BASIC UNDERSTANDING OF CRYPTO

Asif Malik

Sr. Explaination
Rules of Trading
1 Never Invest at Single Point / Price
2 Never use a Single Indicator for Any Trade. Use Atleast 3 Indicators.
3 Initially do a Paper Trading; take 10 Trade for Practice. Invest: if your Sucess Rate is 70% with Small Fund.
Crypto is a Game of Patience.

Fundamental Analysis
It is assessing a financial asset’s valuation. A fundamental analyst studies both Economic & Financial Factors to
determine if the value of an asset is fair. These can include macroeconomic circumstances like the state of the wider
economy, industry conditions, or the business connected to the asset (if there’s one).
Technical Analysis
The core idea behind TA is that historical Price Action may indicate how the market is likely to behave in the future. It
include analysis of Price Action & Volume, Chart Patterns, the use of Technical Indicators, & many other Charting
https://academy.binance.com/en/articles/a-complete-guide-to-cryptocurrency-trading-for-beginners
Tools. The goal of this analysis is to evaluate a given market’s strength or weakness.

Market
It is the Trend
overall direction where the price of an asset is going. In TA, market trends are typically identified using price
action, trend lines, or even key moving averages.

IMPORTANT TERMINOLOGIES
Sr Term Explaination
1 Alts All coins/tokens except BTC.
2 ATH All Time High, it can be in different time frames such as 24 hours to 1 year/more.
3 ATL All Time Low. Can be in different time frames.
4 BTC The king of crypto. First block created on 9 January 2009
5 Bullish Up trend market
6 Bearish Down trend market
7 Buy / Long A futures trade where you predict price will go up
8 Sell / Short A futures trade where you predict price will go down
9 Defi Decentralized Finance, used for loans, etc.
10 DEX Decentralized Exchanges like Uniswap, etc.
11 Entry The price you enter any trade, usually the buying price
12 Exit The price you exit a trade with profit (or loss).
13 FOMO Fear Of Missing Out
14 FUD Creating “Fear, Uncertainty & Doubt”.
15 HODL Hold On to Dear Life, meaning do not sell in loss.
16 Hype Promoting a coin extensively / sometimes unrealistically.
17 ICO Initial Coin Offering
18 IEO Initial Exchange Offering
19 Masternode A full node, which validates transactions within blockchain ecosystem and gets
20 Mining rewards.
GeneratingCan be considered
processing powervirtual mining. Only gives
to validate/authorize rewards
blocks, ofallow
which the same crypto you
transactions to
have Masternode
approve. of.
21 PIP Point In Percentage. This is represented by a single digit move in the fourth decimal
22 Pump & Dump place
Up & down e.g. shit coins.
23 Shilling Make a hype of coin in the market. Doing secretive marketing, which may seem it is
24 Shit Coin genuine but actually
Bad project, the personaims
no aims/pointless is getting
and no paid to promote a project/coin.
team.
25 TA Technical Analysis
26 FA Fundamental Analysis
27 VPS Virtual Private Server used to deploy and integrate a Masternode.
28 Whales Huge investors. E.g 1000 bitcoin owners
29 KYC Know Your Customer. mandatory process of identifying and verifying the identity of
30 Increasing Trend the client
Bullish, when opening
Extension, an account
Appreciation, and periodically
Increase, over Buying
Bullish, Long, time. Trend, Breakout

31 Decreasing Trend Bearish, Correction, Depreciation, Retracement, Short, Selling Trend, Breakdown

TYPES OF TRADING / TRADERS

Sr. Trading Explaintation
1 Scalpers Scalpers are the individuals who makes dozens or hundreds of trades per day in an
2 Momentum Traders attempt
Momentum to scalpe
Traderssmall amount
seeks of profit
the stocks thatfrom
are each
Movingtrade by exploitinginthe
Significantly Onebid-ask
Direction
spread.
in high volume. These traders are attempt to ride the momentum to desire profit.
3 Technical Trading Technical Trading focus on Charts & Graphs. They analyze line on stokc or index
4 Fundamental Trading graphs for signs of
Fundamentalists convergence
trade companiesorbased
divergence that might analysis,
on fundamental indicate buy or sell
which signals.
examines
5 Swing Trading corporate events,
Swing Traders areparticularly
Fundamentalactual or anticipated
Traders who hold earnings reports,
their position stock
longer spilits,
than a single
reorganizations, or acquisitions.
day. Most fundamentalist are really swing trading since changes in corporate
fundamentals typically required several days or even week to produce a price
Difference Between Coin &movement
Token sufficient for the trader to claim a reasonable profit.
1 Coins have their own Blockchain (e.g. BTC, XRP, Tron, Ethereum, Neo, LTC coins).
2 Token are designed on the other coins blockchain (e.g. Eth, Tron and Neo coins blockchain).
ERC20 Tokens means they designed on Etherium Blockchain & TRC20 means The Tron Blockchain.
Coins have Individual Identity with having their own Blockchain while tokens designed on Biggest Giant Coins
Blockchain.

