Beginners Best Practice Guide, Tools and Tips for Crypto Asset Prediction (Part 4 of 4): Enter the 36th Chamber of Crypto

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Cindicator

47 min readMar 27, 2019

Part 3 link, Part 2 link, in case you missed one of them.

Part 1 link, for if you have not started this series of guides at all. This series is for improving your abilities at reading charts and predicting crypto price movement. This final part covers the beginner elements of trading on an open exchange.

Introduction

Throughout the last three document parts, I have shown you how to utilize the Cindicator platform as a tool to improve your abilities predicting price movement and informed you about the tools necessary to begin working with analysis. You should now know how to read a chart, how to pay attention to the market, and how to maintain accuracy in prediction over time. Hopefully, you have practiced diligently and tested yourself repeatedly with Cindicator (or perhaps another paper trading site). With some effort, maybe you have managed a good accuracy rating — low seventies or even higher. You may have placed in the top 200 in a month on Cindicator. But you may ask yourself — to what end is analysis used, and in what way will these skills benefit me?

If you have found your way to this document, you have more than a passing interest in cryptocurrency markets. You have taken the time to understand crypto-asset movements (please start at part 1 if you are not familiar). You have tested yourself thoroughly. Now it is time to take that knowledge and put it to work in the real world as a trader. You might think that being skilled at analysis would translate directly to trading ability, and to a certain extent, that is true. However, there are particular techniques involved in trading, and pitfalls to be avoided in common across markets for over 100 years that are vital to protecting assets. Avoiding anything with a claim of guaranteed returns, using stop-loss orders, and practicing risk and money management are some examples. These tips and techniques help to ensure that your analytical vision turns into profitable market activity.

Part 3 concluded the prediction section of the guide. Now it is time to take that knowledge and fuse it with a base understanding of how to trade in an actual market. I have titled this piece “The 36th Chamber of Crypto” — in honor of the Kung Fu film “The 36th Chamber of Shaolin”. In the movie, a young student named Liu Yude is drawn by his activist teacher into a local rebellion against the Manchu government. After witnessing his parents killed at the hands of Manchu warriors, Liu goes to train at Shaolin Temple.

There he learns the secret Kung-Fu techniques of the temple; each technique shown to the student in its own “Chamber.” There are 35 Chambers in total. After completing them all, Liu becomes the grandmaster of the temple. As the Elders prepare him for his new role, they inform him that each new master adds a new Chamber upon their confirmation. This Chamber adds the technique of the latest master to the canon of the temple. The new master becomes an Elder, and lives out their life as a revered teacher, training new initiates until their death.

Liu, however, has other plans. He is sick of seeing his countrymen brutalized by the Manchus and decides his Chamber, the 36th, will be: the entire world. Liu decides to decentralize the knowledge of Kung-Fu — take the secrets to the masses and arm the everyday village folk against the common enemy. He is officially cast out of the temple to complete his mission (although in secret the Elders support his cause), and eventually returns to establish the 36th Chamber — where laypeople learn the arts of self-defense.

I was first introduced to the film and concept during a screening at the Castro Theater in San Francisco, hosted by the RZA (of Wu-Tang Clan). RZA explained that the overall message of bringing knowledge to the masses was the ethos that informed the work of the Wu-Tang Clan. I immediately associated these concepts with what I had been learning in my research of crypto, decentralized financial assets, and the changes occurring across the world regarding fintech, decentralization, and information technology.

I was busy learning basic institutional trading rules, such as money and risk management, when something occurred to me: There is a clear parallel between the current state of the crypto markets and the Shaolin temple, at a time of need, spilling forth its secrets for the good of the people. With so many uninformed investors entering the crypto markets, it is necessary to produce more general education for traders. I hope that this document and others like it help new traders defend themselves and their assets against the threats they face on live crypto exchanges and the Internet.

While finance is not the high-intensity action of Kung-Fu, the reality is still stark and threatening. People with less financial advantage do poorly across a broad range of categories, including health and education. We may not be dodging punches, but we do share common enemies. Financial institutions rig the game against us. Scammers bank on the old aphorism, “A fool and his money are soon parted.” The list of enemies is extensive and real. Another quote applicable to finance from the world of martial arts, “One’s own mistakes can be a person’s greatest enemy.”

This guide will mainly focus on the most critical problems to avoid, and shorter time-frame momentum trading for quickly extracting profit from the markets. It’s a highly engaged and defensive style of trading. There are other successful strategies to pursue in the crypto market, some of which we discuss here, others we will discuss in future articles. Feel free to adapt or add to this information as it suits your style.

Learning to trade takes time. Understanding the fundamentals of shorter time-frame trading helps to develop the patience required for long-term trades, maximizing profit, and hone trading ability.

The Basics

Three things are absolute prerequisites to profitable momentum trading in the current crypto environment. This guide assumes you either already have these services, or possess the knowledge to access them:

A cryptocurrency wallet. Preferably a hardware wallet (Ledger, Trezor, etc.)
A supply of currency to trade. BTC is the most utilized base pair. I would suggest acquiring BTC.
A Binance account — arguably the best exchange for trade tools at the moment (especially when extended with SmartBinance) and has the best liquidity.

If you are unsure of what these things are or how to get them — this guide is not for you. Please try this beginner crypto guide, followed by my guides on price prediction. This guide is for the intrepid reader who has mastered technical chart analysis and would like to monetize that ability in real-world trades.

The Tools

The next things you are going to need are tools. The order types offered by exchanges may be enough for infrequent inter-day traders, but IMHO exchanges are slow to implement advanced order types. It seems intentional, to cripple the everyday trader and ensure they cannot move quickly in response to bots activity, probably by the exchanges themselves. You are going to need to stack things in your favor to do well in this environment.

Some of the most useful tools are scanners or screeners. Screeners are known tools to standard market traders and should be the first line of offense for any momentum/scalp trader. They help you prioritize your trades. At the time of this writing, there are 2125 cryptocurrencies listed on CoinMarketCap in which you could conceivably initiate a trade, as well as an ever-growing number of newer projects that have not yet met the criteria to get listed on major exchanges or sites.

