Follow The Crypto Lounge on Feedspot

Continue with Google
Continue with Facebook

An Introduction to Margin Trading on BitMEX

Bitcoin and many other cryptocurrencies are famous for the volatility that sees their prices fluctuate substantially in a short period of time.

If you’d like to turn a bear (falling) market into the opportunity to make a profit, you may want to consider leverage trading, and BitMEX is a popular cryptocurrency exchange that allows its users to trade with leverage of up to 100:1, providing traders the opportunity to amplify their gains, as well as potential losses.

BitMEX Seeing on average between 1-3billion dollars in value exchanged on its platform over a typical 24hr period, now becoming the world’s largest margin trading platform.

This guide covers the basics of getting started on BitMEX, however if you’d like to learn more about BitMEX and trading in general, considering signing up for our private trading and training sessions. Investing in your trading future is the best way to increase your chances of trading success.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators’ websites before making any decision.
What Is Cryptocurrency Margin Trading?
The simplest explanation of margin trading is that you are trading cryptocurrencies using borrowed funds. It involves borrowing capital at relatively high-interest rates from a cryptocurrency exchange so you can access increased leverage.

This allows you to access increased profits if the market moves in your favour, but also comes with the risk of increased losses. As a very basic example, let’s say you want to buy a cryptocurrency that you’re confident will increase in price. However, you only have $1,000 to spend in your trading account, and you know that if you had more capital to work with, you could enjoy a bigger profit.

With margin trading, you borrow against the funds you already have in your account. So if you borrowed an extra $1,000 from the exchange, you would then have a total of $2,000 to put towards your purchase, potentially doubling your profits if the price moves in your favour.

How Does it All Work? 

Different exchanges impose different limits on the amount of leverage available, and BitMEX offers leverage of up to 100:1 on some contracts.

However, the amount of leverage you can access also depends on the initial margin (the amount of BTC you must deposit to open a position) and the maintenance margin (the amount of BTC you must hold in your account to keep a position open).

The Crypto Lounge LIVE Bitmex Training Sessions Detailing a currency uptrend
Going Long:

– Opening a “long” position involves buying a contract because you believe the price will increase in value.

Going Short:

– Shorting is when you sell a contract because you think the price is going down, where you can then buy it back at a reduce price at a later day.

When you open a position, a portion of your account balance is held as collateral for the funds you borrow from the exchange. If your trade is successful and you close the position at a profit, your collateral is returned to you along with those profits, minus any fees.

However, if the market moves against you and you are in loss, your trade will automatically be closed and your collateral liquidated when the market reaches a certain price – this is known as the liquidation price

(Bonus Tip)
Finding Profit In Falling Markets
One of the benefits of leverage trading is that it allows you to potentially turn a bear market into a profitable opportunity. As a very basic example, let’s say you owned 1 BTC on 18 December 2017, when its value was peaking at above US$18,737.

Expecting the market to crash, you sold that BTC at this high price point with the aim of buying back later at a much lower price. Had you then decided to buy back into BTC on April 6, when 1 BTC was worth US$6,695, you could have made a profit of US$12,042 (minus transaction fees), And when you add leverage trading into the mix, this potential profit could have been much higher.

If you’d traded using leverage of 5:1, for example, your profit would have been five times greater – it’s this potential for much larger gains that makes leverage trading an attractive prospect to experienced traders.

Margin V Leverage – What’s the Difference? 

If you’ve been researching cryptocurrency trading, you may have come across the terms margin and leverage used more or less interchangeably to refer to the same thing – so what do they both mean?

Margin refers to the loan your crypto exchange offers you to place larger trades. This loan is collateralized by the funds in your account and you will need to pay it back with interest.

Traders use margin to create leverage, which is the increased buying power that allows you to open larger positions than you would be able to if you could only use the funds in your account. Leverage is expressed as a ratio, such as 2:1 or 5:1.

While BitMEX offers several cryptocurrencies to trade, all profits and losses are settled in bitcoin, which BitMEX refers to as XBT (instead of the more often seen BTC). As a result, users must deposit and withdraw funds in bitcoin, rather than dollars, even though dollars are what the platform’s cryptocurrencies are traded against.

How to Leverage Trade on BitMEX

Step 1: Register For a BitMEX Account

Click through to the BitMEX website and register for an account by providing your email address and

creating a password in the box at the right of screen. You’ll then be emailed a link which you’ll need

to click on to verify your email address. Once that’s done, make sure you enable 2-factor

authentication to provide an increased level of security for your account.

