Cryptocurrency Trading Guide

CR Y PTOCUR R RE NC Y TR ADING GUIDE « TR AD A DING THE DECENTR AL A LIZ A AT TION OF THE FIN A AN NCI A AL L S Y STEM »

For Beginn Beginners ers & Advan Advanced ced Cryptocurrency Traders

Cr yptocur r Tr ading G Guide © 201 8 re ncy T © A Apr il 2 Geor ge M M. P Pr otonotar ios © r ights r r eser ved © -All r Exper tSignal.com Distr ibution b by Q Qexper t.com

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«Trading the Decentralization of f tthe Financial System»

CR Y PTOCUR R ADING GUIDE RE NC Y TR « TR AD A DING THE DECENTR AL A LIZ A AT TION OF THE FIN A AN NCI A AL L S Y STEM »

- T ABLE OF CONTENTS • •

PR EF ACE

CH APTER -1: INTR ODUCTION TO CR Y PTOCUR R RE NCIES................. «The New Decentralized Financial Era»

- The Short History of Crypto - Cryptocurrency F AQ AQ

CH APTER -2: STOR ING CR Y PTOCUR R RE NCIES............................................... - Cryptocurrency Wallets - Taxation

CH APTER -3: PR OMISING CR Y PTO PR OJECTS............................................. - Evaluating Cryptocurrencies - Promising Pro jects 

R IPPLE | EOS | IOT A | ETHER EUM | STELL AR AR | R | NEM



C AR D ANO | NEO | TR ON | BITCOIN | LITECOIN

CH APTER -4: TECHNIC AL AN AL Y SIS THEOR IES......................................... «K ey Technical A nalysis Theories»

- Elliott Wave Theory - Six (6) Phases of Dow Theory - Harmonic Patterns 3 / 87


CH APTER -5: TR ADING PL ATFOR MS......................................................................... - Online Cryptocurrency Platf orms - MT4 /M /MT5 Platf orms - CFD Accounts

CH APTER -6: TECHNIC AL INDIC ATOR S................................................................ «Technical A nalysis Indicators»

- Creating Custom Indicators - M AC ACD - Moving Averages

CH APTER -7: MONE Y M AN AGEMENT..................................... . . ............................. .

.

.

«The Importance of an Ef f fe ctive Money Management System»

- The Two Basic Questions f or Successf ul Trading - Trading Leverage & Formula

CH APTER -8: CR Y PTOCUR R RE NC Y E X CH ANGES............................................ - Evaluating Exchanges - List of Crypto Exchanges

• •

APPENDIX

- Trading Orders - Website R esources

• •

R EFER ENCES

• •

BIBLIOGR APH Y

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PREFACE: Since 2009, cryptocurrencies cryptocurrencies have changed the rules of the global financial game. game. A decade ago, ago, the issue, exchange, and use use of digital money without the the intervention intervention of a centralized centralized bank bank was a dream for the financi financial al industry. industry. That dream dream came true true faster than anyone could could have predicted. predicted. The global global penetration of the World Wide Web works as an accelerator to the acceptance of every new technology that aims to serve the emerging needs of people. people. This is the ultimate goal of every technology, technology, to better meet the needs of people, and nothing else matters.

There are many academics academics considering considering cryptocurrencies cryptocurrencies as a bubble ready to burst, payi paying ng a life lifeti time me less lesson on to eve every ryon onee invo involv lved ed.. Thes Thesee acad academ emic icss simp simply ly cann cannot ot understand the magnitude magnitude of the financial revolution emerging emerging from cryptography. cryptography. It should should be be irrelevant irrelevant for academic academicss if the the price of Bitcoin Bitcoin moves moves from from $20,000 $20,000 to $3,00 $3,000 0 and then then back back to to $20,0 $20,000. 00. What What really really matt matters ers is the tech techno nolog logyy behind behind the cryptocurrency ecosystem. Actually, cryptocurrencies themselves are just a simple application of the Blockchain techno technolog logy, y, just just the top top of of the the icebe iceberg. rg. Crypt Cryptog ograp raphy, hy, Scalab Scalable le Block Blockcha chain, in, Smar Smartt Cont Contra ract cts, s, Smar Smartt Asset Assets, s, Dece Decent ntra ralilize zed d Apps Apps,, Dire Direct cted ed Acyc Acyclic lic Gra Graph ph,, and and othe otherr technologies are here to stay, and promise to change our financial universe for good. Neverthele Nevertheless, ss, from a trader’ trader’ss point point of view, price matters, matters, and this ebook ebook includes includes a wide wide var varie iety ty of of usef useful ul res resou ourc rces es and and tips tips in ord order er to help help tra trade ders rs unde unders rsta tand nd the the behavior behavior of the the crypto cryptocurr currency ency market market and and explain explain the extreme extreme fluctuatio fluctuations ns of of cryptocur cryptocurrenc rencyy asset asset prices. prices.

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Graph-1: Currency is only the top of Iceberg

As in the case of every other major revolution, there are many scammers in the crypto crypto industry, industry, who are trying trying to take take advant advantage age of the the lack lack of regulation regulation and make money by deceiving the public. The World Wide Web includes a great variety of website website resource resourcess and especiall especiallyy forums forums (APPENDIX) (APPENDIX) that may help cryptocu cryptocurrenc rrencyy trader traderss to avoid avoid these these scam scammer mers. s. George M. Protonotarios, Athens Financial Financial Analys Analystt -Msc in “ in “Int. Int. Banking & Finance” Finance” Salford, Salford, UK Link Linked edin in:: » https://www.linkedin.com/in/qexpert/

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Chapter-1: Introduction to Cryptocurrencies The New Decentr Decentralized alized Financial Financial Era

Crypto Cryptocu curre rrenci ncies es are virtu virtual al curren currencie ciess operat operating ing as a decent decentral ralize ized d network network,, using using cryp crypto togr grap aphy hy for for secu securi rity ty,, and and a publ public ic ledg ledger er (the (the Bloc Blockc kcha hain in)) to reco record rd all all transactions. Cryptography Cryptography is an encryption encryption method that uses uses advanced techniques to verify and secure transactions, the Blockchain Blockchain refers to a database 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 Bitcoin star starte ted d in a cry crypt ptog ogra raph phyy mail mailin ing g list list sent sent by the the nick nickna name me Sato Satosh shii Nak Nakam amot oto o in 2009. This is the short history history of cryptocurrencies: cryptocurrencies: □ 1983: 83: The American cryptographer David Chaum conceived an anonymous cryptographic electronic money called eCash

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□ 1995: 95: The implementation implementation of Digicash, an early form of cryptographic cryptographic electronic electronic paym paymen entt requ requir irin ing g user user soft softwa ware re and and enc encry rypt pted ed keys keys in orde orderr to with withdr draw aw notes from a bank □ 1996: 96: Laurie Laurie Law, Susan Susan Sabett, Sabett, and Jerry Solinas Solinas (NSA Cryptolo Cryptology gy Division) Division) publishe published d a paper entitled entitled “How to Make Make a Mint: the Cryptog Cryptograph raphyy of Anonymous Electronic Electronic Cash”, describing describing a Cryptocurrenc Cryptocurrencyy system □ 1998: 98: Wei Dai published a description description of "b-money", an anonymous, anonymous, distributed distributed electronic cash system □ 2009: 09: Bitc Bitcoi oin n crea creati tion on by Satos atoshi hi Naka Nakamo moto to (nic (nickn knam ame) e) usin using g a SHASHA-25 256 6 cryptographic hash function as its proof-of-work scheme □ 2011: 11: The release of Litecoin, using using for the first first time scrypt scrypt instead of a SHA-256 cryptographic hash function □ 2012: 12: The official official release release of Ripple Ripple (Ryan Fugger Fugger conceived conceived Ripple Ripple in 2004) 2004) □ 2013: 13: Mastercoin is the world’s first initial coin offering (ICO). In November, the world's first Bitcoin ATM opens □ 2014: 14: The The worl world’ d’ss lar large gest st exc excha hang ngee ‘Mt ‘Mt Gox’ Gox’ decl declar ares es ban bankr krup uptc tcy. y. Due Due to a vulnerability in the protocol, 6% of all circulated Bitcoins were stolen from the “cold storage” storage” of Mt Gox □ 2015: 15: The release release of Ethereum Ethereum (proposed (proposed by by Vitalik Vitalik Buterin), Buterin), a revolution revolutionary ary platform that attracted immediately hundreds of cryptocurrency developers □ 2017: 17: The cryptocurrency prices are booming in astronomical levels. The total market market capitalizatio capitalization n of cryptocurren cryptocurrencies cies exceeds exceeds for the first time 100 billion billion US Dollars. The global global financial and monetary monetary system will never be be the same again 8 / 87


Cryptocurrency FAQ What are Altcoi Altcoins ns and Forks? Forks? Altcoins are all cryptocurrencies cryptocurrencies alternative to Bitcoin. Most altcoins are Forks of Bitcoin. A Bitcoin Fork is a crypto-coin built on Bitcoin’s open-sourced protocol (i.e. Litecoin). There are also cryptocurrencies cryptocurrencies that have built their their own protocols including including Ethereum, Ethereum, Ripple Ripple,, Waves, Waves, and many many more. 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 records all transactions via the use of a public ledger. After the completion of a certain number of transactions, the Blockchain generates a new block. -A block is a database entry, which stores information about the present and all previous transactions. -Each -Each blockchain blockchain proces processs is executed executed using using an ecosystem ecosystem of millions millions of community community computers computers which store store their own copy copy of the the blockch blockchain’s ain’s records. records. Only ifif all copies copies are in agreement, a block becomes a permanent link in the Blockchain. What are Tokens? The ecosystem of cryptocurrencies cryptocurrencies includes includes coins and tokens. tokens. Tokens are digital projects projects created created through through an Initial Initial Coin Offer Offering ing (ICO) (ICO) and differ differ from from coins coins due to their structu structure. re. Tokens Tokens operate operate on top top of a Blockcha Blockchain in in order order to create decent decentral ralize ized d applic applicati ation ons. s. These These projec projects ts trade trade on crypto cryptocu curre rrenc ncyy exchan exchanges ges as common altcoins.

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Initial Coin Offerings (ICOs) An Initial Coin Offering is the introduction of a new altcoin in the cryptocurrency cryptocurrency ecosystem. It is the same as an IPO for stocks. The world’s first ICO was held by Mastercoin in July 2013. Bitcoin Mining Bitcoin mining refers to the process of verifying all Bitcoin transactions and include them in a publ public ic ledge ledgerr (Block (Blockchai chain). n). Minin Mining g is a comple completely tely dece decentral ntralized ized proc process ess with miners operating in all over the world.

Miners get new Bitcoins as a reward for their efforts. As more miners join a network, mining minin g beco becomes mes incre increasing asingly ly less less profi profitable table.. Note Note,, that that NOT NOT every digi digital tal curr currency ency requires mining and miners. Delegated Proof of Stake (DPoS) As mining is too wasteful of energy, a blockchain engineer (Daniel Larimer) built the Delegated Proof of Stake, or DPoS, which is an alternative to the traditional ‘Proof of Work’ used by most cryptocurrencies. cryptocurrencies. DPoS can handle up up to 100,000 100,000 transactions per seco second, nd, wherea whereass Bitco Bitcoin in can hand handle le only only 7 transa transacti ction onss and Ether Ethereum eum up up to 20 transactio transactions ns per per secon second. d. There are quite quite a few few platforms platforms that have adapted adapted DPoS including EOS, Steem, Steem, Bitshares, Bitshares, Lisk, and Ark. 10 / 87


What are Smart Contracts? Smart contracts are are small self-executed self-executed programs that aim to facilitate the exchange of anything of value on the internet. Smart contracts offer maximum security, as they operate exclusively on the blockchain. That means they can eliminate any external interference by performing 100% as they were originally programmed. programmed.

Is Bitcoin Anonymous? Bitc Bitcoi oin n is not not anon anonym ymou ous, s, as a publ public ic ledg ledger er reco record rdss all tran transa sact ctio ions ns.. Ther Theree are othe otherr anonymous crypto-coins such as: •

Monero

•

Z.cash

•

Dash

•

Komodo

•

Zcoin

•

ZenCash

•

PIVX, and

•

Verge

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What Influences Influences the Price of Cryptocurrenci Cryptocurrencies? es?