The sheer number of options means there is a tremendous variance to the opportunity cost of any given sets of trades. A screener will help you prioritize your trades, and allocate your resources to the coins that are seeing the most action in volume and price right now. There is a shortlist of working screener sites in the crypto space:

CryptoPivo.com — Although still in a testing phase, CryptoPivo has an excellent interface once you know how it works. In the settings tab, you can set alerts for the volume % change, and the overall daily trade volume. The two primary tabs to use are “scanner” and “pings” The scanner tab is for an in-depth look at specific assets. The pings page scans assets on Binance relative to your alert settings and feeds the pings page with any meeting the criteria. The small numbers next to the asset indicate the number of times it has hit the alert. Higher numbers indicate more significant movement. My affiliate code is js2nwwn5.
Cryptoxscanner.com — Also an excellent site, it is geared toward the more advanced trader. It is better at giving an overview of the best/worst performers on Binance. It has more customizable alerts and includes two other volume scanners, one of which emulates the functionality of the next link and may replace it, although I have not tested the two side by side. It is also the home page of the Maker app (see below).
Heroku Binance app — As far as I know, this was one of the first working crypto screeners. It is not as advanced as the other two sites, but also extremely simple in functionality. This app scans Binance for assets that meet the site criteria (explained in the FAQ). The Heroku app cannot change scan settings and is best suited to overall bullish conditions.

The following tools we are going to look at vary in functionality, but most of them assist your ability to chart, or trade on an exchange:

SmartBinance — SmartBinance allows advanced order types on top of the Binance API. The free version allows OCO orders (Order Cancel Order), which I find integral to a sane life as a trader. You also get access to dynamic take-profit orders (essentially a trailing stop) and automated trading signals for a small fee. I have used both versions and found them extremely useful.

TradingView — TradingView is an absolute must. It is the best charting tool available. It allows you to save and compare charts, draw out ideas, and trace Fibonacci levels. It also helps you avoid opening the % change calculator app so often: If you shift+click and drag up or down in the main TradingView window, it will calculate % change to the cursor from the current price level.

Cindicator Bot — If you are reading this after the first three parts, you should be aware of the Cindicator bot. It is an excellent platform to train yourself in T.A. and track your overall accuracy. When you want to move to trading, it is worthwhile to consider your assets and decide if an expenditure for access to the bot is in your budget. Keep in mind, there are tiers to access starting at 5,000 tokens( currently around 76$ USD) and going all the way up to 700,000( 10800$ USD). I have found every level useful, particularly for the market cap, EPS standard market, and BTC indicators. Here is a link to a description of the access tiers.

Maker — A handy program for the more technically proficient trader. Made by the developer behind cryptoxscanner.com, it allows many of the advanced order types of SmartBinance, and also runs on top of the Binance API. The difference here is it is a standalone open-source application that you compile yourself and set up to access your trading account. It is the most secure way to extend your trading capabilities on Binance.

CryptoAlerts.ai — A new entry into the space, CryptoAlerts.ai lets you make custom scan settings, and features custom heatmaps of essential metrics. The customizable screener is excellent.

You will also need access to a spreadsheet — Google Sheets is standard and free to access, but any spreadsheet you are comfortable with will do. If you are new to spreadsheets and need to set up a Google Drive account for the first time, this tutorial is an excellent place to start. A % change calculator is also handy, as you will frequently need to figure your profit/loss and make decisions about entries and exits.

The specific style we will consider throughout most of this guide is what is known as momentum trading. The point of momentum trading is to identify a trend as it develops, place positions, and grab profit out of the market. The goal is to identify trends with minimal time and effort and defend your position with a stop-loss order if your analysis is incorrect. It works exceptionally well in crypto markets because of the volatility and rapid volume swings.

Momentum trading allows you to consistently pull a profit from a market with significant volatility happening — whether the overall trend is up or down. It is a highly interactive style. Others may prefer a more tranquil inter-day or more extended strategy. I would suggest you begin by working with some smaller time frames and tight stops, experimenting with your strategy to get a feel for the mechanics of trading and correctly placing orders. When you are proficient at this, work your way up to larger movement, multi-day strategies commensurate with your patience and skill level.

Here is an example of a simple trading sheet:

As you can see, this sheet tracks the asset, entry point, stop price, indicator (if applicable), and outcome (BTC is the base pair for these trades; if you trade multiple base pairs you need a column indicating the underlying asset). The color of the row indicates whether or not the trade was successful. It would be easy to add information (such as date/time of trade, average closing price, and figured profit/loss). It’s up to you to create a sheet with the metrics you find useful. If you are skilled at data visualization, you may want to add more data points to have more information to process later.

Exchange Basics

There are many crypto exchanges currently operating, with varying benefits and drawbacks. It is indeed a topic you should research for yourself and beyond the scope of this guide to cover all of them. We will focus on Binance, primarily, as it has the most liquidity and real trading occurring daily:

Binance — The largest exchange by volume currently operating. It offers several base pairs, long trades, and, most of all — liquidity, and accepts U.S. traders. (Now only for level 1 accounts)

Binance offers most standard order types, and importantly, is easily extensible via its API functionality. Please take the time to download and install the desktop app. The order execution on desktop apps is almost always smoother, especially at times of high activity.

Binance is a centralized exchange, although they will be launching a DEX later this year. Centralized exchanges are targets for hackers, and in the past, have lost user funds in attacks. They also offer the most trading and best execution currently. Use your best judgment in how much you are willing to put onto an exchange to trade.

I do not put my entire BTC holdings on at any time. I leave enough to trade my positions and take out the extra periodically to cold storage. Never put anything on to an exchange you are not willing to lose. In crypto, you are the boss and must manage the security of your assets. With great empowerment comes great responsibility and self-discipline. If you do not hold the private key, you can never be sure the coins are yours.

Make sure to pay attention to notifications of service outage, security problems, new listings, and important dates for the exchange. Platforms often have contests and other initiatives worth it to keep abreast of their daily information releases. I would also like to make clear — Outside of my referral link, I am not paid by or in any way affiliated with Binance, nor do I possess particular affection for it. It has good and bad elements. I am only interested in where we can secure profit.

Most of the profitable crypto traders I know feel that Binance is the only game in town. Bitfinex, Bitmex, and Poloniex may be great, but I cannot set up an account as a U.S. resident. It may be tempting to scam a non-U.S. exchange with a VPN, but be aware that if caught, your account will be closed for violating TOS. I have personally known people who have lost funds in precisely this way.