Step 2: Deposit Funds Into Your Account

Click on the “Account” tab at the top of screen to be taken to your wallet. Click the green “Deposit”

button and scan the QR code or copy your wallet address. You can then use that address to deposit

bitcoin into your BitMEX account.

Step 3: Navigate to the Trading Screen

Click the “Trade” link at the top of screen. You’ll be taken to the trading screen where you can click

the tab of the crypto you want to buy or sell – bitcoin, Cardano, Bitcoin Cash, Ether, Litecoin and

Ripple are all available.

Step 4: Enter the Details of Your Position

In the Order box on the left of screen, select the type of order you want to place. For this example

we’ll be using a Market Order. Enter the quantity of your trade, that is the amount you want to buy

or sell in US dollars (USD).

(Bonus Tip)

We don’t often pay a great deal of attention to the order books or depth charts, however, they are

additional tools to help you make a detail decision on your entry or exit points (If required over

traditional TA, which can be done via your trading chart – Pulling information from Tradinview)

Step 5: Set Your Leverage

Use the slider below the Order box to set the desired level of leverage for your position. In this

example, our leverage is set to 5x. For beginners, we do not suggest playing with anything higher

than 10x leverage until your trading confidence grows and your winning trade numbers increase and

remain consistent – Slow and steady wins the race

Step 6: Review the Details of Your Transaction

Take a moment to review the full details of your transaction. The “Quantity” field shows the value of

your position, but because you’re trading with leverage the money you’re putting at risk is less than

this. The “Cost” field details the maximum amount you can lose on the position if the market moves

against you. “Order Value” shows the value of your position in XBT.

Step 7: Open Your Position

If you think the price will rise and you’re going long, click on “Buy Market”. If you’re shorting

because you think the market will fall, click on “Sell Market”. An order confirmation screen

will appear and contains information such as the level of leverage, order value, cost and the

estimated liquidation price. Review all details carefully before clicking on “Buy” or “Sell” to

confirm your order.

(Bonus Tip)

When trading, we like to have our screen split as shown above, with our BitMEX interface on the

right and our “significant Trades” indicator/site on the right as shown above.

Significant trades is a real-time indicator showing very large buy or sell trades, which can help to

predict price movement.

It can also be set to show trades over certain amounts (ie – show you live trades made over 250k)

Profit and Loss Case Studies

What sort of effect will market moves have on profits and losses when trading with

leverage? Let’s take a look at some hypothetical examples.

Going long with 10x leverage

For simplicity, let’s assume the value of your position is 1 BTC, which is US$10,000, so the

initial margin requirement would be US$1,000.

Profit and Loss Case Studies

What sort of effect will market moves have on profits and losses when trading with

leverage? Let’s take a look at some hypothetical examples.

Going long with 10x leverage

For simplicity, let’s assume the value of your position is 1 BTC, which is US$10,000, so the

initial margin requirement would be US$1,000.

Going short with 10x leverage

In this example, we are betting against the market and going short. Let’s mix up the maths a little bit and assume the value of your position is 1 BTC, which is US$8,500, so the initial margin requirement would be US$850.

Risk Management Tips:

Trading with leverage is complicated and risky, so remember these simple tips to minimise your risk:

* Practice makes perfect. BitMEX offers a practice environment that is set up to feel just like the real thing. This lets users get familiar with placing, executing and canceling orders while interacting with a simulated marketplace. Get used to the feel of things here before trading with real funds.

Start with a small amount. When you’re first starting out with leverage trading, deposit only a small amount into your account. This way, if the markets moves against you or you place the wrong trade by mistake, your losses will be minimised.

Limit your leverage. Don’t get seduced by the potential maximum leverage available. Especially when starting out, minimise the amount of leverage you use as this will help limit risk..

Pick a market. Rather than spreading yourself out across several different markets, focus on one particular market (for example XBT/USD) to develop a deeper understanding of price movements and trends.

Understand your order. When setting up your first few trades, it’s essential that you study and understand the order screen. The field to pay particular attention to is “Cost”, as this shows the maximum amount you could lose from your trade.

Use Limit trades rather than Market trades. When trading bitcoin, BitMEX charges a taker fee of 0.075% of the total position if you use the “Market” tab when opening a position. However, if you select the “Limit” tab to become a market maker, you’ll actually receive a rebate of 0.025% of your total position.

Leave it to experienced traders. If you’re new to either online trading or cryptocurrencies, leverage trading is not for you.

If you know what you’re doing, leverage trading on BitMEX can be an effective tool to help you increase profits. However, make sure you’re fully aware of all the risks involved before deciding whether this is the right approach for you.