As in in the case of every other financial-traded asset, the price of a cryptocurrency depends depends on the general general dynamics dynamics of Demand Demand/Sup /Supply. ply.

These These are all major major factor factorss affec affectin ting g direct directly/ ly/ind indire irectl ctlyy the dem demand and and and the the supply supply for a parti particul cular ar crypto cryptocur curren rency cy asset: asset: I.

INTERNAL FACTORS

•

Necessity of the Project

•

The Team Behind

•

Technological Technological Efficiency of the the Project Project

•

Security/Vulnerability

•

Programmability

•

Scalability of the Project

•

Manage Managemen ment’s t’s Abilit Abilityy to Achiev Achievee its Stated Stated Goals Goals

•

Part Partne ners rshi hip p with with a Key Key Pla Playe yerr

•

Acceptance by an Important Online Online Merchant

•

Listing in a Large Cryptocurrency Cryptocurrency Exchange

•

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

II.

EXTERNAL/DIRECT FACTORS

•

Legislative Legislative Change Changess in Key Countries Countries (new regulat regulation) ion)

•

Phycology Phycology of the the Market Market (this is the subject subject of technical technical analysis) analysis) 12 / 87


•

Existence of Alternative Projects (serving the same needs) needs)

•

New/Emerg New/Emerging ing Technolog Technologies ies (that can create create alternative alternative projects projects in the future)

•

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

•

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

III II..

EXT XTE ERN RNA AL/ L/IN INDI DIRE REC CT FAC FACTO TORS RS

•

New Mac Macroe roeco conom nomic ic Con Condit dition ionss in Key Co Count untrie riess

•

New Social and Political Conditions

•

Inte In tere rest st Rat Ratee Risk Risk (a (ass cr cryp ypto tocu curr rren ency cy is an al alte tern rnat ativ ivee in inve vest stme ment nt to as asse sett clas cl asse sess pa payi ying ng an an annu nual al inte intere rest st rate rate,, su such ch as Tr Trea easu sury ry Bi Bills lls,, No Note tes, s, and and Bonds)

•

•

Extreme Volatility Volatility in other other Financial Financial Markets System Syst emic ic Risk (e (eve very ry finan financi cial al as asse sett pr pric icee in incl clud udes es the ri risk sk th that at the en enti tire re system will su sudde ddenly nly col collap lapse, se, thi thiss is cal called led Sys System temic ic Ris Risk) k)

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Chapter-2: Storing Cryptocurrencies Crypto Cryptocurr currenc encyy Wallet Walletss & Tax Taxati ation on

Crypto Cryptocu curre rrenci ncies es can be be stored stored in in three three (3) majo majorr types types of wall wallets ets (onl (online ine,, softwa software, re, and hardware hardware wallets wallets). ).

What is a Crypto Wallet? A Bitcoin wallet is a software/hardware software/hardware solution used to store, manage, and transfer Bitcoins/A Bitcoins/Altcoi ltcoins. ns. The coins coins are stored stored in the the wallet wallet as private private keys (secret (secret number numbers). s). Moreover, a cryptocurrency cryptocurrency wallet works as the essential mechanism mechanism behind behind every cryptocurrency transaction. transaction. These are the key functions functions of a crypto crypto wallet:

● Storing a Variety of Crypto Crypto in a Single Place A cryptocurrency wallet wallet can store multiple multiple crypto assets assets in the same place. place. ● Wall Wallet etss Stor Storee Publ Public ic Keys Keys Every record of a Blockchain includes includes the seller’s and buyer’s buyer’s Public Keys. The Public Key is not confidential information and works like an email address. ● Wallet Walletss Store Store Public Public Keys Keys with with Secu Security rity The The Pri Priva vate te Key Key is is a very very conf confid iden enti tial al info inform rmat atio ion n and and work workss like like the the password of your email. If someone gest access to your Private Keys, he can also steal your coins. ● Buying/S Buying/Sellin elling g Coins Coins A wallet can send a message to another wallet using the Public Key in order to generate a unique transaction ID.

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Type Types s of Cryp Crypto tocu curre rrenc ncy y Wall Wallet ets s

Different Different types of crypto crypto wallets wallets offer offer different different layers layers of protectio protection. n. The most secure secure method method of stor storing ing crypt cryptocu ocurre rrenci ncies es is a hard hardware ware wallet wallet.. These These are are all the types types of crypto wallets: (i) PC-Based PC-Based Softwar Softwaree Wallets (ii) Smartphone-Based Smartphone-Based Wallets (use the phone’s phone’s camera to scan QR codes) codes) (iii) Online Online Wallets Wallets in Central Central Servers (require (require online online accounts accounts)) (iv) Hardware Wallets The Cost Cost of Owing Owing a Wallet Wallet Online and software wallets wallets are free but offer limited limited security. security. On the other hand, hand, a good hardware wallet costs costs about $100 $100 and offers offers much better security. security. These are the dominant hardware wallets today: •

TREZOR TREZO R whic which h cos costs ts $110 $110 (Bitc (Bitcoin, oin, Ether Ethereum, eum, Dash Dash,, Zcash) Zcash)

•

NANO-S NANO -S whic which h costs $99 (Bitc (Bitcoin, oin, Liteco Litecoin, in, Ethereum Ethereum,, Dash, Dogeco Dogecoin, in, Zcash, Zcash, Stratis)

•

KEEPKEY KEEPKE Y which costs costs $129 (Bitc (Bitcoin, oin, Liteco Litecoin, in, Ethereum Ethereum,, Dash, Dogec Dogecoin, oin, Namecoin, Testnet)

Image: Imag e: The three three hard hardware ware wallets wallets in the same same order order (as mention mentioned ed befo before) re)

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Cryptocurrency Taxation The classific classification ation of cryptocu cryptocurrenc rrencyy assets assets and the taxation taxation of gains gains depend depend entirely entirely on the country of residence. In Europe, most countries are waiting for a common EU legislation towards cryptocurrency taxation.

Examples Examples of of Cryptoc Cryptocurren urrency cy Taxati Taxation on in an Internati International onal Level

•

In the United States, the gain derived from a Bitcoin investment is taxed as “Property”. Cryptocurrencies Cryptocurrencies can be classified as business, investment, or personal property. These are some basic tips: -Τhe best option for the American traders, traders, is to buy and hold hold crypto for more than one year (taxes (taxes are much much lower lower for over over 1 year investm investment) ent) -When you sell a cryptocurrency with a significant profit, keep your money in US Dollars. Do not not convert from one cryptocurrency cryptocurrency to another

•

In the the United United Kingdo Kingdom, m, cryptocu cryptocurrenc rrencyy money money is consi considere dered d ‘Private ‘Private Money’ Money’ and no tax is paid if the capital gains gains don’t exceed the £11,300 threshold threshold (this is valid for personal personal income under £100,000) £100,000)

•

In Germany, Germany, cryptocurr cryptocurrency ency money money is classified classified as ‘Private ‘Private Money’, Money’, the same way 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 a progressive 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 tax 16 / 87


•

In Canada, cryptocurrencies are classified as ‘Commodities’, and there is a capital gain tax

•

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

•

In China, China, crypt cryptocur ocurrenc rencies ies are classi classified fied as as ‘Virtual ‘Virtual Commodi Commodities’ ties’ and there there is no tax yet

•

In Japan, Japan, crypto cryptocurre currencies ncies are classi classified fied as a ‘Method ‘Method of of Payment’ Payment’ and there there is a capital gain tax

•

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

Coin Mining Activity Income from from coin mining is taxable in many countries countries (note that the mining expenses are deductible in the taxable year). •

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

•

In the US, US, coin coin mining mining is taxable taxable by the IRS only only if the reward rewardss emerging emerging from coin mining exceeds $400 in any tax year 17 / 87


Crypto Tax Heavens There are many countries where there is no tax on on capital gains from cryptocurrency cryptocurrency transactions. These are some tax heavens around the world: •

•

Europe (Denmark, Switzerland, Italy, Cyprus, Serbia, Belarus, and Slovenia) Asia (Singapore and and Hong-Kong) Hong-Kong)

•

Oceania (New Zeeland)

•

Other (Barbados, Mauritius)

General Rules for Cryptocurrency Traders

•

Get often updates regarding the tax tax policy of your country country

•

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

•

If your your capi capita tall gain gainss from from cry crypt ptoc ocur urre renc ncyy trans transac actio tions ns are are signi signifi fica cant nt,, don’ don’tt hesitate hesitate to hire a speci specialized alized crypto crypto account accountant ant

•

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

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Chapter-3: Promisin Promising g Crypto Crypto Projects Projects Evalua Evaluating ting Crypto Cryptocur currenc rencies ies & Promis Promising ing Projec Projects ts

In the first part, you will find some key tips on on how to evaluate evaluate cryptocurrency cryptocurrency assets assets.. In the second second part, part, you you will will find find basic basic infor informa matio tion n and and the the total total suppl supply y of some important crypto assets.

Evaluating Evaluating Cryptocur Cryptocurrencie rencies s Evalua Evaluatin ting g crypto cryptocur curren rencie ciess is almost almost the same same as as evalua evaluatin ting g stocks stocks.. The key key numbe numberr to take take into into cons consid ider erat atio ion n is the the Mark Market et Capi Capita taliliza zati tion on deri derive ved d from from Price Price time timess the the Total Supply Supply of coins coins (NOT (NOT from from the the Circulati Circulating ng Suppl Supply). y). If you you want want to evaluate evaluate a crypto cryptocur curren rency cy projec projectt like like a profes professio siona nall invest investor, or, you always always need need to consi consider der the Total Capitaliz Capitalizatio ation. n. These are some basic steps: 1.

Calculating Total Capitalization

Before Before you you buy anything, anything, you must must first first find out how much much it is really worth. worth. Total capitaliza capitalization tion is derive derived d when multiplyin multiplying g the the current current price ($) by by the total total number number of of coins/tokens (MAX SUPPLY). □ Capi Capital taliza izatio tion n ($) ($) = Total Total Suppl Supplyy X Curre Current nt Pric Pricee ($) ($) 19 / 87


Keep that figure in mind because you will need it later. 2.

Level Level of Technolog Technology y and Necessity Necessity of of the Project Project

Visit the website of the the project, and try to answer the following questions: questions: - Why Why has someon someonee create created d this this Coin/ Coin/To Token ken?? - Is it usef useful ul for people people?? - Does it solve solve major major problems problems?? - Is it usef useful ul to many many people people,, or only only to a few? few? - Is this project project unique? unique? - Are there alternativ alternativee projects projects solving solving the same problem? problem? - What What is the curr current ent pha phase se of the the proj project ect accord according ing to to its Road Road Map? Map? (Creat (Creating ing period, beta period, full-launch) 3.

Who is Behind the Project

This is maybe the most important important aspect of any investment, real real or digital. The Importanc Importancee of an Effective Effective Project Project Manageme Management nt When When inves investin ting g in equiti equities es they they say say that that the the bes bestt oppo opportu rtunit nities ies in life life come come from from comp compan anie iess with with a very very bad bad bal balan ance ce she sheet et and and a very very good good mana manage geme ment nt.. Good Good management will provide the best probabilities for the project’s long-term success. Any respectable project must present a full full team on the official official website. The question questionss emerging emerging at this this stage stage are the follow following: ing: - Is there there a team presente presented d on the website website will will full names names and and detailed detailed inform information ation?? - Where Where does does this this team team come come from? from? - Are Are they they exp exper erts ts in the their ir fiel field? d? - Have Have they been been involv involved ed succes successfu sfully lly with with other other crypto crypto projec projects ts in the the past? past? 4.

What Do Internet Internet Users Users Say About About this this project? project?

It is always useful to check what others have have to say say about something. something. Do not focus enti entire rely ly on the the revi review ews, s, as a grea greatt numb number er of thes thesee revi review ewss are are fake fake.. Focu Focuss on crypto-fo crypto-forums rums (APENDIX) (APENDIX) where the the commun community ity validates validates every every reviewer. reviewer. 5.