As noted in recent articles — most of the volume on the major crypto exchanges is fake. It is nearly impossible to trade effectively or take profit out of exchanges where wash trading is 90%+ of the volume. Kraken offers some useful tools and has a good selection of pairs, but these pairs often trade at a low volume forcing you to buy up or sell down the order book. If this situation changes, I will update this guide to reflect places where it is possible to trade effectively outside of Binance.

Here are a few of the other honorable mentions, that may become more viable options in the future:

Kraken — Although not as large as Binance, offers margin accounts with leverage trading for several pairs, and the opportunity to short trade many of the assets. To the best knowledge of the authors, it is the only exchange actively accepting U.S. traders that offers margin and leverage trading.

Bitmex — Does not accept U.S. traders, but offers leverage up to 100x on a large number of pairs, futures contracts, and limited options products. People have also noted some shady practices.

Another honorable mention is Derebit. They offer more reputable options trading than Bitmex, but once again are not open to U.S. traders.

Stop-Loss Orders

Before moving on to advanced order types, we need to take a moment to address the usage of stop-loss orders on a functionality level. In later sections of this guide, we will discuss their placement (both for slippage and on the books).

If you do not skip one section, it should be this one. Stop-loss orders have easily saved me more in loss than the total profit I have taken out of the market. When used correctly, stop-loss orders are a top tool for lowering risk and mitigating loss.

The stop-loss order is your protection, and someone engaged in momentum day trading should be using one at all times. Consider what you would like your base asset to be. Some may prefer a stable coin, such as TUSD or DAI, others may choose BTC. The base value of your account in your preferred asset is your skin in the game. It is your empire, and you must defend it all costs or risk ruin. Cryptocurrency is not a guaranteed value proposition — coins are routinely delisted if their markets fall apart; some have lost nearly 95% or, in some cases, more value from their all-time high. That being the case, you should never leave your positions un-stopped without a specific reason and a watchful eye. In the case of long-hold investments, you may want a very liberal stop (perhaps 30%). You should determine the percentage you use day trading by finding the risk:reward ratio of each trade on an individual basis.

One of the people who trained me to trade, whom I respect very much, and who works as a hedge fund manager on Wall St. told me point blank, “If I see a trader on my floor working a position without a stop-loss order, I fire him on the spot. He’s risking the assets of the fund.” The quote stuck with me and has single-handedly saved me more money than any other piece of advice. During a sideways month, I made over 300 trades, most of which hit my stop-loss orders. What could have been a disastrous month, ending my trading career, put me down 2–5% of my overall funds. In the meantime, I examined and reformulated my strategy, allowing me to rebound stronger than ever with more knowledge, and nearly the same amount of BTC.

Use a stop-loss on all trades except those you have assessed as a long hold, and even then make a plan for the maximum loss you will tolerate in every position you place.

Key Concepts, Pitfalls and Workflow

If you do not know how to place orders on these platforms, these tutorials for Binance, Kraken (allows short positions, some leverage), and Bitmex (non-U.S. crypto futures and options), will get you up to speed on basic order types and the nuts and bolts functionality of the platforms. Although this guide focuses on Binance, hopefully, in the future other exchanges will catch up in allowing U.S. traders and increase their liquidity. It is essential to be aware of them as major players in the field, and also for non-U.S. readers.

Let’s take a moment to talk about advanced order types, proper stop-loss placement, and slippage as the concept relates to crypto orders. You should, at this point, know how to place a stop-limit order on the Binance application. A stop-loss order is merely the use of a stop-limit order to protect a trade. Always use desktop apps when possible to trade. The orders execute better than from a web interface. What you might not know, is how to place a stop-loss order correctly, or why your orders sometimes get skipped when you have a perfectly good stop order!

The reason for this, is slippage. Investopedia defines slippage as —

The difference between the expected price of a trade and the price at which the trade is actually executed. Slippage often occurs during periods of higher volatility when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade.

What this means in practical terms is that when a market is moving with strong momentum in one direction or another, skips in the price can occur as people buy up or down the books. You will see this in the chart sometimes as an actual gap in the candles. If your limit order falls in one of these gaps, it may not execute. If the trend continues, you get left behind with a dangling order, one of the most aggravating problems for traders of all asset classes.

Proper stop placement prevents slippage from occurring. To properly place a stop-limit order, you should always place your limit several satoshis below the stop price when selling, or above when buying, this ensures your order executes slightly ahead of the books. How large of a gap to use depends on the type of jumps the asset is making. A two or three sat gap is reasonable for an asset with everyday movement (not a flag directly up or down). A particularly volatile asset may require five, six, or even 100 satoshis between the stop and the limit to execute. You have to watch the order flow and chart to see how large the jumps in price are. For BTC to USDT, a gap of several cents up to several dollars may be worth it if all other signs justify the position. Use your chart skills and ATR indicator to get a feel for volatility and help with stop placement. The main thing to avoid: do not place your stop and limit orders at the same level, use the stop to trigger an order ahead of the books in the direction you are trading.

This guide assumes you are familiar with the basic order types on Binance — Limit, Stop-Limit, and Market (Kraken has a built-in stop-loss function, but no OCO order at this time). If you are not, take some time now to read and understand their purpose. Each exchange will have its own flow for orders, but the concepts remain the same. Basic orders are standard across exchanges. These are the same basic order types available on traditional asset trading platforms.

There are additional, more advanced order types borrowed from the world of standard asset trading. Let’s talk briefly about three of these advanced order types, which are invaluable to any trader — the OCO order, trailing stop/dynamic take-profit order, and conditional orders. Binance does not offer these order types natively. To use them, you must get a service that extends the API through a desktop app or web service. In my estimation, it is well worth thesmall investment of time and money to do so.

The OCO order is probably the most useful tool for helping a heavy trader lead a successful life. OCO stands for One Cancels Other, and has been an order type on standard asset platforms for a long time. You place an order with an upper limit sale (the target) and a lower limit sale (the stop-loss point); this allows you to cover yourself regardless of how the market moves. It also cancels the order on the opposing side once the price hits or moves past your stop-loss or take profit target. It allows you to step away from trading when you have a goal in mind, instead of constantly watching for an exit point or a sell-off. If you are wondering how to know where to set these values, we will discuss it more in the next section.