So, now you’re up to speed with all things BitMEX, you’ve read this article and watched our FREE YOUTUBE BITMEX TRAINING SERIES (With over 7.5hrs of Live and free Bitmex training materials) and you’re ready to dive in.

We’d love to hear how you go or, answer any questions you have, simply drop us a line anytime! 


Follow TCL On Socials

The post The Complete Beginners Guide to Starting On BitMEX appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Block Sports TCL ICO Review

Block Sports, is a decentralized betting exchange, a place where users can bet their NEO GAS for and against worldwide sporting events.
The difference between this platform and a typical betting platform is that this is an exchange, and that means that people are betting against each other.
This is a really interesting project, that given the right circumstances and time of the market, could really prove to be something unique. 
As with the crypto market, anything is a given, but take a read of this amazing report by our resident ICO guru, Adam, and see for yourself. 

Follow TCL On Socials
Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post Block Sports ICO – The Future Of Online Betting? appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

The Satis Group Published This Report, Predicting Bitcoin to Rocket Above $98k Within the Next Five Years.

According to new research conducted by Initial Coin Offering (ICO) advisory firm Satis Group, the Bitcoin (BTC) price could potentially reach $98,000 in the next five years. The report written by Sherwin Dowlat and Michael Hodapp represents the fourth part of a five-part series covering the crypto space.

The report states that, in terms of upward tendencies in cryptocurrencies over the next five years, BTC will reach $96,000, Monero (XMR) will reach $18,000, and  (DCR) will hit $535.

Bitcoin Cash (BCH) is forecasted to slump to $268, after it “[attempts] to inherit brand recognition and [provides] minimal technological advantage to incumbents.” Cryptoassets, which have centralized ownership will supposedly represent little value, with a forecasted Ripple (XRP) price of $0.01.

The research team forecasts that the Ethereum “platform network” will lose share from nearly entire to half share in 2028:

The latest study also expands on the valuation of cryptoassets needed to support a forecasted economy and provides market condition estimates for the next ten years.

According to the report, the value of cryptoassets needed to support the economy will increase from approximately $500 billion next year to $3.6 trillion by 2028, while 90% cryptoasset value will be extracted from penetration of offshore deposits in the next ten years.

The report says that most fundamental value to support the crypto economy will come from of value use cases, while the analysts believe that the largest opportunity for will be in store of value markets:

Want to see more, click the button below the download the complete report now.

Join Our Ultra-Support Crypto Community Today Hosted in Discord

The post Satis Group Cryptocurrency Future Market Predictions Report appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

BitMEX Profit & Loss Calculator

During our last Friday night live BitMEX training session (which you can watch here) we mentioned we had put together a handle little profit and loss calculator, that you could use to track trades and see your overall trading profit.

Plus, with tax time here and the Australian government cracking down hard on crypto earnings, a calculator such as which could be a great way to keep the tax man happy, winning!

Simply click on the banner below to instantly download your free profit and loss calculator.

Follow TCL On Socials

Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post Free TCL BitMEX Profit & Loss Calculator appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 
WatermelonBlock is an upcoming project that is about to enter the Pre ICO stage, based out of Melbourne, Australia. They aim to scan and analyze social media platforms to read and rate market sentiment on current and upcoming cryptocurrencies. Having the power of this AI allows investors and traders to use this data to make informed decisions on their cash positions, current and forthcoming. Development of this technology is ongoing and widely anticipated. Their AI technology is built around IBM Watson and harnesses the computing power to push the boundaries of the crypto industry. A really interesting project and one we at The Crypto Lounge will be watching closely.

The post Watermelonblock ICO Analysis appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

An Introduction to Elliot Wave Theory

Elliot Wave Theory as we know it, was developed in the early 1920’s by accountant Ralph Nelson Elliot, who developed his famous theory after analysing 75 years worth of stock market data and finding recurring patterns in what was thought to be, a random market.

From his analysis, he discovered that that stock market movements were not random and don’t just go up or down, finding that there was in fact, a distinct pattern, which ultimately became his Elliot Wave Theory, first published in his book entitled The Wave Principle.

In his book, Elliot proposed that the market traded in repetitive cycles, which he pointed out were the emotions of investors caused by outside influences (News etc) or the dominant psychology of the masses at the time.

Elliott explained that the upward and downward swings in price caused by the collective psychology always showed up in the same repetitive patterns. (We see this type of “emotionally driven Trading” – people exiting or entering trades based on FUD, FOMO or an upcoming big news event for example – It’s is often predictable) 

He called these upward and downward swings “waves”.

The basic principle of EWT is that, if you can correctly identify the repeating patterns in prices, you can predict where price may go (or not go) next, and this was the basis of Elliot’s original theory also and something that makes Elliot Waves so appealing to many traders.