Using Smart Smart Metrics Metrics to Estimate Estimate the Fair Value Value

During During my my career career as an an investm investment ent con consul sultan tant, t, I was inv involv olved ed in numero numerous us investment investment/fin /financin ancing g plans. plans. For the evalua evaluation tion of these these projects, projects, I have used used a great 20 / 87


variet varietyy of altern alternati ative ve metho methods, ds, such such as DCF DCF (Disc (Discou ounte nted d Cash Cash-Fl -Flows ows), ), P/E P/E (Price/Earnings), P/S (Price/Sales), (Price/Sales), P/Bv (Price/Book (Price/Book Value), Dividends Dividends Method, and a great variety of empirical methods. If I lea learn rned ed anyt anythi hing ng of of valu value, e, itit is that that the the best best way way to to est estim imat atee the the ‘fai ‘fairr pric price’ e’ of any project project is by by using using empirica empiricall metrics. metrics. It may sound sound strange, strange, but the best best financ financial ial analysts in the world use empirical metrics to look

far

ahead of

the

market.

Why Why Usin Using g Empi Empiri rica call Data Data?? Accountants can easily manipulate accounting data, but it is very difficult for anyone to manip manipula ulate te empir empirica icall data. data. In In addit addition ion,, most most peop people le do not not use empiri empirica call data, data, and and that means you can look ahead of the market. -Empirical metrics can serve as a tiebreaker in your decision-making process. process.

Here are some smart smart metrics for comparing cryptocurrencies: cryptocurrencies: (a) Volume Volume/Ma /Marke rkett Cap Cap Ratio Ratio The Volume/C Volume/Capita apitalizat lization ion Ratio can be be used used for for comparin comparing g the volum volumee activity activity of multiple multiple crypto crypto coins: coins: □ Ratio Ratio = (Volume/M (Volume/Marke arkett Capitaliza Capitalization) tion) % -The greater greater the ratio, ratio, the better better 21 / 87


An easy way to compare crypto based on empirical data is by creating a table that includes the empirical performance of a variety of cryptocurrencies and compare them in respect to their capitalization. Here is an example using the Volume/Market Cap Ratio. Table-1: Table-1: Comparin Comparing g Coins Based Based on Volume/Ma Volume/Market rket Cap Ratio Ratio

CRYPTO

TOTAL SUPPLY

MARKET CAP ($)

24H VOLUME ($)

VOLUME / MARKET CAP (%)

Litecoin

56421838 LTC

9,16 9,165, 5,61 614, 4,68 683 3

556, 556,35 358, 8,00 000 0

6.07%

Bitcoin Cash

17114538 BCH

27,886, 27,886,940, 940,839 839

1,476,66 1,476,660,00 0,000 0

5.30%

Ethereum

99282952 ETH

72,019, 72,019,257, 257,864 864

3,138,12 3,138,120,00 0,000 0

4.36%

Bitcoin

17019900 BTC

159,140 159,140,490 ,490,17 ,174 4

6,807,33 6,807,330,00 0,000 0

4.28%

100000000 NEO

7,81 7,814, 4,36 360, 0,00 000 0

153, 153,27 273, 3,00 000 0

1.96%

Cardano

31112483745 ADA

10,2 10,284 84,0 ,013 13,7 ,715 15

146, 146,49 494, 4,00 000 0

1.42%

Ripple

99992263539 XRP

82,5 82,511 11,2 ,216 16,0 ,058 58

591, 591,95 950, 0,00 000 0

0.72%

Stellar

103906864158 XLM

41,0 41,084 84,0 ,046 46,7 ,740 40

38,1 38,184 84,3 ,300 00

0.09%

ATMCoin

10000000000 ATMC

28,084, 84,600 600,00 ,000

7,300,4 0,400

0.03%

SolarCoin

98034424373 SLR

41,278,570,796

108,460

0.00%

NEO

Notes: - The table consi consists sts the the 10 largest largest cryptoc cryptocurren urrencies, cies, in in terms terms of market market capitalization (Data: CoinMarketCap) CoinMarketCap) - For this this time only, only, it would would be better better to calcu calculate late Market Market Capitaliz Capitalizatio ations ns based on Circulating Supply, and not on Total Supply - The above table includes includes 24-hour volume volume data, data, but it would be wiser to use averag averagee volum volumee data data from from a 30-day 30-day peri period, od, in your your own tables tables (b) (b) Inte Intern rnet et Traf Traffi ficc Metr Metric icss For example, example, check the current Alexa ranking of a project’s website, and and compare compare it with the the rankin ranking g 12 months months ago, and then then 6 months months ago. This way you you can can get get an idea about about the the growing growing interest interest of the the publi publicc for for a cryptoc cryptocurren urrency cy project. project. - Keep in mind that there are ways scammers can manipulate manipulate Alexa rankings rankings

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(c) Google Google Keyword Keyword Planner Planner or Similar Similar SEO SEO Tools Tools Use enquiries such as ‘Buy Ethereum’ or ‘Ripple Exchange’ to estimate the public interest for specific coins. - How many enquires enquires are made for particular particular keywords including this project? project? (d) (d) Soci Social al Medi Mediaa Metr Metric icss The interest interest of people people for for a particula particularr project project will be obviou obviouss in the social social media. media. These are some important social media channels for that job: - Twit Twitte terr - Face Facebo book ok - Redd Reddit it - Tele Telegr gram am

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Promisi Promising ng Cryptocu Cryptocurren rrency cy Projects Projects These are some important important cryptocurrency cryptocurrency projects (most of them are platforms): platforms):

Ripple (XRP) ■Official Website: https://Ripple.com/ ■General Info/Technology: Ryan Fugger Fugger conceived conceived Ripple Ripple in 2004, the intent was was to create a decentralized decentralized network empowering empowering individuals individuals and and communities communities to create their own money. In its current current form, form, Ripple Ripple is is a payment payment network network designe designed d to be used used by by intern internatio ational nal banks. Currently, Currently, the organization organization partner with with more than than 100 banks banks worldwide. worldwide. The project project aims aims to connec connectt exchang exchanges, es, banks, banks, and corpor corporatio ations ns via via the the Ripple RippleNet Net to provide a global global payment system. system. According to Ripple: Ripple: “In a world where three billion people are connected online, cars drive themselves and appliances can communicate, global payments are still stuck in the disco era...”

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 financial institutes 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 24 / 87


EOS (EOS) ■Official Website: https://Eos.io/ ■General Info/Technology: EOS is an alternative platform to Ethereum, which supports thousands of dApps. The platform separate separatess authentication authentication from from execution execution and uses DPoS (Delegated (Delegated Proof of of Stake) instead instead of Proof of Work. You can find find more informati information on about about DPoS in Chapte Chapter-1 r-1.. EOS EOS requi requires res no minin mining g and and ins instea tead d of of mine miners, rs, there there are 21 dele delega gates tes,, voted on by all EOS stakeholders. -EOS partner partner with Bitfine Bitfinex, x, Bitfi Bitfinex nex has announ announced ced a new new decen decentrali tralized zed exch exchange ange built on EOS technology

Strong Pros: √) Advanced and (so far) (√) Advanced far) stable technolog technologyy (√) 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

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IOTA (MIOTA) ■Official Website: https://www.IOTA.org/ ■General Info/Technology: Created in 2015, 2015, IOTA is a ledger technology technology promising promising to function function as the backbone backbone and the the main payment system of the Internet of Things Things (IoT). The platform platform uses Directed Acyclic Graph (DAG) for storing transactions instead of the classic Blockcha Blockchain. in. IOTA IOTA is the first first openopen-sou source rce distri distribute buted d ledger ledger that is is being being built built upon upon the ‘Internet of Things’ Things’ with microtransac microtransactions tions and data data integrity integrity for machines. machines. Notes: -IOTA funded via an Initial Coin Offering (about 1,340 Bitcoin were invested) invested) -The ‘Internet of Things’ Things’ is expected to be worth over $260 billion billion by 2020

Strong Pros: (√) IOTA IOTA (MIOTA) (MIOTA) is the dominan dominantt currenc currencyy of ‘Interne ‘Internett of Things’ Things’ (√) Designed to scale in a vast level (√) No transac transaction tion fees fees No miners are (√) No are required as there are no blocks blocks (√) Currently can handle maximum 1,000 transactions per second ( that that numb number er can can grow 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

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Ethereum (ETH) ■Official Website: https://Ethereum.org/ ■General Info/Technology: Ethereum is an an extremely extremely popular popular platform platform providin providing g coders coders with all all the the essential essential tools to build decentralized applications and self-executed smart contracts. The EVM (Ethereum Virtual Machine) runs on the Ethereum network and enables coding any program no matter the programming language. The Ether cryptocurrency (ETH) plays the rol rolee of a payme payment nt syste system m for for prog program ramss to run run in the the Ethere Ethereum um netwo network. rk. Ethere Ethereum um has introduced introduced smart smart contracts contracts to the world, an enormous enormous innovati innovation on for the crypto crypto industry, industry, but without without predicting predicting the need need of scalability. scalability. Currently, Currently, the network’s network’s dApps are fully programmable but not fully scalable. Ethereum developers are working on solving the scaling problem in future versions of the network. Furtherm Furthermore, ore, there is NO predefin predefined ed set set bloc blockk limit, limit, meani meaning ng we we cannot cannot currentl currentlyy estimate the total total supply supply of Ethers in the the future. That That may be good good news for the network’s future funding funding capabilities, capabilities, but but it is bad news news for pricing the coin today.

Pros & Cons □ Stron Strong g Pros: Pros: (√) Revolutionary technology supported by a vast community (√) Popular Popular coin among among traders traders √) Available for (√) Available for trading trading in numerous numerous crypto markets cryptocurrency projects (√) Most cryptocurrency projects are developing on top of Ethereum, Ethereum, and that fact creates a constan constantt demand for Ethers Ethers

Strong Cons: (x) Signific Significant ant lack of scalab scalability ility (dApps) (dApps) 27 / 87


(x) Can only handle 15-20 transactions every second (x) $0.76 cost per transaction (considerably higher than newer coins) (x) No set block block limit today today (we cannot cannot estimate estimate the coin’s future capitalization capitalization))

■Key Exchanges: BITFINEX | OKEX | HUOBI ■Total Supply (today): 99.015.180 ETH

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Stellar (XLM) ■Official Website: https://www.Stellar.org/ ■General Info/Technology: Stellar Stellar is an innovati innovative ve decentra decentralize lized d (non-p (non-profi rofit) t) platfor platform m that aims aims to connect connect banks banks,, payments payments systems, and and people using using smart contracts contracts (like Ethereum). Ethereum). Transactions Transactions on the decentralize decentralized d Stellar network resolve resolve in 3-5 3-5 seconds seconds with with minimal minimal fees. Notes: - The initial initial funding funding of the the project project was made made by by the payments payments startup Stripe - Corporate Corporate donors include include BlackRock, Google.org, Google.org, and FastForward FastForward

Strong Pros: non -profit and decentralized version of Ripple (√) Stellar is a non-profit (√) Partnership artnership with IBM and and other key players players (√) Developer-friendly software and tools (√) The Stellar network is free to use (the network can handle (√) Great technology (the handle 1,000-3,000 1,000-3,000 transactions 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

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NEM (XEM) ■Official Website: https://nem.io/ ■General Info/Technology: Built Built from from scratch scratch in 2015, 2015, NEM aims to creat createe a new decentr decentralize alized d and fully fully scalab scalable le econ econom omy. y. NEM’ EM’s arc archite hitect ctu ure inc include ludess seve severa rall inte intere resstin ting inn innovat ovatio ion ns towa toward rdss achi achiev evin ing g flex flexib ibililit ity, y, cust custom omiz izat atio ion, n, and and scal scalab abililit ity. y. Usin Using g ‘Sma ‘Smart rt Asse Assets ts’, ’, NEM NEM promises promises to to offer offer exactly exactly what what the devel develope operr needs, needs, whethe whetherr that’s that’s a Fintech Fintech syste system, m, an ICO, ICO, a Logi Logisstics tics Appl Applic icat atio ion n, Dece Decen ntra tralize lized d Auth Authen enti tica cati tion on,, or more more.. The The NEM NEM blockcha blockchain's in's featu features res are availab available le through through simp simple le calls calls to an API API Gateway Gateway Serve Serverr and this this simpli simplifi fies es the crea creatio tion n of any any appl applica icatio tion. n.

