Bitcoin, Cryptocurrency, and Cryptoassets - Beginner's Guide to Trading and Investing in the Digital Money Revolution

Cut through the hype and learn the fundamentals of crypto to make solid investment decisions, based on facts and not emo

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Bitcoin, Cryptocurrency, and Cryptoassets - Beginner's Guide to Trading and Investing in the Digital Money Revolution

Table of contents :
1.1 Introduction
1. 2 What does Crypto-___ Mean?
1.3 Why Is Crypto Better?
1.4 How To Get Started
2.1 Introduction to Trading
2.2 Making A Plan
2.3 Paper Trading and Backtesting
2.4 Steps To Developing Your Trading Journal
2.5 Trading Basics
2.6 Fundamental And Technical Analysis
2.7 Order Types
2.8 Bid/Ask/Spread
2.9 Candles
2.10 Indicators
2.11 Trading Pairs
2.12 Trading Strategies
2.13 Closing Thoughts
3.1 Criteria For Selecting Assets
3.2 Conclusion
Further Reading And Resources

Citation preview

BITCOIN, CRYPTOCURRENCY, AND CRYPTO ASSETS







BY STEVE REZA

© 2021, Unica Communications Disclaimer: The information provided in this book is for informational purposes only and is not intended to be a source of advice or credit analysis with respect to the material presented. The information and/or documents contained in this book do not constitute legal or financial advice and should never be used without first consulting with a financial professional to determine what may be best for your individual needs. The publisher and the author do not make any guarantee or other promise as to any results that may be obtained from using the content of this book. You should never make any investment decision without first consulting with your own financial advisor and conducting your own research and due diligence. To the maximum extent permitted by law, the publisher and the author disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations contained in this book prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained or made available through this book is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. The publisher and the author are providing this book and its contents on an “as is” basis. Your use of the information in this book is at your own risk.

























Unica Communications C/O Joven Tel, Inc. 236 Pritchard Rd. Hamilton, ON L8W 3P7 Canada unicacommunications.com

1.1 Introduction

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1. 2 What does Crypto-___ Mean?

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123



Further Reading And Resources



119



3.2 Conclusion



106



3.1 Criteria For Selecting Assets



102



2.13 Closing Thoughts



95



2.12 Trading Strategies



89



2.11 Trading Pairs



78



2.10 Indicators



76



2.9 Candles



75



2.8 Bid/Ask/Spread



72



2.7 Order Types



65



2.6 Fundamental And Technical Analysis



60



2.5 Trading Basics



55



2.4 Steps To Developing Your Trading Journal



51



2.3 Paper Trading and Backtesting



47



2.2 Making A Plan



45



2.1 Introduction to Trading



33



1.4 How To Get Started



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1.3 Why Is Crypto Better?



PART 1: CRYPTO

1.1 INTRODUCTION



















The digital world is like a parallel universe: it exists within our world, it has permeated our thinking and our society, and in so many ways has opened up a world of new possibilities in communication and information, and what is finance but essentially the intersection of both?   At its very basic level, cyberspace is a universe of the mind.   It is a fascinating time that we live in: To witness the rise of the personal computer and the integration of the internet into daily life has been a fantastic ride so far.   With the development of Bitcoin, Satoshi Nakamoto has effectively created a protocol that marries the internet with finance - a broad term for all of it is MoIP (Money Over Internet Protocol). Bitcoin was not the first to attempt this, but it was the first to effectively solve a problem that most people didn't realize existed: the issue of trust.  

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A cutting-edge intersection of computer science and finance, the key element that made Bitcoin different, and has accelerated its success, was the idea of decentralization. No one person, group, company, or country should control what would become a global exchange of value.   This book is to be a beginner's guide to cryptocurrency investing, so we will attempt to break down every concept into its most fundamental puzzle pieces to reassemble them in a way that makes the overall picture much more straightforward.   If you wonder what cryptocurrencies are, what all the hype is about, and most importantly, how you can profit from this technology revolutionizing how the world does business. In that case, this book will set you on a path of a much deeper understanding of how it all works and can fit into your investment strategy for a brighter future.   This book should be a jumping-off platform into this wonderful and wide-reaching technology space as a beginner's guide. Still, it cannot be stressed enough that continuous learning and adaptation will be the cornerstone in understanding the constantly evolving state of the market and its innovations.





















This book is not intended to be construed as financial advice but simply as an educational tool to open the door and equip you with the criteria and processes to make better-informed decisions based on the information available to you at the moment of execution.   It will be said, and reiterated many times, that while the crypto space is a fascinating technology and an exciting investment prospect, it is also highly volatile and innately risky at the best of times.   As you read this book, please remember that I will refrain as much as possible from recommending individual assets, wallets, or exchanges to avoid the unnecessary hype machine that already pervades the market.   You won't need to listen to the noise to decide what to invest in by the end of this book. It will equip you with the knowledge and skills to make up your mind what's best for your portfolio at the time.

1. 2 WHAT DOES CRYPTO-___ MEAN?

















In this shared imaginary mental universe of cyberspace, cryptography is the structure of locks and keys for providing security in a digital environment.   What is currency? It is a mutually agreed-upon value assigned to an arbitrary asset, i.e., a piece of paper with a promise - regulated by a country's central bank whose currency it belongs. A value can be intrinsic or perceived.   What is value? And what is the difference between intrinsic and perceived value concerning trading assets?  

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What is a cryptocurrency?  

































A decentralized digital exchange of value may be monetary, but it can be much more than that, as we will see in examining case studies for different assets.   The transition from asset-backed currency to fiat currency   What does fiat mean?   By definition, it means "creation by proclamation."   Picture when God said, "let there be light, and it was." That's essentially what a fiat currency is; a government or bank says it is, and it is. That's it, in a nutshell, and the citizens of the country agree on it by using it.   It seems like an absurd oversimplification. However, there was a time when currencies were backed by a more significant value holder, like gold or silver.   Since moving away from this "gold standard," the only thing left to back the money that we use is the promise of a government-run central banking

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system. Which cryptographic techniques do they use to secure our funds? Where are their technologies' whitepapers?  



























That transition keeps moving forward. The majority of the world's population uses a cell phone, making it a genuine possibility shortly where everyone on earth has access to the internet as a utility.   "Banking the unbanked" Not only does Crypto have a great deal to offer those who are using traditional banking as an alternative or add-on, but it may provide transaction capability to those who have not been previously using banks.   For example, in Venezuela, where bitcoin became used for daily purchases when the country's currency devalued.   Here lies the key to the purpose and the very reason for the existence of Crypto - and that is trust, or more aptly, the lack of it.   Zero tr ust is an assumption made by cryptographers. Yet with traditional currencies, all trust lies with a Central Bank, ruled by (some would

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theorize ruling) governments. Here is a logically slippery slope: Do people trust the government to have their best interests at heart, and do they trust them to manage with fiscal responsibility?























We do, inherently, so long as we keep using their currencies because we have to. There were no other alternatives - until recently, that is.   This is why so many believe that cryptocurrency is no fad - it has already, and will continue to, reshape the way the world transacts business the way the internet has changed how we communicate.   It is a paradigm shift with far-reaching repercussions in all aspects of the world, from the personal to the geopolitical.   Banks and financial institutions have always been early adopters of technology. "Black box" trading starting in the 1980s and was subsequently blamed for the crash of 1987 due to its novelty and apparent unfair advantage.   So with early adoption comes the benefits of being the first to utilize the new potential and the risks of finding the potential drawbacks and a lack of

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understanding from the mainstream of people's thinking.   A Brief History of Digital Currencies  



























Digitization of currency, a move toward a cashless society, has been a transition decades in the making.   First with credit cards, then moving to online banking, debit cards, and purely online services like Paypal - money has long been digitized, so why not use an internet-native currency?   Suppose it's just an "imaginary" value. In that case, the internet can be the place to exchange such a value, as it has already become the backbone of financial institutions' standard operating procedure.   Finance has been grafting onto the development of advancements in computer science for a long time, contributing to its growth by its early adoption and motivation to develop faster, more secure, and increasingly efficient methods of transacting business.   

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Bitcoin solves a problem most didn't know existed a fundamental flaw in the FinTech model and provided the opportunity for truly democratized finance - without the interference of anyone behind the scenes. Value became a reflection of its users rather than those that create it in the first place.  

























Recently, credit card companies like Visa and MasterCard and internet transaction giant PayPal are commencing the acceptance of cryptocurrencies as payment. This marks the beginning of a massive shift in bridging the novel cr ypto world with the existing banking infrastructure.   What is the economy based on?   The answer is debt, mostly.   When you consider what a powerful, driving force that debt occupies in the world of finance, it is little wonder that there has been such pushback from traditional institutions.   Blockchain technology, in addition to zero trust mechanisms, also is a straightforward approach to the exchange of value, with no real consideration

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given, at a fundamental level, to interest, lending, and debt.   This is yet another reason that the concept is as revolutionary among increasingly more people as they begin to understand the implications of what it could mean for the future of value.  

