The trailing stop order is also useful for capturing profits. A trailing stop is a stop-limit or market order that will engage when the asset falls by a certain amount from the entry price or follow the asset price if it moves up. For example, if you buy BNB at 0.0020 BTC, and you set a trailing stop at 0.0019, the stop will follow the asset up at the same ratio as was set initially, i.e., if BNB moves sharply upwards, say to 0.0023 BTC, but never dips a full 0.001 BTC, then the stop will follow the price upwards, trailing it at the same 0.001 increment, and be placed at 0.0022 BTC. It allows you to capture profit and leave a trade unattended without fear of unanticipated movement.

The dynamic take profit order is similar in function to the trailing stop. The dynamic take profit is engaged when the asset hits a new maximum price. As the asset moves, the dynamic take profit conditionally inserts a stop order if the asset moves down x% from the maximum level it reaches in the time of the trade. Either one is functionally useful for capturing profit from an asset moving in a steady upward trend.

Conditional Orders are available on SmartBinance. They allow you to set up strings of logic to create orders, such as orders that trigger when other orders send or fail due to changes in price, volume, etc. Experiment with the options, they are all available from the rules drop-down menu on the SmartBinance order page.

OCO orders are available in Maker, or on SmartBinance. Trailing stop orders are available only in Maker, while dynamic take profit and conditional orders are native to SmartBinance. Access to these advanced order types makes a considerable difference in the amount of profit you can capture in a given trade. It also assists with discipline in trading. A stop or target system helps you to have a plan of when to enter and exit a trade, and in fact, will automatically execute the plan. It can help remove some of the emotion from trading, and get you away from the charts so you can manage the rest of your life.

Two other concepts you need in your repertoire for basic proficiency on exchanges are an understanding of the order books, and the idea of buy/sell walls. The orders on the books, as well as the depth chart, should always be regarded with an incredulous attitude (troll boxes as well). That said, they can give useful information. I look for “sticky” orders — ones that seem on the books for real, placed by a person making an actual order, and not someone manipulating a position, or at least not doing so in an obvious way.

You must understand that people are manipulating these assets on a level far higher than the average trader, and that individuals trading on that level use manipulation of the books to drive the market in the direction they prefer. It is worth paying close attention to what happens with the books during times of wild trade volume. Look at the orders that move and compare these to the ones that stay — how these orders change as volume or other conditions change, how behavior differs from asset to asset. It’s up to you to use your skills in analytics and observation with the books. Using the information wisely will give you a valuable edge in the market. Following the books blindly will nearly always lead to disaster.

This definition is from a Reddit user, and it gives a good idea of the psychology at play. Not all large orders stem from this sort of manipulation, but enough do that you should be aware of it:

From the link above. Keep in mind buy walls are the same thing operating in reverse:

What is a sell wall?
A sell wall is a tool used by a wealthy entity or individuals, to manipulate the price of a stock/coin downwards. A large sell order is set at a specific price by the whale(s) to prevent higher sell orders from executing.
How does it work?
Let me explain sell walls with an example: A wealthy person, we will call him Richard, tells a group of his wealthy friends that he wants to make money on a particular stock/coin.
This could be for a number of reasons such as:
The stock/coin has a lot of room to grow
The stock/coin has a low enough volume and market cap to allow easy manipulation.
The stock/coin has the potential to get big in the near future.
Richard and his friends decide that it’s a good idea. They all want 1 million of X stock/coin. Unfortunately, in the cryptocurrency market, Richard and his friends can’t execute all the buy orders at once, or the prices will skyrocket!
To achieve 1 million obtained goal, they decide to set up a sell wall and manipulate the price downwards.
They do this in steps: They accumulate together. Perhaps they acquire 250,000 of X crypto each. In their specific market, this didn’t affect the price that much. Great!
They now set a specific price they feel is low enough for them to reach their 1m X crypto goal. For this particular crypto, they decide to all sell their obtained crypto at $2.40.
Between Richard and the group, there is >1 million dollars worth of X crypto selling for @2.40 on the market, a seemingly undervalued price. There is SO much sell volume in the market, buying pressure cannot eat through that wall in a reasonable time frame — it would take a very high buying pressure to do so. What also happens next is the key: nobody else can sell above that sell wall price until it’s gone.
The result?
People need to sell lower than the sell wall to liquefy their stock; this drives the price downwards.
Richard and his friends can now safely all get to their 1m X crypto mark without raising the price exponentially! When they decide to liquidate their sell wall, the price moves up accordingly!

The last topic I want to address here briefly is laddered orders and sales. You may find it worthwhile to scale into, or out of, an asset you are trading. The idea is to purchase downward in % increments of your whole order, capture the value of a falling asset, and sell-off in % increments at different price levels to maximize profits on sale. Some traders use ladders extensively; some don’t. The choice is up to you. The tutorial in the link above has a more in-depth explanation. I prefer to buy in at a flat level and capture profits with a trailing stop.

How to do an Asset Scan

An asset scan (either by screener or manually) is how people find crypto assets to trade in a day trade situation. What exactly do I mean? Hopefully, you have been working diligently and are now be able to read a chart. You should have a feeling for what indicators you find helpful in TradingView. If you have been predicting on Cindicator and looking at assets daily, you should start to have a feel for the charts, and some idea of how they are going to move. We are going to take that a step further, beyond observing how they move — and become a part of the why assets move: by selling or purchasing at the desired price.

When doing an asset scan manually, always do it on an exchange. You need to see the price and volume action on the exchange where you will be trading. The first thing to do is to arrange the asset list by volume. Clicking above volume, change, or pair on Binance will sort the asset list using that value.

Part of successful day trading crypto by momentum is not getting stuck in trades. You are much more likely to find yourself in a position with coins and no one to buy them at a profitable price in a market with no buyers. If you have been trading crypto for a while, you might know this scenario — you purchase a relatively unknown coin, perhaps on a pump signal (SAY NO TO PUMPS), on an illiquid exchange. You can buy it easily at the start of the pump, and the asset goes up rapidly as people FOMO into the action of the market. For a moment, there is liquidity.

The people running the pump sell out their coins at the end of the price spike, dumping the market and leaving…. No one. No one to buy your tokens at any price, and you holding the bag, like an even less fun game of musical chairs. You can avoid this by trading on exchanges that have healthy (and real) liquidity, and sticking to coins with a large ( >100 BTC daily ) volume. Different people have different preferences, although a minimum of 100 BTC/daily is a good starting point for many day traders.