Which & How to to Choose Coin for Trade? (for Beginners)

1 Recommended to Trade in Top 10 Coins (excl. Stable Coins).
2 Check the Project (read its white paper), Proj. should be good.
3 Check the Technical Analysis at https://www.coingecko.com/en/ , it gives signal to Buy or Sell.

COIN TYPES
Sr Types of Coin Explaination
1 Payment Method e.g. BTC, ETH
2 Infrastructure Coin e.g. New, ETH
3 Security Token e.g. CapexMove
4 Utility Token e.g. Golem
5 Privacy Coin e.g. XMR

BTC DOMINANCE
Sr Situation Explaination
1 Alts ↑ & BTC ↓ People Selling BTC & Investing in Alternative Coins.
2 Alts ↓ & BTC ↑ People Selling Alts & Investing in BTC.
3 Alts ↑ & BTC ↑ People Investing Money in the Market (Addition Funds Added in the Market).
4 Alts ↓ & BTC ↓ People taking out Money from the Market.
For Beginners: Compare BTC Dominance with AltCoin & Take Trade.

CANDLESTICK PATTERNS https://mm5007.sbm-itb.net/2019/02/14/wh

Sr. Candlestick Appearance | Interpretation
1 Doji No Body, Long Wicks. Confusion b/w B&S | Trend Reversal
2 Spinning Top It doesn't work in Sideway Market. Always look
Short Centeral Body, Long Wicks. Indecision. for Doji in Reversal
| Trend Trending Market.

3 Marubuzu Long Body & almost No Wicks. Dominance. | Reversal or Continuation

4 Hammer Short Upper Body, Long Lower Wicks. |ofBullish
Trend Reversal
Found in Down Trend. It doen't matter whether it is Bullish or Bearish, the
interpretation is same.
5 Hanging Man Short Upper Body, Long Lower Wicks. | Bearish Reversal
Found
Hammer in Up
(↑) Trend.
Hanging It doen't matter
Man (↓) whether
are same but itfound
is Bullish or Bearish,
at different Trend & thehave different
interpretation
Interpretation. is same.
6 Inverted Hammer Short Lower Body, Long Upper Wicks. | Bullish Reversal
7 Shooting Star Found in Down Trend. It doen't
Short Lower Body, Long Upper Wicks. matter whether it |isBearish
Bullish Reversal
or Bearish, the
interpretation
Found in Hammeris same.
Up Trend.(↓)It & doen't matterStar
whether it is Bullish or Bearish, the Trend &
Inverted Shooting (↑) are same but found at different
interpretation
have is same.
8 Bullish Engulfing Bullishdifferent
completelyInterpretation.
Engulfs (Cover) Bearish Candle | Bullish Reversal
9 Bearish Engulfing Found
Bearishincompletely
Down Trend. 1st Bearish
Engulfs candleCandle
(Cover) Bullish cover by 2nd Bullish
| Bearish candle.
Reversal
10 Bullish Harami Found
BearishinEngulfs
Up Trend. 1st Bullish
(Cover) candle cover by 2nd
Bullish Candle BearishReversal
| Bullish candle.

