Chart analysis

[dklodner]

Thanks for your opinion. I agree with you about Heikin Ashi and Renko. It was just a request from few users. Also I am not selling anything and I have no plans to monetize that in the near future. I just wanted to share my experiment.

I am open to discussion about heatmaps though. You've said yourself, watching order flow is important to determine if the support/resistance will hold. I might be biased but heatmaps have proved itself very useful in this regard (for me). Support and resistance is so easily visible from order book heatmap and the overall ratio of trading history heatmap can determine trend strenght better than ADx or whatever momentum indicators I tried to use.

It's true I am not a professional trader so I would appreciate some pointers to sources about pro trading and better trading methods based on your trading experience.

P.S. Heikin Ashi/ Renko are to my knowledge based on OHLCV data, Heatmaps on the other hand rely on trading history and order book snapshots. Am I missing something?

That's Ok, I wasn't thinking you selling anything. I have experience from many years in investment banks and know some professional traders in prop shops. Every single one of them trades purely from a Depth of Market. That shows bids, asks, volume at price and cumulative trades at the current price. They only use charts to make a note of possible support and resistance areas first thing in the morning before they start.

Heatmaps are just the latest in a long line of snake oil being sold to retail traders. How can knowing where there were some orders that got pulled previously were help you? The only thing that matters is what is happening right now. Are orders getting filled or being pulled, are there icebergs producing orders as fast as the ones you are seeing being filled. These are the only things that will tell you what is happening now so you can make a good guess what will happen next.

If you want to see how pro traders do it I think you can find youtube videos by a guy called John Grady who is about the only trading educator I know of with prop trading experience and who is an actually profitable trader. (I'm not recommending any of his services, I haven't tried them, I'm just pointing out the videos show what a pro is actually looking at).

Also if you want to have a go yourself you can sign up for a free demo account at Trading Technologies (trade.tt). It's the software the vast majority use. The demo is 10 minute delayed data from the CME and CBOT, but you can pretend it's live.

Great insight, thank you for the links! I will definitely check them.
I am not completely sure though if by heatmaps we mean the same thing. I might be using the term wrongly. You mentioned DoM. That is what I am visualizing with "order book heatmap". I agree it does not provide complete info about DoM due to existence of hidden orders and traders executing orders real time. I believe ask/bid ratio can be complementary indicator of changing volume, canceling pending orders, etc. I might be wrong, no argue with that.

I am still backtesting the trading history heatmap but it looks like a good indicator of market sentiment and trend strength. Do you have any papers or blog posts opposing this charting style?

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[TheQuin]

Great insight, thank you for the links! I will definitely check the.
I am not completely sure though if by heatmaps we mean the same thing. I might be using the term wrongly. You mentioned DoM. That is what I am visualizing with "order book heatmap". I agree it does not provide complete info about DoM due to existence of hidden orders and traders executing orders real time. I believe ask/bid ratio can be complementary indicator of changing volume, canceling pending orders, etc. I might be wrong, no argue with that.

The Heatmap I'm talking about has been "the latest greatest tool available to traders" for the last couple of years. If you look back at the history of it when indicators like MACD first came out snake oil salesmen were selling it for $10k. Then the chart package makers started to include it free, so the snake oil men moved on to the next big thing, rinse repeat.
I'm aware of Bookmap Xray https://bookmap.com/ $49 - $99 a month, being one of the first, now everyone is doing it and it'll be free in all charting packages in a couple of years.
In the end, all Heatmaps are is a visual representation of where orders were and that information is of no use to a trader at all. What I want to know is what orders are there now and do they get filled. So whether it's a chart of what trades occurred in the past or what orders were in the past I don't want to know.

DoM is the trading interface. TT that I mentioned before call it MD Trader but they get very protective of their copyright and patents so everyone else has to call theirs a DoM.
They show all the information a trader needs in numerical form and that's all the pro trader will look at.

Watch this: https://www.youtube.com/watch?v=JXaDX-vtAw0

I am still backtesting the trading history heatmap but it looks like a good indicator of market sentiment and trend strength. Do you have any papers or blog posts opposing this charting style?

Not that I can find right now, I'll have a deeper dig, but this mainly comes from conversations with traders.

Edit: I found a decent review of Bookmap Xray https://www.tradingschools.org/reviews/bookmap/
tl;dr

Pros: Stable software that does exactly what it is supposed to do: display trading volume.
Cons: The information from the graphical display is a nearly useless, set of new age mumbo-jumbo, "market feelings", and hard to prove or disprove trading concepts. A playground for the wandering imagination.

[Granxis]

The charts give the investor a hint but it certainly does not make your guess correct. But there is no effect if you make a mistaken guess. There's a big mistake people made. People think of charts as 3 -5 different graphics. Not all charts are variations of this 3-5 graph.

