Trend Basics - Newcomer start at trading

in LeoFinance2 months ago

We learn anticipation and reflection during our time here on Earth. We anticipate, for instance, our arrival home following the end of a long day. Sometimes, we will reflect upon the day's activities to determine if we can improve our results so that if we repeated them tomorrow, better outcomes would arise.

Image by Csaba Nagy from Pixabay

In the world of financial trading or anything else, technical analysis is key to understanding a behavior pattern to plan for better results in the future.


Image by Prawny from Pixabay

Welcome fellow Hivians to our next discussion on finance. This segment will discuss technical analysis related to charts and how to read them with some understanding. Well, at least at an understanding of a beginner like me.

Chart Analysis Overview


Leo Dex Market Status 12/29/2020

My Basic Understanding

My knowledge of chart patterns was limited to understanding that if the line trend moves upward, then the stock, coin, or token price rises. Contrarily, if the trend moves down, then the value of what I hold becomes less.

If the trend moves up, I felt I had the following options:

  • Hold the token and retain the new value hoping that value doesn't fall in the future and, instead, will rise even higher
  • Sell the token for a profit, assuming the selling price is greater than the purchase price.
  • Swap a portion, or entirety, of the LEO token for another.

If the trend moves down, I felt I had the following options:

  • Sell the token to avoid significant losses
  • Sell the token at a predetermined setpoint to capture the gains predicted.
  • Sell the token at a higher value for another desirable product at a higher volume.
  • Hold the value of the token with the hopes that value will rise to greater heights

It pretty much sums up my knowledge at the time before participating in Leo Finances.

Trending Differences

Trends are important to give you an understanding of how something changes over time. Common plotting from trends comes in the form of line or candlestick graphs.

Coinbase - XRP Overview 12/29/20
LeoDex - LEO Overview 12/29/20

The trends above represent graphs of two different currencies. On the left, you have a line chart generated through Coinbase for the currency XRP. On the right, you have a candlestick graph generated by Leo Dex for the Leo currency. While you can glean some information from the line chart, the candlestick graph provides more information.

Candlestick Graphs

Image by Csaba Nagy from Pixabay

Candlestick History

Sakata City, Yagamata Japan - The Hidden Japan

History credits the development of the candlestick graph to Munehisa Homma. Munehisa Homma (1724-1803) was a rice trader in Sakata City, Yagamata, Japan. He developed a form of the candlestick chart graphs we know today to predict supply and demand for rice trading. In his book entitled, Fountain of Gold - The Three Monkey Record of Money, Homma described his observation of the rice futures market as having bearish and bullish behavior.

Trading Psychology


Image by Gino Crescoli from Pixabay

Homma found that he could discern the market's psychology by observing the changing prices of rice trading. Utilizing his observations provided him with an advantage in the market that earned him great fortune and an honorary Samurai title within Japanese society.

We can see examples of how the emotional state of the market affects cryptocurrency or stock prices today. XRP's recent plummet following an announcement of an SEC lawsuit serves as an example.

Candlestick Anatomy

I found myself in Leo Dex during my first active participation in Leo Finance. I expected to see line graphs, but instead, the candlesticks comprised the currency trend. At the onset, I learned that candlesticks had so much more information than what I was used to seeing.

Each candlestick represents a period of time. The period of time can range from seconds, if the platform supports, to days and beyond. Each trader chooses their period of time-based on their trading habits.

Each candlestick also provides data when the trading period, based upon the time frame view, opens or closes along with the highest and lowest prices of the currency during the applicable period. The lines outside of the candlestick box are called shadows and represent the highest and lowest prices of that currency.

Whether or not the candle is filled or a different color depends on the type of trend during the observed time frame.

Bearish or Bullish Trends

The two primary colors you'll notice on Leo Dex's candlestick bodies are green and red. Each color represents its only type of trend during the trading period.

Munehisa Homma once termed them Yin and Yang markets. Today we know them as Bull and Bear trends or markets.

Bull trends arise when the price of a currency or stock is "rising or expects to rise" according to Investopedia. Conversely, Investopedia tells us that bear trends come about when a currency or stock price "lowers or is expected to lower".

Trading Platforms

Image by Free-Photos from Pixabay

Various trading platforms like Trading View, Binance, Coinbase, and Coin Gecko provide different views of cryptocurrency trending. Coin Gecko and Uniswap offer trading on wrapped Leo (WLEO) tokens.

Not all trading platforms will display all cryptocurrencies. If you're searching for Bitcoin, then you'll have your choice in virtually any trading service. Altcoins, or anything that isn't Bitcoin, won't be supported as widely. You'll have to do your own research to match a platform with your desired currency.

Taking the Dive

Image by David Mark from Pixabay

Investing your money is a daunting task. I've learned the hard way, outside investing, that it's better to keep your head down when you first start something new. I'm taking the time I feel is needed to learn the right way of things before taking on trading more frequently. For now, I have the Leo Community and their vast lessons to speed me through to the level I need to reach.

In Closing

image.png
Image by Gerd Altmann from Pixabay

Thank you for joining me on my continuing journey through Leo Finance. We didn't cover more advanced features, but my lack of understanding limits the amount of time I can dedicate for now.

Subsequent articles in this series will cover trading practices like Fibonacci sequences, Multi-Time Frame Analyses, and Elliot Wave applications. Afterward, we will compare historical performance to see if what I've written about actually applies to what's occurred. At least, I hope to succeed in explaining these things correctly and clearly.

Your thoughts?


Image by Stefan Keller from Pixabay

How do you feel about the information presented today? Do you have any advice or stories to share? Comments, compliments, and criticisms are always welcome. Please share it with us in the comments below!

If you have the time, you might want to read through some of @ScaredyCatGuide and @rollandthomas articles. Their work has been beneficial to me in shaping how I write for Leo Finance. They're a bit above my operating level, but it's harder to see where you need to go if you don't watch how the more experienced guys do it.

@markkujantunen's article entitled, "Advice To Beginner Investors In Crypto, Part 2" and @bizon18's "Basic principles of cryptocurrency trading" got me off to a good start.

Posted Using LeoFinance Beta

Sort:  

Nice you just explained alot of complicated terms in simple English.

Thank you very much. The next article will break down common candlestick patterns that describe bullish or bearish patterns. The article after that will piece everything together from the first two to analyze various token behaviors.

However, this is only the technical part. I’m having problems getting reliable fundamental information.