Image – Example of Elliot Waves in On of Our Regular TA Posts Inside The Crypto Lounge
Understanding Fractals

Although appearing complicated, fractals are in simple terms, structures that can be split into parts, each of which is a very similar copy of the whole or previous part. . Mathematicians like to call this property “self-similarity”.

Have you ever seen an image of a large triangle, with many triangles contained within it, and every triangle is the same shape, which placed together make up the larger triangle image itself? Well, that’s technically a fractal and applies to a trade in the sense that on different time scales, we would often see the same type of candlestick patterns as we would on a much larger timescale.

Image – Example of a basic fractal
There are a number of different fractal lengths:
  • Grand Supercycle (multi-century)
  • Supercycle (about 40–70 years)
  • Cycle (one year to several years)
  • Primary (a few months to a couple of years)
  • Intermediate (weeks to months)
  • Minor (weeks)
  • Minute (days)
  • Minuette (hours)
  • Sub-Minuette (minutes)
Understanding Wave Patterns (The 5-3 Pattern)

Elliott made detailed stock market predictions based on unique characteristics he discovered in these wave patterns. The first type of pattern he discovered was called an “Impulse Wave” and the second a “corrective wave”.

The first 5-wave pattern is the impulse wave. (1, 2, 3, 4, 5)

The last 3-wave pattern is the corrective wave. (ABC)

In this pattern, Waves 1, 3, 5 are motive, meaning they go along with the overall trend, while Waves 2 and 4 are corrective.

Wave 1

The stock makes its initial move upwards.

This is usually caused by a relatively small number of people (or a few large ones) that all of the sudden (for a variety of reasons, real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise. It could also be related to upcoming news, false rumours, air drops etc.

Wave 2

At this point, enough people who were in the original wave consider the stock overvalued and/or want to take profits.

This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.

Wave 3

This is usually the longest and strongest wave. The stock has caught the attention of the mass public.

More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.

Wave 4

Traders take profits because the stock is considered expensive again.

This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips.”

Wave 5

This is the point that most people get on the stock and is mostly driven by hysteria or FOMO , this is the very overpriced region of the coin, we have seen this time and time again, only to see the coin come crashing down a short time later after being shorted and starting what’s called an ABC pattern.

1, 2, 3, 4, A, B, C Pattern
Look For An Extended Wave 

Of these “Impulse Waves” listed above, you will often see what is called an “Extended Impulse Wave”.. what does this mean? Well, Elliot proposed that out of the three impulse waves (1, 3 & 5),  you will often see one of them that is extended, meaning it is longer than the other two waves.

According to Elliot, he stated that more often than now, the fifth (Wave 5) will be the extended wave. However, As time went by, this old-school style of wave labelling has changed because more and more people started labelling the third wave as the extended one (As you can see in the image above).

Corrective Waves

As we are starting to see, it’s not as simple as just drawing some lines or “Waves” to predict where our coin will move next, are you starting to see a pattern of how this works now? Maybe you’ve seen this type of trend with your favourite coins before, and after reading this article, will be able to more easily identify them and use them to your advantage.

So, corrective waves – what are they?

A corrective wave, in simple terms, means a wave where the wave move against the larger degree wave ( In the above example the corrective waves are 2 & 4 because they move against this bigger trend. 

Corrective Trends 

Also related to corrective waves, are corrective Trends.

The 5-wave trends are then corrected and reversed by 3-wave countertrends.

Letters are used instead of numbers to track the correction.

Image- Corrective Wave Example

Can these trends be seen in bear markets too? Absolutely! As the below example shows, they can be found in any type of market and that is the premis behind fractacls and Elliots theory, that these trends can be seen repetatively across all types of market.

Image – Reverse ABC pattern
Types of Corrective Wave Patterns

According to Elliot, there are 21 different types of corrective wave ABC patterns, thankfully most of which you don’t need to familiarise yourself with, so that’s why we will just focus on the three that we have found to be most useful in the majority of trading situations and are the easiest to identify. Strap yourselves in.. here we go.


Zig Zag Corrective Pattern

Zig-zag formations are very steep moves in price that goes against the predominant trend. Wave B is typically shortest in length compared to Waves A and C. These zig-zag patterns can happen twice or even thrice in a correction (2 to 3 zig-zag patterns linked together). Like with all waves, each of the waves in zig-zag patterns could be broken up into 5-wave patterns.


Flat Formation

Flat formations are simple sideways corrective waves. In flats, the lengths of the waves are generally equal in length, with wave B reversing wave A’s move and wave C undoing wave B’s move. We say generally because wave B can sometimes go beyond the beginning of wave A.

