Una introducción al trading de criptomonedas: Tickers, mercados, gráficos

“I’m new to crypto, I see these trading charts with lines and read/hear all these buzzwords, but I have no idea what they mean and/or where to start.”

Understanding Tickers/Markets

The first thing you need to know when starting to learn how to trade cryptocurrencies is how to identify individual coins and the different markets you can trade them in. Websites like Tradingview.com and Investing.com are great places to start, and they offer free cryptocurrency charts so you can analyze and familiarize yourself with them.

Ticker

Each cryptocurrency has its own ‘ticker’ or shorthand symbol that is used to identify it when trading on an exchange or viewing a trading chart. Bitcoin  has the ticker ‘BTC’,  Ethereum  has the ticker ‘ETC’,  Litecoin  has the ticker ‘LTC’ and so on. You can find a cryptocurrency’s ticker by simply searching for it on Coinmarketcap.com or any other coin listing website. A cryptocurrency’s ticker does not change, it is the same across all exchanges and cannot be changed.

Markets

When trading on an exchange or analyzing a cryptocurrency chart, you are limited to specific fiat and cryptocurrencies that can be traded with another digital asset. A “market” refers to these fundamental currencies.

Bitcoin, Ethereum, and USDT ( Tether ) are the 3 main cryptocurrency markets you will find on digital asset exchanges. For those of you unfamiliar with Tether, it is essentially a virtual currency version of the US dollar that can be traded as digital fiat, where each USDT token is pegged to 1 real USD to stabilize its price against the volatility of the crypto market.

This means that if you plan to buy/sell or research a particular coin, you will need to determine which trading pair or ‘market’ you would like to do so on. For example, if you are interested in buying Stellar Lumens (XLM) and you already own Ethereum, you will need to trade on the XLM/ETH market. The same goes if you are interested in analyzing the price of Stellar Lumens against Ethereum on a trading chart.

When trading on a particular crypto exchange, the vast majority of platforms tend to exclusively support crypto-to-crypto trading pairs. However, there are some exchanges that do allow fiat currency trading pairs, but these are limited exclusively to the major currencies in circulation: US Dollar (USD), Japanese Yen (JPY), British Pound (GBP), Korean Won (KRW), and Chinese Yuan (CNY). When analyzing or trading against a fiat currency pairing, use each ticker shown above, exactly the same way you would against a cryptocurrency.

Introduction to Candlesticks and Charts

So, now that you understand how to identify and search for particular crypto assets in each market, the next step is to understand the basic fundamentals of a trading chart and what all the data means.

Above is an image of what a typical crypto trading chart looks like. First, you can see from the tickers in the top left corner that this is a Bitcoin trading chart against the US dollar.

At the bottom of the table you have the date, on the sides you have the price (which in this case is in dollars) and also a real-time price line that tells you at what price BTC is being traded.

Candlesticks

The chart itself is made up of ‘candlesticks’ or ‘candlesticks’ which are usually green and red in colour, and are used to represent the ‘price action’ of an asset. This simply refers to the price activity of an asset or the direction it is taking in the market.

Although they may seem very confusing, candles are actually a really simple and effective way to represent the market movements of an asset. Green candles are known as “bullish” candles, meaning when the closing price ends higher than the opening price. This means that over a certain period of time the asset has increased in value. The lines above and below a candle are called “wicks” and represent the lowest and highest price points the asset reached during that particular candle.

Red candles are known as “bearish” candles, meaning when the closing price ends lower than the opening price. This means that the asset has fallen in value. In the example shown above, you can see that the red candle has no wick above it. This occurs when an asset does not rise higher than its opening price. The same can happen with the wicks below, if the asset does not fall in value below its closing/opening price.

Time periods

Next to the trading pair you have the time period of each candle. Time periods can be set at will to minutes, hours, days, weeks, months and years.

By changing the time frame, you increase or decrease the trading time that a candle represents.

