How to use the Ichimoku Cloud indicator while trading?

As mentioned yesterday we will be going over Ichimoku Cloud trading structure, which does not need any extra pointers on the chart. This Ichimoku trading strategy is relevant for every trading instrument and timeframe.

Placing a trade when the price closes outside the cloud

This technique could also be coined the Ichimoku Breakout Trading Strategy. This is because the trade trigger occurs at the point the price breaks through the cloud. First, you open your trade in the direction of the respective breakout and then hold the position until the security breaches the Kijun Sen (blue line) on a closing basis.

Sequence of Events

When analysing the price action for potential trade entries, we walked through the following sequence of events:

First, the price of Intel goes through the Tenkan Sen (red) and Kijun Sen (blue) in a bullish fashion. Although these indications are bullish, we still need extra approval to take a long position.

Second, the price of Intel breaks through the cloud in a bullish fashion as well. We open a long position (first green circle) and wait for the best strategy.

Third, Intel had a few unsuccessful attempts to break the Kijun Sen (blue), but lucky for us, the price never breaks on a closing basis, and the upward trend remains intact.

Fourth, the price breaks the Kijun Sen in a bearish direction and closes below the Kijun Sen. This price action means we need to exit our position and begin seeking other opportunities.

So, What Happens Next?

In the next 4 hours, the price does another bullish break through the Tenkan Sen (red) and the Kijun Sen (blue). At the same time, Intel also breaks the cloud in a bullish direction once again. We take another long position based on the bullish price action. On this run-up, Intel, unfortunately, broke the Kijun Sen (blue) on a closing basis; therefore, we exited our long position with a decent profit.

These are two trading examples of how Ichimoku Cloud trading strategy could be effectively applied. Note that in the second case, the signal to exit the position wasn’t very strong, but should still be honoured.

Game Theory For Cryptocurrency

To understand how game theory works within the sphere of Cryptocurrency we need to get through the basics first. To know more about game theory and how it’s used in cryptoeconomics keep reading on.

Let’s first get a feel for Game theory. It is essentially the study of logical decision making made by players within the clear parameters of a classification (game, scenario, etc). It uses mathematical models and can be applied to economics, psychology, logic, computer science, distributed systems, and more. Game theory can be seen as a microcosm of human behaviour under set conditions wherein certain inducement structures and mechanisms can lead to predictable and honest behaviour by players.

In a archetypal game theory scenario, there are 3 primary components: Players, Strategies, Outcomes.

Players are the users that make decisions. Strategies are the manoeuvres that players make while simultaneously taking into account possible strategies of other players. The conclusions are the result of the players’ moves inside the system, and with the right incentive mechanisms, can be motivated to a certain route or played out recurrently with similar results.

Game Theory in Cryptocurrencies

Cryptoeconomics can be well-defined as the amalgamation of cryptography, economics, and game theory incentive models merged into distributed blockchain protocols in order to create a secure, stable, and sustainable system.

It is a very new concept, but when you really dig deep into the functionality of cryptocurrency platforms, you will see how important it is to justifying malevolent actors and endorsing honest, trust less behaviour across the network.

The best example to understand the role of game theory and cryptoeconomics in cryptocurrency platforms is Bitcoin. In order for dispersed blockchain networks like Bitcoin to remain secure and have the ability to reach the essential consensus on the blockchain, they need to remain Byzantine Fault Tolerant.

For the system to remain Byzantine Fault Tolerant, the decentralized nodes have to come to a majority agreement on the current state of the blockchain without trusting each other.

This is very difficult to accomplish and is outside of the scope of the employed cryptography, which is used to cryptographically link each block of the blockchain, not determine whether the transactions contained within the blocks are valid or which of 2 competing chains is the valid one.

Bitcoin solves this problem through its Proof-of-Work consensus model. The model works where miners need to solve computationally intensive mathematical problems in order to win the reward for mining the next block.