Strong Pros: (√) Customize Customize how you use the NEM blockchain via ‘Smart Assets’ Assets’ (√) Enables businesses businesses to to build build a vast variety of real real world application application uses (√) Designed for speed and full scalability (√) Offers innovations innovations such as ‘Proof-of-Imро ‘Proof-of-Imроrtаnсе rtаnсе (POI)’ algorithm, algorithm, Multi-Signature Multi-Signature capabilities, capabilities, and the application application of ‘Eigentrust++’ ‘Eigentrust++’ as a reputation reputation system system (√) Introdu Introducing cing “Namesp “Namespace” ace”,, a system system that that can be used used to crea create te unique unique names names and subdomains subdomains like a domain domain name system system (√) The netwo network rk can can handle handle 3,000 3,000 transac transaction tionss per seco second nd

Strong Cons: (x) Current Currently, ly, most most develop developers ers are skeptic skeptical al switchin switching g to NEM (needs (needs more more users) users) (x) Complicated Complicated project project (needs to to offer more educational educational resources) resources) ■Key Exch Exchan anges ges:: BITRI BITRIX X | ZAIF ZAIF | BINANC BINANCE E ■Total Supply (today): 8.999.999.99 8.999.999.999 9 XEM 30 / 87


Cardano (ADA) ■Official Website: https://www.Cardano.org/en ■General Info/Technology: Cardano is a 3rd-generation 3rd-generation open-source open-sourced d blockchain blockchain project that that evolved out of a research-driven approach. The Cardano team is developing a smart contract decentralized platform, strongly backed by the scientific community. The development team consists of a large global collective of expert engineers and researchers. Notes: -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

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NEO (NEO) ■Official Website: https://Neo.org/ ■General Info/Technology: NEO is a decentra decentralize lized d alternati alternative ve platfor platform m to Ethereum Ethereum offeri offering ng program programmab mabilit ilityy with improved execution execution speed and extended extended flexibility. flexibility. NEO is a non-profit project using dBFT dBFT (dеlеgа (dеlеgаtеd tеd Bуzаn Bуzаntіnе tіnе Fаult Fаult Tоlеrаn Tоlеrаnсе) се) for for securi security ty instea instead d оf Prооf Prооf оf Wоrk. Wоrk. There are 40 dApps listed in the Neo website today.

Strong Pros: an d Smart Contracts (√) Can host dApps, ICOs, and (√) 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, future, Neo may may be forced forced to follow the strict strict Chinese legislation legislation for the crypto industry (that (that may be an obstacle obstacle for its future future growth)

■Key Exchanges: BINANCE | BITFINEX | UPBIT ■Total Supply: 100.000.000 NEO

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TRON (TRX) ■Official Website: https://Tron.network ■General Info/Technology: Tron is a non-profit development development platform platform supporting supporting a great variety of decentralized decentralized apps based based on entertainment entertainment and content content ѕhаrіng. ѕhаrіng. The Tron protocol protocol allows each user to freely publish, store, and own data but also the issuance, circulation, and trading of digital assets through through a decentralized self-governance self-governance model. model.

Strong Pros: (√) 10,000 transactions per second (√) Focused on creating a free global соntеnt еntеrtаіnmеnt еntеrtаіnmеnt and sharing sharing system 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

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Bitcoin (BTC) ■Official Website: https://Bitcoin.org ■General Info/Technology: Everybody knows Bitcoin and its popularity is comparable to Nike, Microsoft, and IBM. Furthermore, there are more than 2,600 Bitcoin ATMs and more than 100,000 merchants worldwide accepting bitcoin. On the other hand, Bitcoin is built on obsolete technology technology and that makes it slow and very expensive. According According to crypto experts, in the future, Bitcoin will play a role similar to ‘Gold’ in the traditional financial markets. Meaning it will become an asset providing stability in the cryptocurrency market. -

Note that that the the total numb number er of Bitcoi Bitcoins ns today today is 16.996 16.996.250 .250 BTC BTC

-

In total, 21 million Bitcoins can be mined (limit reached 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 any crypto or FIAT currency

Strong Cons: (x) High fees on all transactions ($42) (x) Obsolete Technology and low transaction speed (can only handle 4-7 transactions every 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 Total Supply: Supply: 21.000. 21.000.000 000 BTC {20,999,999.9769 BTC} 34 / 87


Litecoin (LTC) ■Official Website: https://Litecoin.com/ ■General Info/Technology: Released in 2011 by a former Google employee (Charlie Lee), Litecoin is a fork of Bitcoin and consequently does not offer any great technological advantages. On the other hand, Litecoin is considerably faster than Bitcoin and it can handle much more transactions transactions per second. second. If Bitcoin will will play the role of ‘Gold’ ‘Gold’ in the future, future, then Litecoin might play the role of ‘Silver’. - In May 2013, 2013, the first first Lightning Lightning Network Network transaction transaction was complete completed d through through Litecoin, transferring 0.00000001 LTC from Zürich to San Francisco in under one second

Strong Pros: (√) Compared to Bitcoin, Litecoin is considerably faster and more flexible (√) Popular among traders as one of the first first digital 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 handle only 56 transactions transactions per second (much mor moree than Bitcoin but still poor performance)

■Key Exchanges: OKEX | GDAX | BITFINEX ■Total Supply: 56.227.838 LTC

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Chapter-4: Technic Technical al Analysi Analysis s Theori Theories es Key Techni Technical cal Analys Analysis is Theori Theories es

Technical Analysis is a method of forecasting future price movement based on the evaluation of past price movement and on statistics generated by past market data. Technical Technical analysis analysis is not not able able to predict predict future future price price movem movements ents with accura accuracy cy but it can provide a framework for measuring the likelihood that certain price movements may occur occur in the future. future. A technic technical al analys analystt uses uses charts charts and indicators indicators to identi identify fy patterns patterns that that can suggest suggest future future price price movemen movement. t.

Main Main Focu Focuss Tech Techni nica call anal analys ysis is focu focuse sess on two two majo majorr issu issues es:: 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 proces processs of of fore forecas castin ting g future future price price movem movement ent is based based on the follow following ing major major assumptions: 1. The current price price levels incorporate incorporate all fundamental fundamental data data 2. The current price levels incorporate all news 3. Price Price move moveme ment ntss are are not not ‘tot ‘total ally ly rand random om’ ’ 36 / 87


4. Prices are moving in trends 5. Historic trends are usually repeating repeating in the same patterns patterns 6. Future price movement movement is more likely to follow the the same direction of an already established price trend 7. There is no particular particular timeframe when when you trade the market (technical (technical analysis uses multiple multiple timeframe timeframes) s)

Basic Technical Analysis Theories These are some basic technical technical analysis analysis theories that may help cryptocurrency cryptocurrency traders to understand and explain the behavior of the cryptocurrency cryptocurrency market: 1. Ellio Elliott tt Wave Wave Theo Theory ry 2. Dow Theory 3. Ha Harm rmon onic ic Patt Patter erns ns

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1. The Ellio Elliott tt Wave Wave Theory Theory «Exploring the Natural Order»

Ralph Nelson Elliott was a famous American investor (1871-1948) who studied and wrote about about the waving waving behav behavior ior of financial financial markets. markets. Short-Explanation Short-Explanation of the Elliott Wave Wave Principle As Elliott said, what appears random and unrelated will actually trace out a recognizable pattern once you learn what to look for. The Elliott Principle tries to expl explai ain n how how peop people le inve invest st in the the fina financ ncia iall mark market ets. s. Inv Inves esto tor’ r’ss psyc psycho holo logy gy is constantly moving from extreme pessimism to extreme optimism in a natural order that create a specific pattern. This is especially true as concerns cryptocurrencies. cryptocurrencies. This general pattern involves two (2) phases: ■Phase-1: Impulsive Impulsive Phase Phase (or Motive Phase) Phase) -Financi -Financial al markets markets are advancing advancing in in three up up waves, waves, 1, 3 and and 5, which which are are separated 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.

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Elliott Wave Theory and Principles Elliott focused on the behavior of Dow Jones Industrial and discovered that equity prices change in a structural way, reflecting nature’s basic harmony. These are some basic principles principles of the Elliott Waving Waving model: •

Wave-2 must not fall below the starting of wave-1. If it falls below then the pattern 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 is especially true when the whole impulsive phase is near completion at the end of wave-5. The Best Times to Trade ■ Best time to trade long during the impulsive impulsive phase is when wave-4 wave-4 is near completion. Risk-averse traders prefer to wait until wave-5 has moved above the highest point of wave-3. ■ Best time to to trade short short during the the corrective phase is after wave-C has fallen below the lowest point of wave-A. Elliott Waves and Degrees Elliott discerned nine degrees of waves. These are all the degrees from smallest to largest: i.

Subminuette

ii.

Minuette

iii.

Minute

iv.

Minor 39 / 87


v.

Intermediate

vi.

Primary

vii.

Cycle

viii.

Supercycle

ix.

Grand Su Supercycle

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

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2. The Six Phases Phases of Market Market Trends Trends (Dow (Dow Theo Theory) ry) «What Starts with Greed Ends with Panic»

One of the leading theories in financial trading is Dow Theory. According to the Dow Theory, the market trends are evolving in six phases. Three bullish market phases and three three bear market market phases phases.. That is the key differ difference ence between between the the Dow Theory Theory and the Elliott Wave theory which counts only five waves. Graph-4: The Phases of Bull and Bear Market Trends

This This is my short short analys analysis is of these these six phases phases:: BU LLISH ISH TREN TR ENDS DS (↑) (A) BULL

(i) Accumulation (Phase-1) During the accumulation phase, the ‘smart money’ buys or or sells an asset asset against the general market sentiment. Therefore, demand from ‘smart money’ equals supply from retail investors and prices tend to accumulate, remaining unchanged. During this phase, the market usually ranges between a Master Support and Resistance level. The volume activity is usually considerably limited.

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(ii) Public Participation (Phase-2) As retail investors eventually start to follow the ‘smart money’, a strong trend is forming. The previous range is abandoned, and a Trending Market emerges. This phase continues continues until speculators speculators decide decide to capitalize capitalize some of their profits. During this phase, the volume activity and volatility is booming. (iii) The Excess Phase P hase (Phase-3) Excessive optimism optimism and greed greed are moving prices prices to very high levels. levels. As the market is expensive in terms of of fundamentals, fundamentals, the ‘smart money’ capitalizes most of its profits profits by scaling back positions. Volume activity is very high, but volatility can be limited. During During this phase, phase, we can witnes witnesss the creation creation of of extreme extreme bubbles bubbles.. For exampl example, e, during the Dot-Com bubble in the start of the millennium, Yahoo! P/E ratio exceeded 400.

(B) BEARISH TRENDS (i) The Distribution Phase (Phase-1) This is the first phase of the new bear market. This phase is the exact opposite of the accumulation phase-1 of a bull market. The smart money now aggressively sells the market. Prices are falling but they don’t tank as many retail investors remain optimistic regarding the master trend. During the first few days of phase-1, the volume activity is booming. booming. During During this phase, usually usually the media advise advise investors to hold their positions. positions. (ii) Public Participation (Phase-2) As retail investors realize that the business conditions conditions are getting worse they want to sell the market. The smart-money smart-money continues continues to sell, and remains long only only on assets with an exceptional long-term fundamental outlook. Prices are falling fast but panic is not yet seen, as retail investors anticipate they will have better chances to sell the

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market. Volume activity is shrinking as there are many sellers and only a few buyers (speculators). (iii) The Panic Phase (Phase-3) This phase of the bear-market is characterized by pure panic. Everyone wants to exit the market at any available price (sell-off). As cash becomes king, prices tank. The media make things even worse as ‘blood in the street news’ sells a lot now. The smart-money does not sell, during this phase. On the contrary, it opens selectively long positions. -In the 18th century, Baron Rothschild said: “Buy When There's Blood in The Streets”.