It is not just the new technology, but a fresh new take on systems that we have taken for granted as the only option.    Now, with the boundary lines between credit card companies and Crypto becoming blurred, the debt model will inevitably become absorbed into cryptocurrencies' contracts at the same time.   Cryptocurrency is a logical evolution of this process, as cryptography is the cornerstone of securing and verifying these transactions.   As we know it today, money has become a number on a screen that we take for granted will be honored by the parties involved, like a bank or credit card company, and backed by what? Simply more promises and records of ledgers of what we own and what we owe.

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When put into context, cryptocurrency is not that different from how we have been using fiat currencies - except that no one can manipulate the underlying system. It is entirely transparent for anyone who wishes to view the blocks of transaction data.   One of the biggest drivers behind the explosive growth of cryptocurrency is the loss of value and potential loss of stability in traditional currencies.   Most people take for granted that the unit of our society's value as currency is some kind of fixed, stable constant. In reality, foreign exchange markets will quickly teach you that your Dollar/Euro/ Pound/Yen, et cetera, is just an undulating wave in an ocean.   They are constantly rising and falling in context to their trading pair, with economic repercussions to match on a global scale.   Multiply that with people becoming more aware of cryptocurrency and the hype of seeing a digital asset making year over year advances in value, the likes of which have rarely can be seen in other investment opportunities.  

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Put that all together, and you have a perfect storm, a self-fulfilling prophecy.   



























A currency's value implies trust, and from the meteoric takeoff of Crypto, it is apparent that many people prefer the zero trust model.   How is the value determined?   For crypto assets, the underlying network's utility and its adoption create value through its use case.   The more people utilize the services, the greater the demand becomes for the asset itself. Demand versus supply causes prices to increase, which fuels even more interest in the crypto asset as a standalone value holder.   This process becomes a self-perpetuating loop: people desire to hold the asset for its potential future value, increasing the developers' incentive to maintain and improve the network to facilitate better functionality and utility capabilities.  

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Seems straightforward enough, right? At first glance, it appears to be a kind of perpetual motion if done successfully.     This Book Aims To Dispel Some Myths: Bitcoin is a made-up currency, a scam, or a craze. It's too late to start investing at All-Time Highs (ATH). Crypto is a bubble that is going to burst.   Bitcoin and blockchain technology are only in their late infancy and have not nearly reached the mass adoption tipping point. If current conditions are any indication, it has the potential to disrupt and improve the world's financial systems completely.   Once you understand just how fluid the value of money is and the basis of what a sound currency is, it becomes very apparent that the argument against cryptocurrency that it is "imaginary" money begins to fall flat.   All currencies stand on arbitrary (made up but mutually agreed upon) value. The question becomes, "what promise do I want to base the value of the currency on"?





























--

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The choice now is between centralized government banks or decentralized cryptographic networks with zero trust mechanisms.   Bitcoin has proven as an experiment that a global exchange of value can and will be established without a central governing authority by utilizing cryptographic technology and adoption as a social construct of mutually agreed upon value.   This experiment continues to grow as the desire for such a decentralized capability becomes better understood by more people.   The more we can learn and explore the capabilities of this technology and its potential impact on so many facets of exchange, the more inherent value will increase and the perceived value even more so.     The initial anonymity of crypto assets is disappearing. That isn't ideal for the continuity of its underlying philosophy, but it is helping facilitate widespread adoption.   We are in an accelerating transition phase where crypto assets are becoming bridged to traditional finance. The existing systems are beginning to

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model their approach to transactions on crypto technology.   It's a fascinating phenomenon to watch. Once you become familiar with the inner workings of both, to realize the potential repercussions of just how rapidly and consistently the world's financial systems are evolving with, and because of, these technologies.  



























Some Further Explanation on Terms Used   To further clarify, many expressions in the crypto space may seem unfamiliar, even overlapping and contradictory. Let's break it down:   Crypto - The act of securing sensitive data with codes and keys (public and secret).   Cryptocurrency - A crypto asset that is used primarily for purchases and as an exchange of value for goods or services.  

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Crypto asset - This is an expression that is more inclusive than cryptocurrency, despite that expression being the most commonly used.   Not all crypto assets imply use as currencies, as you will learn, and you can more broadly use the word Crypto asset to describe many forms of value held in the crypto sphere.   Blockchain - A decentralized record, or ledger, of wallet addresses, funds held, and transactions between wallets.   Coins & Tokens - These two expressions are often used interchangeably and mean almost the same thing: a unit of a crypto asset. The word token is technically more accurate than "coin" since there are no physical "coins" involved at any step in the process yet are still used to denote ownership of a "piece" of a crypto asset, however large or small.      

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The Writers Journey   I got into the crypto space during the bull rush of 2016-17 because I thought then and still believe now that cryptocurrency has the potential to one day replace traditional fiat currency.   This assumption looks more promising with each passing day, as even government banks are beginning to develop their own crypto-style currencies.   Cryptocurrencies work on Blockchain technology, which has the exciting potential for redefining how the internet operates from a computer science perspective.   On a personal level, how we transact business and interact with digital service providers should be more of a concern than ever. Privacy, security, and transparency in the background processes they employ in managing our personal information have become a fundamental concern of our age.   I bought into many different crypto assets in the heady days of the 2016 run-up, some have proven

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to be fantastic investments in the short to mid-term, and I believe they will only continue to hold and





























grow in the long term. Other assets have performed dismally, or worse, become de-listed from exchanges and referred to affectionately as "shitcoins."   In trading, as in life, the best way is usually the middle ground between two extremes.   Everyone wants to ride the dramatic gains, and no one wants to suffer the precipitous drops.   I have found the best way to capitalize on the one without suffering the other is through increased awareness: a better fundamental understanding of the thing you are buying and analysis of day-to-day movements in the market.   We are living through history in the making: we are watching the birth of a potentially new era of commerce, one that is hopefully fairer and more democratized than the past.   The act of trading in crypto assets is not that much more complicated than online banking.  

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While you don't have to be a software engineer or cryptographic expert to invest in this fascinating sphere of assets, the more deeply you understand the underlying technology, the easier it will be to identify potential investment opportunities.   Warren Buffett never invests in a business that he doesn't understand. So, therefore, you don't have to be able to create your own cryptocurrency (but you could!) to profit from a world-changing technology. But first, let's dig into the nomenclature, which can be confusing at times.   Cryptography is all about secrets: more importantly, keeping what needs to be secured safe, away from prying eyes and sticky fingers.   It does this by making codes that are too difficult or time-consuming to break. So if you find the whole mess of crypto-this and crypto-that, don't lose heart: secrecy is a built-in concept.   Just think of it like this: you want your bank to remember how much money you have deposited when you want to spend or withdraw it, but you don't want a random stranger to know how much you have or much less to have access to it.  

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So, between you and the bank, there are layers of cryptographic codes. That's all that is keeping your "money" records safe and private between you and the bank. Blockchain development is an extension and evolution of the same processes.























  What is the Blockchain?   Blockchain is a decentralized database of wallets and transactions that people can use for financial technology solutions (FinTech, DeFi), and a wide range of decentralized applications (dApps) from simple contracts to streaming video (DTube, lbry.tv).   Bitcoin protocol, and the Blockchain in general, are built for two primary purposes: to facilitate transactions and to manage digital assets.   What the internet has done for information, the Blockchain will do for digitized ownership of assets: whether crypto tokens or "coins" as they are known or tokenized ownership of stocks or other equities.  

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With non-fungible tokens (NFTs), the ownership can even extend to digital pieces of art, making the potential uses of Blockchain technology nearly limitless.   What does decentralized mean?   Imagine the process of purchasing something with your credit card or bank debit card.   The vendor enters the amount you agreed upon, and you either swipe the card or insert or tap its chip on the point-of-sale (POS) system. That gives the vendor's payment processor a bit of information to work with: your bank or institution, your account number with them, and will begin a query to verify that you have the funds available to make that purchase.   Once you accept the transaction and enter your password, the transaction is approved, and the funds are removed from your account and placed in the vendor's account. This process usually takes a few seconds and has become so common that it's done millions of times each day.  

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With a decentralized database, blocks of data store this information and distribute it throughout the network so that no one single entity has exclusive access to it.   Block   A block is the basic structure of data in a crypto network. It contains a block header and all of the transactions that occur during that block. These information blocks are combined by including cryptographic hashes of their predecessors to form a linked list commonly referred to as a "blockchain."   The block is a ledger of transactions performed during a period of time. They get processed in sequence relative to the order of the block in which they occur.   See Blocks and Chains, by Aljosha Judmayer, et al. for a more in-depth analysis of the Blockchain and all of its components.  

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Mining   Users pay transaction fees to miners who support the network by supplying the processing power and record-keeping needed to conduct transactions.   Address   At the basic level, addresses are accounts on the Blockchain that have public and private keys. These allow funds to transfer into and out of them when the owner wishes while keeping the remaining assets safe from unwanted movement.  

































