Categories
Math trading

Why Technical Analysis isn’t enough.

I only trade Bitcoin and Bitcoin has many variables. I assume you’re experienced with the many variables. If you’re just starting this article isn’t for you.

Technical analysis generally tells me what other traders are thinking. For me just TechnicalAnalysis isn’t enough for me to confidently pull the trigger. I do factor in various variables. Prior weekly-monthly-close, open-interest and funding rates, CME gaps, network-difficulty, orderbook-depth etc, volume profile -POC, LVN, HVN’s. All these variables do increase you probability. I don’t know what is going to happen with 100% certainty. With 70% + probability and excellent risk-management that factor in R-multiple. You can be profitable long-term.

I will explain in the next post, why trading Altcoins is pretty much gambling.

There are other forces in the markets that make Technical Analysis often doesn’t account for… For example, Network difficulty will affect the profitability rate for bitcoin miners. If the hashrate is high and network difficulty increases.. a percentage of the network will mine at a loss. When miners go out of business, it can generally results in 10-50% drops. (Miners have to sell their newly mined Bitcoin for Fiat to cover the mining-expenses.) The market must absorb 27000 newly mined bitcoins per month or price will tank and break support. We’ve seen 52 difficulty drops in difficulty since 2009 and I am expecting one soon. Price has a major effect on where miners exits. This is all I am willing to share.

Charting

[PAID] Tradingview Pro (contains referral) – This is your bread and butter for charting. $155 to $600 a year. Only useful for telling you majority of the traders are thinking.

Network

[FREE] https://www.blockchain.com/charts/difficulty Network Difficulty (No referral link)

[FREE]https://jochen-hoenicke.de/queue/#0,4d Mempool (No referral link)

[FREE] https://terminal.bytetree.com/bitcoin Onchain Analytics (No referral link)

Orderbook Depth

Tools for measuring the combined (aggregated orderbook depth) from all the spot-exchanges. Meaning combined depth of the market. This data should be measured in real-time near key support and resistance levels. Depth of market indicates pending price-levels with large amount of buyers-sellers. This data is important for large players, their key-concern is slippage. Orderbook-depth should be combined with orderflow and volume-deltas. A candle may print green but you can’t see the delta or difference between buyer and selling power. What you want to look for is how much selling was absorbed by buyers at key-support-key-resistance levels. If you see supply-absorption, a reversal is imminent.

[FREE] https://vcdepth.io/coins/bitcoin-btc Market Depth Ratio is very limited. (No referral link)

vcdepth

[PAID]https://www.trdr.io $200 a year for the pro version. This is my favorite tool so far. (No referral link)

Thanks, to whalepool for proving what I had suspected for a long-time. Volume Validation.

Take my advice, disable all exchanges and only leave kraken bitstamp bitfinex, gemini visible. Filter out all the exchanges that execute fake orders.

If you’re gonna switch to Bitfinex, please be so kind to my referral thanks.

https://www.bitfinex.com/?refcode=wj0ltT7Gh

Liquidity analysis tools.

Software that allows you to see inside the candle. Useful for seeing strength at key support/resistance levels. Compare the Volume Delta’s to measure the strength of a bearish or bullish candle.



Statistics

[FREE] www.skew.com (No referral link)

Open interest

https://www.coinmarketman.com/market-scanner

(No referral link)

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