TRADING BITCOIN MASTER-CLASS

Part 1
INTRODUCTION –

In the next few days, we are going to learn to trade Bitcoin for profits.
I will keep in mind to
1. Keep it as short as possible.
2. Making it completely comprehensible for extreme beginners.

Terminology

Before you learn to trade, we MUST know the true meaning of a few terms.
I have written down the most important terms and tried to explain them in the simplest manner possible.
If you're a new trader, please go through them.
People who already trade can refresh their understanding.

Where can I see the Charts?

There are several websites, I use tradingview.com
Simple, easy and offers everything most people need.
You don’t need a paid version. The basic free version is enough.

1 Bitcoin = 100 Million satoshis

1 Million Bits
Exchange- In terms of Crypto, a marketplace which allows buying and selling of Bitcoin or other
coins. Eg.Bybit,Bitmex.
FOMO- Fear Of Missing Out a trade. All beginners do it; they enter a trade without enough
research in the fear of missing out profits.
Total supply- The amount limit of coins that will ever exist. Supply limit of Bitcoin is 21 million.
Bull is someone expecting the price to go higher, and bear is the opposite
Bull market- A market where the prices are seeing a continuous uptrend, leading to new
highs being created. Generally, happens when new investors enter the market.
Bear market- A period where the prices are seeing a long term down trend leading to a sell off.
See the chart below
Note- A Bull market can have many bearish cycles and vise versa as shown below.

Market Cap: The market capitalisation of an Asset calculated by current supply of coins
multiplied by CMP of one coin.
Bubble- A situation where the prices are irrationally high as compared to the actual value of the
asset.
Whole of an asset could be a bubble, or a market cycle could be a bubble.
E.g. Theranos as an asset/company was a bubble.
FUD- Fear, Uncertainty and Doubt
Day trading- Taking a position in the market, either buy or sell and exiting it the same day.
E.g. McAfee announcing in 2018 that Binance had been hacked was a FUD.0
Swing trading- This method looks for buying and selling positions in a weekly range.
Swing traders make my 2-3 traders a week. Most of my trades are swing trades.
Positional trading- The aim is to buy monthly lows and hold them for days, weeks or
sometimes months. This is a longer term trading time period.
Day trading- Taking a position in the market, either buy or sell and exiting it the same day.
Leverage- Refers to the extra amount of asset bought or sold, over your capital
limit. E.g. If you buy $2000 of Bitcoin with a Capital of $1000, you have a leverage
of 2x. Sites like Bitmex allow leverage as per your choice.
Margin- The amount of funds required to open a leveraged trade.
E.g. If you want to open a position of $1000 with a leverage of 5X, your margin
requirement would be $200.
200 x 5 = $1000
Long Position- This is a buy position buy with leverage.
E.g. If you have $1000 as capital, you could buy $2000 worth of Bitcoin with leverage, or
even more.
Both profit and loss in this case is multiplied by the leverage you take.
E.g. A 10% rise/fall in price in case of a long position with 2x leverage will lead to 20% profit or
20% loss.
Short Position- Exact opposite of Long Entry. You enter a short entry when you expect the
prices to fall.
Shorting allows you to make money in a bear market.
Volatility- It is the percentage movement in price of an asset over a period. A balanced volatile
asset gives ample opportunity to short and long. Traders look for predictable volatility.
A very highly volatile or low volatile assets isn't considered good for trading.
ROE: Return-on-Equity. This is calculated by the actual capital employed in a trade and not
through leverage.
OHLC: Open, high, low and close
Altcoin- All coins except Bitcoin.
Bull trap- A technique used by market makers to buy a huge amount suddenly, spiking the
price. This makes everyone else that this is a Breakout and everyone buys.
They market makers then sell enormous amounts, pushing the prices down, in turn liquidation
everyone else that had bought, producing a cascading effect of liquidations.
Bear trap is just the opposite of the above for making the prices go higher in the end.
Ask/Bid: Sell orders are asks and Buy orders are Bids.
Spread-The difference between what the sellers are ready to sell at and what the buyers are
ready to buy at.
There always exists a small spread on all exchange, the Higher the liquidity, the lower the
spread.
E.g. In the below situation, the spread is 10 dollars. See pic Below of an order book explaining
the above terms.
Support and resistance- A support is a zone/line where we can expect the price to bounce back
up. Resistance is a line/zone where we can expect the price to rebound downwards.
We will study this in the next lessons
Walls: Extremely large orders at a range.
Demand Zone- A zone with huge buy orders. This is determined through the heat map. Supply Zone- A
zone with huge sell orders. This is determined through the heat map.
Stop-Loss: Order that is triggered when the price goes below this point. Used to cut losses.
Support/Resistance:
Liquidity- The measure of how actively the coin is being traded in the market.
A high liquidity coin/exchange has many buyers and sellers at the same time, making it easier to
acquire or sell the coin at any time.
Uptrend- A price is said to be in an uptrend when it's making higher highs and higher lows. It
can be confined in a channel.
Channel, uptrend and Higher High and Higher lows are shown in the chart below.