Transaction   Transactions are the transfer of units of value between addresses. They can be initiated by anyone who controls the private key of the address.   A transaction in Crypto works very much as a traditional bank or credit card company would.   A request for funds gets sent by the receiving party or offered by the sender. This request verifies that the sender has possession of the private key and the

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funds necessary to complete the transaction. The private key generates a signature upon the sender's authorization, which permits the value to be released and sent to the receiving address.  

NFTs



















A relatively newcomer to the crypto sphere is the NFT, a non-fungible token that is not directly transferable to another of its kind, as a currency would be.   Since each NFT is unique and therefore not replicable, they present the opportunity to own unique pieces of intellectual property. They may potentially disrupt the creative space how iTunes and streaming services have revolutionized the music and film industries with an entirely new business model.   Individual pieces of work can now be held, confirmed, and monetized directly on the Blockchain. The primary value will be held by the current owner/creator and determined based on the inherent value it represents through use and resale.

 30   Is it too late to get into the action?   The crypto space, exciting as it may be, is very much at the point of its lifecycle where the internet was in the mid-'90s: Everyone knew it was going to be huge.

































Some believed it would revolutionize the world. Few had any real idea how that was going to happen. Even fewer still had a vision that would create some of the largest companies still leading today.   It is never too late to get into something new, and this story has just entered its second chapter.   Not only will Crypto change how we spend but potentially how we use the internet itself when considering Bitcoin and Ethereum as protocols like TCP/IP, VoIP, SMTP, HTTP, et cetera. These are protocols that form the basis of how everything digital that we interact with daily works.   If the whole process of crypto assets seems overly confusing, don't lose heart and conclude that it may not be for you.  

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Think of it like internet banking. You don't necessarily have to understand all of the underlying processes behind the bank's backend procedures to use the technology to conduct your business. You just have to trust that it does work and use it to transact to your advantage.

1.3 WHY IS CRYPTO BETTER?

Bitcoin, in particular, will perform in trading with results that other traditional assets may take weeks, or months, to do in terms of movement upward and downward.







Price is determined by the community's perception, value, and use of the network.



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It doesn't take much capital to get started. Even $20 can get you into the market - coins are divisible to eight decimal places, and trading costs are proportional to the size of the trade.



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The markets never close and are mostly accessible worldwide.



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1.4 HOW TO GET STARTED

























Creating a Wallet and Exchange Account   Think of your wallet like a bank account because essentially, it is: one to which only you hold the keys.   That said, some words of warning: since only you have the keys, be cautious not to lose the secret key or phrase that you are given when setting up the wallet.   A lost or forgotten password can be retrieved if you can meet the conditions described while setting up. If not, however, there is a risk of losing your funds.   The wallet you choose to use will offer recommendations to avoid this unpleasant outcome, and I advise anyone to follow them closely.  

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Make a Wallet   There are too many options to list, so instead, assess a prospective wallet's ability to satisfy the following criteria:   Consider your own needs: are you looking for easy access for trading (exchange wallet), easy access for making purchases of goods, or the Crypto itself (Binance, Coinbase, or something extremely secure)   Consider the security policies and reputability of the place you keep your money: you wouldn't give your money to any person claiming to be a bank, but fortunately, crypto traders are a very particular and vocal group, so it isn't hard to find good and bad reviews about any service.   It doesn't take long to read some reviews about a wallet, and you should quickly find an answer to whether or not you want to use a service.   Be aware of the distinction between wallets where the owner keeps the private key and those where they are not.   Most exchange wallets do not allow a user to hold the private key and therefore pose a risk to the user

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in case of hacking exploits or exchanges getting shut down.   While exchanges are where most trading occurs, it is recommended not to use these wallets as long-term storage of funds since, technically, they do not belong to you,  and you should treat them accordingly.   "Soft" Wallets vs. Hardware "Cold Storage"   A wallet that exists exclusively online is referred to as a "soft wallet." Most of the addresses are "soft wallets" due to their availability and convenience to access anywhere and from any device connected to the internet.   A "hardware wallet," also referred to as "cold storage," is a wallet that keeps funds stored on a device like a USB memory stick that is only accessible to the owner when connected.   For obvious reasons, this is considered the safer and more permanent way to store funds, but it also presents the danger of loss from physical damage, hardware failure, or simply by losing the device.  

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Established exchange services will usually describe their process of maintaining their funds in this way and should be a serious consideration when choosing an exchange to trade on their platform.   Trading Exchanges   There are also many to choose from, so consider the following criteria:   Criteria for Exchanges



























How long has the exchange been in operation?   Security: How do they store the funds entrusted to them? Is this information readily available? It should be, and it should inspire confidence that the exchange is professionally managed and has taken precautions to prevent losses from malicious actors, primarily and any other potential threat.   Two-Factor Authentication (2FA): To further secure your funds and your account from unauthorized intrusion, 2FA can be seen as incrementally less convenient for your use but exponentially more difficult for someone who is not you to access your funds. Google Authenticator is one of the most commonly used methods of 2FA

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and will require you to install the app on your device. This process will provide you with a unique algorithmic password that changes every minute, in addition to your login details for the platform.   User Interface and functionality of the exchange platform: look for a robust set of indicators and easy-to-use and understand buy/sell options that make sense to you and offer the features that will make implementing your plans more effortless and not more frustrating. Simply speaking, if you like and feel more comfortable with a platform's layout and features, you're more likely to continue using it based on this criterion over any other.   Look for a charting style and the indicators you prefer to use. If you choose to use a third-party charting platform like TradingView, consider the interoperability with the exchange you're considering using. This can make for a much more streamlined approach in the future when you trade in different asset classes.   Easy access to Crypto with fiat currency (i.e., your bank account or credit card) and from Crypto back to fiat is an excellent sign of a mature, stable, and

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reputable exchange. It can reduce the necessary costly steps to buying and selling your assets.   How many and what kind of assets are available? More is not necessarily better. As you research more crypto projects, you will see trends in "coins" that you want to invest in versus those you would not. Which exchanges offer either can be an indication as to what kind of entity they are. It may be appealing to test the water with some lesser-known assets in the hope that they may "pop," but these can just as quickly go bust, or worse, become delisted in time.   Consider community user reviews: Crypto investors are a very vocal group online. If a platform has performed well or poorly for them in the past, you will have no difficulty finding ample reasons from actual people why or why not to choose a particular platform.   Robust KYC (Know Your Customer) practices: ID verification is a standard practice conducted by Crypto exchanges to comply with Anti-Money Laundering (AML) standards worldwide.   Commission fees: Generally these range from 0.1-0.25%, so consider how much the exchange will

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charge each time you trade, as this can drastically affect your profit margin, depending on the frequency of trading you plan to do.   Some of the best exchanges available are, but by no means limited to: Binance, Coinbase, Kraken, Gemini, Bittrex, BitFinex, KuCoin, and the list can go on.   The purpose here is to give you a starting point in your journey, not to recommend any specific exchange in particular. There are many great ones to choose from, and with the criteria listed above, they will not be hard to find and determine which is suitable for your purposes.   Withdrawing & Transferring Funds  



























Where the proverbial rubber hits the road: once you have successfully traded an asset and want to take out your profits, you will want to have a system to ensure no unwanted surprises or disappointment.   This is a critical step in the process and one that you need to consider very carefully.  

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It is possible to lose funds while transferring on the Blockchain if you don't input all details correctly. It has happened to me and many others, so take care to do it properly, so you don't have to repeat these easily avoided mistakes.   Before transferring a large amount, or any amount, it is an excellent idea for your peace of mind to start with something small after carefully reading the instructions provided on both ends of the transaction.   Say you want to open an exchange account and you have purchased some crypto-asset tokens with a fiat-based exchange and wish to send your funds from one wallet to another. To make sure that everything works, especially for the first transaction, try sending a minimal amount to the new wallet to ensure that it arrives as expected.   You will feel assured that you have entered the wallet address and other requirements correctly when it does. This process will also tell you the speed at which the network is currently operating miners solving blocks and the volume of transactions.  

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Depending on the volume of traffic and the asset whose network you are utilizing, the transfer may be nearly instantaneous, or it could take up to several days.   If this happens, you will be glad to have sent only a nominal amount to reduce the stress that can occur when you hit send but can't yet see the funds arriving. Once it is successful, you can proceed with confidence that your more significant amount will also get to where you want it to be without fearful hand-wringing and regret.   For in-person or in-store transactions,  the recipient will usually present their address and public key as a QR code that you can scan with your phone's camera. This removes the need to enter the address manually and eliminates the likelihood of user error due to improperly entered details.     While creating multiple accounts for wallets and exchanges, you begin to appreciate just how much cryptography goes into securing the accounts, with passwords and email verification, 2FA (two-factor authentication), and can give a lot of confidence about the processes in place to keep your funds

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secure. This is done very much in the same fashion and is superior to traditional banks in many cases.   Many established exchanges now will accept fiat currencies (your money) and convert them into the Crypto of your choice. However, wallets held in exchanges are riskier than those you have the private keys to yourself in the long term.   As time goes on, Crypto is increasingly becoming integrated with traditional trading platforms, and the process of buying and withdrawing to your bank is becoming much more straightforward.   Coinbase, PayPal, and Venmo are now viable options for purchasing and selling crypto assets with and for traditional fiat currencies. At the time of writing, many banks still refuse to facilitate direct transactions to and from crypto exchanges, but the process is becoming increasingly commonly adopted. These three services offer an excellent workaround option and have all benefitted from making the service available.   Not all exchanges will list coins that are either very new or don't meet their criteria.  