Sometimes, sorting by volume reveals a surprise. A highly unlikely coin topping the list is always a likely candidate for a trade. As you trade and develop your strategy, you will find conditions that you like for trades. If you are tracking the conditions of the trades closely in your sheets, you can pull metrics for the trades, find out if your analysis was correct, and which of the strategies you have employed are most profitable.

There are a lot of elements vying for your attention. For the remainder of the section, I will switch to the first person, as I think learning by example is going to be the easiest. I cannot tell you what to look for in your trades, but I can give you an example of what I am looking for in a trade.

First, I sort by volume. I check for an outlier that should not be at the top and start scrolling down. If nothing jumps out, I move to price. What I am looking for is assets that have either fallen or risen by +/- 0.01 to 3%, .i.e., the start of a trend. So I re-sort the list by price and start at 0%, working my way out in either direction. If I see an asset above the 150 BTC volume mark in this range, I make a note of it as a maybe. After I have my list of possible assets, perhaps 20, I immediately narrow it down to the assets I am comfortable trading — the ones I have traded profitably in the recent past — that I have been watching, and possess an understanding of the motion. On a high volatility market day, this usually leaves me with between 5 and 7 assets to analyze further.

Now it is time to analyze the charts. I open each one of the interesting assets and begin to look. My favorite indicators at the moment are volume, MACD, STORSI, OBV, ATR, and several moving averages on the chart itself. I would prefer an opening MACD cross in the positive direction, an increasing OBV, a STORSI cycle at the bottom, and preferably good volume and ATR range.

I would also prefer to open long positions in an asset showing a stable upward trend on the 1D chart, although I usually have the time frame at 30m or 1H for the trade. The overall trend in the 1D chart is quite significant. It’s much easier to trade with an overall trend than against it. If nothing is moving in an upward direction, I consider a short trade instead.

If I have found something that satisfies my other criteria, I then move on to check the books. I would like to see sticky orders with massive support, hopefully, a 2:1 or higher buy/sell ratio. I watch these orders to see if they are moving around, flickering on and off, or seem like real orders. On the 30M/1H frame, I would like to see clear upward motion, hopefully in confirmation of retracement after a recent drop. These, to me, are the ideal conditions I am looking for a quick percentage gain scalp trade, although it is rare to see such a “perfect setup.”

Developing a Plan

Now that you are aware of the method, it is time to develop a plan. At this point, the accuracy you have trained yourself for using Cindicator will come to fruition. If you can maintain a 70% accuracy rating on Cindicator, if you can look at a bull/bear question for a closely watched asset and make a decision on the platform, you can do it for yourself on the open market. But merely having proper tools, knowing the full spectrum of orders to use, and having analytical skills is not the end. We have to put all of these elements to use in a cohesive plan to direct our trades.

You should never enter a trade without seven compelling reasons why you think the asset will move in a way that justifies the entry. You should always enter a trade with a plan — for both entry and exit. You should always enter a trade with consideration of the plan for your total assets. These are hard and fast rules, but they have served me well. A list of compelling reasons to open positions might include: A release date of some kind, continued volume increase, sudden increase in price or volume, an upward trend, an opening MACD cross, rising OBV, bottom or top of STORSI for buy/sell respectively, listing on a new exchange, coin burn, books with solid buy:sell ratio or strong support on the books on whichever side you are trading — the list goes on.

There should be an overwhelming convergence of factors that you can identify, and that indicates the movement will occur that will make your trade profitable. If you cannot clearly and keenly see the analytical narrative of the position you wish to open, you should not open it at all. Now that you are getting a better handle on when to buy and why to buy let’s talk about how to buy and how to decide position size.

Two topics you need to become very familiar with are risk and money management. Have you ever seen a professional at a blackjack table? They do not play like a sucker, waiting for two kings and betting 60% of their stack when they get it. A professional gambler knows that they are good at blackjack. They know that they will succeed in a favorable enough ratio to make their play worth it. To mitigate risk, they use managed positions. A player will place equal bets between hands, folding those not to his advantage, and pressing forward with those that work. A good player will know when to push their advantage to the fullest to maximize their payouts. A good day trader works in the same way.

Let’s say you have $1,000 worth of BTC, and you see an asset with movement that intrigues you. After further inspection, you decide a position is warranted. How much should you buy? It depends on your individual risk tolerance. This amount should be low enough for you to watch it go to zero and not have a heart palpitation. Let’s work with a starting point of 5%. In the example above, this would work out to $50 if that doesn’t seem like a lot — good. The amount in an individual position should feel like a small amount in relation to your overall bankroll.

At 5%, you can have 20 positions open at any given time. If you are boasting a 70% win rate on your predictions, the way to monetize with momentum trading works like this: Out of every ten positions, seven hit your profit target, and three go to stop. Let’s say that the seven that hit your target gain 5% each (a $2.50 increase in each position), and the ones that go to stop lose 5% each (a $2.50 loss). You have only placed $25.50 of your funds at risk over the trading day with stop-loss usage. 50% of your assets were in play — $500. On that $500, you’ve made $10, a 2% gain overall on the capital used.

The gain was achieved in an extremely defensive way, risking very little of the overall stack at any given time. The effort required to place ten positions in crypto trading is relatively minimal and becomes less so with every step you can automate. It doesn’t seem like much initially, but if you consistently reinvest and manage a 70% ratio (without even including the trades that do much better than 1:1) — at the end of 10 days you have $1,218.99, an overall increase of approximately 22%, or $218. A starting point of $10,000 would yield $2,189 in the same period with the same performance.

During the whole day of trading, only $25.50 was ever at risk in total, or about $2.50 per position. Naturally, as your capital base expands, so does the order size. Remember, place your positions with a consistent size in % relation to total holdings. The best risk % and managed position sizes are going to differ from person to person and changes with experience and available capital. You might also consider varying your position size based on various indicators, such as ATR.

Another important note: You will almost always miss your first 3–5 trades after an increase in risk %. Keep track and see. Also bear in mind the example above is highly simplified. In real life, you will have good and bad days. The key is discipline, consistent performance, and knowing when not to trade, to minimize loss. As long as you manage incremental profit and manage not to lose it before re-investment, you will see progress.