Triangle Formation

Triangle formations are corrective patterns that are bound by either converging or diverging trend lines. Triangles are made up of 5-waves that move against the trend in a sideways fashion. These triangles can be symmetrical, descending, ascending, or expanding.


Some Guiding Rules of Elliot Wave Theory 

Rule Number #1: Wave 3 can NEVER be the shortest impulse wave

Rule Number #2: Wave 2 can NEVER go beyond the start of Wave 1

Rule Number #3: Wave 4 can NEVER cross in the same price area as Wave 1


Elliot Wave Trading Guidelines 

Unlike the three rules above, these guidelines can be broken (A little bit).

Sometimes, Wave 5 does not move beyond the end of wave 3. This is called truncation.

Wave 5, more often than not, goes beyond or “breaks through” the trend line drawn off Wave 3 parallel to a trend line connecting the start of Waves 3 and 5.

Wave 3 tends to be very long, sharp and extended.

Waves 2 and 4 frequently bounce off Fibonacci retracement levels.

So there we are, some basic tips of a very powerful method of trading and predicting future coin movements. Elliot wave theory is something that a lot of beginner traders will avoid, simply due to the complexity involved in using it accurately, however with a little time and effort, you can absolutely use this powerful tool to your advantage.

Trade Safe – Team TCL

Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post Elliot Wave Theory Explained appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Ichimoku Cloud – A Beginners Guide

A versatile indicator that defines support and resistance, identifies trend direction, gauges momentum and provides trading signals, the Ichimoku Cloud, also known as Ichimoku Kinko Hyo, was developed by Goichi Hosoda, a journalist, whose ideas were first published in his 1969 book.

Ichimoku Kinko Hyo translates into “one look equilibrium chart”, meaning with one look, chartists can identify the trend and look for potential signals within that trend.

You may have also hear of the names TenkanSen and KijunSen? These parts of the Ichimoku cloud are similar to moving averages and analyzed in relation to one another. When the shorter term indicator, TenkanSen, rises above the longer term indicator, KijunSen, the securities trend is typically positive. When TenkanSen falls below KijunSen, the securities trend is typically negative. This is the basic overview of the Ichimoku cloud, and like other indicators, was designed to able to identify trend reversals at a glance, often with great accuracy.

TenkanSen and KijunSen as a group are then analyzed in relationship to the Cloud, which is composed of the area between Senkou A and Senkou B.

How Ichimoku Cloud Work In Simple Terms:
Bullish Signals:
  • Price moves above Cloud (trend)
  • Cloud turns from red to green (ebb-flow within trend)
  • Price Moves above the Base Line (momentum)
  • Conversion Line moves above Base Line (momentum)

Bearish Signals:

  • Price moves below Cloud (trend)
  • Cloud turns from green to red (ebb-flow within trend)
  • Price Moves below Base Line (momentum)
  • Conversion Line moves below Base Line (momentum)
Time Entries with the Trigger & Base Line

Once you have built a bias of whether to look for buy or sell signals with the cloud, you can then turn to the two unique moving averages provided by Ichimoku. The fast moving average is a 9 period moving average and the slow moving average is a 26 period moving average by default. What is unique about these moving averages is that unlike their western counterparts, the calculation is built on mid-prices as opposed to closing prices.

Traders will often refer to the fast moving average as the trigger line and the slow moving average as the base line.

Ichimoku Cloud Conclusion: 

The Ichimoku Cloud is a comprehensive indicator designed to produce clear signals. Chartists can first determine the trend by using the Cloud and Once the trend is established, appropriate signals can be determined using the price plot, Conversion Line, and Base Line.

The classic signal is to look for the Conversion Line to cross the Base Line. While this signal can be effective, it can also be rare in a strong trend. More signals can be found by looking for price to cross the Base Line (or even the Conversion Line).

It is important to look for signals in the direction of the bigger trend. With the Cloud offering support in an uptrend, traders should also be on alert for bullish signals when prices approach the Cloud on a pullback or consolidation. Conversely, in a bigger downtrend, traders should be on alert for bearish signals when prices approach the Cloud on an oversold bounce or consolidation.


Take a look at this very stripped back and super simple easy-to-understand explanation of
the Ichimoku Cloud by our friend David Moadel, who will appear on an episode of the TCL podcast in a few weeks. 


Facebook & Twitter 

Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post Ichimoku Clouds – An Introducton for The Beginner Crypto Trader appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Beginner Guide to the Moving Average Convergence Divergence Indicator (MACD)

One of our favourite indicators is the Moving Average Convergence Diverge Indicator or MACD.

