road Map? (Creatingperiod, beta period, full-launch)

3 Who is Behind the Project

This is maybe the most important aspect of any investment, real or digital

The Importance of an Effective Project Management

When investing in equities they say that the best opportunities in life come fromcompanies with a very bad balance sheet and a very good management Goodmanagement will provide the best probabilities for the project’s long-term success.Any respectable project must present a full team on the official website

The questions emerging at this stage are the following:

- Is there a team presented on the website will full names and detailed information?

- Where does this team come from?

- Are they experts in their field?

- Have they been involved successfully with other crypto projects in the past?

4 What Do Internet Users Say About this project?

It is always useful to check what others have to say about something Do not focusentirely on the reviews, as a great number of these reviews are fake Focus oncrypto-forums (APENDIX) where the community validates every reviewer

5 Using Smart Metrics to Estimate the Fair Value

During my career as an investment consultant, I was involved in numerousinvestment/financing plans For the evaluation of these projects, I have used a great

variety of alternative methods, such as DCF (Discounted Cash-Flows), P/E(Price/Earnings), P/S (Price/Sales), P/Bv (Price/Book Value), Dividends Method, and

a great variety of empirical methods

Why Using Empirical Data?

Accountants can easily manipulate accounting data, but it is very difficult for anyone

to manipulate empirical data In addition, most people do not use empirical data, andthat means you can look ahead of the market

-Empirical metrics can serve as a tiebreaker in your decision-making process

Here are some smart metrics for comparing cryptocurrencies:

(a) Volume/Market Cap Ratio

The Volume/Capitalization Ratio can be used for comparing the volume activity ofmultiple crypto coins:

□ Ratio = (Volume/Market Capitalization) %

-The greater the ratio, the better

If I learned anything of value, it is that the best way to estimate the ‘fair price’ ofany project is by using empirical metrics It may sound strange, but the best financialanalysts in the world use empirical metrics to look far ahead of the market

An easy way to compare crypto based on empirical data is by creating a table thatincludes the empirical performance of a variety of cryptocurrencies and comparethem in respect to their capitalization.

Here is an example using the Volume/Market Cap Ratio

Table-1: Comparing Coins Based on Volume/Market Cap Ratio

CRYPTO TOTAL SUPPLY MARKET CAP

($) 24H VOLUME

($)

VOLUME / MARKET CAP

- The table consists the 10 largest cryptocurrencies, in terms of market

capitalization (Data: CoinMarketCap)

- For this time only, it would be better to calculate Market Capitalizationsbased on Circulating Supply, and not on Total Supply

- The above table includes 24-hour volume data, but it would be wiser to useaverage volume data from a 30-day period, in your own tables

(b) Internet Traffic Metrics

For example, check the current Alexa ranking of a project’s website, and compare itwith the ranking 12 months ago, and then 6 months ago This way you can get anidea about the growing interest of the public for a cryptocurrency project

- Keep in mind that there are ways scammers can manipulate Alexa rankings

(c) Google Keyword Planner or Similar SEO Tools

Use enquiries such as ‘Buy Ethereum’ or ‘Ripple Exchange’ to estimate the publicinterest for specific coins

- How many enquires are made for particular keywords including this project?(d) Social Media Metrics

The interest of people for a particular project will be obvious in the social media.These are some important social media channels for that job:

- Twitter

- Facebook

- Reddit

- Telegram

Promising Cryptocurrency Projects

These are some important cryptocurrency projects (most of them are platforms):

Strong Pros:

(√) Cost per transaction is only 0.00003 USD

(√) High speed of transaction (currently can handle 1,500 transactions per second,but according to Ripple, that number can grow significantly in the future)

(√) Holds a clear competitive advantage against traditional bank services

(√) Adopted already by a great number of financial institutes

Strong Cons:

(x) The total supply is huge, almost 100 billion XRPs

(x) It is a centralized/private network where the organization holds 70% of all XRPs

■ Key Exchanges: BITHUMB | UPBIT | BITBANK

■ Total Supply: 99.992.334.929 XRP

-EOS partner with Bitfinex, Bitfinex has announced a new decentralized exchangebuilt on EOS technology

Strong Pros:

(√) Advanced and (so far) stable technology

(√) No need for mining

(√) Fully programmable and fully scalable network

(√) Great speed (every second can handle more than 50,000 transactions)

(√) Crypto democracy (21 delegates, voted by all EOS stakeholders)

Strong Cons:

(x) New platform (cons will be discovered in the future)

■ Key Exchanges: BITHUMB | UPBIT | OKEX

■ Total (Max) Supply: 1.000.000.000 EOS

-IOTA funded via an Initial Coin Offering (about 1,340 Bitcoin were invested)