11 Bearish Harami Found

Bullish in Down(Cover)
Engulfs Trend. Bearish
1st Bearish
Candlecandle covered| Bearish
2nd Bullish candle.
Reversal
1. Bearish - 2. Bullish/Bearish - 3. Bullish. | Bullish
Found in Up Trend. 1st Bullish candle covered 2nd Bearish candle. Reversal
12 Morning Star Found in Down Trend. Use bigher time frame (e.g.| 1Bearish
day or 4Reversal
hr chart)
1. Bullish - 2. Bullish/Bearish - 3. Bearish.
13 Evening Star Found in Up Trend. Use bigher time frame (e.g. 1 day or 4 hr chart)
Three White Soldiers 1. Bullish - 2. Bullish & bigger than 1st one - | Powerful Bullish Reversal
Three Black Crow 3. Bullish with no or samll upper shadow
1. Bearish - 2. Bearish & bigger than 1st one - | Powerful Bearish Reversal
Found in Down
3. Bearish Trend.
with no or samll upper shadow
Found in Up Trend.
PRICE INDICATION - TREND LINES
Sr Explaination
1 It is simply a Straight Lines that shows the Market Trend (i.e. Upward / Downward).
2 It also shows the Support & Resistance.
3 To be Valid Trend Line, we need At Least 2 Tabs of Price on Trend Line.
4 It also shows the Trend Reversal (Breaking Out or Breaking Down).
5 It gives Buying/Selling Indication (e.g. Support: Buy & Resistance: Sell).
6 Price Channels can be made with Trend Lines that help in Buying/Selling.

CHART PATTERNS
Sr Chart Explaination
1 Symmetrical Triangle a. Need at least 2x Low of the Resistance level to the Downside &
2 Ascending Triangle at least
a. Need at2x Highs
least of the Support
2x Resistance Linelevel to the Upside
in Horizental sequence (straight)
b.
b. Found
Found in
in Up
Up Trend
Trend or
or Down
Down Trend
Trend
3 Descending Triangle a. NeedbeatBullish
c. Can least 2x Lows ofPattern
/ Bearish Resistance Level toward Downside
4 Head & Shoulder b.
d. Need at least
Interpretation: 2x Support
Wait for LevelsRight
Breakout
a. Consist of Left Shoulder, Head, in(Bullish)
Horizental sequence (straight)
or Breakdown
Shoulder (Bearish)
e. Neckline
b. Target: Price
is Measure
formed the hight
connecting of Triangle to analyse Take Profit Position.
shoulders
5 Inverse Head & Shoulder a. Consist of Left Shoulder, Head, Right Shoulder
6 Double Bottom b.
a. Neckline
Consist ofis2xformed
Bottomsconnecting
(like W).shoulders
Price makes a low then slightly pushes upside &
7 Double Top then makesofanother
a. Consist low of
2x Tps (like almost
M). Pricethe same
makes length.
a high then slightly pushes downside & then
makes another high of almost the same length.
8 Bull Flag a. Continution Pattern make a Flag in Up Trend
9 Bear Flag b.
a. Found in UpPattern
Continution Trend make a Flag in Down Trend

10 Cup & Handle b.

a. Found
Rounded in Down
BottomTrend
& followed by Handle like Cup
11 Falling Wedge b. Found in Up Trend
a. It is Widest at Top & become Narrow as it moves Downward/Descending way
12 Rising Wedge b.
a. Found in UpatTrend
It is Widest Bottom & become Narrow as it moves Upward/Aescending way
b. Found in Up Trend or Down Trend

TECHNICAL INDICATORS/OSCILLATORS
Sr Indicator Explaination
i. TREND INDICATORS
Trend-following indicators smooth out the price and follow the trend line of the chart. They are based on the past
performance of the asset and show the price trend and its strength. These indicators are normally placed on the
chart line.
1 Tripple Moving Average It averages last specific no of closing price & show a Trend Line
(aka Simple MA) SMA give Equal Value to All Data & EMA gives More Value to Recent Data
Settting: 10 Yellow, 25 Green, 99 Red
Bullish: 10, 25, 99 (YGR) & Bearish: 99, 25, 10 (RGY)

2 Exponential Moving Avg a. EMA gives higher weights to recent prices & SMA assigns equal weights to
all values.
Setting: 8 Yellow, 32 Blue, 55 Green, 100 Red
Bullish: 8, 32, 55, 99 (YBGR) & Bearish: 100, 55, 32, 8 (RGBY)

3 4 EMA Indicator a. Shows the Market Trend (Bullish / Bearish)

by Philakone b. It gives Entry & Sell Signal
c. It act as Support & Resistance
d. Setting: Blue 8, Green 12, Yellow 21, Red 55
e. Buy: If in Sequence (8, 12, 21, 55 - BGYR). Trend will be Upwards
f. Sell: Reverse Sequence (55, 21, 12, 8 - RYGB). Trend will be Downwards

4 Parabolic SAR a. It appear in the form of Dots & works best in Trending Market
by everget b. It is secondary confirmation, so us it bigger time frame (15, 30 min or 1 hr)
c. Preferable to use it with Triple MA
Buy: When Dots are Below the Candlestick
Sell: When Dots are Above the Candlestick
ii. MOMENTUM INDICATORS (OSCILLATORS)
These indicators aim at determining the overbought and oversold levels and they are effective for finding price
reversal points. They are usually displayed under the chart, so it is easy to distinguish them from the trend ones.