A powerful tool for indicating reversals or trends is the MACD indicator, that can be applied to both the Forex and Crypto markets with great accuracy, especially when paired with other indicators such as Fibonacci or RSI.

Gerald Appel developed this indicator in the 1960s, and although its name sounds very complicated, it’s really quite simple to use. Read on to learn how you can start looking for ways to incorporate this powerful tool into your trading strategy.

Who’s Your MACD(addy) and What Does He do? 
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.
The Numbers For Your Set Up
With a MACD chart, you will usually see three numbers that are used for its settings (Trading View / Coinigy etc)
  • The first is the number of periods that is used to calculate the faster-moving average.
  • The second is the number of periods that is used in the slower moving average.
  • And the third is the number of bars that is used to calculate the moving average of the difference between the faster and slower moving averages. (The Histogram)

For example, if you were to see “12, 26, 9” as the MACD parameters (which is usually the default setting for most charting software), this is how you would interpret it:

  • The 12 represents the previous 12 bars of the faster-moving average.
  • The 26 represents the previous 26 bars of the slower moving average.
  • The 9 represents the previous 9 bars of the difference between the two moving averages. This is plotted by vertical lines called a histogram (the red lines in the chart above).
Keepin It Simple.. Real Simple
To identify potential trend reversals in the most basic of ways, traders will often look for these early signs
(Using the chart above as an example) – Called Crossovers

Using the MACD Line (In BLUE)

  • When the MACD line crosses below the Signal Line (In RED), we might expect to see a downtrend on that particular time frame
  • Conversely, when the MACD line crosses back above the signal line, we might expect to see a reversal to the upside on the particular timeframe

This is putting it in the absolutely most simplistic way, as we would be looking towards volume increases OR decreases, as well as any types of divergence to confirm the trend.

Diggin a Little Deeper. 

1. Crossovers – As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting “faked out” or entering into a position too early, as shown by the first arrow.

2. Divergence – When the security price diverges from the MACD, it signals the end of the current trend. For example, a stock price that is rising and a MACD indicator that is falling could mean that the rally is about to end. Conversely, if a stock price is falling and the MACD is rising, it could mean that a bullish reversal could occur in the near-term. Traders often use divergence in conjunction with other technical indicators to find opportunities.

3. Dramatic Rise – When the MACD rises dramatically – that is, the shorter moving average pulls away from the longer-term moving average – it is a signal that the security is overbought and will soon return to normal levels. Traders will often combine this analysis with the Relative Strength Index (RSI) or other technical indicators, such as a Fibonacci indicator to verify overbought or oversold conditions. 

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart above, the zero line often acts as an area of support and resistance for the indicator

NOTE: There is a common misconception when it comes to the lines of the MACD.

The two lines that are drawn are NOT moving averages of the price. Instead, they are the moving averages of the DIFFERENCE between two moving averages.

The Benfits of Using the MACD Indicator

The various signals generated by this indicator are easily interpreted and can be quickly incorporated into any short-term trading strategy. At the most basic level, the MACD indicator is a very useful tool that can help traders ensure that short-term direction is working in their favor.

The Drawback of the MACD Indicator

The biggest disadvantage of using this indicator to generate transaction signals is that a trader can get whipsawed (A very quick pivot in a coins direction – catching out the trader) in and out of a position several times before being able to capture a strong change in momentum. As you can see in the chart, the lagging aspect of this indicator can generate several transaction signals during a prolonged move, and this may cause the trader to realize several unimpressive gains or even small losses during the rally.

The Bottom line on MACD 
The MACD is a useful indicator but it isn’t perfect. The Indicator is prone to “false signals” – providing a trade signal just as the price is turning the other way. The MACD also doesn’t come with built-in risk controls or profit targets – it is just an indicator, not a strategy. Traders need to, therefore, implement their own risk and profit management tactics.

Divergence is a useful tool and warns a trend has slowed down, but this doesn’t mean the price will reverse. Even if the price does reverse, divergence doesn’t tell you when that will occur.

If the MACD is above zero it helps confirm an uptrend; below zero and it helps confirm a downtrend. Zero line and Signal line crossovers are used as trade signals to enter and exit trending trades. Losing trade signals occur when crossovers occur in rapid succession due to choppy price action. Divergence shows when momentum is slowing, but it doesn’t indicate when a reversal will occur (if it occurs).

Combing different elements of each strategy makes the indicator more useful, such as taking buy signals following a bullish divergence. Using price and trend analysis will aid in determining which signals to take, such as only taking buy signals when a long-term uptrend is in place.