-The ‘Internet of Things’ is expected to be worth over $260 billion by 2020

Strong Pros:

(√) IOTA (MIOTA) is the dominant currency of ‘Internet of Things’

(√) Designed to scale in a vast level

(√) No transaction fees

(√) No miners are required as there are no blocks

(√) Currently can handle maximum 1,000 transactions per second (that number cangrow to 1,500 in the near future)

Strong Cons:

(x) New project, currently undeveloped

■ Key Exchanges: BINANCE | BITFINEX

■ Total Supply: 2.779.530.283 MIOTA

Furthermore, there is NO predefined set block limit, meaning we cannot currentlyestimate the total supply of Ethers in the future That may be good news for thenetwork’s future funding capabilities, but it is bad news for pricing the coin today.

Pros & Cons

□ Strong Pros:

(√) Revolutionary technology supported by a vast community

(√) Popular coin among traders

(√) Available for trading in numerous crypto markets

(√) Most cryptocurrency projects are developing on top of Ethereum, and that factcreates a constant demand for Ethers

Strong Cons:

(x) Significant lack of scalability (dApps)

(x) Can only handle 15-20 transactions every second

(x) $0.76 cost per transaction (considerably higher than newer coins)

(x) No set block limit today (we cannot estimate the coin’s future capitalization)

■ Key Exchanges: BITFINEX | OKEX | HUOBI

■ Total Supply (today): 99.015.180 ETH

- The initial funding of the project was made by the payments startup Stripe

- Corporate donors include BlackRock, Google.org, and FastForward

Strong Pros:

(√) Stellar is a non-profit and decentralized version of Ripple

(√) Partnership with IBM and other key players

(√) Developer-friendly software and tools

(√) The Stellar network is free to use

(√) Great technology (the network can handle 1,000-3,000 transactions per second)(√) Cost per transaction is only 0.00001 USD

(√) Transaction confirmation time is 3-5 seconds

Strong Cons:

(x) The founders hold 90% of all XLMs

■ Key Exchanges: BINANCE | UPBIT | GOPAX

■ Total Supply: 103.887.050.716 XLM

an ICO, a Logistics Application, Decentralized Authentication, or more The NEMblockchain's features are available through simple calls to an API Gateway Server andthis simplifies the creation of any application.

Strong Pros:

(√) Customize how you use the NEM blockchain via ‘Smart Assets’

(√) Enables businesses to build a vast variety of real world application uses

(√) Designed for speed and full scalability

(√) Offers innovations such as ‘Proof-of-Imроrtаnсе (POI)’ algorithm, Multi-Signaturecapabilities, and the application of ‘Eigentrust++’ as a reputation system

(√) Introducing “Namespace”, a system that can be used to create unique names andsubdomains like a domain name system

(√) The network can handle 3,000 transactions per second

Strong Cons:

(x) Currently, most developers are skeptical switching to NEM (needs more users)(x) Complicated project (needs to offer more educational resources)

■ Key Exchanges: BITRIX | ZAIF | BINANCE

■ Total Supply (today): 8.999.999.999 XEM

-Programmed from scratch within Haskell coding language

-Cardano is the first platform that uses academically peer-reviewed code

Strong Pros:

(√) Open-sourced, designed to be scalable and reliable

(√) Smart contracts for developing dApps

(√) Backed by scientists and international researchers

(√) 200-250 transactions per second

Strong Cons:

(x) New project, currently undeveloped

■ Key Exchanges: UPBIT | BINANCE

■ Total Supply: 31.112.483.745 ADA

Strong Pros:

(√) Can host dApps, ICOs, and Smart Contracts

(√) Smart Contracts can run 340 times/seconds

(√) NEO is backed by Alibaba and other online giants

(√) Great acceptance in China

Strong Cons:

(x) In the future, Neo may be forced to follow the strict Chinese legislation for thecrypto industry (that may be an obstacle for its future growth)

■ Key Exchanges: BINANCE | BITFINEX | UPBIT

■ Total Supply: 100.000.000 NEO

Strong Pros:

(√) 10,000 transactions per second

(√) Focused on creating a free global соntеnt еntеrtаіnmеnt and sharing system(√) Solid team of developers

Strong Cons:

(x) 100 billion TRX total supply

■ Key Exchanges: UPBIT | BINANCE | BITHUMB

■ Total Supply: 100.000.000.000 TRX

- Note that the total number of Bitcoins today is 16.996.250 BTC

- In total, 21 million Bitcoins can be mined (limit reached in 2140)

Strong Pros:

(√) Massive global popularity and brand name awareness

(√) 2,600 Bitcoin ATMs and acceptance by more than 100,000 merchants

(√) Very liquid asset, and that means you can trade Bitcoin in minimal spreads(difference between Ask/Bid)