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3. Harmonic Harmonic Patterns Patterns «Seeking «Seeking the Harmony Harmony in Price Price Movement» Movement»

Harmonic patterns are recognizable price patterns that use the alignment of exact Fibonacci ratios to identify highly probable probable reversal points. points. Harmonic Patterns offer a very very high high succ succes esss rate rate» »

Structure Each harmonic harmonic pattern has two basic structures: structures: the internal internal and the external external structure. Beginners and semi-advanced semi-advanced traders traders should better focus focus on the internal structure. (a) The internal structure structure refers to the ABCD ABCD formation and and it’s obviously obviously crucial in signifying the existence existence of the pattern. pattern. (b) The external structure structure describes the price price action before and after the formation formation of each pattern (pips, bars, candlesticks) and it can provide very useful information. Six (6) basic harmonic patterns: i. ABCD Pattern ii. Three-Drive Pattern iii. Gartley 222 iv. Harmonic Bat v. Harmonic Crab vi. Harmonic Butterfly Chart-1: Applying Harmonic Harmonic Patterns Recognition Software on BTCUSD (MT4 Daily chart)

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Six (6) Types of Harmonic Patterns The following patterns are presented mainly for educational purposes. If you want to learn how how to trade the harmon harmonic ic patterns patterns with accuracy accuracy,, you should should better better refer refer to the book “Harmonic Trading, volume 1” by Scott M. Carney.

(i) The Basic AB=CD Pattern The AB=CD pattern is a very important 4-point harmonic formation and it is considered as the basic structure of all other harmonic patterns. The AB=CD can be either bullish or bearish. •

•

AB and CD form the legs BC is the retracement

If AB line equals the CD line, then the point point C is indicating the existence existence of a potential AB=CD pattern, and point D is very crucial as concerns the completion or not of this pattern. Graph-5: Graph-5: Basic Basic ABCD Formation Formation

How to identify the Perfect ABCD Formation (1) Find the the Fibonacci Fibonacci retracement retracement tool which which is available available in almost almost all modern trading platforms 45 / 87


(2) By applying the Fibonacci retracement tool on AB, the BC retracement must reach the 0.618 level (2) By applying again the Fibonacci retracement tool on BC, the CD should ideally reach the 1.618 level The AB=CD Pattern Pattern Key Characteri Characteristics stics

1. AB leg must be equivalent to the CD leg near completion 2. The Point C retracement can vary between 0.382 to 0.886 and that creates alternative AB=CD formations 3. The ideal Point C retracement is 0.618 (as seen in the above chart) 4. The BC projection can can vary from 1.13 to 2.618 (according to point C retracement) retracement) 5. The ideal BC projection is 1.618 (as seen in the above chart) Alternative AB=CD Reciprocal Reciprocal Ratios The following reciprocal ratios may help to identify alternative AB=CD formations: Table-2: ABCD Reciprocal Ratios CD Retracement

BC Projection

0.382

2.618

0.500

2.000

0.618

1.618

0.707

1.410

0.786

1.270

0.886

1.130

Tip: The projection of BC line should converge closely with the completion of the AB=CD.

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(ii) Three-Drive Pattern

The 3-Drive pattern is similar to the AB=CD pattern, except the fact that it has 3 legs and 2 retracements. AB=CD has 2 legs and 1 retracement. The 3-Drive Pattern is also similar to the Elliott Wave formation, which is one of the basic formations of technical analysis. GraphGraph-6: 6: The ThreeThree-Dri Drive ve Patter Pattern n

Basic Steps to identify the 3-Drive Pattern (1) Point A must be the 0.618 of Drive 1 (2) Point B must be the 0.618 retracement of Drive 2 (3) Drive 2 must be the 1.272 extension of correction A (4) Drive 3 must be the 1.272 extension of correction B (5) Ideally, the time required for the price to form Drive-2 equals the time for the formation of Drive-3

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(iii) The Gartley 222 Pattern The Gartley 222 pattern pattern was discovered discovered by H.M. H.M. Gartley on page 222 222 of his book book “Profits in the Stock Stock Market, 1935). The Gartley 222 incorporates the classic ABCD formation with some extra features. The Gartley pattern is formed by 5 pivot or swing points which can be visualized as: •

‘M’ for bullish patterns patterns

•

‘W’ for bearish patterns patterns

GraphGraph-7: 7: The Gartle Gartleyy 222 222

The Gartley 222 Pattern Key Characteristics

• The Point B must be the exact 61.8% retracement of XA • The projection of BC must not exceed 1.618 • Point C point must be within the range of 0.382–0.886 retracement retracement • The point D must be precise 0.786 of the XA leg • Ideally, AB must be equivalent to CD in length • Ideally, the time required for the formation of AB equals the time required for the formation of CD

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(iv) The Bat Pattern The Bat pattern is considered a very reliable formation. A strong advantage when trading the Bat pattern is that you can place a tight stop-loss. A tight stop-loss means a great Reward/Risk ratio. GraphGraph-8: 8: The Bat Patter Pattern n

Bat Pattern Key Characteristics

• The point B must be less than the 0.618 retracement of XA line, preferably the 50% or the 38.2% retracement of XA line • The BC projection must be at least 1.618 • The point C ranges between 0.382 and 0.886

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(v) The Crab Pattern The Crab is a harmonic harmonic 5-point 5-point formation. formation. The completion completion of the pattern is confirmed by the XA projection at 1.618. GraphGraph-9: 9: The Crab Crab Patter Pattern n

Crab Pattern Key Characteristics

• Point B is the 0.618 or less retracement of XA line • BC projection is 2.618 or 3.618 • XA projecti projection on at 1.618 1.618 • Point C ranges between 0.382 and 0.886

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(vi) The Butterfly Pattern The butterfly pattern, discovered by Bryce Gilmore, is another 5 -point formation. GraphGraph-10: 10: The Butte Butterfl rflyy Patter Pattern n

Ideal Butterfly Pattern Key Characteristics

• Point B retraces 78.6% 78.6% B of XA XA line • The projection of BC must be 1.618, or more • AB=CD must be met. There are alternatives but AB=CD is the most common • Point C point must range between the 0.382–0.886 retracement

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Chapter-5: Trading Platforms Expl Explai ainin ning g Tr Trad adin ing g Plat Platfo form rmss & CFDs CFDs Tr Trad adin ing g

This This is some some basic basic info informa rmatio tion n regard regarding ing the the use use of electr electron onic ic platfo platforms rms and CFDs CFDs when trading cryptocurrencies.

What is a Trading Platform? A trading platform is a computer software allowing traders to open, manage, and close positions positions through through a financial intermediary. intermediary. Trading platforms platforms operate as a bridge bridge connect connecting ing trader traderss with brokers brokers and and liquidity liquidity providers providers..

Commo Common n Types Types of of Electr Electroni onicc Platfo Platforms rms:: These are the three common types of Electronic platforms available for trading cryptocurrencies: → Web-based platforms (no need to install) → PC-based PC-based platforms (install needed) → Smartphone/Tablet Platforms (apps) Most cryptocu cryptocurrenc rrencyy exchang exchanges es support support exclusive exclusively ly web-bas web-based ed platfo platforms, rms, but there are are some some offe offeri ring ng mobi mobile le apps apps too. too.

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Using Multipl Multiple e Trading Trading Platforms Platforms

Cryptocurrency traders can use a wide variety of trading platforms. They can use webweb-ba base sed d plat platfo form rmss off offer ered ed by cryp crypto tocu curr rren ency cy exch exchan ange ges, s, but but also also the the more more advanc advanced ed MT4 platfo platform rm offere offered d by CFD brokers brokers.. The Web-Based Web-Based Platforms Platforms of Cryptocurre Cryptocurrency ncy Exchange Exchanges s

The web-pl web-platf atform ormss offere offered d by crypto cryptocur curren rency cy excha exchange ngess are easy easy to use but but offe offerr limited capabilities. Heree are some Her some basic basic feature featuress of these these platfo platforms rms:: •

Free software

•

Web-base Web-based d (no need to install) install)

•

Easy Easy to use use and and to star startt tra tradi ding ng

•

Offering internal wallets wallets (note that online wallets wallets are vulnerable to hacking) hacking)

•

Transfer Transfer easily coins coins to external external wallets (software (software/hard /hardware ware wallets) wallets)

•

Limited set of trading orders

•

Limited charting capabilities

•

Limited number of indicators

Image: This is an example example of an Online Online Platform (Cexio exchange)

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MT4/MT5 Platforms

The The seri series es of of MT4/ MT4/MT MT5 5 elec electr tron onic ic plat platfo form rmss from from Met MetaQ aQuo uote tess are are also also free free to to use use and and off offer er some some adva advanc nced ed capa capabi bililitie ties. s. In orde orderr to to use use a MT4 MT4 plat platfo form rm you you nee need d a brokerage account account with a CFD broker (also free). This is a little bit complicated complicated and it will be covered later. First, First, here are some basic features features of MT4: •

Free softw software are (requires (requires a Forex/CFD Forex/CFD account) account)

•

Extended set of trading orders (APPENDIX)

•

Multiple timeframes

•

Extended charting capabilities

•

Built-in Built-in indicator indicatorss

•

Automated trading trading capabilities

•

Includes a built-in programming language (MQL-4) and a compiler

•

Built-in historic tester (back-testing capabilities) capabilities)

•

Demo/Practice mode

•

Includes separate separate mobile/tablet mobile/tablet traders for iOs and and Android

•

Trading cryptocurrency CFDs

•

Limited number of cryptocurrenc cryptocurrencyy assets

•

Complicated to use/trade

The following following image image presents presents an Ethereum Ethereum candle candlestick stick chart chart on MT4. MT4. You can add add any commer commercia cial/c l/cus ustom tom indic indicato atorr inside inside or below below the chart chart.. Image: Image: Trading Trading Ethereum Ethereum on MT4

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CFD Trading Trading Platform Platforms s MetaTr MetaTrade aderr is a free free electr electroni onicc platfo platform. rm. The only only prereq prerequis uisite ite to use MT4 is openi opening ng a CFD CFD acco accoun unt. t. What is a CFD? CFD means means Contrac Contractt for Differen Difference ce and it is an an OTC (over (over the counter) counter) derivat derivative ive product that can be used for trading on any financial market, including cryptocurrencies. When you open a CFD position, you mirror the market and gain or lose money based on the price of the underlying asset. Explaining CFDs CFDs enable enable traders traders to easily easily trade a great great variety variety of assets assets in tight tight sprea spreads. ds. While other derivative instruments use complicated formulas to determine their current values, CFD prices are identical to the underlying asset prices. That means if you buy Ethereum Ethereum using using a CFD contract contract you you will buy and and sell sell it almost almost at the same same price price as the curren currentt Ethere Ethereum um price price on a domi domina nant nt exch exchan ange. ge. That That make makess it extre extremel melyy easy easy to monito monitorr your your cryptocur cryptocurrenc rencyy positions positions.. Simply put, if the price of the underlying underlying asset has risen between between the time you have opened your position position and the time you have closed it, you have made a profit. If the price of the underlying asset has fallen below, then you suffer a loss. Financing charges (Trading Spreads) Usuall Usually, y, CFD broker brokerss charg chargee only only spread spread and no trad trading ing commis commissio sions. ns. Sprea Spread d is the the difference between buyers buyers and sellers (Bid/Ask (Bid/Ask prices). prices). Here are some typical typical spreads on popular crypto: •

$15.0 on Bitcoin

•

$2.0 on Ethereum

•

$0.015 on Ripple

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Maintaining Cryptocurrency Positions Overnight If you you kee keep p a CFD CFD posi positi tion on aft after er mid midni nigh ght, t, you yourr posi positi tion on beco become mess the the subj subjec ectt of overnight charges (SWAP Rates). In general, when you go long on a cryptocurrency, you are are payin paying g an over overnig night ht rate, rate, and and if you you go go short short on a crypto cryptocu curre rrenc ncy, y, you receive receive an overnigh overnightt rate. In any case, case, befo before re opening opening any any position position on a cryptocur cryptocurrenc rencyy CFD, you shoul should d check check the swap swap charge chargess on the website website of your CFD broker or via the LiveChat service.