1 RSI Relative Strength Indicator is a Momentum Indicator

Setting: Length: 14, Above: 80%, Below: 20%
Above 70%: Over Bought, Selling Region. Sell at 80% recommended
Below 30%: Over Sold, Buying Region. Buy at 20% recommended
In b/w 70-30%: Market is Side Ways, Not recommended to enter in trade.
Signal: It gives Early Entry & Exit Signal

2 RSI Divergence a. Bullish Divergence: Price: Lower Low, Indicator: Higher Low
b. Bullish Hidden Divergence: Price: Higher Low, Indicator: Lower Low
c. Bearish Divergence: Price: Higher High, Indicator: Lower High
b. Bullish Hidden Divergence: Price: Lower High, Indicator: Higher High
* For best result, use 2-3 more confluence (e.g. Support & Resistance, Candlesticks,
Chart
* CheckPattern
biggeretc.)
time frame (e.g 1 hr or 4 hr) for confirmations

3 Stochastic (RSI) a. Above 80%: Over Bought, Selling Region. Sell at 80% recommended
b. Below 20%: Over Sold, Buying Region. Buy at 20% recommended
d. Buy Signal: In Buying Region, when Stochastic Line cross over Signal Line
e. Sell Signal: In Selling Region, when Signal Line cross over Stochastic Line
f. SL (Blue) shows last 14 Period results (14 Day, 14 Hr etc.) like RSI
g. 3 Day SMA Line alongwith Stochastic Line give more accurate result
https://www.youtube.com/watch?v=7Dliw0yjZLk&list=PLIAO2T5dSfa3CUH0a42nugdqLi_jVXjLT&ab_channel=BinanceAcademy

4 MACD a. MACD line is calculated by subtracting the 26 EMA from the 12 EMA
(Moving Average b. A 9 EMA of MACD is called the Signal Line
Convergence Divergence) c. It Shows Strength, Direction, Momentum, Duration
Signal: It gives Entry & Exit Signal (Buy & Sell Point)
Buy Signal: When MACD Line cross over Signal Line
Sell Signal: When Signal Line cross over MACD Line
 Histogram: The Hight & Color Darkness (Green/Red) shows Increasing Activity
(Buying/Selling) & vise versa
https://www.youtube.com/watch?v=RU8gIjWDPbg&list=PLIAO2T5dSfa3CUH0a42nugdqLi_jVXjLT&index=3&ab_channel=Binance

5 Custom MACD Its rules are similar to MACD but gives better understanding
by ChrisMoody Setting: Fast Length: 10, Slow Lenght: 26, Signal Length: 9

5 Squeeze Momentum Ind. a. It is simplified indicator shows the Momentum as well as Enty & Exit point
by LazyBear b. Use 3 or 5 min chart as it reduce the Noise
c. You need to check Color & Hight for Entry & Exit

iii. VOLUME INDICATORS

This class of indicators shows the volume of the traded asset. Tracking the volume is useful in order to see how
strong the price movement might be.

1 Volume a. It show the Volume of Trade In or Out in Histogram

b. High volume indicates Upward or Downward Trend

iv. VOLATALITY INDICATOR

These indicators show how much the price of the asset is changing in a set period. The price has to be volatile in
order for a trader to be able to trade it, but high volatility is associated with higher risk.

1 Bollinger Bands a. It shows 3 Lines; SMA (length: 20 - Center) & 2x Standard Deviation lines
(SD: 2 i.e. Positive
b. It measure & Negative
the volataility & to- identify
Bands) Extreme
away from SMATerm
Short line Prices

c. Expension: When Prices are more Volatile - High Volatile

d. Contraction: When Price are in Tight Trading Range - Low Volatile
e. Cycle: Expension follows Contraction & Contraction follows Expension
Setting: Length: 21, SD: 2
Buy: When Price moves Lower Band, Over Sold
Sell: When Price moves Upper Band, Over Bought