Want More?
Follow The Crypto Lounge on Facebook and Twitter 

Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post MACD Indicator – The Ultimate Beginner Crypto Trader Guide appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Mainframe Crypto ICO Review

(The Privacy Network) (Development Platform)

– Data Privacy
– Surveillance Resistance
– Censorship Resistance

Current Market Situation:

Market Cap – 49B
Circulating Supply – 2.1T
Total Supply – 10T 

How it works
  • P2P overlay on top of existing network topology. Having this added layer means that layers underneath are hidden or abstracted. This virtual network hides the physical network characteristics
  • DNS on the blockchain
  • Traditional DNS services use main servers to route traffic to correct addresses by linking physical characters to IP addresses, manipulation of these services can be done by administrators and powerful investors and
  • Beng able to host these services on the blockchain directly can cease this manipulation through its nature of being a decentralized service.
  • Dark routing compatible
  • What this means is every node has its own private and public ID for
  • When node A wants to send data (packets) to node C only. It will
    be encrypted in such a way that only node C can read. Then the
    data is sent to all nodes that contain the same starting address as
    node C. But only node C can decrypt the data.
Chat operations
  • Chat services hosted on a P2P virtual layer reduces the chance of network outages to near zero. The decentralized nature of blockchain technology is the base of this concept.
  • Current chat services offer encrypted chat services. But the data is still stored traditionally on a centralized network. This is still a huge vulnerability to surveillance.
  • P2P chat service run on unmanaged network infrastructure. Cannot be
    intercepted by anyone without private keys.
  • Completely private
  • Cross-chain
  • The network will provide smart contracts for ERC20 tokens that are part of the Ethereum blockchain
  • This means that any other token or application that runs or uses ERC20 tokens can take advantage of the Mainframe network
  • P2P enabled (Chat messaging platform)
  • SDK and development framework
  • Can build a variety of applications on the framework.
  • Chat applications
  • Examples (Could be rebuilt and compiled to run on the network)
  • Facebook messenger
  • Whats-app
  • Mailing platforms
  • GmailThey have a working chat application on the network already running.
    (Proof of concept)- This is still in Prerelease.
    – Listed on IDEX & Binance
    – A huge community that is 100k+ strong and growing
    – White Paper is rich with technical examples and a steady roadmap
  • – Token has a high coin supply
  • Low market cap
  • Potential criminal activity (Could drive positive price action)
  • No ICO
Team & Advisors
  • A large team of engineers
  • CEO/Founder of the project has a history in business and mainframe has been a long time coming since 2013.
  • A powerful list of advisors and investors in the project
  • This gives an indication that the project is long-term and driving towards the goal of mass adoption
  • Most of the advisors and investors are heavily part of the messaging space currently
  • Both Email and instant messaging
Team & Advisors
  • Long-term
  • Return could be extremely large due to mass adoption
  • 7/10Could be a higher rating in the future providing the project is ongoing and has more
    development and more positive movements in the future. This is an extremely positive project and could re-imagine and revolutionize they we interact. Imagine having a completely decentralized system to converse and transfer data that is free from manipulation from any 3rd party regardless of size and financial power.Adoption of this technology is key for this project. When the technology matures and it is able to scale up we could see this being picked up by the main centralized chat services we all know and use today
TCL FREE Discord

Hosted in Discord, join over 1,000 other crypto traders discussing all things crypto, sharing up to the minute TA, news and information.

Facebook Group

Join  oup for live TA, educational posts, competitions and giveaways, including free memberships and more exclusive content.

Join Our Crypto Community Completely Free! Become a Better Trader With The Crypto Lounge

The post ICO Review: Mainframe – The Privacy Network Development Platform appeared first on The Crypto Lounge.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

The Origin Of The Fibonacci Sequence
Leonardo Pisano, nicknamed Fibonacci, was an Italian mathematician born in Pisa in the year 1170. His father Guglielmo Bonaccio worked at a trading post in Bugia, now called Béjaïa, a Mediterranean port in northeastern Algeria. The young Leonardo studied mathematics in Bugia, and during extensive travels, he learned about the advantages of the Hindu-Arabic numeral system. In 1202, after returning to Italy, Fibonacci documented what he had learned in the Liber Abaci (Book of Abacus). In doing so, he popularized the use of Hindu-Arabic numerals in Europe.
The Fibonacci Number Sequence
In the Liber Abaci, Fibonacci described the numerical series now named after him. In the Fibonacci sequence of numbers, after 0 and 1, each number is the sum of the two prior numbers. Hence, the sequence is as follows:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610 and so on, extending to infinity.