Advantages when Trading Cryptocurrency Cryptocurrency CFDs •

•

You can trade both both directions of of the crypto market market (buy/sell) Mirroring the price of of a cryptocurrency cryptocurrency without owning owning it (no need for for a wallet and no risk to be hacked)

•

Crypto Crypto CFD prices prices are identic identical al to their underlyin underlying g asset prices prices

•

Tight spreads spreads on Bitcoi Bitcoin n and Etehreu Etehreum m trading trading

•

Leverage Leverage your your trade tradess (usually (usually up to 3:1)

•

Advanced charting charting capabilities and use of unlimited indicators indicators

•

You may create a robot (automated (automated system) to trade trade cryptocurrencies cryptocurrencies 24/7 without human intervention

•

•

•

Demo/Practice account is always available Accessibility from everywhere (web platforms, mobile platforms, etc.) etc.) CFD brokers are better regulated than cryptocurrency cryptocurrency exchanges (choose only among regulated CFD brokers maintaining headquarters in trustworthy coun countr trie iess such such as as EU coun countr trie ies, s, UK, UK, Japa Japan, n, etc etc.) .)

Disadvantages when Trading Cryptocurrency CFDs •

•

Currently Currently,, only a very limited limited number number of crypto cryptocur currenci rencies es is available available (2-10) (2-10) You can’t withdraw your your coins to an external wallet (as you you don’t actually own the cryptocurrency you buy)

•

When you go long (buy) on a cryptocurrency using CFDs, your position becomes becomes the subject subject of overnigh overnightt charges (explaine (explained d before) before) 56 / 87


•

Unattractive to long-term cryptocurrency investors wishing to go long

•

The use of leverage makes trading riskier

•

The trading spreads on instruments other than Bitcoin and Ethereum may be considerably expensive

•

There are a lot of CFD scams (in order to avoid them focus on regulation and headquarters country and NOT on bonuses)

Demo and Real Real Accounts Accounts Nowadays, most CFD brokers offer a basic cryptocurrency asset index. You can open a demo account account with a CFD broker, but a demo account account is usually only active for a limited time-period and provides limited functionality. The best best option option is to open open a real real accoun accountt and to depo deposit sit only only $5. That That way, way, you suff suffer er no risk risk and and your your accou account nt will remain active active indefinitely. indefinitely. In order order to open open a real CFD account you need: need: -Mobile phone verification -ID verification -Address verification -Usually -Usually a $5 deposit deposit (don’t (don’t depos deposit it more more unless unless you have have fully fully unders understood tood CFDs) CFDs) Combining Trading Platforms The smartest thing for cryptocurrency traders is to combine the use of multiple platforms. → Use the extended capabilities of MT4/MT5 for market analysis (advanced charting capabilities and an unlimited number of indicators) → Use the online platform of your crypto exchange to trade the market CFD broker broker offering offering MT4/MT5 MT4/MT5 These are some regulated CFD brokers offering MT4 and a basic cryptocurrency asset index (none of the following following brokers accepts US trades). trades). Table-3: Table-3: CFD brokers brokers offering offering Cryptocu Cryptocurrenc rrencyy Trading

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CFD BROKER

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■Tigh Tightt Sprea Spreads ds,, low low Commissions ■JForex JForex platform platform ■ Auto-Trading » DUKASC DUKASCOPY OPY ACCOU ACCOUNTS NTS ■FIX/API FIX/API Trading Trading ■ PAMM PAM M Accoun Acc ounts ts REGULATION: ■Includes Includes Social Social □ FINMA FINMA (Dukasc (Dukascopy opy Bank Bank)) Networking ■Client funds are □ FCMC FCMC (Dukasc (Dukascopy opy Europ Europe) e) protected in the CORPORAT CORPORATE E INFO: amount of CHF Dukas Dukascop copyy Bank Bank founde founded d in 1998 1998 and and it is domi omicil ciled in 100'000 for Dukascopy Bank Switzerland Dukas Dukascop copyy Europe Europe founde founded d clients and in the in 2011 2011 and and it is domi omicil ciled in amount of EUR 20'000 for Dukascopy Europe Latvia clients

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ACCOUNTS Open Open an Acco Accoun untt with with Duka Dukasc scop opyy and and get get 30% 30% Reba Rebate te for for the 1st 1st month onth of trading:

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FBS FBS foun found ded in 2009 2009 and and it is domi domici cile led d in Russ Russia ia Offi Office cess in many many Asia Asian n Counties

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Chapter-6: Technical Indicators Technical Analysis Indicators Bitcoin trading is a risky business, business, as BTC price price can move from +10% to -10% in 24 hours. Therefore, effective Bitcoin trading requires advanced trading skills and a balanced money management system. This chapter chapter aims aims to sharpen sharpen trader’s trader’s skills skills and the next chapter chapter to explain the basic principles of money money management. management.

Starting with Indicators.

Indicators for Creating Bitcoin Trading Signals

An indicator is a small code that plugs in a trading platform and helps traders to dete determ rmin inee the the dire direct ctio ion n of of the the mark market et or to iden identi tify fy over overbo boug ught ht/o /ove vers rsol old d mar marke kett levels. An indicator is NOT an independent independent predictive trading system. Indicators are useful only as part of of a complet completee trading trading system system which which also includes includes confir confirmatio mation n and money money mana managem gement ent.. Many Many Bitc Bitcoin oin trader traderss have have star started ted using using techni technica call analys analysis is indicators indicators such as the 100-day 100-day SMA SMA and MACD. MACD.

Creating Creating Custom Custom Indicator Indicators s on MT4 to Trade Trade Cryptocurre Cryptocurrencies ncies

Once you you have downl downloade oaded d the MT4 platform platform,, you can can create create your own indic indicators ators to analyze the cryptocurrency cryptocurrency market at a glance. Moreover, Moreover, you can can set your indicators indicators to send you alarms alarms on on screen, screen, via email email or SMS. SMS. The EA Builder Application Application (Free for Creating Indicators, Indicators, Paid for for Creating Robots) Robots) EA Buil Builde derr is an exce excellllen entt free free appl applic icat atio ion n that that can can help help trad trader erss to crea create te cust custom om indicators without without requiring any any programming programming skills. The application is free but you have to to create create an accou account nt and confirm confirm your your email. email. There are are no time time limits limits for for creating free indicators. 59 / 87


-Note that in order to to create a fully automated automated trading robot robot you need to pay a onetime fee ($97).

These are some basic features of EA Builder: •

Free for creating creating indicators indicators for MT4, MT5, and TradeStation TradeStation

•

Online app (no need to install)

•

No need for for programmin programming g skills skills

•

Analyze any cryptocurrency cryptocurrency listed on MT4

•

High-customizable High-customizable with tens tens of functions

•

Alert service via eMail, SMS, Audio, and On-Screen On-Screen

•

Full money-m money-manag anagemen ementt control control

•

Create a fully automated automated trading robot robot (for EAs an one-time fee is required)

Start Start a free free accoun accountt here: here: » The Free EA-Builder App Downlo Download ad Free Free Indica Indicator torss for Meta MetaTra Trader der 4 and Trad TradeSt eStati ation on You can use the same app (EA Builder) to download already-built indicators for MetaTrader MetaTrader-4 -4 (MT4) (MT4) and Tradestat Tradestation ion platform platforms. s. These indicators indicators are open to modifica modification tion and you you can download download them them here:

» Download Free Indicators for MT4 or or Tradestation Tradestation

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Trading Cryptocurrencies Using MACD and MAs

MACD and Movin Moving g Averages Averages (MAs) (MAs) are two two commo common n technica technicall analysis analysis tools tools for trading cryptocurrencies. cryptocurrencies.

(i) MACD Bitcoin Signals MACD means Moving Average Convergence/Divergence and it is one of the most widely used and reliable indicators in financial trading. MACD aims to identify the direction direction,, strength, strength, momentum momentum,, and the duration duration of the price price trend. Bloomberg MACD Strategy Bloomber Bloomberg g has applied applied an investm investment ent strategy strategy based based on MACD which which has returne returned d 1,152 percent percent in 12 months. This is the biggest biggest gain among 22 22 technical analysis analysis Bitcoin indicators tracked by Bloomberg. The Bitcoin MACD daily prices turned bearish in December 2017. Check the chart below: Chart-2: Bitcoin MACD daily prices prices (source is Bloomberg) Bloomberg)

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MACD Divergences More More advanc advanced ed trader traderss trade trade also also the the MACD MACD diverg divergenc ences. es. A MACD MACD diver divergen gence ce is a slope slope divergenc divergence, e, which which occurs occurs between between the the price price slope slope and and the the MACD MACD Histo Histogram gram’s ’s slope. slope. This diver divergenc gencee is an indication indication of a very probable probable price price turnaroun turnaround. d.

(ii) Moving Averages A moving average (MA) is a very common lagging technical analysis tool that can help investors define the master trend of a financial asset. An MA can filter the “market noise” derived from random price fluctuations. Bitcoin traders usually focus on thes thesee SMAs: SMAs: •

25-day Simple Moving Average

•


•


•


Identifying the Master Trend using MAs

We can can use use three (3) different different MAs to identi identify fy the master master trend. trend. In the following following exampl example, e, we will will use use three three SMAs SMAs and two time timefra frames mes (D1 (D1 and H4). H4). •

3 SMAs (20, 50, and 100 periods)

•

D1 and and H4 time timefr fram ames es

Conditions for Identifying the Trend Trend (i) The Price Price and and the SMAs SMAs mus mustt move move all in the the sam samee direc directio tion n (all (all up up or or all down) down) (ii) The Price Price and the the three three SMAs must must move move in perfect perfect order order (iii) The above above conditio conditions ns must must be be met met in both D1 and and H4 charts charts

(↑) Bullish Trend -If the Current Price is above the short SMA (20), and SMA (20) is above SMA (50), and SMA (50) is above SMA (100), then the trend is Bu Bullllis ish h (↑ ( ↑) 62 / 87


(↓) Bearish Trend -If SMA (100) is above the SMA (50), and SMA (50) is above SMA (20), and SMA (20) is above above the Current Current Price, then the trend is Be Bear aris ish h (↓ ( ↓) (-) No-Tre No-Trend nd -If all three moving averages are in random order then there is no clear trend t rend Chart-3: Chart-3: Bitcoin Bitcoin Daily Daily (1D) (1D)

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Chapter-7: Money Management The importance importance of an Effective Effective Money Management Management System System Informati Information on and tips tips on how how to formulate formulate a simple simple and effectiv effective e Money Money Manageme Management nt System to trade cryptocurrencies.

The Two Basic Basic Questions Questions of Successful Successful Trading Trading Profitable Profitable trading trading require requiress the existen existence ce of a comp complete lete trading trading system system that is able able to answer two basic questions at any given time: 1. Whe When n to Trad Tradee (Time (Time)) 2. How Much Much to Trade Trade (Money) (Money)

Money Money Managem Management ent is all about about time time and and money. money. ‘The right right time to to trade’ trade’ is part of of technical analysis, “How much to trade” trade” is the job of Money Money Management. Management. Effective Money Management Money Money mana managem gement ent acco account untss for for at least least 50% 50% of of the the long-t long-term erm suc succes cesss of any any trader in any any financial market. The absence of an effective money management management system can lead even experienced experienced and very talented traders to suffer great losses. 64 / 87


Portfolio Portfolio Diversific Diversification ation Anyone familiar with financial economics knows that portfolio diversification is the golden rule of investing. investing. “Don’t Put all your Eggs in the same Basket” can can be translated as “Don’t put all your Money is the Same Trading Opportunity”. Opportunity”. Portfolio Differentiation Differentiation has proven to be the the ideal method of investing investing in studies for periods of 100 years and more. Therefore, we need to distribute our cryptocurrency funds in many positions, as opposed to just a few.

Investing Investing -In how many many positions positions should should we distribute distribute our funds? funds? The answer answer comes comes from from a simp simple le mod model: el: ■Calculate Calculate your Total Total Annua Annuall Incom Incomee (i.e. $20,000) $20,000) ■Divide it by 10 (i.e. $2,000) ■The Outc Outcome ome is is the highe highest st amount amount of of money money you you shoul should d invest invest in a single single cryptocu cryptocurrenc rrencyy position position Trading Trading -The 1% 1% and 2% Rules Rules When it comes to short-term trading, the maximum position allowed should be considerably smaller. Many professional traders follow the 2% rule and that means 65 / 87


no trading position should be worth more than 2% of a portfolio. Other asset managers managers follow follow the 1% 1% rule and that that means means no trading trading position position shou should ld be worth worth more than 1% of a portfolio.