2 Relative Volatality Index a. It show Price Valatality similar to RSI

b. High Volatile Coin easily wipe the your investment in Future Trading
c. You can check Naturan or Balooned up Valatality
d. Before jump into new coin, we need to check Sharp Edges (More or Less)
3 ATR Average True Range considered to be one of the best Indicator
by guikroth or Its success rate world wide is clsoe to 65%
by ceyhun ATR Smooth: Period: 20, Multiplier: 6.3, Smooth: 100
Best to use with Custom MACD

GOLDEN RULE FOR COMBINING

https://blog.iqoption.com/en/top-3-indicator-combinations/
There is one ground rule: Do Not overdo It. Having multiple indicators applied on the chart does not improve your
results. On the
Note: There contrary,
is no it can
indicator confuse youof
or combination and give outthat
indicators or confirm wrong
will show 100%signals.
accurate signals all the time.

Some Combination
1 RSI + Bollinger Bands
2 SMA + Stochastic
3 ATR + Parabolic SAR

RISK MANAGEMENT & POSITION SIZE

Sr. Explaination
1 In Trading/Investing it is not about "how much you Make", but "how much you don't Lose".
2 R/R ratio (Risk to Reward Ratio) reflects how much Risk a Trader is taking for a Certain Reward in a Trade.
3 1-2% Risk Per Trade is a Baseline to Start with.

Position Size
1 Entry The Price at which your order is Executed (Buy or Sell)
2 Capital Portfolio Size, Account Balance
3 Stop Loss Order to Close a Position to prevent it from further loss
4 Risk Amount Capital you lose on the Trade if your Stop Loss get triggered
Position Size & Risk Amout is not the Same
If your trading Capital is $1,000 and you’re risking 1% per trade, it means if your Stop Loss gets triggered, your
losses will be limited to $10 ($1000 x 1% = $10). i.e. you will lose $10 if your Stop Loss is triggered . It does
NOT mean that your Position Size is $10.
 Position Size = Capital x Risk / Stop Loss
Essential: 1) Risk Amt 2) Entry Price 3) Stop Loss

MARGIN & LEVERAGE

Sr Explaination
Margin Trading is a method of trading using borrowed funds from a third party. It refers to the Amt of capital you
commit (i.e., put up from your own pocket).
Leverage means the amount that you amplify your Margin with. So, if you use 2x leverage, it means that you open a
The Higher
position Leverage
that’s youamount
double the use, theof Closer the Liquidation
your margin. Price
If you use 4x is to your
leverage, youEntry.
open If
a you get liquidated,
position that’s four you’ll
times risk
the
losing your entire margin.
value of your margin, and so on.

Never use Leverage (Future Trading) Without Stop-Loss

1 Understanding Leverage
a 1x Leverage - Inv $100 $100 x 1 = $100 --> You just have your own investment.
b 2x Leverage - Inv $100 $100 x 1 = $200 --> You got loan of $100
c 10x Leverage - Inv $100 $100 x 10 = $1,000 --> You got loan of $900
d 100x Leverage - Inv $100 $100 x 100 = $10,000 --> You got loan of $1,900

2 Components of Leverage Description

a Position: Long / Short Investment
b Type: Cross / Isolated Profit %
c Entrt Price Gross Profit
d Exit Price Buy Fee
e Quantity / Contract Size Sell Fee
f How Much Leverage Net Profit
g Liquidation Price
/mm5007.sbm-itb.net/2019/02/14/what-are-the-candlesticks-charts/

https://blog.quadency.com/how-to-read-candlestick-charts-p
 2r 3r
Portfolio $ 6,000 $ 6,000
Risk Per Trade (2%) $ 120 $ 120

Expected Profit if Take Profit Hits $ 240 $ 360

Expected Loss if Stop LossHits $ 120 $ 120
30 Trades with 50% Accuracy:
15 Trades Won $ 3,600 $ 5,400
15 Trades Lose $ (1,800) $ (1,800)
Net Proft/(Loss) $ 1,800 $ 3,600

POSITION SIZE
 Amount
Portfolio Size $10,000
Risk Per Trade 1.00% $100
Entry Price $14,650
Stop Loss 3.23% $14,177

Position Size $3,096

SPOT Margin (5x)

$ 100.00 $ 500.00 (100 + 400)
2.00% 2.00%
$ 2.00 $ 10.00
$ 0.10 $ 2.50 (0.1% & 0.5%)
$ 0.10 $ 2.50 (0.1% & 0.5%)
$ 1.80 $ 5.00
om/how-to-read-candlestick-charts-patterns-crypto/