This solution needs to be verified by the other miners and the inherent cost of the process is electricity, a real-world asset with a financial value. The resulting chain becomes secure and very costly to manipulate or attack. The larger and more decentralized the network becomes, the increased difficulty in accomplishing an internal or external attack.

Incentive structures predicated on game theory mechanisms come into play in order to encourage the players (users and miners) in the system to act honestly. Additionally, some abstract concepts within game theory work subtly in the background.

Starting with miners, the obvious economic incentive stems from the block reward if they solve the next round of mining for the next block. The reward in Bitcoin is currently 12.5 BTC. This is important because since the miners are receiving the reward in Bitcoin, it is in their best interest for the value of Bitcoin to increase and the network to remain valid and secure.

They actively spend resources (electricity) to have a chance to win the block and thus, their efforts will be a sunk cost if they use malicious actions to attack the network and jeopardize the value of the reward. It becomes increasingly more costly to act dishonestly than it does to act honestly within the system.

This creates a positive feedback loop where miners have a consistent positive incentive to maintain the valid blockchain and mitigate against malicious actors, resulting in a secure network.

Miners can act malevolently in a number of ways, counting adding invalid transactions into blocks or mining on top of invalid blocks to gain more BTC. However, this is where game theory mechanics come to the rescue. Invalid blocks will be rejected by the majority of miners in a coordination game format where it is in the best interest financially of miners to remain with the majority and not attempt to create invalid blocks due to the inherent and increasing cost associated with doing so.

The resulting conclusion from this is that the Bitcoin blockchain is constantly in a self-reinforcing Nash Equilibrium state. The system is Byzantine Fault Tolerant due to the majority of miners working in coordination to achieve and maintain the most stable state of the network at all times.

With regards to users, their preference for the longest chain (and the most secure) is a result of a concept known as Bounded Rationality. Essentially, users are acquainted with the main chain and switching chains creates unnecessary complications. Maybe reckless, but most users assume that incentive devices are working correctly to keep miners’ power in check.

Game theory dynamics in cryptocurrencies will endure to develop and should become one of the most captivating concepts within the industry. Their role in security, rationality, and viability cannot be modest and their eventual success or demise within decentralized networks will unfold in real-time as novel platforms go live and incorporate larger numbers of users.

The field of crypto economics is just commencement, with insinuations not solely referred to cryptocurrency platforms, but to the larger progress of game theory process themselves.

Understanding Japanese Candlestick

Pro traders likely analysed price action and investor emotions by using the candlestick charting style. Although modernized in the late 1800s by journalist Charles Dow, the core principles of candlestick charting remain intact today. Both the modern and historical technical analysts who swear by the style regard price action as more important than earnings, news or any other fundamental principles.

In other words, all known information is reflected in the price, which is precisely displayed in the candlestick. A candlestick represents the price activity of an asset during a specified timeframe through the use of four main components: the open, close, high and low.

The “open” of a candlestick represents the price of an asset when the trading period begins whereas the “close” represents the price when the period has concluded. The “high” and the “low” represent the highest and lowest prices achieved during the same trading session.

Every candlestick uses two physical features to display the four main components.

The first feature, known as the body, is the wide midsection of the candlestick and it depicts the open and close during the observation period (most charts will allow you to set the range for the candlesticks)
The close is represented at the top of the body in the green candlestick and at the bottom of the body in the red candle.
On the opposite is true of the open, which forms the bottom of the green candlestick and the top of the red candlestick.
The final two components, the high and low, are represented in the second feature of the candlestick known as the ‘wick.’ Wicks are simply displayed as the thin lines extended above and below the body.

Cryptocurrency traders tend to take advantage of the inherent market volatility by using charts on the intra-day time frames. Each candlestick typically represents one, two, four or 12 hours. (A longer-term trader will likely choose to observe candlesticks that represent a single day, week or month.)

A candlestick becomes “bullish,” typically green, when the current or closing price rises above its opening price. The candlestick becomes “bearish,” typically red, when its current or closing price falls below the opening price.

It’s important to keep in mind that the longer the duration of the candlestick, the more powerful its effect is on the overarching trend.

For instance, a hammer spotted in a one-hour candlestick will have almost no impact on a 6-month long downtrend, whereas if the hammer formed on a 1-week long candlestick, its reversal impact would be much more significant.

Explained: Margin Trading For Cryptocurrency

Margin trading with cryptocurrency allows users to borrow money against their current funds to trade cryptocurrency “on margin” on an exchange. In other words, users can leverage their existing cryptocurrency or dollars by borrowing funds to increase their buying power (generally paying interest on the amount borrowed, but not always).

For example, you put down $25 and leverage 4:1 to borrow $75 to buy $100 worth of Bitcoin. The only stipulation is that no matter what happens, you’ll have to pay back to $75 plus fees. In order to ensure they get the loaned amount back, an exchange will generally “call in” your margin trade once you hit a price where you would start losing the borrowed money (as they will let you borrow money to trade, but they don’t want you losing that money). A margin call can be avoided by putting more money into the position.

A given exchange will have a range of different leveraging options (2:1, 3.33:1, 4:1, 100:1, etc.). Margin trading can be done short (where you bet on the price going down) or long (where you bet on the price going up). Further, it can be used to speculate, to hedge, or to avoid having to keep your full balance on an exchange.

How Margin Trading Cryptocurrency Works – Call Prices and Liquidation

This brings us to the next point. As noted above, you have to have enough funds to cover the bet you are taking. If you don’t have the funds, your position will automatically be closed, “liquidated” or “called in.” As, although the lender will let you use their money for a fee to margin trade, any money lost and any fees paid will come out of your funds. This is like the friend who let you borrow $50 in the Investopedia quote above; the lender is letting you borrow money, not have it to lose.

Specifically, if your balance falls below the “Maintenance Margin Requirement (MMR)” due to the price going the opposite way that you bet on, the exchange will either start liquidating your assets to get its money back or will simply request the funds from you. This is called a “margin call.” TIP: A margin call can be offset by contributing more funds to the order book you have the margin in (ex. BTC/USD). When you deposit more funds, you increase your margin ratio and improve your call price.

In other words, technical jargon aside, the concept here is: margin trading allows you to make bigger bets than you otherwise would at the cost of extra fees and extra risks. When you take a bet, you can use the lender’s money, but if the bet goes the wrong way, the funds come out of your pocket. You take all the risk.

That is the gist of margin trading; with that information, you know just enough to be dangerous.

Should You Use This Strategy?

We strongly suggest staying away from margin trading unless you have done research, are experienced, and are margin trading with a very specific purpose such as hedging. Losing money trading cryptocurrency is stressful enough without borrowing funds plus interest to create leveraged positions. That magnifies your stress level.

Of course, if you are less conservative than we are and want to trade on margin anyway, your next step should be reading all the documentation on margin trading for a given exchange before getting started. Understanding how to open and close margin positions, and making sure you understand margin ratios and calls, as well as brushing up on some margin trading strategy, is part of the next step. We’ll assume you are already well versed in technical indicators.

WARNING ON RISKS, RATIOS, AND BET SIZE: Margin trading cryptocurrency is one of the riskiest bets you can take. Cryptocurrency is risky, and margin trading is risky. Put them together on a highly leveraged moonshot, and you could find yourself owing a great deal of money rather quickly (especially with low volume high volatility altcoins). Unlike with regular trading, you can lose your entire initial investment margin trading. Further, the more you leverage, the quicker you can lose it.

For example, if you go long on a 4:1 margin and the position goes down about 25% from where you opened the position (or a little less since you’ll likely owe fees), the margin will be called in, and you’ll be left with nothing. Think of it this way; you put down $25, you borrowed $75, and thus with fees you only have a little under $25 to lose of the total $100 you are betting. If it goes up, then you can keep the position open as long as you like (as you aren’t risking the lender’s $75), but if it goes down your position will be liquidated based on the rate at which you are leveraged unless you put more funds in. Do an 8:1 leveraged position and it will be called in twice as fast at around 12.5%, do a 2:1 position and it will be called in at around 50%. Yes, you can always add to your position to prevent it from closing, but this is the exact sort of rabbit hole that loses people money. For an obligatory horror story and fair warning of the perks and perils of margin trading, see the Reddit post “How I Lost Nearly 200 BTC trading this past month.”

Four Of The Best Crypto-Trading Bots

In our previous post we have learnt and understood what crypto-trading bots do and what you as a trader should be looking for while choosing a trading bot. If you haven’t read the blog, it is advised that you do so before you read about the various trading bots mentioned below:

Zignaly

This is a trading bot that is still in its development stages. However, you can still use the beta version of the app for free and make great profits from using the bot. Even though it is a new contestant to the trading bots industry, it has accomplished to win over the hearts of many crypto enthusiasts. The main reason for its prevalent fame is the transparency provided by this trading bot. Unlike other trading bots whose developers don’t share many details on how to contact them, Zignaly prides on the developer’s sincerity to the community. Users of the bot can easily connect with the developers of the bot in case of any issue that they face or even provide them with suggestions to add more features to the bot. Either way, being in touch with the developers offers a sense of trust. On top of all this, the bot also permits users to device their own modified trading strategies. Thus, giving litheness to the more practiced traders as well.

Cryptohopper

This might be a new bot in the crypto trading market. However, this novice has managed to turn heads due to the wide array of features that this bot offers. One of the downfalls of most trading bots is that they run on your local machine. This means that they run only when you have turned on your PC. With the rise in curiosity for cloud-based technologies, Cryptohopper uses cloud technology to keep the bot running 24/7. By running the bot on a cloud, users will be able to place trade orders even during the night. Thus, no chance is missed. Another key reason that led to the rise in renown of Cryptohopper is its ease of usage, particularly for the novice. The bot has unified with an external trading signaller. This means that anyone can start using this bot by running it on autopilot. This is a boon to the new traders, who need not fear afor setting trading signals for their bot. The bot also lets more skilled users mess around and set their own trading signals. Thus, satisfying the needs of both.

3Commas

Even though 3Commas bot is very new to the trading bot scene, it has been able to provide its users considerable gains, even during the crypto bear market. The unique feature that separates this bot from the other bots is its ability to trail any crypto market. This allows the bot to close the trade at the most profitable position even though the target gain set by the user had already been reached. This feature helps immensely during the crypto bull run.Additionally, the bot also allows users to trade multiple cryptocurrencies at the same time. Thus, not missing out on any good trading opportunity that comes along the way. The bot is set up on the cloud and is accessible through the website. This means that the bot runs 24X7. The bot can be configured with Binance and Bittrex right now and more reputable exchanges such as BitFinex, Poloniex, KuCoin, etc will be added soon.

Gekko

This is the most versatile cryptocurrency trading bot in existence right now. For anyone who wants to learn a thing or two about trading bots and not spend any money buying one, then Gekko is the bot for you. The Gekko trading bot is an open source bitcoin trading bot project that is accessible for anyone to use for free. The fact that it is free to use is the main reason for its wide popularity. Like any other open source projects, Gekko is free of almost all bugs and even the ones the pop are repaired up at lightning speeds. The Gekko bot can relate with several exchanges, including Bitfinex, Poloniex, and BitStamp. The bot uses a web interface to interact with the users and can run on a local machine with Windows, Linux or the Mac OS. The bot comes pre-configured with some trading stratagem. You can begin using the bot on autopilot as soon as you install and arrange it with an exchange. However, if you would like to use your own trading strategy, the bot also allows you to construct it to your liking.

Pick a crypto-trading bots that suits your needs the best and use it on one of the 14 exchange platforms that XcelToken Plus is listed on to make profits, with a touch of a button.

Features to Look for While Getting Yourself a Crypto-Trading Bot

To understand exactly what is needed in a Crypto-Trading Bot, it is essential to understand what they are, a trading bot is a software program that networks unswervingly with financial exchanges (often using API’s to obtain and interpret relevant information) and places where you can buy or sell orders on your behalf relying on the reading of the market data.

The bots make these conclusions by monitoring the market’s price program and responding according to a set of predefined and pre-programmed guidelines. Characteristically, a trading bot will analyse market activities, such as volume, orders, price, and time, though they can usually be programmed to suit your own tastes and partialities. Now that you’ve understood what they are and how they perform, here is a list of features that you ought to keep in mind to make sure that you make some profits:

1. Reliability

One of the most significant aspects to deliberate on is the reliability of a trading bots consistency. You would not want to lose on a golden chance just because your crypto bot went offline or at a standstill for some time. You might argue that there is no way to be sure about the reliability of a particular trading bot. However, you aren’t the only one using a bot. Hunt for what the other users who have used a specific crypto-trading bot has to say about its reliability or merely.

2. Security

When it comes to cryptocurrencies, you do not have anyone to blame but yourself in case of a hack. When you start using a trading bot, you are giving the bot admission to your funds. This can be very risky, particularly if the trading bot is very new in the field, there is no telling how safe a specific bot is. So, while selecting a trading bot, do a complete exploration and select a bot that has been widely commended for its safety.

3. Profitability

It all comes down to this vital component, is the bot that you are choosing lucrative or not? A question whose answer is pretty hard to find. The main reason you choose to go with a trading bot is to profit over its profit proficiency. There is no point in by means of a bot that is not lucrative. So, find out the productivity of a bot before you capitalize both your time and currency into it.

4. Transparency

The main reason why cryptocurrency rose to fame is that the whole network is entirely transparent. There is no place for any foul play. The same should be expected even from the trading bot that you decide to go with. Try to select a bot whose developers are extensively known for their work in the community. Transparency not only aids to build trust but also helps you to get in contact with the correct people in order to solve any issue.

5. Ease of use

The whole point of going with an automatic crypto-trading bot is to make the whole procedure of trading cryptocurrencies easy for everybody. A bot which comes with a simple to use interface is the one that is very popular. Being able to regulate the bots with just a limited click of the mouse is to some degree what you should look out for, in the bot that you resolve to use.

Considering all the factors we have compiled a list find yourself a crypto-trading bot that suits your needs and use them to make profits using your XcelToken Plus on any of the 14 trading platforms that it is listed on. This list will be updated in order to make sure that you receive updated information as basic necessities required from crypto-trading bots grow.

Common Mistakes to Avoid While Trading Cryptocurrencies

Many people are now making their way into the world of cryptocurrencies. What attracts them here, simply put are the, excessive amounts of opportunities that the crypto-world has to offer (privacy to profit). Trading beginners tend to be very inquisitive when it comes to cryptocurrency trading. Trading is a type of activity that involves work to extract profits from the trading process. It is essential to develop specific qualities necessary for achieving high competence, particularly, a very analytical and attentive mind.

Those that are new to the crypto world hoping to earn a difference in the exchange rate without putting in much efforts. However, the reality is something that is completely the opposite this makes armature traders extremely disappointed in this kind of activity. Below is a list of common mistakes to avoid while trading cryptocurrencies:

Keeping yourself uninformed will be catastrophic

Anyway, it is you who will spend your money on purchasing cryptocurrencies. If you do not understand the product and its value, but only listen to “experts” from Medium, Twitter or Slack, who tell everyone when to purchase and sell currency, you will get into big trouble and lose a lot of money. If your decision to buy a currency hinge on on the opinion of someone else, then you will have to rely on this view and when selling. Explore the marketplace in which you work.