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Coinbase and the other well-established exchanges are usually the last to list a currency. Usually, it's big news when they get listed due to the rigorous criteria used in selecting assets.   So they are more limited in options for trading, but you know that generally, the assets they work with are less likely to get de-listed. It is also an indication of an exchange's reputation when they have listed anything and everything. Those are usually less reliable, and the coins probably aren't worth much in the long run.   The relationship between exchange and currencies is important to consider when considering which to use and what to buy.



PART 2: TRADING

2.1 INTRODUCTION TO TRADING















Trading on any market, whether in stocks, forex, or crypto assets, is a bit like standing on continuously shifting dunes: sometimes the market can propel you upward; other times, the ground underneath you can disappear.   It is not to say that navigating these shifts should be scary or impossible, but keeping this in mind will give a healthy dose of respect for the sake of your portfolio.   Trading is a mindset. It may become your primary source of income, but this is not necessarily true for

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most people. Most successful investors maintain it as a parallel activity to their main job or business, alternate revenue source, or future planning.   What you want to achieve from investing is unique to you, so start thinking like an investor and dream big, then set out to achieve them all with a concrete plan.   It may sound fantastic, but this is the mindset that will lead you to success in trading and life.   The first investment you need to make is in your education: know that you can achieve your goals and feed your mind the necessary information to make them a reality.

2.2 MAKING A PLAN

“If you fail to plan, you are planning to fail.” Benjamin Franklin  





















The first and arguably most important step is making a plan that will evolve in time with your goals and objectives.   The prospect of creating a game plan when you are new to investing may seem like a daunting task but bear in mind that this will become an ongoing process that will grow and improve with you as your knowledge, skills, and experience increase.   The plan you devise at the beginning will undoubtedly change very quickly. Still, it is a crucial part of the entire experience. It is highly advisable to begin with planning before any other step, as will become very apparent.  

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We will explore the excellent jumping-off point of paper trading, a theoretical practice that will teach you so much more than any amount of reading and hypothesizing ever could.    



























Ideally, investing should be satisfying but not exciting.   Excitement translates into mistakes made, and that's why having a plan of action is crucial to staying on task, whether things go up or down for your portfolio.   "Make lots of money" is a great dream and motivation, but it is not a plan.   Write down what you want to do. Make a list of your financial life goals, then set out to achieve them with the help of your future successful investments. It isn't necessarily that simple, but it is the right place to start.   Heading into trading with the solitary goal of making money is a good motivation and an apparent desire. Still, it alone won't help you

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navigate the many decisions that stand between you and the successful accomplishment of your goal.   Some ideas for goal setting:   Make short term gains   Grow capital to accumulate more of an asset   Develop a balanced portfolio between growth opportunities and some relative stability, with a proportion of either that you choose   Accumulate more of an asset for long-term holding   Develop a Portfolio Allocation plan   Consider assembling a team of professionals if you have not done so already.   Financial advisors and accountants are crucial in your financial planning and can help you understand and work with the tax implications of investing in crypto-assets and beyond.   They can present options available to you in your area to manage your tax liability within your existing

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situation, like putting crypto investments in a registered retirement or tax-free savings and the conditions that you need to meet to qualify for these.

2.3 PAPER TRADING AND BACKTESTING













Prepare yourself for the realities of trading by practicing with paper trading, taking imaginary positions, recording your entry and exit points, and testing whether or not your analysis was profitable or not.   If it is, great, and if not, then no loss.  You will have learned something from experience, and it didn't cost you anything but time. The act of paper trading is also an excellent foundation for the habits that you will need continuously while trading and allow you the opportunity to fine-tune the methods so that they work best for you.  

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It is difficult for some to play make-believe, and this is understandable. However, while the motivation of greed is missing, it also cannot cloud your otherwise logical assumptions, either.   Paper trading is working with hypothetical situations, not necessarily on physical paper anymore. The methods you use will become refined in practice, and every rough edge you can remove in testing will make your life that much easier when you begin trading for keeps.   Backtesting is a critical component of the process, and it will determine whether a theory or a formula is worth it's salt or not. It is a good rule of thumb to test a new strategy by considering past data for the asset in question and then expanding into others as many times as possible - 100 is a nice round number. This will help you determine your strategy's success rate and provide good metrics for the likelihood of success in play.   The goal should be to develop and discover strategies that not only work but work for you.   Many tactics are sound ideas, but on their own may not provide enough certainty for you to stake money confidently. Often the best strategies will

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combine data from multiple indicators that will reveal what the market will do next.   Using too many indicators may refine your search so far that nothing will ever match, but two or three should give you confidence in your prediction. The combination of these will become evident as you begin practice trading and testing.   The ultimate aim in testing and trading is to do the hard work of figuring out a system that works for you and can be replicable in the future, with minor modifications for the situation at hand.   Otherwise, the process for each trade, when you're starting, may seem quite overwhelming. The idea of having to spend that much time for each transaction may seem daunting in the future. But understand that as you grow in your practice, that a) it becomes much smoother and more manageable, and b) learning while doing is always harder than just doing when it's familiar.   If you can write code, an advanced concept to consider is writing scripts to translate the system logic you are developing into an algorithm that can automate many, if not all, the processes you're creating.

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Most trading done on the market is executed by software algorithms designed and used by people who once went through the exact steps that you are doing now.   So know that the sky is the limit. All the effort you put into learning and developing sound strategies will only be improved on in time and eventually even be replicated by software systems, as institutional investors have done.   The future looks very exciting in the combination of A.I., machine learning, and even quantum computing for predictive analysis for the application of investment selection, trading automation, and portfolio management. However, these topics fall outside the scope of this book.

2.4 STEPS TO DEVELOPING YOUR TRADING JOURNAL

















A trading journal is your logbook of trades made, whether in reality or just in theory. Having a record of the decisions you make, the information those decisions are based on, and the outcome of that movement will provide discipline to your trading practice and a very tangible look at your progress.   Learn   Whether it's from a book, a blog post, an article, a YouTube video, or simply your own theory that will arise from observations - there are so many options available to learn from that may be usable in trading.  

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Whether an isolated tactic or a combination of these as a strategy, take whatever you learn or discover yourself and test it.   Test   When you understand the parameters of the strategy you have learned, you have to put that theory to the test, and you do this by looking through a chart of your chosen asset for opportunities that would fit.   For example, one of my favorite strategies is utilizing the MACD indicator for a Bitcoin/USDT pair, particularly with a one-hour candle length.   The standard setting for MACD of twelve and twenty-six for length have worked pretty consistently well, so I don't have to change those (but you can if you want to later).   The MACD is a visual representation of the moving averages as they converge and diverge.   The divergence part is exciting when the shorter length average (shown in blue) rises and pulls away from the longer moving average (shown in red)

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after reaching a period of low momentum in trading.   I particularly like this kind of setup. Although it gives no solid indication of the extent of price movement, the momentum can usually give you a clue as to when the price will reverse in its course.   A vital part of the strategy is to wait until the lines cross one another, then it's a fair bet the direction will change. This is not always the case since this indicator is a measure of trading volume, so ultimately the ongoing market conditions dictate how the Moving Average will progress.   As a side note from observation, it seems that many indicator strategies work the other way around as well. If institutional investors and other individuals are also timing their trading based on the same conditions, prediction accuracy may result from a self-fulfilling prophecy.   The better you can understand why the market moves the way it does, the better your ability to anticipate how it will move.  

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Execute    Find as many instances where the indicator or sequence of indicators used could be applied. Then you can set about measuring the movement and the relative prices of both.   Record   Make notes or a spreadsheet of your findings.   How you choose to implement a trade journal is entirely up to you, but you will most definitely benefit from keeping a record of all the decisions you make so that in the future, you may look back and see what worked, what didn't, and more importantly why.   The act of recording the price data and the logic you employed to arrive at a decision will be a great learning tool for improving your process. The most crucial factor in having this record is the ability to test a strategy in time.   Some ideas sound great, look impressive at first glance (i.e., the first couple of instances applied to), but in the end, they don't bear weight to becoming profitable trading practices.

