Read Online Bitcoin Exposed: Today's Complete Guide to Tomorrow's Currency by Daniel Forrester, Mark Solomon - Free Book Online
Authors: Daniel Forrester, Mark Solomon
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days and the purple or shaded portion represents Bollinger bands:
What we are looking for are extreme moves where the short-term trend moves significantly beyond the longer-term trend. This tells us that a bubble or reversal may be at hand. A perfect example occurred during the April 1-11 time frame. The chart shows with the Bollinger bands, and the two exponential moving averages shown by the brown and purple lines (the 10 day is almost always above the 25 day EMA line for those with black and white readers), where the danger zone happened. All experienced traders knew there was a steep collapse dead ahead.
At the Financial Survival Center ( http://www.financialsurvivalcenter.com ) and @financialsurvvl twitter feeds, there were warnings saying to sell out of BTC immediately. When the price leaps outside of the upper bounds of Bollinger bands, and the short term EMA moves much higher than the long term EMA - jump off the BTC ride into a national currency.
Conversely, when the BTC value dives deep into the Bollinger bands, and the short term EMA crosses below the long term EMA line, there is a good opportunity to buy shortly. Then we can ride the short term EMA back up as it re-crosses above the long term EMA.
The main reason we can make these trades confidently is that there is a fixed amount of BTC's in the system. That gives it a strong upward trend bias. We also know that when there is too high of a price spike, the down move will be swift and relatively short-lived. All of this knowledge stems from our most important call – in which Bitcoin is in a secular bull market against all national currencies.
This is all manual trading. More automated trading uses key techniques such as:
- Stop Loss orders (for selling based on a triggered loss level)
- Stop Age (time based selling)
- Target Price (buying or selling based on reaching a price)
- Buy Order Protection (forces over priced orders to below current market rate)
The stop loss and target price tools are the most critical. With a high beta market, the stop loss should be set as high as 20% or even 25%. Lower beta markets can use a 10% stop loss, or what is known as a tight stop loss. This translates to buying in at $100 and setting a stop loss at about $80.
While there could be much more written for covering other trading techniques, this basic knowledge will suffice. We can spot the too highs and too lows for selling and for buying. That is all we need to do for making a handy profit with Bitcoins.
For those interested in learning more about trading any currency or market, the challenge is there are too many books or courses available. Financial Survival Center has a free newsletter for trading, general investing, alternate income, and alternate currency investing.
Bitcoin Application Development
The trend for Bitcoin trading leads toward trading robots. While we might consider this a threat, it can be the saving force for Bitcoin. Bitcoin suffers from high volatility or Beta as explained earlier. Trading robots can reduce this volatility. Trading robots, or software, that tie into trading exchanges via Application Development (Programming) Interfaces, will make frequent small trades when there is movement in the market either up or down.
These frequent trades for small gains (and losses), are called scalping trades. They steady the market considerably because price movements immediately result in buys or sells against the move.
Mtgox.com has automated trade platform API's with two forms:
- HTTP API
- Streaming websocket API
All relevant trade information can be accessed through these protocols for trading.
There have been a few free trading bots written in PHP, but they were pulled off sites quickly. A robot that is consistently profitable is worth a fortune. The essence of what makes the robot work is being able to spot the price trends instantly, execute instantly, and avoid
What we are looking for are extreme moves where the short-term trend moves significantly beyond the longer-term trend. This tells us that a bubble or reversal may be at hand. A perfect example occurred during the April 1-11 time frame. The chart shows with the Bollinger bands, and the two exponential moving averages shown by the brown and purple lines (the 10 day is almost always above the 25 day EMA line for those with black and white readers), where the danger zone happened. All experienced traders knew there was a steep collapse dead ahead.
At the Financial Survival Center ( http://www.financialsurvivalcenter.com ) and @financialsurvvl twitter feeds, there were warnings saying to sell out of BTC immediately. When the price leaps outside of the upper bounds of Bollinger bands, and the short term EMA moves much higher than the long term EMA - jump off the BTC ride into a national currency.
Conversely, when the BTC value dives deep into the Bollinger bands, and the short term EMA crosses below the long term EMA line, there is a good opportunity to buy shortly. Then we can ride the short term EMA back up as it re-crosses above the long term EMA.
The main reason we can make these trades confidently is that there is a fixed amount of BTC's in the system. That gives it a strong upward trend bias. We also know that when there is too high of a price spike, the down move will be swift and relatively short-lived. All of this knowledge stems from our most important call – in which Bitcoin is in a secular bull market against all national currencies.
This is all manual trading. More automated trading uses key techniques such as:
- Stop Loss orders (for selling based on a triggered loss level)
- Stop Age (time based selling)
- Target Price (buying or selling based on reaching a price)
- Buy Order Protection (forces over priced orders to below current market rate)
The stop loss and target price tools are the most critical. With a high beta market, the stop loss should be set as high as 20% or even 25%. Lower beta markets can use a 10% stop loss, or what is known as a tight stop loss. This translates to buying in at $100 and setting a stop loss at about $80.
While there could be much more written for covering other trading techniques, this basic knowledge will suffice. We can spot the too highs and too lows for selling and for buying. That is all we need to do for making a handy profit with Bitcoins.
For those interested in learning more about trading any currency or market, the challenge is there are too many books or courses available. Financial Survival Center has a free newsletter for trading, general investing, alternate income, and alternate currency investing.
Bitcoin Application Development
The trend for Bitcoin trading leads toward trading robots. While we might consider this a threat, it can be the saving force for Bitcoin. Bitcoin suffers from high volatility or Beta as explained earlier. Trading robots can reduce this volatility. Trading robots, or software, that tie into trading exchanges via Application Development (Programming) Interfaces, will make frequent small trades when there is movement in the market either up or down.
These frequent trades for small gains (and losses), are called scalping trades. They steady the market considerably because price movements immediately result in buys or sells against the move.
Mtgox.com has automated trade platform API's with two forms:
- HTTP API
- Streaming websocket API
All relevant trade information can be accessed through these protocols for trading.
There have been a few free trading bots written in PHP, but they were pulled off sites quickly. A robot that is consistently profitable is worth a fortune. The essence of what makes the robot work is being able to spot the price trends instantly, execute instantly, and avoid
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