Each number is approximately 1.618 times greater than the preceding number.

The Golden Ratio
This figure 1.618 is called Phi or the Golden Ratio. The inverse of 1.618 is 0.618. The Golden Ratio mysteriously appears frequently in the natural world, architecture, fine art and biology. For example, the ratio has been observed in the Parthenon, Leonardo da Vinci‘s Mona Lisa, sunflowers, rose petals, mollusk shells, tree branches, human faces, ancient Greek vases and even the spiral galaxies of outer space.
Fibonacci Levels Used in the Financial Markets
The levels used in Fibonacci retracements in the context of trading are not numbers in the sequence; rather they are derived from mathematical relationships between numbers in the sequence. The basis of the “golden” Fibonacci ratio of 61.8% comes from dividing a number in the Fibonacci series by the number that follows it.

For example, 89/144 = 0.6180. 

The 38.2% ratio is derived from dividing a number in the Fibonacci series by the number two places to the right. For example: 89/233 = 0.3819. The 23.6% ratio is derived from dividing a number in the Fibonacci series by the number three places to the right. For example: 89/377 = 0.2360.

Fibonacci retracement levels are depicted by taking high and low points on a chart and marking the key Fibonacci ratios of 23.6%, 38.2% and 61.8% horizontally to produce a grid. These horizontal lines are used to identify possible price reversal points. The 50% retracement level is normally included in the grid of Fibonacci levels that can be drawn using charting software. While the 50% retracement level is not based on a Fibonacci number, it is widely viewed as an important potential reversal level, notably recognized in Dow Theory and also in the work of W.D. Gann.

Fibonacci Retracement Levels as Part of a Trading Strategy
Fibonacci retracements are often used as part of a trend-trading strategy. In this scenario, traders observe a retracement taking place within a trend and try to make low-risk entries in the direction of the initial trend using Fibonacci levels. Simply put, traders using this strategy anticipate that a price has a high probability of bouncing from the Fibonacci levels back in the direction of the initial trend.

For example, on the EUR/USD daily chart below, we can see that a major downtrend began in May 2014 (point A). Price then bottomed in June (point B) and retraced upward to approximately the 38.2% Fibonacci retracement level of the down move (point C).

In this case, the 38.2% level would have been a good place to enter a short position with the goal of capitalizing on the continuation of the downtrend that started in May. There is no doubt that many traders were also watching the 50% retracement level and the 61.8% retracement level, but in this case, the market was not bullish enough to reach those points. Instead, EUR/USD turned lower, resuming the downtrend and taking out the prior low in a fairly fluid movement. Keep in mind that the likelihood of a reversal increases if there is a confluence of technical signals when price reaches a Fibonacci level.

Other popular technical indicators that are used in conjunction with Fibonacci levels include candlestick patterns, trendlines, volume, momentum oscillators and moving averages. A greater number of confirming indicators in play equates to a more robust reversal signal. Fibonacci retracements are used on a variety of financial instruments including stocks, commodities and foreign exchange.

They are also used on multiple time frames. However, as with other technical indicators, the predictive value is proportional to the time frame used, with greater weight given to longer time frames. So, for example, a 38% retracement on a weekly chart is a far more important technical level than a 38% retracement on a 5-minute chart.

Using Fibonacci Extensions
While Fibonacci retracement levels can be used to forecast potential areas of support or resistance where traders can enter the market in hopes of catching the resumption of an initial trend, Fibonacci extensions can compliment this strategy by giving traders Fibonacci-based profit targets.

Fibonacci extensions consist of levels drawn beyond the standard 100% level and can be used by traders to project areas that make good potential exits for their trades in the direction of the trend. The major Fibonacci extension levels are 161.8%, 261.8% and 423.6%. Let‘s take a look at an example here, using the same EUR/USD daily chart:

Looking at the Fibonacci extension level drawn on the EUR/USD chart above, we can see that a potential price target for a trader holding a short position from the 38% retracement described earlier lies below at the 161.8% level at 1.3195.

The bottom Line

Fibonacci retracement levels often mark reversal points with an uncanny accuracy. However, they are harder to trade than they look in retrospect. The levels are best used as a tool within a broader strategy that looks for the confluence of a number of indicators to identify potential reversal areas offering low-risk, high-potential-reward trade entries.

Join The World's Most Supportive Trading Community Become a Better Trader With The Crypto Lounge

The post STRATEGIES FOR TRADING FIBONACCI RETRACEMENTS appeared first on The Crypto Lounge.

Read Full Article

Read for later

Articles marked as Favorite are saved for later viewing.
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview