The image of the curve of the volatility of the Crypto-currency is the platform for the trade and exchange of some digital money for others or for various world currencies (USD, EUR, RUR, CNY). In addition to mining, which is the original way of creating crypto-currencies, exchanges are the way to get them. In addition, only with the help of exchanges can they be exchanged for real money.
Types of Exchanges
The division of the entire list of exchanges can be made conditionally according to one of the most important criteria:
Exchange, where bitcoins and part of the basic forks can be exchanged for national, world currencies (fiat money).
Exchanges on which trade exclusively between bitcoin and forks and the exchange of some crypto-currencies for others.
Forks are called digital money, derived from the main bitokoyn. Many forks can only be traded on certain exchanges.
Popular Currencies Exchange
Below is a list of exchanges of crypto-currencies, which received the greatest popularity.
One of the largest exchanges in terms of trade. There is a list of only three pairs: BTC / USD, BTC / LTC, LTC / USD. As in the stock market, it is possible to carry out margin trading, without margin and brokerage, which provides for other players the opportunity to trade on the exchange with margin.
The main and only pair for this exchange of crypto-currencies is BTC / USD. A distinctive feature is the commission charged for each transaction. Initially, it is 0.5% and decreases with the growth of trade volume.
One of the most popular stock exchanges is the crypto currency, which is due in part to the lack of mandatory verification during registration. It’s enough to specify e-mail to start trading. The lists of pairs of bitcoins for fiat money, such as the euro, the US dollar, the Russian ruble are presented.
The stock exchange, opened in 2011, by 2013 became the largest in terms of trade volume. However, after the release of a number of laws regulating the exchange and trading of virtual money, it lost its primacy.
The large Chinese stock exchange is a crypto currency, which sells a lot of pairs with a list of different forks, together with three major CNY, BTC and LTC. In total, the list includes more than 35 different pairs. Attracts many players a wide range of forks used and a relatively low commission of 0.2% for trading.
Exchange Coined Up
One of the many exchanges on which trade is conducted exclusively with bitcoin and forks.
The exchange, which also trades exclusively with crypto-currencies. It is allocated the largest list of traded pairs with forks. Interest in the stock exchange is caused by information that it will be possible to trade in pairs with USD participation.
Internet site designed for trading in digital currencies and allied pairs with USD, EUR, KRW.
The exchange on which the trade in crypto-currencies was actually started. Until 2013, it was the largest, attracted huge volumes of both crypto-currencies and real money. Has lost its primacy in the list of top exchanges and has somewhat surrendered positions by volume as a result of security problems.
One of the largest Chinese exchanges. Provides opportunities to trade BTC and LTC in relation to CNY. Possessing its own software platform, it keeps it only in Chinese, as well as conducting all operations, except for this, when registering, it is required to provide documents confirming the identity of the trader.
Principles of trade
Exchange transactions and speculation on the exchange kriptovalyut are identical to any other. To make a profit you have to buy cheaper, sell more expensive. That is, just like when investing in ordinary currency. Naturally, the base of instruments and the principle of determining goals for trade are put in the same way as in the securities markets or forex. To make a profit by trading in virtual money will not be a problem for those who know the basics of trading in the stock market, securities and national currencies.
The main components used by the trading participant on the exchange are the following:
orders sell, buy for sale and purchase;
history of concluded deals;
trading volumes held on the exchange (s).
To understand the basics of the exchange of crypto currencies, it is worth considering all these elements in turn.
Image of the graph of the course bitcoin
Figure 1 – Schedule bitcoin on btc-e
The graph represents the history of the rate of one crypto-currency in relation to another or to fiat money. Most often the graph is presented in the form of Japanese candles, clearly demonstrates the development in time of the ratio of spread spread. Spread is the difference between the currently offered, the best values for the sale (ask) and the purchase (bid) of the currency, which are relevant on the exchange.
The presentation of the schedule in the form of Japanese candles is taken at the stock exchange, because it is considered the most informative to trade. Especially it concerns the issues of technical analysis.
Japanese candlestick indicates the movement of the price for a certain period of time. Figure 2 shows an example with the basic elements of the candle. Graphs of the same pair of crypto-currencies can be represented with different time axes, for example hourly chart or 15-minute time, on which the unit of time is hour or 15 minutes, respectively. One candle shows the values that were relevant at this time interval.
The body of the candle, that is, the rectangle, is formed from the values at the time of the beginning of the next period of time and its end. If the opening level is below the closing level, then this candle is called bull, it is painted in red or black. In the opposite case, the bear’s candle is painted green or white. So visually it becomes clear that with the bullish candle the course grew, and when the bear was falling.
The lines that depart from the candle are called shadows, indicate the presence of maxima and minima that were recorded during the time of the candle formation. In the absence of the upper shadow, it is said that the top of the candle is cut off, in the absence of the lower shadow, the base is cut off. Dodges are candles that do not actually have a body, so the price at the beginning of the time period and at the end is equal to. Tops are candles with a small body size. The ability to read candles greatly facilitates the trade in crypto-currencies and other financial instruments.
Orders of purchase and sale
Example of a glass of orders
Figure 3 – A glass of buy / sell orders
Orders for purchase / sale from participants in the trade on the stock exchange form a so-called glass. This is a list or table that lists requests from users for the purchase or sale of one crypto currency for another or for fiat money and approximated by value to the current price at which the pair is traded.
Figure 3 shows an example of such a list. In three positions, the offer is submitted to the participants of the trade, the total amount of the crypto currency that they want to buy or sell at this rate and the total amount of the second crypto currency or real money for which the transaction is being executed.
The glass reflects the desire to trade in crypto currency at the rate of interest. If there is a counter offer to sell or buy, then the transaction is made, and the current price of the traded pair is corrected towards the perfect transaction. It should be borne in mind that, for example, if there is a sell order, counter offers of purchase are sought for at a price equal to or greater. In the absence of response sentences, the warrant remains on the demand list, or until the order cancellation instruction comes from the participant who put it out.
The analysis of the market on a glass of quotations
Only based on the data from a glass of quotes, you can perform analysis and make decisions for trading. The first thing you can calculate based on the list is the current spread on the pair being traded. For this, the first values from the list are taken, and their difference is calculated: 23694-23439 = 255 rubles.
Based on orders placed in a glass with a large volume, you can predict the further behavior of the price chart before trading on the exchange of crypto currency. So if large purchase orders are found, then we can expect rapid growth. In the reverse situation, a large order for sale, most likely, will push the rate to decline.
It is important to remember that not all the requests submitted by the participants are listed in the list. Only the positions closest to the current price are displayed in it, therefore, it is already quite difficult to find out how the exchange rate will react after a number of large positions already worked out, so that only quotations can be counted on short-term analysis only. The easiest way is to filter the list for large queries, and only on the basis of their workout, to draw appropriate conclusions. For a deeper analysis, you will need to apply approaches that include a review of the news about the pair you are interested in, or the means of technical analysis.
Separation of orders into passive and aggressive
An order can be called passive if it is put on hold not at the current exchange rate, but at a certain level, which is supposed to be strong resistance or support. Such orders just form the strength of resistance / support levels (sup / res). Only at the moment when the course of the crypto currency will approach the specified level it will be clear whether it will be able to overcome it or after testing will reverse in the opposite direction. Determining in this case will be the ratio of the list of positions for sale and purchase, as well as trading activity, when they place orders only at the current exchange rate.
Aggressive orders are those that are intended to trade on the exchange at the current level. In other words, they are called instantaneous, since they are executed at the first opportunity, there is a response sentence. The main part of the movement on the chart is formed and supported by aggressive orders. After the execution of a major aggressive order, the exchange rate can significantly
movement and trigger the activation of a whole list of pending passive orders.
Levels of resistance and support for the price
Support and resistance levels
Figure 4 – Support and resistance levels
The price is constantly changing, forming a schedule, far from rectilinear movement. It contains peaks and dips, which mark the highs and lows, often called local extremes. In addition to this, extreme extrema over a significant time interval are called significant or absolute. If you can draw a line along a series of highs or lows, it will indicate the level of resistance and support, respectively. These are the levels and values of quotations at which the course of the crypto currency is clearly perceived as a significant obstacle, after which it makes a turn.
Strong levels of support arise in places of accumulation of a significant list of purchase orders. Also with the resistance level, which is determined by the presence of a significant list of sell orders. Actually, the main goal of the majority of the Exchange’s players is to purchase the Crypto-currency during the depreciation and sale at a time when the price reaches higher values.
If we represent resistance and support lines in the form of a channel, then it is most profitable to trade at the borders of the channel. Determining significant levels for the price chart is one of the main tasks for any analysis and forecasting.
One of the main definitions that market participants face is the trend and trend price movement. It is important to know the direction of the trend. The trend itself is just a channel composed of parallel resistance / support levels.
The direction of trend movement is determined by the slope of the levels. If they are directed upwards, then the trend is called ascending. This means that the trade in crypto currency is conducted with the predominance of purchases. For a downtrend, the opposite is true. The lateral trend is a movement in which the resistance / support levels are horizontally positioned and an approximate equality of sales and purchases is observed.
History of Completed Deals
According to the history of transactions, one can judge the total volume of trade on the exchange and a particular pair. This helps in the first place to assess the interest of the bulk of participants to a particular price for the provided instrument.
Use of trading volume in the analysis
Example of trading volume
Figure 5 – Trading Volume Chart
The volume of trade is represented as the total number of units of traded crypto currency, which passed from hand to hand on the basis of executed orders for a certain period of time. Naturally, talk about the direct transfer of something material speech does not go. For analysis, it is very important to measure the volume that emerged when a price reaches a certain level. This can be a strong signal to start trading in anticipation of further price movement.
In various software platforms for trading with crypto currency, a vertical and horizontal volume representation is used. The highest prevalence on the exchanges was the vertical volume.
In this case, a list is formed with information on the amount of all concluded transactions for a certain period of time and displayed as bars under the price chart in time-bound. The time interval for building one column is the same as on the price chart. That is, if the hour schedule is used, the volume is represented in the form of bars, each of which indicates the total volume of trade in the past hour. For the daily chart, it is calculated for the entire trading day.
The most practical use of volume may be the determination of the end of the corrective movement as part of the trend. Strongly increased volume at a price going against the main trend, can signal its end. This moment is profitable to start trading in the direction of the trend.
Analysis of trading volume
Figure 6 – Trading volume analysis
However, it should be borne in mind that the presence of a large volume of trade in crypto-currencies may not always indicate a further strong movement of the price. The main incentive for changing quotations are aggressive orders, and it is impossible to determine only the prevalence of bearish or bullish sentiments in volume only. This will help the joint analysis of a glass of quotations and volume.
Differences between the stock exchange and currency markets
Unlike the stock or currency market, volatility, which is observed on the exchange kriptovalyut, is hundreds of times larger. Volatility determines the size of the price movement for a certain period in time. For example, in 2013, the bitcoin rate rose by more than 5500%. Such changes during the year can not be found on the securities market, shares or real currencies.
Given the steady movement of the exchange rate on stock exchanges in order to trade with tangible income, it is necessary to invest significant funds in turnover. On the other hand, for the entire list of exchanges, it is quite probable that the currency will be invested only 5,000 rubles, to receive in a few days net income of
30000-40000 rubles. Naturally, together with the possibility of rapid growth of savings, you can also quickly lose everything, that is, incredible volatility carries high risks. Everything depends on the ability of a participant in trading on the exchange to correctly forecast the rates. To do this, you can use both a fundamental analysis, relying mainly on news related to the interests of crypto-currencies, and trust in technical analysis.
Technical analysis on its effectiveness in relation to stock exchange crypto currency is somewhat questionable. Everything depends on the high volatility of trading instruments and the presence of a small share of systematic events in this market. As a result, the courses are managed by groups of players disparate in their specificity and purposefulness, capable of increasing the traded volumes at the same time. And yet many participants successfully apply a small list of elements of technical analysis for forecasting prices. Only basic tools and simple approaches are used, which are easier to interpret.
News trading strategies are more effective, however, to find adequate news on crypto-currencies and, most importantly, in time is extremely difficult. One of the best sources of news are thematic forums and blogs, in which players often post their views and comments on further developments. In the mass media, news on the lists of crypto-currencies if they appear, then with a long delay, which negates their relevance. Much can be picked up, for example, by visiting a thematic forum
It should be borne in mind that on the stock exchange the main part of the movement is created by limited groups of participants who sell large amounts of funds and are able to make a significant correction of the exchange rate. To say in advance about their intentions, such groups or individual players are unlikely to have time to detect the beginning of events in time and place the corresponding orders.
Other, more dangerous for a beginner player are situations where some market participants deliberately cause a sharp price movement in order to attract the attention of the masses to the beginning of a more significant advance. As a result, a lot of hasty market participants pick up the initial spurt, start trading and already stimulate traffic on their own.
Important rules for the exchange crypto-currency
Beginners, and many crypts already familiar with stock exchanges are advised to familiarize themselves with the list of main theses:
Greed is the main enemy of any trade. It is never worth waiting for additional growth or a fall, if the forecast does not convincingly say this, it is better to be safe and stop on time or to enter the existing conditions without waiting for the ideal option.
Patience is a guarantee of profit. This applies both to the maintenance of open positions and to waiting for more convincing signals to enter. This simple thesis will allow you to understand how to trade with the Crypto currency, avoiding excessive impulsive entries and exits in anticipation of a strong move.
It is extremely important to always monitor the glass with a list of quotes. A glass is the main source of information for the exchange.
The volume and capitalization for the markets are the key factors reflecting the mood of other players. Because only knowing these characteristics, you can clearly predict the behavior of quotations.
The dictionary of crypto-exchange exchanges
Fiat is the designation of many national, world currencies (USD, RUR, EUR, etc.) that are familiar to many people.
Bulls – a designation for market participants, who by their purchases raise the rate.
Bears – a designation for market participants, who reduce their sales by their sales.
Trend – the direction of the general price movement. The moment when each subsequent extremum is higher than the previous (uptrend) or lower (downtrend). A lateral trend or flat shows a balanced market condition.
Growth is a convincing rate increase.
Drain – a sharp drop in the rate.
Wall – an order or a group of orders, which can have a significant impact on the price movement. In other words, the expected level of resistance or support.
Glass (stock glass, list of quotations) – a table with orders from market participants, in which a price close to the current one is offered.
Hamster is a newcomer to the exchange, which understands the situation, makes decisions and trades without taking into account even the main features of the market, analysis and forecasting.
Keith is a professional and experienced market participant.
Grooming is the definition of a situation where funds from hamsters are transferred to more experienced players. Often the definition is applied to the situations of draining the means of hamsters, who were led to provocation, a false price movement.
Pump – the provocative filling of the market with voluminous deals aimed at the forced reaction of less knowledgeable players to enter the market and support the movement.
Dump – the collapse of the course, argued by directional trade of individual market participants.
Shorts are short positions that are designed to make a profit when trading is decided at a short time
Long – long long positions, profit taking is assumed after a long period of time (week, month, etc.)
Volatility is a sharp price movement with a large amplitude.
Vangovat, vangovanie – to predict the important levels from which it is profitable to trade, forecast with a high degree of realization.
A turn is a situation where the movement of a pair changes direction. For example, the Crypto currency was growing and, after reaching a certain resistance level, began to decrease.
Like any other market, the exchange of crypto-currencies is characterized by a specific vocabulary used by its participants. It is very important, especially for beginners to understand all the definitions used by experienced participants in their entries, blogs and forecasts, as well as in various literature and articles. In addition, in view of the huge number of different crypto-currencies, it is desirable to understand what kind of crypto currency is better.