For the first target of a trade, it is common to use a 1:1 risk:reward ratio. By target, I mean, “price at which you will execute your sale,” this is how we decide the initial target. Although trades with a greater ratio are better, I usually start at 1:1 and work my way up with stops. Let’s take a look at an entry from the trade sheet to break it down:

This trade was particularly memorable. It was the result of a mistake. It demonstrates the importance of discipline, of sticking to a plan. In this case, I misread the 1D chart as 30M, and I eagerly placed a position at 0.0000451 BTC. I was upset, momentarily emotional, and angry. I had made such a stupid mistake. I nearly closed the position, but resisted, sticking with the plan — to target or stop.

My entry was at 0.00004510 BTC. I set my stop at 0.00004408 BTC.

Setting the first target is simple — you want a 1:1 ratio. You want to stand to gain as much as you initially risk, at the very least. There is a 0.00000102 BTC difference between the entry price and the stop, so the first target was set at 0.00004612 BTC( 4510 + 102 ). Within 20 minutes, the asset zoomed past 4600, and I followed up the books diligently, moving a manual trailing stop up with the action. Finally, I hit my stop — at 5x target, 0.00005020 BTC. In the end, this trade was closed at 1:5 risk: reward. The only reason I was able to take this profit was through adhering to discipline in my trading technique.

The next thing to know is — how is a stop effectively placed? Let’s use an example: take a look at BNB from 3.7.2019 on Binance:

As you can see, OBV is rising. The STORSI cycle is near the bottom. The MACD is flat, and the volume is decreasing. Also, there is sizable sell pressure on the books at 0.004 BTC. Not the best trade to enter. But if you did, where would the stop order go? Given all of these variables, assuming entry point somewhere in the 0.0039x range, I would place the stop behind the support at 0.0038–0.0039 BTC, at 0.0037x, where the last of the large buys end — somewhere around 5% down from current price.

These buys may or may not be real, but their presence is the current support at work. In this case, the orders are not moving around and are filling. If you look at the chart, a 5% loss would indicate a significant deviation from the current trend. By that point, I would be aware my initial prediction of upward movement (implied by placing a long position) is incorrect.

As you can see from the chart, breaking below 0.0038 BTC would mean a significant change from the current upward trend, and would be the signal I would use for an exit. The convergence of trend change, support level on the books, and 5% being my comfortable stop range is what would inform my stop placement.

The first target is set equidistant from entry as the stop, for a 1:1 ratio. In the above example, target one would be in the 0.0041x range. As an asset hits, and hopefully exceeds targets, you have several options. You can close the trade and take the profit, move your stop up manually, or engage a trailing stop to maximize profits. There are merits to each approach, and the call should be made on a per-trade basis as the situation requires.

On a practical level, this is done by either setting a stop-loss order and following the trade manually (which I will do, especially for longer inter-day trades) or through an OCO order. If you plan to follow the asset up to additional targets manually, be sure to adjust your stop upward to lock in profits, it does no good to recognize your trade hitting a target if you don’t move the stop up to secure the profit. A position placed at 2 am most likely will be best served by an OCO order.

Once you know your entry, your stop, and your 1st target, you can set up an OCO order + trailing stop on one of the platforms discussed earlier. In SmartBinance, you create a new order. In the rules section, set conditions for a limit sale: “If price is greater than or equal to” your target, or “if price is less than or equal to” the stop. To set up a trailing stop, you add another condition on the top sale behavior, “If price falls more than the percentage value specified from maximum price.” You input the percent amount, and when the asset hits a value past the top target, it will start assessing the maximum price, and once it falls X% from the highest value attained by the asset, a sale will occur. The procedure is similar in Maker, and the option for trailing stop and profit are available in the main window. Maker also has a handy function allowing you to set order size as an overall percentage of your balance.

Here is an example of a correct OCO/dynamic profit order on SmartBinance:

The OCO order and trailing stop are valuable tools for locking profits and retaining your sanity. It is too difficult — especially across ten rapidly placed positions — to watch and manually adjust each position. I have done it, and past four positions, it becomes challenging. The OCO order lets you make a plan and set it in place for execution as conditions develop, whether you are awake, or asleep, at the terminal, or AFK. The OCO order also helps to instill discipline in your trades. You can walk away and let it go to target, or to stop. These words have become one of my mantras — To Target, or to Stop! Once you have assumed the risk of opening a position, there is little reason to close it outside of the conditions you identified when entering the trade.

It is not uncommon that your analysis is correct as far as the end outcome, but how things get to that outcome are different from what you anticipated. The move up or down that you envision might first require a small correction in the opposite direction, or happen after a period of relative inactivity. In my trading, the number of times I have closed a position early as the books cleared and the price dropped off, only to have the situation reverse fully and meet my expectations is more than I care to recount. If you had sound reasoning in entering the position, it is best to see your analysis through to the end. If you are taking care of managing your position size and risk in each position, getting stopped out should be of little consequence to you as a trader. You have to get stopped out sometimes to secure profit and test your accuracy in analysis. When you can operate in this way — with no emotion regarding outcome — your analysis and clarity are markedly better. Do not enter trades on passion, or whim. Always have a plan.

You will need a fair bit of self-discipline to track your trades and progress at all times, but this discipline will serve you well. Without metrics, there can be no analysis, and it is imperative that you begin gathering statistics to analyze your performance.

Developing a Team

The world of cryptocurrency trading is a fast-paced, rapidly changing one. New tools and techniques emerge regularly, new asset classes become tradeable in new ways, and innovative participants in the space always devise new methods of obtaining profit. These facts, and the 24-hour nature of the crypto market, make it highly advisable to find friends with whom to trade, share news, and bounce ideas off. To be clear — this is NOT to follow trades of others. Rather, it is to be alerted to assets on the move, to get a window into other viewpoints to give you new angles on your personal analysis.

Never execute a trade based on the plan of anyone but yourself. Trade partners are good for a few things: Having more eyes on the market, picking out moving assets, and considering the factors you have overlooked in your analysis. They are not there to tell you where your stop should go or how large a position to place. The analysis and trading should be done entirely by you.

There are active and engaging trading communities all across the web. Telegram and Discord are two of the most popular platforms. I have found two chat groups useful, one on Discord and the other Telegram: The Pursuit of Crypto and Cryptiverse(no longer functioning), respectively. Both are groups of active and engaged traders working to help one another out. TPoC is the home community of the CryptoPivo.com utility, and some of the Maker utility creators haunt the Cryptiverse. Come in and see if you enjoy the community, or strike out on your own and find a new home.