(√) Hundreds of crypto markets worldwide offering Bitcoin and exchange it for anycrypto or FIAT currency

Strong Cons:

(x) High fees on all transactions ($42)

(x) Obsolete Technology and low transaction speed (can only handle 4-7 transactionsevery second when VISA can handle 40,000-50,000 transactions every second)

(x) Lack of programmability, as it operates exclusively as a digital currency

■ Key Exchanges: BITMEX | BITFINEX | BINANCE

■ Total Supply: 21.000.000 BTC{20,999,999.9769 BTC}

- In May 2013, the first Lightning Network transaction was completed throughLitecoin, transferring 0.00000001 LTC from Zürich to San Francisco in under onesecond

Strong Pros:

(√) Compared to Bitcoin, Litecoin is considerably faster and more flexible

(√) Popular among traders as one of the first digital currencies in the world

(√) Available for trading in a great variety of crypto exchanges

(√) New Proof of Work algorithm

Strong Cons:

(x) It is not programmable as it is designed as a simple digital currency

(x) Litecoin can handle only 56 transactions per second (much more than Bitcoin butstill poor performance)

■ Key Exchanges: OKEX | GDAX | BITFINEX

■ Total Supply: 56.227.838 LTC

Chapter-4: Technical Analysis Theories

Key Technical Analysis Theories

Technical Analysis is a method of forecasting future price movement based on theevaluation of past price movement and on statistics generated by past market data.Technical analysis is not able to predict future price movements with accuracy but itcan provide a framework for measuring the likelihood that certain price movementsmay occur in the future A technical analyst uses charts and indicators to identifypatterns that can suggest future price movement

Main Focus

Technical analysis focuses on two major issues:

1 What is the current price of a financial asset?

2 What is the history of price movements for this financial asset?

Major Assumptions of Technical Analysis

The process of forecasting future price movement is based on the following majorassumptions:

1 The current price levels incorporate all fundamental data

2 The current price levels incorporate all news

3 Price movements are not ‘totally random’

4 Prices are moving in trends

5 Historic trends are usually repeating in the same patterns

6 Future price movement is more likely to follow the same direction of an alreadyestablished price trend

7 There is no particular timeframe when you trade the market (technical analysisuses multiple timeframes)

Basic Technical Analysis Theories

These are some basic technical analysis theories that may help cryptocurrencytraders to understand and explain the behavior of the cryptocurrency market:

1 Elliott Wave Theory

2 Dow Theory

3 Harmonic Patterns

1 The Elliott Wave Theory

«Exploring the Natural Order»

Ralph Nelson Elliott was a famous American investor (1871-1948) who studied andwrote about the waving behavior of financial markets

Short-Explanation of the Elliott Wave Principle

As Elliott said, what appears random and unrelated will actually trace out arecognizable pattern once you learn what to look for The Elliott Principle tries toexplain how people invest in the financial markets Investor’s psychology isconstantly moving from extreme pessimism to extreme optimism in a natural orderthat create a specific pattern This is especially true as concerns cryptocurrencies.This general pattern involves two (2) phases:

■ Phase-1: Impulsive Phase (or Motive Phase)

-Financial markets are advancing in three up waves, 1, 3 and 5, which areseparated by two down waves, 2 and 4

■ Phase-2: Corrective Phase

-The correction of any advance is happening in three waves (A,B,C)

Graph-2: The Elliott Wave Pattern and its extension in 34 waves

Elliott Wave Theory and Principles

Elliott focused on the behavior of Dow Jones Industrial and discovered that equityprices change in a structural way, reflecting nature’s basic harmony

These are some basic principles of the Elliott Waving model:

 Wave-2 must not fall below the starting of wave-1 If it falls below then thepattern is still in prior trend

 Wave-3 must not be the shortest wave compared to Wave-1 and wave-5

 Wave-4 must not overlap the range of wave-2

Confirming the Completion of Waves with Volume Activity

The end of each wave is usually characterized by increased volume activity That isespecially true when the whole impulsive phase is near completion at the end ofwave-5

The Best Times to Trade

■ Best time to trade long during the impulsive phase is when wave-4 is nearcompletion Risk-averse traders prefer to wait until wave-5 has moved above thehighest point of wave-3

■ Best time to trade short during the corrective phase is after wave-C has fallenbelow the lowest point of wave-A

Elliott Waves and Degrees

Elliott discerned nine degrees of waves These are all the degrees from smallest tolargest:

i Subminuette

ii Minuette

iii Minute

iv Minor

v Intermediate

vi Primary

vii Cycle

viii Supercycle

ix Grand Supercycle

Graph-3: Elliott Wave Degrees and Symbols as described by Robert R Prechter, Jr