Trading Trading Leverage Leverage –More –More of a Liability than than an Asset Some crypto crypto exchan exchanges ges have started started to offer offer capital capital leverage. leverage. Capital Capital leverage leverage means opening opening a trade position by paying only only a portion of its its value, which is called the ‘margin’. In other words, trading with more funds than you own. It sounds sounds like like a great oppo opportuni rtunity, ty, but but actually, actually, high high leverage leverage is a great great threat threat to any portfolio. Because the more trading leverage you use the more risk you must accept, and the more trading trading cost you must must pay. Higher leverage means accepting higher risk and paying higher transactional cost, and therefore, trading leverage is more of a liability than an asset.

The Leverage Formula In a pa past analy nalyssis on my web webssite ite Trad Tradin ingC gCen entter. er.org org (201 (2013 3), I have ave in intro troduce uced a simp simple le form formul ulaa to expl explai ain n the the opt optim imal al leve levell of of lev lever erag agee for for a Fore Forexx trad trade. e. Here is the formula: ■Leverage Formula= [ ( P/L Ratio ) x ( 1/Spread ) x ( R/2 ) ] % Where: □ (P/L) = Profit to Loss Ratio, or else Potential Profit Pips / Potential Loss Pips Pips □ Spread Spread is differenc differencee betwee between n Bid Bid and Ask (in pips) pips) □ (R) = Risk Risk Toleran Tolerance ce range range between between 1-100 1-100 and reflects reflects the level level of risk risk a trader is able/willing to accept This simple formula combines: 1. Technical Technical Analysis Analysis (To (To calculate calculate Profit/Los Profit/Losss pips) pips) 2. Market Market condition conditionss (To measure measure Spread Spread & Commiss Commissions ions)) 66 / 87


3. Money Money Manageme Management nt (To calcula calculate te Risk Toleranc Tolerance) e)

Calculating all Components: Components: (i) Calculating Profit/Loss Ratio The first component is the P/L ratio. Technical analysis can provide information about what is the potential profit and loss loss each time we trade. For those who are trading using ‘Support & Resistance’, the potential potential profit is the difference between between the Current Current Price Price and and the First First Major Major Resist Resistance ance Level, Level, and the Potentia Potentiall Loss is the the difference between the Current Price and the First Major Support Level. Calculation: ■Potential Potential Profit Profit = First Major Major Resistanc Resistancee – Current Current Price Price ■Potential Potential Loss Loss = Current Current Price - First First Major Support Support For more advance advanced d P/L calculatio calculations, ns, we can use multiple multiple support/re support/resist sistance ance levels, levels, as follows: -Averaging the three (3) (3) Closest Major Support and Resistance Levels: ■Potential Profit Profit = (Average Price of the 3 Closest Major Resistance Resistance Levels) Levels) – Current Price ■ Potential Potential Loss = Curren Currentt Price Price – (Average (Average Price of the the 3 Closest Closest Major Major Support Levels)

(ii) Spread and Commissions Charged in pips The second second compone component nt of the formul formulaa is trading trading cost. cost. Trading Trading cost cost include includes: s: -Average Spread -Commissions Charged Calculation: ■Calculati Calculation on is simple simple as long as all cost cost sources sources are expresse expressed d in pips

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(iii) Personal Ability to Accept Risk Risk Risk is a very very impor importan tantt invest investing ing factor factor,, and unfort unfortun unate ately, ly, it is not taken taken ser seriou iously sly enough. In order to calculate calculate your Risk Tolerance, Tolerance, you must must take into consideration consideration several factors, for example: •

The value of your portfolio

•

Your annual income income

•

Your age and especially especially your trading trading experience

•

Your character

•

The likelihood that you will need to withdraw some money in the future

In general: 

if you are a newbie trader use a Risk Tolerance Ratio = 0.1



if you are semi-advanced trader use a Risk Tolerance Ratio = 0.33



if you are an advanced trader use a Risk Tolerance Ratio = 0.67



if you are a professional trader use a Risk Tolerance Ratio = 1.0

Summary Here are some key points/conclus points/conclusions: ions: •

The two basic basic questi questions ons are (i) when when to to trade, trade, and and (ii) (ii) how much much to trade trade

•

Money management helps traders to answer ‘How Much to Trade’

•

Portfolio Diversification is always crucial no matter if you are a Professional Investor or a Beginner Trader

•

Diversify your portfolio in multiple levels 68 / 87


•

“Don’t Put all your Eggs in the same Basket” can be translated as “Don’t put all your Money is the Same Trading Opportunity”

•

We should never invest more than 10% of our annual income on a single investment

•

We should never trade (short-term) more more than 1-2% of the value of of our portfolio

•

Trading leverage is very risky and expensive (as it widens both trading risk and trading cost)

•

High trading trading leverage leverage is more more of a liability liability than than an asset asset

•

The rate rate of levera leverage ge must must be alway alwayss in balan balance ce with with (i) Profi Profit/L t/Los osss Ratio, Ratio, (ii) (ii) Trading Trading Cost, Cost, and (iii) Individu Individual al Risk Tolerance Tolerance

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Chapter-8: Cryptocurrency Exchanges Choo Choosi sing ng Cryp Crypto tocu curr rren ency cy Exchan Exchange gess & List List About 50% of your overall success as a financial trader comes from your ability to choose the right partners.

Evaluating Evaluating Cryptocur Cryptocurrency rency Exchanges Exchanges These are some some key issue issuess when choosing choosing an exchange exchange (every (every factor factor listed listed below below is important): 

BASIC CONCEPTS

● Accept Acceptanc ancee -Does -Does an exchan exchange ge acce accept pt your your coun country try?? ● Verifi Verifica catio tion n -What -What are the requireme requirements nts for verifying verifying?? -What -What are are the trading trading limits limits before/af before/after ter verificati verification? on? ● Deposit/W Deposit/Withdr ithdrawal awal Methods Methods -What -What are are the availa available ble fund fund meth methods ods (Card (Cards, s, Online Online Wall Wallets ets,, etc.)? etc.)? ● Asset Asset Index Index -Which -Which coins/to coins/tokens kens are available available in the exchang exchange? e? 

SAFETY/RELIABILITY

● Safety Safety of of money money -Where is the headquarters base? -How many years in the market? ● Onlin Onlinee securit securityy -Are the crypto cryptocurre currencies ncies of client clientss stored stored into into cold cold storage, storage, as they should? should? -In case of P2P transactions, is there an Escrow Service? ● Online Online reviews reviews for this exchange exchange -What other people people say about this this exchange (Caution, 50% 50% of all the reviews you read are fake)? 70 / 87




COMPETITIVENESS

● Transacti Transaction on cost -What -What are are the transa transacti ction on fees? fees? ● Exchan Exchange ge rate rate -What -What is the exchang exchangee rate for the crypt crypto o you need need to buy? -What -What is the ask/bid ask/bid spread spread?? ● Responsi Responsivene veness ss of of the Customer Customer Service Service -Is there a phone phone line and/or and/or a live live chat chat service service available available??

CRYPTOCURRENCY EXCHANGES Cryptocurrency exchanges exchanges are common places to buy/sell buy/sell Bitcoins and other other digital coins. -Warning: Please be careful with your money When sending funds to an exchange or other counterparty you are trusting that the operator will not abscond with your bitcoins and that the operator maintains secure systems that protect against internal or external theft. It is recommended that you obtain the real-world identity of the operator and ensure that sufficient recourse is available. available. Exchangin Exchanging g or storing storing signific significant ant funds funds with exchange exchangess is not not recommended. These are some popular crypto exchanges:

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CEXIO

■TYPE: BITCOIN/ALTCOINS EXCHANGE ■WALLET: YES ■HEADQUARTERS: UNITED KINGDOM ■ONLINE SINCE: 2013 ■CUSTOMER SERVICE: EMAIL SUPPORT ■LANGUAGES: ENGLISH

INFORMATION ABOUT THE MARKET

Founded in 2013, Cexio is a multi-functional crypto exchange based in the United Kingd Kingdom. om. Cexio Cexio starte started d initia initially lly as a cloudcloud-min mining ing provid provider, er, but in 2015 2015 begun begun to operat operatee exclus exclusive ively ly as a Bitcoi Bitcoin n exchan exchange. ge. Cexio Cexio offer offer a web-b web-base ased d platfo platform rm and and two two (2) (2) mobile mobile app appss for for tradin trading g Bitco Bitcoin, in, Ethereum, Ripple, Dash, ZCash, and Stellar. LEGAL: -MSB status in FinCEN (USA) -Registered with the ICO (UK) ■SUPPORTED SUPPORTED COUNT COUNTRIES: RIES: Most Countries Countries (except (except many many states states in the US) US) ■FIAT CURRENCIES: USD | EURO | GBP | RUBLE

► The Cexio Bitcoin Exchange

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LOCALBITCOINS

■TYPE: P2P BITCOIN EXCHANGE ■WALLET: YES ■HEADQUARTERS: FINLAND ■ONLINE SINCE: 2012 (LocalBitcoins Oy) ■CUSTOMER SERVICE: EMAIL | FORUM ■LANGUAGES: ENGLISH | SPANISH | FRENCH | PORTUGUESE | RUSSIAN | ITALIAN

INFORMATI INFORMATION ON ABOUT ABOUT LOCALBIT LOCALBITCOIN COINS S P2P MARKET MARKET

LocalBitc LocalBitcoins oins is the the largest largest Peer-2-Peer Peer-2-Peer decentral decentralized ized BTC marketpla marketplace ce allowing allowing users users to exchange FIAT currency for Bitcoins. The marketplace consists: (i) Trad Traders ers,, and (ii) (ii) Users Users,, 'Traders' create advertisements with the price and the payment method they want to offer. 'Users' respond respond to these advertisements, and and if they both agree, a transaction completes. There are more than 60 different payment methods available and that makes LocalBitcoins an easy solution for everyone wishing to buy Bitcoins. You can store your Bitcoins at LocalBitcoins or use an external wallet. The LocalBitcoins team recommends the Electrum Wallet, which is free. -Buy/Sell Bitcoin for fiat currency -LocalBi -LocalBitcoin tcoinss requires requires no verificati verification on ■SUPPORTED COUNTRIES: 248 COUNTRIES ■FIAT CURRENCIES: NO RESTRICTIONS (ALL CURRENCIES)

► The LocalBitcoins Exchange

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LIVECOIN

■TYPE: WIDE CRYPTO EXCHANGE ■WALLET: YES ■HEADQUARTERS: UNITED KINGDOM (UK) ■ONLINE SINCE: 2013 (DELTA E-COMMERCE LTD) ■CUSTOMER SERVICE: EMAIL | CHAT SERVICE ■LANGUAGES: ENGLISH | SPANISH | RUSSIAN | CHINESE | PORTUGUESE | FRENCH | ITALIAN | INDONESIAN

INFORMATI INFORMATION ON ABOUT ABOUT THE LIVECOI LIVECOIN N EXCHANGE EXCHANGE

Based in the United Kingdom, Kingdom, LiveCoin is a multi-functional multi-functional Bitcoin/Altcoin exchange exchange offering offering a very wide crypto crypto asset asset index. index. LiveCoin LiveCoin suppo support rt the exchange exchange of 125 125 altcoins for FIAT currency. ■SUPPORTED COUNTRIES: ALL COUNTRIES (EXCEPT US) ■FIAT CURRENCIES: CURRENCIES: USD | EUR | RUBLE

► Visit the LiveCoin Exchange

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BITBAY

■TYPE: BITCOIN/ALTCOINS EXCHANGE ■WALLET: YES ■HEADQUARTERS: POLAND (EU) ■ONLINE SINCE: 2014 ■CUSTOMER SERVICE: EMAIL | CHAT SERVICE ■LANGUAGES: ENGLISH | RUSSIAN | POLISH

INFORMATION ABOUT BITBAY

Operating since 2014, 2014, BitBay is a large Polish Polish cryptocurrency cryptocurrency exchange. Bitbay offer the exchange of BTC, LTC, ETH, ETH, DASH, and a few more more crypto assets by by accepting USD, EUR, and PNL. BiBay BiBay suppor supportt credit credit credits credits and and offer offer addition additional al funding funding solutions solutions such such as the Bitomats Bitomats ATMs and the BitBay BitBay Mastercard Mastercard.. The BitBay platform is user-friendly user-friendly and provides a full full set of trade orders, orders, including stop-orders, and 'Fill-or-Kill' orders. ■SUPPORTED COUNTRIES: 240 COUNTRIES ■FIAT CURRENCIES: EUR | USD | PNL