You should find a place where you enjoy the people, and most importantly, a place to draw quality information that informs your analysis and get feedback from peers who are working with similar assets and techniques. The crypto space has always been about community, individual freedom, and responsibility. The best communities will empower you to reach new levels of understanding, and with a bit of persistence, success in trading.

Some of my favorite community members from these spaces have taken the time to add input to this document — and I would like to share their advice with you, as it has been valuable to me. First up, we have Martin Lawrence from the Cindicator community. He has been a long time analyst for the platform, becoming an employee after dominating the charts for several months in 2018.

Top Advice from Mr. Lawrence

1. FOMO (Fear Of Missing Out) — You will often encounter the sense of loss of potential profit in the cryptocurrency market. Remember, never buy a cryptocurrency if you have seen a significant increase in a short time-frame. You should gain a better understanding of the reasons for the growth in the first place. In most cases, the price drops sharply after such growth.

2. Buy High — A frequent mistake of beginners, and a natural extension of FOMO. After observing a period of growth in which one has missed potential profits, people often move to make a purchase, which results in a buy at the highest price — the away to avoid this to work on self-discipline. Make purchases during corrections, rather than at the height of growth. It is also necessary to analyze the causes of growth, so you can identify when it will happen again with other assets.

3. Sell Low — The opposite of buying the high is selling at the low. Often, people that bought at high prices sell their cryptocurrency at a low one. The cryptocurrency space certainly has its share of failed investors. The reason for this can be stress from the fall of the market (no risk/position management!), causing the investor to panic and sell the asset at the most depressed point.

Remember: If you enter the long-term cryptocurrency market, you should prepare yourself for the fact that your assets can temporarily depreciate by 60–70%. Crypto is a young and highly volatile market. Before choosing an asset, you should analyze it. In cryptocurrency, you can lose 100% but earn more than 10,000%.

4. Incorrect Interpretation of the Signals — Often, novice traders interpret market signals in their favor. They want to believe that the market is working with their outlook and seek signals to confirm their theories. Classic confirmation bias.

5. Lack of Experience — New traders, often start reading books on Technical Analysis. They learn many patterns, such as Eliot waves, trend lines, or support and resistance levels, but they may fail because they have no experience in the market. Everything they learn is theory, without time taken to develop the practice. Most books on Technical Analysis relate to the traditional market. Keep in mind cryptocurrency markets are a little different.

6. False Belief — Mainly refers to investors who are very sure they are correct, with little evidence to back up their position. The market can never be 100% sure. The trader should have a plan of action for any market behavior. Given any scenario, she/he should be able to stop losses and take profits.

7. Compliance with Risk and Money Management — Often, a trader is ruined by not respecting discipline and systems of their own making. An increase in the number of transactions compounds both negative and positive results. The novice trader may increase his risks and the amount at stake to chase greater one-time profits or to compensate for previous losses (the “one last hand syndrome” at the gambling table).

8. Making Large Profits that Exceed Your Maximum Profit — If you received your biggest profit from a single transaction, you should not immediately make other transactions. You can acquire a sense of euphoria and self-righteousness, which may very well lead to losses exceeding the initial profit, and then to the experience of depression. If you have made a big trade, take a break for a short time to decompress from the market and analyze the conditions of the successful trade.

9. Reduce trading after a Series of Unsuccessful Trades — If you have made a string of unsuccessful trades, you should temporarily reduce the frequency of your positions and test your strategy until you start making correct calls again.

10. Impulsive Trading — Panic buying and panic selling, a common mistake that results in lost profit. You think that the asset will begin its strong movement in the direction you need, and immediately make a purchase or sale. If such a transaction is not part of your strategy/analysis, then it is quite likely that you may incur losses.

11. Participation in Pumps — Do not fall for the ads in chat rooms with a call to participate in a pump. They lure you with big profits, but only the organizers of pump groups are the only ones who benefit. They make a profit at the expense of you, and by misleading traders.

If you see that a cryptocurrency has grown in a few minutes by 60–150% or more, never buy at this time. It is likely the activity is the result of pump groups, and soon, the rate will return to its regular or lower prices.

12. Purchase Near Large Orders — A big mistake for newbies, this is a purchase near large orders. They think that this is a firm level of support, and the price will not fall below it, but this is usually how market manipulations occur. You buy in near a large order, then it is removed, and pressure is lower, forcing you to close your position. Do not give in to manipulations.

13. Chat Trading — You should never listen to chat rooms and make deals based on them. This advice also applies to signals in Telegram and pump groups. You have to analyze the market yourself and accumulate your own experience. In the market, you should listen only to yourself.

14. Using Others Advice when Making a Deal — You should not create a deal based on someone else’s advice, be it an experienced expert or your best friend. You have to make a decision and analyze it. You manage your money and take responsibility for it, not others.

15. Uncertainty — Uncertainty in the market is equal to death. You must be adequately confident in yourself and your abilities. Otherwise, failures are waiting for you in the cryptocurrency market.

16. Unnecessary Emotions — You should never trade based on emotions. In the market, emotions that bother you can leak into your trades. You should trade with a sober head. Often, feelings are bad for your business deals.

Emotions violate your trading system, money, and risk management.

The reasons for big emotions can be big profits, big losses, or a feeling of lost profits. Your personal problems should not affect your deals.

Top Advice from the Cryptiverse–

This small set of study tasks comes from the classroom in the Cryptiverse telegram chats. It is a good beginning point for analyzing assets on Binance:

Recommendations for study:

You are to view the Binance exchange on the daily time-frame reviewing 100% of the BTC-paired coins.

Yes, all of them. That’s how you learn and become aware — one by one.

Make sure you’re zooming out on the daily chart to view all of the asset history at once.

You will need:

Pencil and paper or a text entry application such as Word, Notepad, or a Notes app.

Percentage Change Calculator

First, decide on a time frame within which you will be working. Use the same time frame for all the assets you analyze. You can look back at previous price action to estimate the duration required to wait for entries/exits. Alternatively, if you don’t want to consider time-frame, make sure your chart stays locked on one section of time for the complete analysis of all the coins which interest you.

Step 1: Make a note of the coin’s trending lows that are acting as support.

Step 2: Make a note of the coin’s all-time-high.

Step 3: Make a note of the coin’s current price.

Step 4a: Use the percentage change calculator to determine the difference between the two.

Step 4b: Make a note of the difference between 3 and 1 (this will be your risk), and the difference between 3 and 2 (this will be your reward). This step is more reasonable in a market that isn’t down 80%, but it is still an excellent way to get an idea about how relatively depressed the asset is at any given time. Use the techniques from earlier sections for setting the first stop and target of a new trade.

Step 5: Determine which coins have the best risk:reward ratio for holding. You are exempt from analyzing the coins that are still making new historic lows, as we will need to wait for a positive trend to form on the daily first before being interested in them. Write down what loss you’d accept and what profit you’re hoping for, and the least you’ll accept in profit to exit the position. Keep these notes in with your overall sheets to inform trade decisions.

In TradingView, color the VWMA blue and the M.A. red. Blue pushes the direction of red, so if blue is above red, it will go down. If blue is under red, it will go up (try it out!).

If you are trading on an exchange that soundly dominates the overall daily volume of the coin (80%+), you can use the 1m chart and order list of that exchange to get a better sense of where big money is really getting in, or out.

Renko charts are useful for getting an overall view of the trend. The blocks in a Renko chart are not created by time frame, but by price movement. Take a moment to read here and understand Renko charts. They are excellent for spotting overall trend development. Learn about different chart types; they all have application in particular situations.

Train yourself in a bear. If you can trade profitably in a bear market, you will annihilate a bull market.

Upping the Ante: Where to Go Next?

With so many excellent tools coming to market all the time, it can be hard to keep up. In upcoming articles, I will be moving forward from standard trading into algorithmic trading, the creation of trading bots, and keeping up with the newest tools. Be on the lookout for some deep dives into additional strategies, trading algorithms, new tools, and some exciting interview pieces.

I will be working to develop a strategy primarily on the Cryzen platform, which has just launched. Cryzen features Binance data for backtesting and a hybrid Python / GUI development method. I am also beginning to explore CryptoHopper after several recommendations.

Capitalise offers natural language trade automation. It seems like it would be beneficial, but I have yet to set up a system with it. If anyone has a positive experience, I would like to know about it.

I am always on the lookout for new ways to get an edge in trading. If you find one, please contact me on Twitter or Telegram (user @xkr4dx). If it’s a worthy addition, I’ll credit you and add it to the guide.

You can and will find better strategies and methods. Please adapt what you see here, take what helps and feel free to disregard what does not. The purpose of these guides is to get you started and walk you around the deepest beginner pitfalls.

You will still get your ass kicked by the market. Expect it. Learn at all times from all experience, the good and the bad. With perseverance and a clear mind, you will progress in your skills.

Welcome to the 36th Chamber.

Special thanks to Kristi Z for editing/contributing to the series, and all the help of The Pursuit of Crypto, Cryptiverse and Cindicator communities

Glossary of Terms

ATR, OBV, MACD, STORSI

Technical indicators, see full investopedia indicator section.

Opportunity Cost

Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. While financial reports do not show opportunity cost, business owners can use it to make educated decisions when they have multiple options before them.

Risk:Reward

Many investors use a risk/reward ratio to compare the expected returns of an investment with the amount of risk they must undertake to earn these returns. Traders often use this approach to plan which trades to take, and the ratio is calculated by dividing the amount a trader stands to lose if the price of an asset moves in an unexpected direction (the risk) by the amount of profit the traderexpects to have made when the position is closed (the reward).

Slippage

Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage can occur at any time but is most prevalent during periods of higher volatility when market orders are used. It can also occur when a large order is executed but there isn’t enough volume at the chosen price to maintain the current bid/ask spread.

Order Book

An order book is an electronic list of buy and sell orders for a specific security or financial instrument organized by price level. An order book lists the number of shares being bid or offered at each price point, or market depth. It also identifies the market participants behind the buy and sell orders, although some choose to remain anonymous.

Momentum Trading

Momentum investing seeks to take advantage of market volatility by taking short-term positions in stocks going up and selling them as soon as they show signs of going down, then moving the capital to a new position.

VPN — Virtual Private Network

A method of masking your traffic and IP. Necessary for anonymity online.

Stop-Loss, Limit, Stop Limit, Market, and Stop Orders

Basic order types common to any exchange. Here is a guide on basic order types.

Trailing-Stop Order, OCO Order

A trailing stop is a stop order that can be set at a defined percentage or dollar amount away from a security’s current market price. For a long position, place a trailing stop loss below the current market price. For a short position, place the trailing stop above the current market price. A trailing stop is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in the investor’s favor.

A one-cancels-the-other order (OCO) is a pair of orders stipulating that if one order executes, then the other order is automatically canceled. An OCO order combines a stop order with a limit order on an automated trading platform.

Leverage and Margin

Two concepts that are important to traders are margin and leverage. Margin is a loan extended by your broker that allows you to leverage the funds and securities in your account to enter larger trades. In order to use margin, you must open and be approved for a margin account. Going hand-in-hand with margin is leverage; you use margin to create leverage. Leverage is the increased buying power that is available to margin account holders. Essentially, leverage allows you to pay less than full price for a trade, giving you the ability to enter larger positions than would be possible with your account funds alone. Leverage is expressed as a ratio. A 2:1 leverage, for example, means that you would be able to hold a position that is twice the value of your trading account. If you had $25,000 in your trading account with 2:1 leverage, you would be able to purchase $50,000 worth of stock.

Depth Chart

Depth chart is defined as a constantly changing display showing the total number of orders to buy and sell an asset (stock, cryptocurrency, etc.). A depth chart is split in the middle, which is the price of the asset during the last trade. It is also organized across the bottom by price.

Short Position

Short selling is the sale of a security that the seller has borrowed. A short seller profits if a security’s price declines. In other words, the trader sells to open the position and expects to buy it back later at a lower price and will keep the difference as a gain.

Long (or Long Position)

“A long (or long position) is the buying of a security such as a stock, commodity or currency with the expectation that the asset will rise in value. In the context of options, long is the buying of an options contract. An investor that expects an asset’s price to fall will go long on a put option, and an investor that hopes to benefit from an upward price movement will be long a call option.

A long position is the opposite of a short (or short position).”

Volume Weighted Moving Average (VWMA)

“The Volume-weighted Moving Average (VWMA) emphasizes volume by weighing prices based on the amount of trading activity in a given period of time. Users can set the length, the source and an offset. Prices with heavy trading activity get more weight than prices with light trading activity. In periods of low market volume, the SMA and the VWMA are close in value. The indicator can be used to identify and trade trends.”