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If you conduct sufficient backtesting, though, using at least fifty to one hundred instances, you will see in your record of profits and losses very quickly whether the strategy will get you closer to your goals or not.   Repeat   If this whole process has worked out to your satisfaction, that's great!   But if not, as is often the case, don't dismiss the experiment as having failed until you consider the different options that can be crucial variables in making it work.   Fine-tuning will almost always be necessary. Usually, this is done by pairing one indicator with another or changing the candle timeframe or overall chart length until you can find a way to fit the strategy into the chart in a way that makes sense to you and works.   The bottom line is: something that works or doesn't work on just one attempt is not a sufficient test of the value of a strategy but requires multiple tests to figure out how best to use it.

2.5 TRADING BASICS

"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett  



















Fear and greed are the two main driving factors behind trading.   The key is to manage and balance them in equal measure and utilize them at the optimal time. This may end up being the opposite of what most others are doing.   It takes a mixture of caution and daring. The only thing you can control, in trading and life, is yourself.

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If you can maintain your composure, you can keep growing your portfolio.   Crypto taught me about trading, not the other way around. If you already have experience in trading, fantastic, but if not, take heart.   The most profound thing I have learned about trading, no matter what you are trading, is that the behavior of the people doing the trading determines the outcome on both a micro and macro scale. This principle applies to the crypto space, foreign exchange, or equities like stocks, bonds, futures, and options.   Group psychology is very evident in any type of market. In many cases, the sentiment toward an asset drives its price more than any other factor especially concerning crypto markets because they are relatively new, novel, and prone to alluring growth spurts.   If you approach trading like gambling, then that's what it will be for you: an exciting rush of emotions and ultimately losing to a rigged system.   But that doesn't have to be the way because as turbulent as the waters may appear at first, with

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some discipline and persistence, you can learn to navigate from position to position with an increasing degree of accuracy.   It can get stormy, but if it were impossible, no one would do it successfully. Success, of course, is up to you to define.   Trading is all about information: the amount of information available to traders today is at an unprecedented level - but not all of it is correct, and not all will pertain to what you're trying to accomplish.   Always consider the source of your information and be mindful of the agenda behind giving you the information. This is good life advice, as well.   It takes much effort to stay informed, to sift and filter through the volume of data to extract usable information, but the results will be well worth the effort. In time, like with everything else, it becomes more accessible, more fluid, and eventually will become second nature.   Accuracy is the key and the more support you can find for or against a move, the better the likelihood of being correct in your assumption. 

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If you aren't confident in your setup, wait. Better to miss an opportunity than to lose on a stupid bet and kick yourself as your asset drops.   You want to win trades and develop a system that works for you in finding the winning trades. Getting lucky is not a strategy. It's a gamble. You should have a set of practices in place that will allow you to reliably and consistently make good choices in picking your positions in the market at the right time.   It all may seem like a complex task, and it is, but it is an art and science that can be learned and taught.   Every day is a new day: take what you learned from the past and do better with that knowledge, but don't expect today to be the same; it never is. That's a challenge, but it makes things interesting.   It's easy to get frustrated when things don't go as expected, and it happens this way quite a lot. In times of uncertainty, it is crucial to see a bigger picture, stick to your plan, and try to avoid kneejerk reactions that will cost you much more in the long run than adverse market movements will.  

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  READ AS MUCH AS YOU CAN ON TRADING   Successful trading is all about ongoing learning, and that's a constant.   The "talent" for trading will grow from practice. Read about all kinds of trading, not just specifically crypto, and don't limit yourself to reading about the same things you're interested in trading.   There are countless great books available based on lifetimes of research and experience, and every single one will teach you something new you can add to your repertoire.   This book's end is a bibliography of some of the most informative books that I have discovered. Keep asking questions, and don't give up until you find the answers.

2.6 FUNDAMENTAL AND TECHNICAL ANALYSIS

















Finding Order in Chaos   Fundamental analysis constitutes "The What" of initial decision making. What should you invest in? Who are they, what do they do, and why should you care?   Long-term forecasting helps base decisions on whether the current trading price accurately reflects the underlying asset's value: is it underpriced, overpriced, or just right? These are, as the name suggests, fundamental aspects of the investment.  

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Regarding stocks, it would include research into the company's financial statements of revenue, debts, and management team vision and practices.   With crypto-assets, the fundamental analysis would be the criteria used for determining a use case for the asset and potential future adoption, developers involved with the project, the whitepaper outlining the technology used and plan for implementation, coin offering, and developer holdback. (Link to Criteria Section)   Market capitalization (Units * Price) and daily trading volume are two of the most basic fundamentals of a crypto asset, and can tell you a great deal of information about it's adoption and use in trading.



















News of current events can offer information about an asset that you are considering investing in or have already, indicating changing market conditions that may affect the value of the investment.   Pick an asset and treat it like you would your favorite sports team. If you employ the same level of dedication to learning the daily movements of an asset that you're planning to trade with, it won't take

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long to start putting things together as to the forces at play, and the effects felt in the price movement.   What patterns can you find? As you begin to ask questions about events surrounding a particular market, even if they are seemingly unrelated, you will start to see the effect they can have on the movement of assets' prices.   Predicting the direction of the changes and the extent of movements based on news is measured and can be analyzed with technical analysis.     Technical Analysis   "The When”

































After you answer the initial question of what to invest in, the most critical factor becomes timing.   Technical analysis is a measure of price action during a certain period, and it is like the market's heartbeat.   It shows a great deal of information based on the observation of price and volume of trading in either direction. Investors can chart and analyze

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information visually and using technical indicators. This visual chart helps to understand better the sentiment and forces driving demand, which ultimately determines the agreed-upon price of an asset at a given moment.   Reading charts is like reading a map: it will tell you mostly everything you need to know, but you have to ask the right questions and correctly interpret what you're seeing.   Ensure that the data you're basing a decision on is current: sometimes, while navigating through charts, the indicators you look at don't necessarily represent the real-time situation, so verify that before deciding to buy or sell.   Price is both a cause and an effect in trading on the market - it reflects the current trading demand and can also drive it, but it is a poor indicator alone as to what will happen next.   Everyone looks at an asset's price chart for the first time and can quickly feel overwhelmed with the amount of information, but a severe lack of clarity as to what will happen next, and most importantly, when.  

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Timing Entry to and Exit from A Position   Start small: with amount invested and with time frames.   As you start to get the decision-making process for short-term (hour by hour) picks, you may start looking at positions with a longer maturity, like days, weeks, and months. This timeframe expansion will become much more satisfying and a lot less twitchy in your trading experience than constantly watching charts and hovering over the sell trigger.   This circles back to the importance of making a plan, not only for the short-term but particularly for longer-held positions.   As you experiment with different time frames, you will also begin to project your chart reading beyond the immediate few hours and begin to see trends forming over days, weeks, and months.   When you have these theories, you can backtest them using past periods. Once some definitively positive patterns form in your mind, you can begin to add 1% (of your overall portfolio) positions to test out these theories.  

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A trade log or journal becomes critical if you have not started yet at this point in your journey. This journal will allow you to record when entries are made, for what duration you intend to hold them, and when you plan to exit (time and price, projections). Without records, things can get out of hand pretty quickly, and no one's memory is that accurate or reliable.   Look at the micro and the macro before making a decision.   For an entry point, you will be looking at the 1-day view and probably zoomed in to the 1-minute candle, and that's fine for tuning, but don't neglect to zoom out to 5-day and 1-month because some significant overall trends are hard to ignore at this level but not easily observed on the micro.   Always consider the past as a template for the future: it may not happen the same way exactly, but there will always be echoes of familiarity. Look at the year and month indicators to tell you how the day and week should go, then look for an ideal entry at the day level to maximize your entry point.   Reading charts with an eye for specific details will become like reading a topographical map. The chart

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will lay out the ups and downs of the trading market in a concise visual pattern that is easily recognizable to the trained eye and reads very much like the ups and downs of a story or a road sign on a curvy road.  















The signs aren't always complete, but the road's curves will become apparent enough to anyone who spends any time on it, and anticipation eventually can become like second nature.   Regular practice and persistence over time, like any other skill, will improve the more you do it.  

2.7 ORDER TYPES



















As the name implies, the Order Book is the record of recent and upcoming trades on the market and can give, at a glance, an indication of whether buying or selling is winning out at that moment.   Limit Order   Allows the user, whether buying or selling, to place an order triggered when the price reaches that limit or when the other party agrees to accept the offered price.   You can use limit orders to get a better deal in practice, whether buying for slightly less or selling for a higher price. They can, however, go unfilled. Therefore, in theory, a limit order is better, but unless accepted by the other party to the sale, it may

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sit in the order book until such a time as it may no longer be what the user would consider a "better deal."   Market Order   The quicker approach to completing a transaction, market orders effectively agree to pay the current price of the asset and allow for fluctuation in price between the time you place the order and when it gets filled.   This time gap can become a problem if the trading volume is high and the price is rising or falling rapidly, but generally, most market orders are filled very quickly after authorizing them.   OCO   If you need to walk away from trading but think there may be some exciting price action while you're away, a One-Cancels-the-Other trade setup is great because it allows for a stop-loss price to be given and the intended sell price also.   If the price drops to the stop-loss price, then the higher price trade gets canceled. If the asset price goes up, you take your profit, and if it drops, you

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only lose a pre-determined amount rather than riding a more prolonged downturn.  