► The BitBay Bitcoin Exchange

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PAXFUL

■TYPE: PEER-TO-PEER MARKETPLACE ■WALLET: YES ■HEADQUARTERS: USA, DELAWARE ■ONLINE SINCE: SINCE: 2015 (Paxful, Inc.) Inc.) ■CUSTOMER SERVICE: EMAIL | PHONE {+1 (865) 272-9385} ■LANGUAGES: ENGLISH

INFORMATION ABOUT PAXFUL

PaxFul is a Peer-2-Peer Bitcoin exchange similar to LocalBitcoins. Paxful operates as a decentralized marketplace trading only Bitcoin via a network of more than 1,200 vendors. The marketplace operates operates as a mediator mediator between Bitcoin Bitcoin traders and vendors and provides the framework for its users to interact and to exchange Bitcoins for FIAT currencies. Paxful offer the wider selection of of payment methods methods in the market market (300+ methods) methods) plus an escrow service for the maximum security of Bitcoin transactions. ■SUPPORTED COUNTRIES: Almost all countries ■FIAT CURRENCIES: All Major currencies

► Visit the PaxFul Bitcoin Exchange

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COINMAMA

■TYPE: BITCOIN MARKETPLACE ■WALLET: NO ■HEADQUARTERS: SLOVAKIA, ISRAEL ■ONLINE SINCE: 2013 ■CUSTOMER SERVICE: EMAIL | TELEPHONE (+1-800-261-6932) ■LANGUAGES: ENGLISH

INFORMATION ABOUT COINMAMA

Founded in 2013, 2013, Coinmama Coinmama is not a traditional traditional Bitcoin exchange, exchange, as it sells Bitcoin Bitcoin and Ethereum out of a personal inventory. inventory. Transactions are always between between the trader and Coinmama. Currently, traders can only only buy buy (not sell) crypto. crypto. -The marketplace does not offer a wallet. Account Verification To place an order at Coinmama, Coinmama, you need need to have your account account verified. Once you get verified, you can buy in total up to 10,000 USD worth of bitcoin by using credit/debit cards. ■SUPPORTED COUNTRIES: Most Countries, including 24 US States ■FIAT CURRENCIES: Many currencies but pricing is always displayed in USD or EUR ■REGISTERE REGISTERED: D: Coinmam Coinmamaa is registered registered with FinCEN FinCEN (US)

► The Coinm Coinmama ama Bitcoin Bitcoin Excha Exchange nge

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BITMEX

■TYPE: PEER-2-PEER CRYPTO EXCHANGE (LEVERAGED PRODUCTS) ■WALLET: COLD WALLET ■HEADQUARTERS: SEYCHELLES ■ONLINE SINCE: 2014 (HDR Global Trading Limited) ■CUSTOMER SERVICE: EMAIL | TICKETING SYSTEM ■LANGUAGES: ENGLISH | CHINESE | RUSSIAN | KOREAN | JAPANESE

INFORMATI INFORMATION ON ABOUT BITMEX BITMEX

BitMEX (Bitcoin Mercantile Exchange) is an innovative trading platform that offers access to the global cryptocurrency markets using margin-trading (trade leverage) on all of its products. Note, that you can only deposit Bitcoin to Bitmex as no FIAT currency is supported. Perpetual Contracts The marketplac marketplacee operates operates with Perpe Perpetual tual Contract Contracts. s. A Perpetual Perpetual Contract Contract is a product similar to a traditional Futures Contracts Contracts in how it trades but but does not have an expiry, so you can hold a position for as long as you like. Perpetual Contracts trade like spot, tracking the the underlying Index Price closely. closely. Bitcoin trades are offered offered in Spot and Futures trading options. Be ext extrem remely ely car carefu efull ifif you you dec decide ide to tra trade de Per Perpet petual ual Co Contr ntract actss and use tra tradin ding g leverage lever age (esp (especial ecially ly if you are a begi beginner) nner).. ■SUPPORTED COUNTRIES: COUNTRIES: Many Countries Countries (but not the USA) ■FIAT CURRENCIES: NONE

► The BitMex Bitcoin Exchange 78 / 87


APPENDIX: Trading Orders & Website Resources (i) Trading Orders Cryptocurrency traders can place classic market orders but also pending orders and try to buy/sell crypto crypto at best possible possible rates. These These are the main orders for for trading crypto: •

Market order: Buying/selling a cryptocurrency at the current market level. The great advantage of a market order is the speed of execution, as you execute your trade almost immediately. The great disadvantage is slippage, and that means get a worst price that you expected. Executing market orders in non-liquid assets may prove a bad idea. Especially as concerns volatile sessions, slippage on order order execution execution can grow grow significantly. significantly. In overall, market market orders orders are are effecti effective ve only only for trading trading liquid liquid assets assets and only only if the market conditions are not choppy.

•

Limit order: Placing an order for buying/selling a cryptocurrency in a specified price. There are two outcomes: outcomes: (i) it will be filled by someone else’s else’s order at this specified price, and (ii) it will stay unfilled. The advantage of a limit order is the protection that it offers against slippage and choppy market conditions. In overall, overall, limit orders orders are ideal ideal for volatile and non-liq non-liquid uid markets. markets.

•

Stop-loss order: order: Placing an additional additional order to limit the potential loss. loss. A stoploss order activates only if a specified price level has been reached. Once this stop level has been reached, the position is automatically closed. Stop orders can be used as a shield to limit the losses of a portfolio in case the market moves in the unfavorable unfavorable direction.

•

Take-profit order: Placing an additional order to guarantee profits. As in the case of a stop-loss, a take-profit order activates only if a specified price level has been reached. Once this take-profit level has been reached, the position is automatically closed. This type of order aims to protect your profit when the market is very volatile.

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(ii) Important Websites for Crypto Traders These are some some essential websites websites for cryptocurrency cryptocurrency traders:

□ Market Market Data: Data: 

https://coinmarketcap.com/



https://www.coingecko.com/en

□ Cryptocu Cryptocurrenc rrencyy News: News: 

http://www.coindesk.com/



https://cointelegraph.com/



https://www.ccn.com/

□ Experts Experts on on Twitter: Twitter: 

https://twitter.com/VitalikButerin



https://twitter.com/brian_armstrong



https://twitter.com/rogerkver



https://twitter.com/dan_pantera



https://twitter.com/jgarzik



https://twitter.com/bobbyclee



https://twitter.com/ErikVoorhees

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□ Foru Forums ms:: 

https://bitcointalk.org

□ Reddit Reddit Threads: Threads: 

https://www.reddit.com/r/icocrypto/



https://www.reddit.com/r/Cryp https://www.redd it.com/r/CryptoCurrency/ toCurrency/



https://www.reddit.com/r/crypto/



https://www.reddit.com/r/CryptoMarkets/



https://www.reddit.com/r/Bitcoin/



https://www.reddit.com/r/altcoin/

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 REFERENCES

■Wikipedia, the Free Encyclopedia: The History of Cryptocurrencies https://en.wikipedia.org/wiki/Cryptocurrency ■Bitcoin.org: Bitcoin: A Peer-to-Peer Electronic Cash System https://bitcoin.org/bitcoin.pdf ■Coinmarketcap: Compare the Market Capitalization of Cryptocurrencies https://coinmarketcap.com/coins/views/market-cap-by-total-supply/ ■ExpertSignal.com: Comparing Crypto Exchanges http://expertsignal.com/index.php/cryptocurrencies/bitcoin-exchangescomparison Cryptocurrenc Cryptocurrencies ies -Frequently -Frequently Asked Questions http://expertsignal.com/index.php/cryptocurrencies/cryptocurrency-faq ■HackerNoon.com: Delegated Proof of Stake https://hackernoon.com/explain-delegated-proof-of-stake-like-im-5888b2a74897d ■Medium.com: Cryptocurrency https://medium.com/topic/cryptocurrency ■TradingCenter.org: Trading Leverage Formula http://tradingcenter.org/index.php/menu-training/training-online/theleverage-formula

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■Digital Coins (Official Websites): We bsites): •

Bitcoin.org

•

Ethereum.org

•

Ripple.com

•

Stellar.org

•

Neo.org

•

EOS.io

•

Tron.Network

•

Cardano.org

•

IOTA.org

•

Litecoin.com

■SEC: Initial Coin Offerings (ICOs) https://www.sec.gov/ICO ■Bloomberg: Bitcoin Trading Signal https://www.bloomberg.com/news/articles/2018-02-06/bitcoin-tradingsignal-that-returned-1-152-is-flashing-sell ■“Trading World Markets Using Phi and the Fibonacci Numbers” ebook ebook by George George Protonot Protonotario arioss (2016) (2016)

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 BIBLIOGRAPHY (1) Harmonic Trading, Volume One {Scott M. Carney}………………………………………… …………… (2) The Wave Principle Principle {Ralph Nelson Nelson Elliott}………………… Elliott}……………………………… ……………………… ……………………………… ……………………… …… (3) The Elliott Wave Principle: Key to Market Behavior {Robert Prechter}…………………………… (4) Elliott Wave Principle {A.J. Frost and Robert Prechter}………………………………………………… (5) Market Wizards: Interviews with Top Traders {Jack D. Schwager}……………………………… …

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© George George M. Protonotari Protonotarios os 2018

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CRYP CRYPTO TOCU CURR RREN ENCY CY TRAD TRADIN ING G GUID GUIDE E «Trading the Decentralization of the Financial System» © George M. Protonotarios 2018

COPYRIGHT INFORMATION

ALL RIGHTS RESERVED. No part of this eBook (including text, information, tables, analysis, resources resources and images) may be copied, copied, reproduced, reproduced, mirrored or sold.

DISCLAIMER AND LEGAL NOTICE

The informati information on presente presented d in this eBook eBook represen represents ts the the view view of the author. author. Every attemp attemptt has has been been made made by the the autho authorr to verif verifyy all inform informati ation on includ included ed in this this eBo eBook, ok, but there is no guarantee about the accuracy and the reliability of any information presented presented in in this eBook. eBook. This eBook eBook is not intended intended for use use as a sourc sourcee of financial financial or investment advice. In addition, addition, this eBook eBook includes affiliate links. 86 / 87


RISK WARNING

There is considerable exposure to risk when trading trading Cryptocurrencies, Cryptocurrencies, Forex, Futures and Optio Options. ns. Trading Trading Cryptocu Cryptocurrenc rrency, y, Forex, Forex, and other other leverag leveraged ed product productss involves involves a significant level of risk risk and is not suitable for for all investors. Before undertaking undertaking any such transactions you should ensure that you fully understand the risks involved and seek independent independent advice if necessary. The possibility possibility always exists exists that you could could sustain a substantial substantial loss. Never Never trade with funds funds that you may need need in the future. Past performance performance is not necessarily indicative of future future results. results. Any opinions, opinions, suggestions, brokers, systems, services, software, reviews, promotions, bonus, rebates, links, links, and web-sites web-sites mentioned mentioned on on this eBook eBook are provided as general general market commentary, and do not constitute investment advice in any way.

RISK WARNING ON CRYPTOCURRENCIES

-Warning: Please be careful with your money When sending funds to an an exchange or other counterparty you are trusting that that the operator will not abscond with your bitcoins and that the operator maintains secure systems that protect against internal or external theft. It is recommended that you obtain the real-world identity of the operator and ensure that sufficient recourse is available. Exchanging or storing significant funds with exchanges is not recommended.

RISK WARNING ON CFDs

Trading in cryptocurrency CFDs involves significant risks. Cryptocurrency CFDs are an extremely high-risk, speculative investment. You should be aware of the risks involved and fully consider whether investing in cryptocurrency CFDs is appropriate for you. •

Major Cryptocurrency Risks

•

Price volatility

•

Leverage

•

Charges and funding costs

•

Price transparency Cryptocurre Cryptocurrency ncy Trading Trading Guide -Copyright -Copyright © April 2018 2018 George George M. Protonotarios Protonotarios ©-All rights reserved reserved Distribution by Qexpert.com

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Cryptocurrency Trading Guide

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