I believe all markets behave in a similar way, and I do not think it matters if you are trading a digital currency, a stock or an option. I started out my career trading futures contracts on currency before all global currency rolled into the Euro. We would trade futures contracts on the Swiss Franc, the Japanese Yen or the German Mark which were side by side on the floor of the Chicago Mercantile Exchange (NYSE: CME), making it easy to trade them against one another. Eventually, they rolled all of these into the Euro we know today, but in the 1980’s these futures contracts were the stepping stones to derivative markets.
Soon to follow these currency contracts were Stock Index Futures, which changed the game in terms of leverage and hedging. The S&P 500 futures contract became the benchmark for any portfolio manager who wanted another instrument to enhance his/her performance. The introduction of the Stock Index contracts at the CME in the 80’s had perfect timing as the stock market was making a turn higher and this added instrument allowed a new entrant in equities markets, and brought commodity speculators into the mix who were used to leverage. I think adding these contracts contributed greatly to the rally in global markets and gave managers other tools to manage risks.
One of the most important lessons in trading and investing has to do with patience. Markets spend 85% of the time preparing to move, and 15% of the time moving, so the tendency is to over trade versus picking your spots and executing your investing plan. The lesson I learned (the hard way) was to never short quiet markets which are trending higher. They seem to tempt you to sell them because they appear heavy, and before you know it you are in a melt up chasing them higher covering your short position competing with other buyers trying to fit through a small door. It is a painful experience, and one you never forget. It is like touching a hot stovetop, and the burn stays with you every time you touch something.
All Traders Love Keeping Score
I was motivated to write this as I watch digital currency settle down after this week’s volatility, and I know the drill about random selling or shorting. The volatility in digital currency like Bitcoin, Ethereum or Ripple is 100x the stock market volatility. The common stock market volatility indicator is the VIX contract, which has languished for so long it has become irrelevant. Volatility in digital currencies is nearly unmeasurable in its current form with 30% moves in price in a week, so there is really no comparison to stocks. You can have a single stock risk, but for the most part, investing in macro volatility contracts is a fools journey.
I think the trading world is excited by volatility and this is contributing to the attention digital currency is getting today. The world loves keeping score, and most investors love the action. The just need to be wary of touching the hot stove and shorting quiet markets. It is a lesson everyone learns in their trading career and they wear it forever like a market tattoo.
Photos attributed to the CME, Shutterstock
Trade Recommendation: Bitcoin
The price broke the downtrend line and it gives a signal that the market can move upward. MACD supports the continuation of the main uptrend. DMI shows that the bears are not so strong and it allows us opening long trades. Entry level can be above the high of the signal candle and it’s 16500.00 level. Stop orders must be placed at 15350.00 level. Profit targets are 17200.00 and 18000.00 levels. As the market is overbought, the buying based on this trading idea looks more risky that it should be. That’s why you should invest small part of your deposit and consider this signal as for short term trading only. If you don’t use leverage, trading volume for this trade is up to 10% from your deposit.
Profit Targets: 17200.00 and 18000.00
The trading signal is based on Poloniex chart.
Disclaimer: The analyst are some invested in Bitcoin.
Crypto Market Reaches Historic Milestone as Ether, Ripple Surge
The cryptocurrency market reached a historic milestone Wednesday, as the combined sum of all coins in circulation peaked above half a trillion dollars for the first time. The gains were mainly driven by Ethereum and Ripple XRP, a pair of high-profile altcoins that have been on investors’ radar for some time.
Global Crypto Market Cap
The combined value of cryptocurrencies in circulation broke above $500 billion on Wednesday for the first time ever. According to CoinMarketCap, the overall market peaked around $512 billion at around 15:17 UTC.
At last check, the total market capitalization was around $498.5 billion. That represents a gain of 29% over the past seven days and 144% over the past month.
As the following chart illustrates, bitcoin’s dominance has declined sharply since February as altcoins proliferated. At the start of the year, bitcoin represented nearly 95% of the global cryptocurrency market in terms of value. That figure fell to a low of 39% in June, and has since moderated around 60%.
Ethereum has seen its percentage rise the most relative to bitcoin. At its highest, ether accounted for nearly one-third of the market value, according to CoinMarketCap data.
Ether, Ripple Step Up
Earlier in the day, Hacked reported that ether prices surged past $700 for the first time in a renewed show of strength. The gains were largely driven by positive headlines out of Switzerland after UBS, Barclays and others announced they would be leveraging Ethereum’s smart contracts to meet new stringent regulatory requirements.
At press time, ether was trading right around $700. That translates into a total market cap of $67.2 billion.
Ripple XRP also climbed to new highs Wednesday as prices peaked a hair shy of 50 cents U.S. Ripple was last seen trading at 0.4841, having more than doubled in the span of a week. In fact, Ripple’s gains have been so dramatic that it overtook Litecoin in overall market cap. Ripple’s market is currently valued at $19.1 billion, placing it fourth among active crpyptos.
The recent gains in the altcoin universe highlight the importance traders are placing on the news headlines. It also sends another clear signal that the cryptocurrency market is about much more than just bitcoin. In the case of Ethereum and Ripple, each system provides its own unique advantages that go beyond just transactions.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets
Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.
While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.
XRP/USDT, 4-Hour Chart Analysis
Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.
ETH/USD, 4-Hour Chart Analysis
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