The Chart below showcases an Uptrend, an Uptrend channel and Higher highs and Higher lows
Downtrend--Opposite of uptrend, the prices here make lower highs and lower lows.
Consolidation- A period where the price is ranging in a well-defined region. This is a period of
indecision and generally leads to a volatile movement in either directions.
Correction- A correction is a fall in price after making a new peak or an upwards rally. Many
authors define the correction as 10% drop from all time high but its arbitrary.
Sideways market- an indecisive market which isn't leading to a breakdown or a Breakout, and
not giving any signals in either way.
Sell off- Profit taking after a rally in price, which leads to lowering of price of the asset.
Rally- An upward trend leading to increase in price of the asset. Can happen in both bear and bull
market.

Accumulation: The process by which one builds a position in an asset.

Pattern- A chart pattern is a predefined shape that have been historically studied by
technicians. Traders try to use these previous performance statistics to predict future price
movements.
E.g. A Head and Shoulders top is considered bearish. There are many such pattern which will be
Fractal: A pattern of Price movement which has occurred earlier and might occur again.

Limit Order: Order will execute at a predefined price, if the market riches that price.
Market Order: An order to buy or sell at the current price level, executed immediately.

Time Period/ Time Frame- The time spread of each candle stick in a chart.
Common time periods are 15min,30 min, 1Hour, 4 Hour, Daily and so on.
ATH- All-time highs prices.
Average Down: Trying to lower the average entry cost of a position by slowly buying the asset
at reducing rates.
Liquidation--When you are stopped out of your position because the trade went in the
opposite direction and your margins are not big enough to carry the trade anymore.

Arbitrage: A method of making profit using the pricing difference between exchanges
E.g. If Bitcoin is trading at $10,000 on Bitstamp and $10,100 on Bitfinex, People wil buy from
Bitstamp and sell on Bitfinex.
 Premise of Technical Analysis
Now that we've completely understood a few important trading jargons, let's begin with Technical
Analysis.

Technical Analysis is the use of charting techniques to predict future price movement.
1. It uses previous human reactions to a similar situation to predict future price movements.
2. Only price movement it taken into consideration while using technical analysis. All other information
(like news, earnings) is not taken into consideration.

It might come as a surprise to all new traders that news is disregarded while studying charts.
Murphy in his Book on technical analysis explains in detail why it is so.
To keep it short, the price discounts everything. Market price of an asset already has taken into
consideration all the fundamental news.
News, information and other analysis available in the public already have affected the price and hence the
price is an amalgamation of all the fundamental information.
Technical Analysis is the study of price; hence by studying price, ALL the fundamentals have already been
taking into consideration.
Hence we can conclude that all the fundamentals affect the price. Since the technical analysis is the study
of price movement it automatically takes all the fundamentals into consideration
 CandleSticks.
Technical analysis starts and ends with Candlesticks.
A clear understanding of candlestick is a must to trade.
While the subject of Candlesticks is really vast, there are only a few basics you need to understand.
The candlestick is used instead of a line chart because a simple line chart doesn't tell the movement at a
given period of time whereas a candlestick tell you the high, low, open and close at a given time period.

There are 100s of kinds of Candlestick and it’s an unending study but to start with I want to explain two
important candles, hammer the Engulfing.
Hammer- In simple terms, it’s a bottom reversal candle with a short body and long wick. This can be
spotted at potential bottoms.