This is a useful tool that allows you to view intraday, daily, weekly or monthly charts, depending on the type of trading you are interested in.

For example, if you set the timeframe to 5-minute candles, you can watch the price action much more closely to spot sudden deviations – this is great if you are looking for intraday trading and want to open and close positions quickly. Therefore, daily candles are useful for long-term investors who are interested in ‘HODLing’ or trading an asset over a longer time frame.

To summarize this point quickly, depending on the type of trading you are looking to do will determine what type of candle interval you use. Short-term traders are better off using closer range candles, anywhere between 5 minutes and 2 hours. Medium to long-term traders will tend to use anything from 4-hour candles onwards.

Basic Terminology

Okay, so you might have heard a few buzzwords in this guide or during your own research by now that you’re not familiar with, some of which are common trading terms and others that are exclusively crypto-related. Below is a list of the most commonly used terms that you’ll no doubt come across when trading, analyzing, and researching cryptocurrencies; HODL – “ Hold On for Dear Life .” This is a very popular term in the crypto space adapted from the term “to hold.” The word comically refers to when crypto investors hold on to their crypto portfolio during a sharp market crash. FUD – “Fear, Uncertainty, Doubt.” This term is used when mainstream media outlets, individuals, or groups spread rumors/news about market shortcomings or predict bearish declines when there may be insufficient evidence to support it. Sometimes, these individuals or groups are said to be “spreading FUD” to create a negative response in the market. Alt-Coins: This term stands for ‘alternative coins’ and can be used to refer to any cryptocurrency that was created after Bitcoin. Basically, every coin other than Bitcoin is an alt-coin. Hard/Soft Forks: These are usually when developers want to make fundamental changes to the underlying protocols or when an existing blockchain has been corrupted/breached. Hard Fork: A permanent change that creates an entirely new blockchain, rendering the old chain obsolete. Soft Fork: These are temporary divergences in the blockchain that are used to implement network upgrades and minor modifications. Both the ‘old chain’ and the new chain remain compatible with each other. SegWit: This stands for ‘Segregated Witness’ and is a protocol upgrade that reduces block sizes by removing signature information. When blockchains like Bitcoin and Litecoin became too ‘heavy’ in the past, both employed SegWit as a means of reducing their block sizes to help with scalability. DLT:















“Distributed Ledger Technology” – This refers to the decentralized nature of blockchain technology. When someone syncs with a blockchain as a ‘node’, each has a complete record of every transaction made on that particular network. This means that the ledger is distributed across the world and is not owned solely by a single party or organization. Because of this, it is virtually impossible to corrupt a blockchain ledger, because you would have to change each nodes ledger individually.

Decentralized: You’ll see this term everywhere . Decentralization refers to the concept that no single entity, organization, or nation can control a cryptocurrency because of DLT. It also means that a blockchain network does not possess any single point of failure because it is distributed identically across the globe to thousands of people (roughly speaking). Unlike fiat currencies, the vast majority of cryptocurrencies have finite supplies that cannot be manipulated or changed by anyone, not even their own creators. Cryptocurrency creators also do not possess the ability to claim or freeze coins once they have been released after an ICO on exchanges. ICO: This stands for “ Initial Coin Offering ” as it is the crypto equivalent of an IPO in the traditional corporate world. ICOs are employed by crypto startups to raise seed capital to begin developing a service or product. Tokens or coins are sold at wholesale prices before being released on exchanges. ICOs have come under scrutiny in recent times due to the large number of ‘ICO scams’ that have been created to swindle money from unsuspecting investors.

Bullish/Bearish: Our first trading term is perhaps the most used term you will find. “Bull, Bulls, Bullish” are all part of the same term used to identify ‘market buyers’ and indicate a positively moving market. If an asset is rising in price, it is considered “bullish.” Bearish, therefore, is the opposite. A bear is a seller/someone who acts against a buyer in the market. Bear markets occur when sellers dominate buyers.

