Technical Analysis

Lately been on Facebook? Telegram? Reddit? No? Any other social media platform? Surely you are subscribed to a discussion group on any platform to satisfy your needs for juicy crypto infos.
People heard more and more about other people that made some decent money fast with cryptos and want to get in, which is no wonder – they want their part of the cake. So far so understandable, however what happens in social media is no fun anymore, it is dumb.

Technical analysis (TA) is very close to a gamble, when it comes to low volume coins. One has to understand that technical analysis relies on volume and liquidity of the markets, furthermore it reflects often the algorithms of the big institutional traders like banks or big hedgefonds – and last but not least the emotions and sentiments of the traders. That works for FX, but do that on dead shitcoins and you are going to be burned. But also coins with volume in crypto trading rely onto emotional behaviour to a a high level and are therefore hard to predict, maybe a bit like your girlfriend when she gets emotional. You know her, yeah, but the reactions tend to be differently from what you expected.

Look, this coin floored since days, consolidated very deep – it MUST breakout!!!One!11!!!

Yes, likely to break out south, though – as the rest of it is rare holders recognized they have some capital bound onto a dead fish and want to get at least something out. This is also one reason why it is dumb to say HODL on each and every coin. “I have 10k dodgecoins, what shall I do?” Reply: “HODL!!!!” – Heck, no – you should not HODL a dead coin, this makes no sense.  Let’s be honest, it often happens like this:

Facebook Group participant Fred :

$ASScoin is going to moooooooon sooooooon. Very good whitepaper, I read all the details, great team with many *vic -ending names, fantastic tech, so complicated I don’t even understand what it is about. Hop on, this is gonna be a $10 coin easily in a few month. #lambo #moon #hodl

Newbies are reading it, desperate wannabe-overnight-rich action takers are reading it and a fraction of them will comment it – many will just buy silently, not doing any research at all. Why taking the effort, Fred has it already done and vouched for it. Hey, he has 1k facebook friends, can’t be wrong at all. Despite the low volume of the coin and the many groups Fred has posted this, they generated a little spike on $ASScoin. Some recognize what’s going on and sell of again quickly, feeling dumb, but ok, just a few dollars in fees and a bit of rate loss. Others though are still waiting for $ASScoin to skyrocket, having $50 in it, the order form of the lambo dealer is pre-filled already – but nothing happens. Now all these people sitting in reddit, forums, facebook and telegram groups seeing an other follower of Fred asking

Hey, whatcha all think will $ASScoin moon soon?

The question hits the 30 others, that bought $ASScoin as well, some maybe with more significant money, some might have thrown the kid’s college money or their pension on it.

YES, just HODL, HODL FOR YA DEAR LIFE, MOON soooooooon, then lambo for everyone. HOOOODDDLLLLLLLLL I am all in! CAN’T go wrong!!!!!1111!!!!!!!! It is only a loss if you sell at a loss!!!!11!11ONE!! It is at discount rate right now!!!!! I am selling my wife, the kids and my kidney to buy morreeeeee!

Seeing this kind of dedication, the newbies just don’t want to be the noob that sells at a loss and holds tightly. Even throws some extra packs on it, but waits and waits and waits. No moon, no lambo, just hodl. The thing the newbie has fallen for, was the dream, the emotion of another one. Everyone can publish everything in the internet. There are many reasons why you will find wrong informations within cryptoverse:

• Newbies, that want to appear as Pro seeking to get attention
• Wrong TA (Technical Analysis) applied
• Correct TA applied to no volume charts, bad price action
• People actually trying to convince themself, that their decision to hold is the correct one. Sellers are weak hands, only hodlers are right, generally speaking
• Paid advertizers posting to groups to push ICOs
• People want to push their held shit coins
• People spreading myths / beliefs that they just overtook from someone else
• Pump and Dumps

It is all about the strategy you use and not to fall for experienced traders, exploiting low volumes for pump and dump actions. First at all we need to have a differentiated look at what you do with your money. Decide if you want to invest or if you want to do day trading.

Investing

You do your research on projects, allocate a defined percentage of your funds to the project and buy tokens for it. First think of how many projects you will be able to follow in the long run. Subscribe to their social media channels, their website rss, their github. Let’s say you think you will be able to follow 5 projects, so you split your total amount of funds by 5 and use each portion for one project you want to invest in, by buying their tokens.

Before you buy anything you want to do your research, a basic overview can be achieved by asking these questions:  1. Which problem does this project solve? And has it realistic chances to do so? 2. How is the realisition of it, is there something done already like an existing MVP? 3. How is the github activity? 4. How is the team? 5. Is there an actual use for the token itself? You can go along with the very detailed and good methodology of Cryptohydra. Then you put a % of your allocated money into it and simply forget about the price of the coin, just follow the news of the project to check if it is doing any good. Alternatively, if you want some more action, you can create a portfolio and check the price development. Once you see a 100% increase you could withdraw 50% and leave the rest in your wallet. These 50% can be used for new projects you like to invest in. So you diversify more and more over time. Diversification is key if you want to grow your account hands-free. Theoretically speaking, you spread your money over promising projects and hope that some of them skyrocket, compensating the loss on others with profits.

Trading

If you want to do day trading on coins / tokens, you want to be extra careful. Technical analysis might help on coins with volume like  or , but will give you rarely reliable informations on $ASScoin.  Be prepared for a long and painful road, if you want to learn it. However, it is advisable to learn some basics like support & resistance to find good entry points for investing (like in the prior paragraph) to optimize the outcome. If you want to take a deeper look into daytrading Coinigy could be a first step into learning it.

Some words I found on Bitcointalk. Obviously I don’t agree in every case with it, but I found it entertaining enough to share:

I type d that tyitle twice because I knew it was wrong the first time.  Still wrong.  w/e.  GF’s out at a lesbian bar, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY.  It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.  Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.  Likewise the weak hands are like OH NO IT’S GOING DOWN I’M GONNA SELL he he he and then they’re like OH GOD MY ASSHOLE when the SMART traders who KNOW WHAT THE FUCK THEY’RE DOING buy back in but you know what?  I’m not part of that group.  When the traders buy back in I’m already part of the market capital so GUESS WHO YOU’RE CHEATING day traders NOT ME~!  Those taunt threads saying “OHH YOU SHOULD HAVE SOLD” YEAH NO SHIT.  NO SHIT I SHOULD HAVE SOLD.  I SHOULD HAVE SOLD MOMENTS BEFORE EVERY SELL AND BOUGHT MOMENTS BEFORE EVERY BUY BUT YOU KNOW WHAT NOT EVERYBODY IS AS COOL AS YOU.  You only sell in a bear market if you are a good day trader or an illusioned noob.  The people inbetween hold.  In a zero-sum game such as this, traders can only take your money if you sell.