2.8 BID/ASK/SPREAD



























Bid   A buyer offers the bid prices to a seller. Limit orders form the basis for the Bid/Ask spread: if a buyer offers a higher or lower price than the current market, they have effectively placed a bid, similar to an auction.   Ask   Ask is the asking price of a seller from a buyer.   Spread   The spread is the difference between the bidding and the asking price.

2.9 CANDLES











Reading Candles is an art unto itself.   Candles indicate price action based on the push and pull factors of people buying and selling an asset. The demand versus the supply will dictate whether the bearish (sellers trying to lower the price in a transaction to promote selling) or the bullish (buyers offering higher prices for their purchase to close) sentiment will win out in influencing the price in a given time (the candle).

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The thin line that forms above or below a candle indicates interest in moving the price to those levels, but the thick solid line is the range in which actual trading closed in that time. So essentially, it's a race of forces to see who has more successful bids and asks, those buying and those selling.











Candle Analysis is essentially a visual representation of bid (offered price) versus ask (asking price) race, and the result is the market price.   For an in-depth understanding of the power of candle reading, I recommend reading Japanese Candlestick Charting Techniques, by Steve Nison.

2.10 INDICATORS





















Indicators are different styles of observational metrics used to show different visual interpretations behind price movements.     Indicators and What They Do    Moving Average (Simple, Exponential)   "Moving averages are usually calculated to identify the trend direction of a stock or to determine its support and resistance levels. It is a trend-following —or lagging—indicator because it is based on past prices." (Investopedia.com)

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For a good start on ideas where trading levels will be on a more specific level, it is helpful to look at Moving Averages of varying lengths.   MACD

MACD Indicator for Bitcoin-USDT, on Bittrex Exchange













  "Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA." (Investopedia.com)

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RSI - Relative Strength Index   A Momentum-based indicator that can tell you the rate at which upward or downward price movement is going, and a trend direction illustrated by the line's direction and graphed with a value between 0 and 100. An asset is considered overbought when its RSI rises above 70 and oversold below 30, but this is a general rule of thumb and does not apply to all assets equally in every period.









Bitcoin-USDT Chart shown with RSI Indicator

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Stochastic Oscillator   "A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result." (Investopedia.com)

Stochastic Oscillator Indicator













 

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Fibonacci Retracements and Extensions   Used for projecting future level projections, Fibonacci retracements and extensions are a little complicated and arcane for beginners, but something interesting to consider further.   Fibonacci levels are based on numbers in the Fibonacci sequence, which describes a ratio of predictable curvatures found in nature being













Fibonacci Extension, auto generated using TradingView

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divided by their preceding or the following number and placed on a chart relative to recent price movements.

Fibonacci Retracement for BTC/USDT

  As with any indicator, this can help establish a guideline of approximately when and at what price to maximize entry and exit timing. 















Combining Indicators   My favorite pair of indicators together are RSI (the relative strength index) and MACD (Moving Average Convergence/Divergence). These are both

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momentum indicators that demonstrate trend direction based on the volume of trading and the closing price of each candle of time, and I have successfully utilized both in conjunction.

BTC/USDT with MACD and RSI

















    Support and Resistance   When observing price movement, you will notice that there will be certain levels that price will approach, and the momentum will slow down in either direction.  

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These are called support and resistance levels, and they are essentially psychological barriers created by traders' beliefs and projections whether an asset can continue to increase beyond a certain point (resistance) or a fundamental understanding that an asset's value is potentially higher than its falling price (support).   Support and resistance levels generally coincide with reasonably even numbers, but not necessarily so. It's a fair indicator of what goals have been set by investors in the market and what they really believed to be the scope of the asset's value.   For example, Bitcoin approaching $60000 in early 2021 met with resistance, and while temporarily rising above the price, did not remain there for long. On the downside, Bitcoin found support, shortly after, at the $30000 level and began to rise back up in price after finding this invisible baseline.   If trading approaches and breaks through a level of resistance, it may be taken as a sign that the price will continue to rise and test new levels. On the other hand, if prices drop further below previous support levels, this may trigger panic selling, causing prices to continue to decrease.  

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Algorithmic Trading   One explanation of how so many of these indicators work consistently is that institutional traders make up a large percentage of the market movement.   That translates to the use of automated trading systems developed into software to recognize and act on the same patterns you can see at work in your own decision-making.   Suppose your own system's logic for making decisions holds up to rigorous backtesting. In that case, you can reasonably assume that other traders are looking at the same set of conditions, therefore making it more likely that the market may move in the way that you predict.   



























Indicator Timeframes   Beyond initial asset selection, timing is everything, and the timeframe of your indicators can tell you a lot about the period of your position.  

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The daily (weekly or monthly, et cetera) trading range is a very important factor to consider while starting trading on an ongoing basis. Generally, price moves within a given set of limits in a certain period, so to establish a range, you should look at the week and month graph, and you will quickly see the extent of the highs and lows of that period. It is safe to assume that the same period length into the future will follow roughly the same parameters. Still, more careful consideration is needed as sometimes it seems that just about anything can happen.   If your daily chart indicates a good buying time, but the week and month look bearish, it may be that the opportunity is very short-lived. If the year and 3month look optimistic, and so does the day, then it may be advisable to stay in the position for more than just a few hours.   Learn to observe different time frames and trends so you can make a better decision as to whether to hold on or take profits out. Zooming out the timeframe can suppor t a decision or a contradiction, but do consider beyond just the time you plan to trade for a more accurate indication of what will happen next.  

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Staged Selling   As trading drives an asset's price upward, you may make a profit on a percentage of your position at any time you like. If you are unsure what the price will do afterward, you reduce your risk exposure while still allowing for the potential of further profit.   While this strategy is used mainly by institutional investors managing large portfolios to avoid creating unintended repercussions in trading volume, retail investors can also use it to their advantage.

2.11 TRADING PAIRS





















Starting With One Trading Pair   You don't need to invest in dozens of crypto assets (or any investment) to be profitable. The ensuing confusion will likely do just the opposite.   Identify one asset that interests you based on your criteria, then get to work on it.   Look at its history when you start examining a currency and its trading pair (the currency you trade it against). The most important information that you can gather is from reading the charts of its past trading behavior - you can observe all of its onetime gains and losses and when they happened. From this, you can begin to build a portfolio of information as you answer questions about their causes and relationship to other assets that interest you.  

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The profit comes from being accurate in your analysis and predictions, not planting many seeds in many gardens. The more time you spend working with and studying a particular asset, the more familiar you will become with its behavior and peculiarities. Therefore the better position you will be in to make sound decisions at any given time.   There's no getting around it; time and effort will equal better results. Develop your strategies with one pair of assets traded against each other, and once you get some traction with those, expand into others.     Multiple Base Pairs   This is a more involved, time-consuming approach. It involves observing the timing of charts for assets that move in correlation to others and those that move in opposite directions.   Working with multiple pairs can present an opportunity to maximize the use of capital, with a reasonable entry price around the same time another one of your assets is reaching a targeted sell level. This keeps your money growing with minimal lost time.

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At the time of writing, this technique applies more to equities, and especially foreign exchange, than to crypto markets. Still, they are quickly maturing and predominantly tied to Bitcoin's cycles.   This means that when Bitcoin is on a bullish run, the altcoin market (everything but Bitcoin) generally remains flat or slightly decreases. Once Bitcoin reaches all-time high levels (ATH), there is usually a pullback in price activity leading to increased interest in other assets, which generally see dramatic price rises.   This alternating pattern is affectionately referred to as Bitcoin Season and Altcoin Season and can be tracked at blockchaincenter.net/altcoin-seasonindex/. It is a cycle that has been repeating on a higher level of magnitude each time and with increasing frequency and will likely continue to do so until the crypto market fully matures.  

























First Trading Pair   BTC/USDT or other "Stable Coins"   This pair may or may not fit your long-term strategy, but it is a simple way to start. 

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There may come a day that the U.S. dollar is not used as a standard of value. Still, for now, it is exactly what its T stands for: a tether, both to the traditional currency’s value and in the mind of the new trader between established trading systems and the exciting new developments in blockchain technology.   As a matter of explanation, though, USDT is not USD. It is a crypto asset that remains the same in value (pegged) as the U.S. Dollar.   The reason I like this pair: it is a simple but great way to mitigate the risk inherent in trading bitcoin, especially when it's soaring high. Despite its simplicity, it's one of the best ways to trade when getting started to capitalize on an asset's price increase while avoiding the inevitable drops.    Most other cryptocurrencies are relatively correlated with the value of Bitcoin, mainly as a trading pair, but the whole market moves with Bitcoin. And Bitcoin has been following an approximately fouryear cycle of running up, peaking, and then correcting precipitously - a sharp, painful drop that can catch inexperienced traders riding down a huge

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wave that didn't seem like it would ever come, but it will.   Until the market stabilizes in maturity, it seems like when, not if Bitcoin corrects downward, it is best to out of position when that happens.   Pro tip: Remember the adage about buying low, selling high? Well, here is how to put that into practice. If you're eager and are watching with an itchy trigger finger, be aware that the drop can come and be ready to trade into USD or USDT (Tether).   This way, ideally, if the downward ride goes on further, you can leverage that Tether when Bitcoin's price settles into its bottom to buy more and wait for the next run-up.   I have learned this lesson from several regrettable missed dips where I held, in unfounded hopes, that the price would bounce back. And it did, eventually, but Bitcoin has been moving on a four-year cycle, so if you don't want to have to wait that long in anticipation, be ready with a "stable coin" pair.  

