Market Sentiment: This term is used to describe the tone of a market. If an asset is gaining well, you would say that there is a ‘Bullish/Positive Market Sentiment’. Alternatively, if an asset is underperforming, you would say that ‘Market Sentiment is Bearish’. Support/Resistance: When analysing a trading chart, you will start to notice that there are common price areas that a price returns to/struggles to overcome. This is what is meant by support and resistance (respectively). A support area is a particular price point where an asset ‘rests’, usually after a bearish decline. A resistance area is a price that an asset does not pass above and is often a target for bullish traders when starting a ‘bull run’. Bullish/Bearish Trend: An uptrend is simply when candles gradually rise on a chart over a particular period of time, usually when there is bullish market sentiment. A downtrend is the opposite of this movement, and is usually caused by a decrease in demand for an asset. Reversal: This is pretty self-explanatory. A reversal is when an asset finds support after a downtrend and begins to travel upwards. This can also be used to describe a sudden bearish decline after an asset reaches a peak price point.

Support/Resistance Trend Lines

As mentioned above, identifying support and resistance lines is vitally important for every investor when deciding whether to trade or not. Finding these lines will provide you with a solid foundation to analyze an asset in more detail. If we look again at the BTC/USD chart below, over the 1-day candles, we can see very clear support and resistance lines that have played a major role in shaping Bitcoin’s price action over the past few months.

The best way to identify an area of ​​resistance is by drawing a line connecting all of the higher highs of the stock price. Sometimes you will find that a line does not always fit perfectly between certain points and you may have to ignore certain anomalous candles, but you will still have a good idea of ​​where the stock price is likely to struggle in the future. The same goes for finding support lines; draw a line connecting as many low points as you can find. This level is also sometimes referred to as the ‘support base’ and can be an excellent area to open a position if the asset has rallied from the same area in the past. As you can see from the chart above, Bitcoin was able to pull back from its support base on 3 separate occasions. That makes it a strong support base level. However, it is worth noting that support bases can fail if bearish opposition overcomes bullish traders; so you cannot always rely on good support lines alone to make accurate market predictions. The same can be said for strong resistance areas as well.

There are also times when a resistance or support can ‘flip’ and act as the opposite over a given period. Typically, these lines cut through the price action and can sometimes provide clues that a trend is about to reverse.

On the same BTC/USD chart you can see an example of this ‘resistance/support flip’ level. On this occasion, Bitcoin broke the resistance level to the downside and started using it as a support area; later on to push this support and start reversing bullishly.

Basic Fibonacci Retracement

A famous and renowned Italian mathematician named Leonardo Fibonacci discovered a sequence of numbers of great importance in the early 13th century. The sequence of numbers had a wide range of amazing applications in algebra, geometry, and was later used to explain natural phenomena such as the way flowers and snail shells are formed.

During the 20th century, stock traders began to notice that future support and resistance levels could be identified using a certain range of numbers from the Fibonacci sequence; particularly 0.236 (or 23.6%), 0.382 (38.2%), 0.5 (50%) and 0.618 (61.8%).

This trading tool remains very popular, even in today’s highly volatile and often unpredictable crypto market. You can use this indicator tool in a number of different ways to predict all sorts of different patterns, but for now we’ll focus on its basic application. When using the Fibonacci retracement, you’ll want to identify both a high and a low point on the chart over a particular time period that you’re interested in analyzing. In the BTC/USD chart above, the highest point since early May 2018 was used and measured to the lowest price point at $5,856. Here you can clearly see how the projected Fibonacci support and resistance levels have played a major role throughout Bitcoin’s recovery from the lowest price point, and where Bitcoin is likely to find support and bearish selling pressure in the future.

Introduction to MACD, RSI and Moving Averages

Now that you understand the support/resistance areas and the Fibonacci retracement, it is time to look at 3 of the most commonly used indicators by market traders; MACD, Relative Strength Index (RSI) and Moving Averages.