Don’t put in money that you cannot afford to lose.

As an example, we will bring to the deposit all your available savings, or, especially, loan funds. Not a single person is covered against failures and errors; even professional traders often bear significant financial losses. The stories of newcomers who succeeded not to make any of the typical mistakes at the beginning of the trade route can be called anomalous, or at least unlikely, with independent trading from scratch. Mistakes must be made (not intentionally, of course) because learning from their mistakes is much more effective than on others – this is a characteristic feature of obtaining practical knowledge. The best thing you can do before the start of exchange trading is to minimize the consequences of initial errors in advance. The rest will come with time.

Do not make decisions based on emotions and mis-information

Admittedly, avoiding this mistake can be difficult, especially if you follow the news from the world of cryptocurrency on Twitter with messages like “ABOUT THE LORD, THE COURSE IS GROWING ALL BUYING” or “So it seems that bitcoin has come to an end, it’s better to sell. “Let there be some truth in these reports; it is materially impossible to follow everything at once and, in general, the most patient ones still win. No one in Telegram chats will spread REAL insiders (private information about the prospects of pricing); moreover, even advertised paid channels often give more erroneous information than true. Rely primarily on your experience and recheck the incoming data. And, if you have a plan of action, thought out in advance, it can be fatal to depart from it by shifting moods.

Refrain from selling your coin at peak values

“This is not the maximum, hold and do not sell,” advised experienced investors. The point is that you never know how much a particular token will grow. For example, if you bought bitcoin for $100, you probably experienced an incredible desire to sell it when it jumped to $ 1000. But today you would have regretted it a lot: the ether is already trading above $ 9,000. For selling cryptocurrency, you need a strategy. Set a goal and strive for it, no matter what. Yes, with the fall of the market it will be incredibly difficult to look at how money flows. But is it worth to panic and sell everything at once? The answer is one: no.

Refrain from buying cheap coins without knowledge of the currency

Even before investing funds, it is clear how the currency will develop. If this is not a risky investment, then it is necessary to calculate what the result will be from the investment. A coin can develop, but it can be a fraud. You cannot invest money in currency, just because it is cheap. Many inexperienced users are used to thinking that most of the altcoins with a small price are merely underestimated. This is because there are already many stories of sudden growth in value. But this is not so – not all of the cryptocurrencies are profitable.

Security

This, perhaps, is the most serious error possible in the crypto- community today. Hundreds of millions of dollars were lost because people trusted all their data to a stock exchange that was hacked, or to a service that stopped working. With the development of technology, scammers and hackers do not stand still and where money is free, without sufficient control, those sin for them not to take. Even if you have a little money now, and even if you did not plan to stay in the trade for a long time, you should carefully approach the security of your data: two-factor authentication, use of individual computers, data encryption – are mandatory. You need to write down all your passwords, secret keys, print them and hide in a safe place. Thus, if something happens to your computer, you can restore everything to another device.

Fear of Missing Out

Fear of Missing Out. It manifests itself in situations such as the early sale of an asset due to fear of losing profits, buying at the maximum because of the feeling that you are missing something important, or the fear of misplaced a promising ICO, which is why you are capitalizing in dubious projects. It is the fear of losing the profit most often and leads to the fact that we drop profit. Getting rid of FOMO is tough, but you can fight it. To do this, create a set of rules for trading on the stock exchange or choosing a project, as well as limits on the possible allowable losses and profits. Be above it. It is important to understand that new opportunities in the world of cryptocurrencies appear every day, so relax and let this fear retrocede.

Endurance is the key to trading in cryptocurrency. Do not be afraid to slip any deal – the marketplace is so big and ever developing that there will be sufficient money for everyone. However, make sure you remember that it is easy to make profits on the market, but it’s hard to keep what you have made. Do not let greed and greed get over yourself. Follow this list of mistakes that people make while trading cryptocurrencies so that you can stay ahead of the game.