 

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So as a long-term strategy, this advice may very well soon be obsolete. USDC looks to take the place of USDT, but until it becomes a commonly recognized market trading pair, USDT seems like the best option, in the short term at least.   DAI is another "stable coin" that can be used as a simple trading pair since its value is also pegged to USD. This kind of knowledge of assets is why fundamental analysis, on an ongoing basis, is crucial to understanding the broader workings of the market as a whole and relating to your investments.   While you use technical analysis on a micro scale for decision making, fundamentals are the foundation of your mid to long-term decision making and really what distinguishes an investor from a trader.  

2.12 TRADING STRATEGIES























Buy Low, Sell High   It's the most clichéd advice and the first bit of wisdom to go out the window, so I will make it the number one rule of developing a system for yourself because this will become a loop on repeat.   Rule number one sounds simple, and in theory, it is. But when the excitement from gains or terror from losses kick in, rationality can quickly be overshadowed by adrenaline and lead to costly mistakes.   It boils down to the entry and exit points: the market is constantly moving, so the timing for your trades is paramount.    

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Managing Emotions & Expectations   People are driven by two primary emotions while trading, no matter how cool in temperament or experienced, and those are greed and fear.   FOMO (fear of missing out) can drive the greed of investors who buy into hype late in a cycle, FUD (fear, uncertainty, and doubt) drive downward corrections into massive losses.   While this sounds seriously obvious, even to the point of being simplistic, you will be amazed to know how often traders can ignore wisdom in the heat of the moment. Overoptimism and fearuncertainty-and-doubt (FUD) are serious emotional challenges to resist to avoid becoming among the panicking masses reacting blindly.   Timing   Once you have decided to buy and trade with an asset, the question becomes when to do it? And at what price? This decision is where technical analysis comes in.   Beyond the hopeful speculation of buying an asset that will appreciate, investing should be looked at

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primarily as a relationship with the asset you are considering.   Crypto markets have been following a four-year macrocycle, with Bitcoin leading and the Altcoin market following.   This cycle is the most prominent observable pattern in cr ypto cur rently. The first and most advantageous trading strategy is to buy a crypto asset (having assessed its fundamentals, of course) when the market is most depressed and then sell when it reaches all-time highs.   The Investment Relationship   Bitcoin, cryptocurrencies, and crypto-assets are an increasingly important factor of the global economy, with over two trillion dollars of market capitalization. This magnitude puts the crypto space in position with some of the highest-valued corporations in the world, and therefore can no longer be considered "just a fad" or ignored.   Aside from all of the market movement and price speculation, you have to ask yourself how you feel about who and what you are investing in.  

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By no means does that imply that just making decisions on instinct is in any way a good plan, but ultimately your gut instinct will be the deciding factor if you pull the trigger or not, and it's likely what has gotten you this far.   After all your research has been exhausted, and if you still don't feel right about an opportunity, pass on it. There are always many opportunities available, and it's much better not to get into a losing situation to be ready for the right one to come along.   Never Lose More Than You Can Afford To   After "buy low, sell high," this has got to be the most often touted bit of advice available, and it makes good sense.   But how? The answer is stop loss: figuring out what that should be is quite simple, and should always be a part of your setup process. It can be the difference between a fairly hands-free process and panicked white-knuckle ride, staring at your screen.   “A stop-loss order is essentially an automatic trade order given by an investor to their  brokerage. The trade executes once the price of the stock in question falls to a specified stop price. Such

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orders  are designed to limit an investor’s loss on a position.” (Investopedia.com)    































Margin Trading   For the above-mentioned reasons, as a new trader, the concept of margin should not even be considered until you are highly confident in your analyses and your system consistently produces winning trades.   Margin trades are essentially utilizing borrowed funds, which can maximize your buying power and increase returns dramatically. However, they can also magnify your losses should the market not go the way you had hoped.     Buy and Hold   Buying to hold, affectionately know as "HODLing," is the most straightforward strategy but can be a financial and emotional rollercoaster, particularly in the crypto sphere.  

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It's one way to invest, but most traders prefer to ride the roller coaster up, take a profit out, then buy more when the coaster goes down and repeat.   It's certainly a lot more involving process, but also much more profitable and can be utilized whether the market is overall upward or trending downward. As long as there is volatility (movement up and down), there is opportunity.     Scalping at ATH   Scalping refers to short-term trades made while prices of an asset are currently at, or near, their alltime highs (ATH). To do this successfully it is important to understand that as long as there is movement in price (volatility) there are opportunities to profit, provided that you understand the increased risks involved and intend to monitor the situation more closely than in longer-held positions.























Understanding and recognizing consolidating patterns is an essential predictive skill, and for an indepth study I highly recommend the book Trading Stocks Using Classical Chart Patterns, by Brian Kim.

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To reiterate the steps from the Trading Journal section into three simple principles: IDEA - TEST - IMPLEMENT (and repeat, forever)













  Trade with some, hold some: it is up to you to decide the percentage of each, based on your plan and goals for investing.

2.13 CLOSING THOUGHTS





















Trading is a discipline, one with many potential benefits and risks.   It is not easy money, by any means, but if you're doing your research, you're already well on your way to understanding that.   Don't buy any get rich quick advice. There is no such thing as a magic bullet in this or any other aspect of life.   A little to do with luck, a lot to do with skill and preparation, but the right mindset and emotional resolve is everything.  

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Like playing a sport, you can train and practice but ultimately not win every attempt. Don't beat yourself up if things don't always go your way.   Reading a chart in retrospect is always much clearer than interpreting one in real-time. Once history is written, it is easy to see how events transpired, but it's not always that clear while it is ongoing. Hindsight is 20/20, after all.   There are many facets to consider. The picture becomes much clearer when each asset is examined like a puzzle piece, and how they fit together will be determined by the overall plan you make for your portfolio.   It's essential to note that wishing does not make it so, and so it goes with trading and everything else in life.   If a position is not doing what you had hoped, it takes patience, and faith to remain calm and not panic. Remember to make decisions based on facts and indications, not just emotions like fear or greed.   Ultimately, it is you that needs to pull the trigger. This becomes a matter of instincts, but more importantly, reiterate: have I done enough research?

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How many indicators support the decision? Does this trade follow my plan?   Some days of trading will consistently make you wonder if you know what you're doing at all. But this is the challenge: you can't control the market, but you can moderate yourself. Once you manage that, you can accomplish anything you put your mind to doing.   Take your time! Let your excitement for this fantastic new technology drive you to learn first, test your theories with zero risks, and finally implement what you have learned to become a successful cryptocurrency trader!



PART 3: CRITERIA

3.1 CRITERIA FOR SELECTING ASSETS



















Trading is a fascinating way of making money but by no means a walk in the park.   Someone who makes any kind of outlandish claim of success without proof is probably trying to deceive you or themselves.   Once you have a solid grasp on the fundamentals of crypto assets, you will be eager to dip a toe into trading. The overwhelming number of projects to invest in seems to be a subject that has not been given nearly enough attention in the many books already available.   This primary motivation led me to write this book, as it has been an ongoing effort since beginning with trading. 

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This type of consideration is fundamental analysis because it is a high-level decision-making process that helps determine what to invest in.   Why go through the trouble? Because, simply speaking, it can be highly profitable if done correctly.      



























Everyone wants to invest in the "next" Bitcoin upon examining its meteoric success. But finding a project that can potentially be an excellent longterm investment and not one that will pump up in price due to unfounded hype and disappear is by no means impossible but requires work.   These outcomes are not an exaggeration: both can, and have happened, to many investors - the writer included.   With the growth of blockchain technologies and their inherent open-source nature, anyone can obtain the source code for the original, modify it slightly to meet their needs, and hypothetically launch their own crypto-asset project.  