MACD

MACD stands for ‘Moving Average Convergence/Divergence’. It belongs to a group of indicators known as ‘lagging’ indicators, meaning it plots data after a particular move has occurred on the chart. However, the MACD indicator is every trader’s bread and butter when it comes to gauging the strength and future direction of an asset. The MACD consists of two moving averages (MAs), the ‘faster’ MA and the ‘slower’ MA. The former tracks the stock price much closer than the latter, allowing us to draw market inferences when the two interact. When the faster MA converges (or passes above) the slower MA, we assume that buying momentum is gaining behind an asset. When the faster MA diverges (or passes below) the slower MA, we assume that selling momentum is gaining behind an asset. There is also a 9-day horizontal MA line known as the ‘signal line’ that is used to determine buy and sell signals. When both MAs cross below the signal line, we assume that overall momentum is decreasing and we assume it is increasing when it crosses above it. This is accompanied by a histogram that sits along the line to depict the strength and duration of a move. On the BTC/USD chart above, the MACD is the bottom indicator. Here you can see that both MAs are well above the signal line, with the faster MA moving away from the slower MA. This is a good sign of strong buying momentum behind BTC right now.

Relative Strength Index (RSI) 

The RSI indicator is the opposite of the MACD, as it is part of a group known as ‘leading’ indicators. This means that it uses a particular formula to predict price movements in advance. The RSI is an oscillator that travels between zero and 100. Within this range is an index channel that runs between 30 and 70. When the RSI goes below 30, we assume that the asset is ‘oversold’, meaning that the asset is trading below its expected market value and should bounce back up shortly. When the RSI goes above 70, we assume that the asset is ‘overbought’ – this means that the asset is trading above its perceived market value and typically corrects back into the channel shortly after breaking out. In the BTC/USD chart above, you can see that BTC was already oversold in a previous market move and is close to breaking above 70 again. Among other things, this tells us that demand for Bitcoin is high and that the asset has strong buying momentum.

Moving Averages

There are two types of moving averages that most traders tend to use, simple moving averages (SMA or simply MA) and exponential moving averages (EMA). The only difference between these two is that EMAs give greater weight to the most recent price points, while SMA applies equal weight to all price points. In the example above, we are using EMA.

Any moving average can be set to different lengths – a low value (5,10,15, etc) will give you a very close moving average relative to price action, while a higher MA value (50, 200, 500,1200, etc) will give you a much wider midline. Similar to timeframes, moving average lengths can be adjusted to suit any type of trading you are interested in doing/monitoring. You will always want to use at least 2 moving averages together to get similar reference points that you get in the MACD indicator. If you are looking at intraday bitcoins then you will most likely be looking at BTC/USD on 5 minute to 30 minute candles and using two MAs or EMAs set to something like 25/10. This means that one MA is tracking an average of 10 candles whilst the other is tracking an average of 25. If the lower value converges above the higher value MA then you can assume that the market is moving bullish. Alternatively if the 25 MA starts to cross the 10 MA then this will give you a good indication of a bearish market. If you are looking at daily chart trading like above then the best combination to use is 50/200 MAs or EMAs. When the 50 MA crosses above the 200 MA it is known as a ‘Golden Crossover’ and is widely regarded as a very strong buy signal. If the 200 MA crosses below the 50 MA it is known as a ‘Death Cross’ and indicates strong selling pressure from the bears.

Basic patterns of triangles, pennants and flags

Finally, we have a selection of basic patterns that sometimes form in an asset’s price action, and which tend to foreshadow bullish or bearish market moves before they happen.

It is worth reiterating at this stage that when you begin analyzing the crypto market, you will want to combine ALL of these individual factors before making your prediction/move.

Triangular patterns

A general rule with all patterns is that if candles enter the pattern from the bottom, they are likely to continue up (bullish). If candles enter the pattern from the top, they are usually likely to continue down (bearish).

Flag Patterns 

Flag patterns are characterized by having uniformly downward/uptrend support and resistance levels. The stock price can sometimes travel a long way within these patterns and can be difficult to spot at first.