Engulfing- This occurs after a move is invalidated because of a sudden price movement in the opposite
direction by the next candle. Example below.
The basic concept and assumption while studying the candlesticks is that a candle with long tail wick has
seen the buyers being successful in pushing the price up by buying at this price level even though there
was a significant selling. A candle with a short body long tail wick denotes supply absorption

Similarly a candle with a long overhead wick is bearish and shows that even though the bulls tried to push
the price up the supply was too high for the price to go up.
Adding the above two we can conclude that a candle with a short body and with both a long upper wick
and a long lower wick is a candle denoting indecision and confusion in the market.It might denote a
reversal or could act as a warning for an end of a trend
In this tutorial we will learn to identify the supply and demands zone on the chart for entering high
probability trade before learning anything else this the topic to master after reading this tutorial please
open a live chart and try to identify the supplies and demand zones
Using candlesticks to find demand and supply
Apart from using candlesticks to identify price momentum in a certain time period candlesticks can be
used to identify the demand and supplies ZONES (demand and supply zone is different from support and
resistance)
Using candlesticks to find the demand and supply zone is a high probability method to find a profitable
entry since in the demand and supply zone there can be multiple entry triggers. The aim after identifying
demand and supply zones is to enter at a point which has multiple entry triggers at one point.

Finding SUPPLY and DEMAND pressure using candlesticks.

Candlesticks can be used to find supply and demand pressure, especially in intra-day trading. I hope this
changes how you view and use candlesticks on a daily basis
Candlesticks with a long tail wick, about 2-3 times their body have overcome a big supply zone. This means
that below that candle existed a huge supply order which was absorbed. This is generally bullish, means
the demand in that zone was able to overcome the supply.

At this zone, traders could look for a safe long entry.

1. Look for candles with a long tail.
2. It should have bounced off of a previous resistance now turned support.(WE WILL LEARN MORE
ABOUT SUPPORT AND RESISTANCE IN THE NEXT LESSON, FOR NOW ONLY CONCENTRATE ON
DEMAND AND SUPPLY ZONE)
3. Wait for the price to break a resistance above.
 The same principle is applicable with candles with a long overhead wick.
This implies that the candle was not able to absorb all the supply above itself, which is generally
bearish.
We should look for signs of reversal at this level
 In a similar manner, on confirmation of a candle which failed to absorb the supply above, a safe
short entry can be made.
1. Look for candle with long overhead wick.
2. Wait for previous supply to be broken.
See pic below for a short entry.

Conformation- A conformation in trading is a positive signal to establish a bias for foreign entry
example- if the current candle looks bullish a safe entry with conformation would be when the price on
the next candle goes above the highest price of the set bullish candle
Retest- After a price breaks a certain resistance it comes back to the point where the resistance was to
establish that the resistance has been broken and the same resistance has now being turned into a
support for the price structure.
Let us try to understand the trade by using the following-
Concept of
1. Demand Zone
2. Supply Zone
3. Uptrend line(A DETAILED TUTORIAL WILL BE UPLODED ON THIS)
4. Break-out
5. Retest
6. Confirmation
How to find a short entry after a supply zone.
1. Long overhead wick candles generally denote supply.
2. Wait for them to close at same level.
3. Find new support.
4. Wait for it to break.
5. Wait for support to turn into resistance.
6. Enter short trade upon confirmation.
So in this tutorial we have learned the concept of supply and demand and how to identify on
chart. To reiterate, the use of supply and demand once mastered is the MOST useful tool to
find high probability trade entry most beginners learn it very late hence are unable to
identify high probability entry zones it. Must be noted that supply and demand zone is not a
tool for entering a trade but a tool for identifying the zones and areas of interest for high
probability high profit trade
Instead of spending too much time to identify the kind of candle stick that has been printed
on a chart, we should rather concentrate on what the candle is trying to say about the
demand and candle structure. As a trader our soul aim is to identify the trend (whether the
demand and supply is more and enter it)
Please read this tutorial several times and try to identify the zones on your own on historical
charts.DO NOT WORRY ABOUT FINDING THE ENTERY POINTS RIGHT NOW.
Only try to identify the zones finding entries will be taught in the next lessons.

I hope this tutorial was useful. This is the first trading lesson, don’t worry or give up if you
didn’t understand a few concepts. Always here to help.

Love,
EmperorBTC