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The following guide will provide the reader with a framework for their future investigations into what will inevitably become a financial revolution in our lifetime.   Crypto projects are a marriage of software engineering and entrepreneurship: as such, everyone will soon recognize them for their vast potential that many investors still undervalue; however, this is a quickly developing landscape. So, no time like the present!   A crypto asset is a blockchain network and software built upon that network. Its token or coin is the currency that investors can trade on open markets based on that network's inherent or perceived value and potential use.   So many books have been written on the subject, so why another one, you may ask? Despite having read (and continue to) as many as I can, I feel that I have yet to find one that succinctly tells a reader the criteria and processes to choosing a cryptocurrency to invest in.   This book is not to be constituted as investment advice, and ultimately the choice is yours how you

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want to invest your money. This book aims to provide a helpful framework for you to add to or build upon in constructing your long-term plan and actionable strategies to get where you want to be.   The critical takeaway for investing in crypto assets is that, despite the novelty and hype, they follow similar behavior patterns, albeit with more volatility due to their fundamentally disruptive nature and relatively young history.   They are similar in patterns to foreign exchange and stock trading because they are all traded by people.   People are at the heart of the entire mechanism: in funding, in communicating their sentiment, and in actively predicting the movements of assets for profit.   Buying a crypto asset can be understood in the same sense that buying a traditional investment is essentially a commodified instrument of that thing.   Stock is equity ownership in a company that you buy to benefit from the growth and dividends of that enterprise or a commodity like gold. Unless you are buying actual physical gold, you are buying into an idea of the future value of gold,

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commodified as a financial instrument or vehicle in other words, a contract with a promise.   Whether holding for some time or trading daily, these instruments are designed to capitalize on movements in value. Volatility is a constant, and the basis for the market is an agreed-upon value.   What is a crypto asset?   There are now tokenized assets, proportional ownership of stocks offered to be traded on crypto exchanges, so the line between traditional assets and currencies is becoming less definite.   Cryptocurrency is no longer a novelty but a serious method of value exchange. It's not a craze, nor a fad, but a revolution in commerce that we have the opportunity to witness in the making.   It is by no means too late, nor will it ever be, to jump into this exciting space. Is it "too late" to buy Euro? Of course not, depending on the day's conditions, that is.    

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The Use Case   Ask questions. Look for answers. Ask more questions, and repeat until you're satisfied that the asset you're investigating is worth your funds and your faith, or not as the case may dictate.   Having to do this might not sound exciting, not nearly as much as hype on social media would be. But simply speaking, if it is a serious investment that you are after, then this is the mentality that you must apply to your decision-making. Otherwise, the whole experience will be just an emotional one full of ups and downs.    





























Questions To Ask   What is it?   There should be a straightforward answer to this question that explains what a project is about and its value for its users.  

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It sounds almost too simple, but there have been crypto projects that didn't even answer this most fundamental question in hindsight.   If the answer is not readily found, move on to asking further questions, or consider looking elsewhere.     What is it used for?   What problem can it solve? Suppose there is a way that the project you're researching can provide a better way of doing something that already exists or proposes to do something entirely new. In that case, it's a good indication that it may present a profitable investment in the future if managed correctly.   Can the solution be considered innovative, or can it be solved more simply by using another existing crypto project?   Who made it?   Sincere developers put an immense amount of time, energy, and investment into creating a software project.  

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So, it stands to reason that if a project is legitimate, the developers would be eager to take credit for their work. Any lack of transparency in the ownership of a project should cause you to rethink the validity of the asset.   Who are they?   What's their background, past projects? Do they have a track record of successful crypto or software projects in the past?   What level of adoption is possible?   What is the likelihood of mass adoption? Is the project likely to solve a problem that affects many sectors or individuals, or is it a tiny niche that would benefit from its function?       Red flags that you should avoid: Unsubstantiated hype















Overly generic project aspirations



















-

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Close similarity to other assets: not to say that a new project needs to be entirely novel and unique, but if it is very similar to another offering, what makes it stand out from its competitor? What are they trying to do differently, and does it matter? Lack of clarity and a short supply of solid answers to basic questions from developers Lack of transparency relating to ownership and development team

Criteria

























  What makes a project appealing to investors?   Transparency   What it is, what it does, who made it, and who they are: all are key fundamental questions that you must satisfy before investing in anything. By doing so, you are putting your faith in their future success. A reasonable amount of transparency from the people

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or companies behind an asset is a must to inspire that confidence.   Regular communication from the Development team (Usually found on Twitter, Discord, and Project Blogs) Sound management principles Revenue (Actual or projected)   Accessibility to finding the answers to all of the questions you may have is a crucial indicator of whether or not a project and its developers should have your trust and your investment.  

--

Aspects to Consider:   Privacy/Anonymity   Security - how does the development team plan to deal with potential threats to the network?   Decentralization - is the asset genuinely decentralized, or is it still under the control of the developers?  



































• • •

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• •  

 

•  



















The daily volume of trading Sentiment Analysis - Google trends and Twitter hashtags are a great resource to indicate what (and how many) other people interested in this project think about it Cost - transaction cost pays for mining rewards, has to be balanced enough to support the infrastructure but still be low enough to make sense in the use case. Limited supply and logical rollout - in contrast to fiat currencies that governments can manipulate



 

Liquidity in trading - is this asset easily traded on exchanges? Or will it become something difficult to sell?







 

Speed/Performance - how well does it work, practically? Is it fast and stable, or is the network constantly bogged down with transactions? What is the developer's plan to manage this key functionality?







 

Scalability -  can the network handle volume? How will it grow in time to meet the needs of its user base?





 

•  



and destabilize by simply printing more of it (Zimbabwe, Venezuela, and to a lesser extent, all of them) ICO (Initial Coin Offering) - What is the outline for token issuance, and what proportion is held by the developers? Which exchanges, and how many, list the asset?





































    Mistakes to Avoid   Don't ever buy something only because someone tells you to.     If you feel confident after considering the many facets of a crypto project, your new knowledge will empower you to make decisions based on facts and not just emotions. Nothing is guaranteed, and conditions are continuously changing.   At least you will have ruled out a great deal of noise and avoided potentially over-optimistic promises made by developers. Also, you should now be able to see what is the true intention behind a project.









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Don't ever give up. It may seem overwhelming initially, but trading is a practice, and research is critical in making profitable decisions. The more you do, the more you will learn and refine your approach.  Whether or not to invest in an asset, and critically when to do so, is entirely up to you. Hopefully, once you can answer all the questions you have regarding the investment, the choice should be a clearer one to make.  











 

3.2 CONCLUSION    





















  Investing, especially trading, puts your future in your own hands. So the more knowledge you gain, the brighter that future can become. Continuously research, ask questions and make sure that decisions are made based on factual evidence from credible sources.   This concept cannot be stressed enough, especially when you start out on the journey. To be forewarned is to be forearmed, so the more effort you put into learning about the assets you're interested in and the more time you invest into training yourself with proven techniques, the more confident you will be and pay off in your future successes.   While cryptocurrencies are a hot topic with exciting upsides and potentially terrifying downswings, fundamentally trading with them doesn't follow an

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entirely different set of rules than any other traditional investment. That means that you can transfer the knowledge you gain back and forth and benefit your other investing methods as well.     The landscape has and will continue to evolve very quickly, and blockchain technology has the potential to disrupt and revolutionize the world's increasingly digital ecosystem.     Every app we use today that has revolutionized the way the world does business, like Google, Amazon, Uber, Airbnb, et cetera, has been built on a protocol that the company didn't create themselves. Crypto assets give future entrepreneurs the potential to create something incredible, from the ground up, on a platform that is monetized and distributed within itself.    



























Looking to the Future   It is with a great reluctance to include anything that sounds like a prediction for the future because anyone will tell you that it is impossible to predict

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what the future will hold with certainty. This fact is especially true in the fast-paced world of crypto developments.   Central Banks are investigating the prospect of adopting and creating their own decentralized currencies, based on blockchain technology.   Traditional banks have resisted the transition most of all, but now that crypto-assets are here to stay, that resistance is loosening. As time goes on, they will likely adopt their own system of use, if not fullon integration with the existing infrastructures that have developed.   Crypto assets will become the new fashion of monetizing the application market, as it is a technology-native monetization system that developers can build right into the technologies as they are designing, as opposed to being grafted on later.   Bitcoin itself will probably never be the "world's currency" for day-to-day transactions but will likely remain as a value holder like gold is today.   Rather than thinking of the driving forces behind the market as greed and fear, you could more aptly

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describe them as hope and despair. It can be seen as an act of faith - a hope and a will to action.   There is only one way to get into action, and that is to start. Start learning, start researching, and take action based on facts and evidence that your decision is good and that the time is now.   This book has hopefully brought you to a point where you are confident in your understanding enough to put your hope into action, so go forth and conquer the market and may the future of your finances be ever bright and prosperous!

FURTHER READING AND RESOURCES Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond, by Chris Burniske & Jack Tatar. Trading Stocks Using Classical Chart Patterns: A Complete Tactical & Psychological Guide for Beginners and Experienced Traders, by Brian Kim. Blocks and Chains Introduction to Bitcoin, Cryptocurrencies, and Their Consensus Mechanisms, by Aljosha Judmayer, Nicholas Stifter, Katharina Krombholz. Japanese Candlestick Charting Techniques, by Steve Nison



























Investopedia.com   Coinmarketcap.com   Messari.io   Github.com