[YaChou]

is there like a course or tutorial to get initialized in technical analysis ??

[dklodner]

Great insight, thank you for the links! I will definitely check the.
I am not completely sure though if by heatmaps we mean the same thing. I might be using the term wrongly. You mentioned DoM. That is what I am visualizing with "order book heatmap". I agree it does not provide complete info about DoM due to existence of hidden orders and traders executing orders real time. I believe ask/bid ratio can be complementary indicator of changing volume, canceling pending orders, etc. I might be wrong, no argue with that.

The Heatmap I'm talking about has been "the latest greatest tool available to traders" for the last couple of years. If you look back at the history of it when indicators like MACD first came out snake oil salesmen were selling it for $10k. Then the chart package makers started to include it free, so the snake oil men moved on to the next big thing, rinse repeat.
I'm aware of Bookmap Xray https://bookmap.com/ $49 - $99 a month, being one of the first, now everyone is doing it and it'll be free in all charting packages in a couple of years.
In the end, all Heatmaps are is a visual representation of where orders were and that information is of no use to a trader at all. What I want to know is what orders are there now and do they get filled. So whether it's a chart of what trades occurred in the past or what orders were in the past I don't want to know.

DoM is the trading interface. TT that I mentioned before call it MD Trader but they get very protective of their copyright and patents so everyone else has to call theirs a DoM.
They show all the information a trader needs in numerical form and that's all the pro trader will look at.

Watch this: https://www.youtube.com/watch?v=JXaDX-vtAw0

I am still backtesting the trading history heatmap but it looks like a good indicator of market sentiment and trend strength. Do you have any papers or blog posts opposing this charting style?

Not that I can find right now, I'll have a deeper dig, but this mainly comes from conversations with traders.

Edit: I found a decent review of Bookmap Xray https://www.tradingschools.org/reviews/bookmap/
tl;dr

Pros: Stable software that does exactly what it is supposed to do: display trading volume.
Cons: The information from the graphical display is a nearly useless, set of new age mumbo-jumbo, "market feelings", and hard to prove or disprove trading concepts. A playground for the wandering imagination.

I see your point. The MD Trader looks interesting. I will look into it more, possible implementing it into my app. Even though it might render itself as useless, I always learn ton along the way.
Nice to chat with you. Really appreciated

[ubeng07]

The charts give the investor a hint but it certainly does not make your guess correct. But there is no effect if you make a mistaken guess. There's a big mistake people made. People think of charts as 3 -5 different graphics. Not all charts are variations of this 3-5 graph.

Chart doest give you an answer for what will be the next that might happen its just your patern on what you must gonna do next some use yhis as their hint and they use this as the best that they gonna do for what will happen this is their what look for but they dont know that this is just an instrument its hard to speculate what will happen next eve though you are always check the chart.

[TheQuin]

I see your point. The MD Trader looks interesting. I will look into it more, possible implementing it into my app. Even though it might render itself as useless, I always learn ton along the way.
Nice to chat with you. Really appreciated

It was nice to chat with you as well. Please don't take me being so dismissive of Heatmaps personally but I've been in this game many a long year and have seen the cycle of new toys for retail traders too many times. If they worked the top trading firms would have commissioned software developers to make in-house versions.

On your other point if you were to release a trading platform for crypto exchanges with a serviceable trading interface, capable of only part of what MD Trader can do, then I think you would be on to a winner.

[dklodner]

It's always more interesting to hear opposing opinions rather than to intesinfy your confirmation bias by positive feedback. Actually I have connected the interface to other exchanges but the responsibility to execude trades is too much to handle right now. Just the mere fact exchanges change their API here and there plus their own issues with reliability is this feature on par with gambling right now

If you would like to check out my app someday without registration and providing email, just PM, I would send you an invitation code.

[Victorycoin]

Yes technical analysis skills from forex trading can be also used in analyzing crypto charts. Most of the elite crypto traders were forex traders before, they got attracted towards crypto because market is more volatile than forex and they can make profit every day on price swings.

I have been into forex trade for couple of years and now also trade on cryptocurrencies! Here's something I had put up to highlight the place of technical analysis even in crypto-trading:  
https://bitcointalk.org/index.php?topic=2125422.msg21228551#msg21228551
Technical analysis are basically one and same whether they're are deployed on maize, oil, stock or cryptos. At best, they serve as navigational tools and traders that see them from that point of view, hardly run into troubled waters.

Crypto market is still driven more by emotion and psychology decisions than forex.

I would rather say that the crypto market is still in its infancy and quite far behind in capitalization from forex trade. That's what creates room for the crypto markets to be manipulable by whales and things like China bias. Nevertheless, a sound background in technical analysis, is good enough to face anyone of those markets, paying close attention to the fundamentals that moves each market.

[TheQuin]

It's always more interesting to hear opposing opinions rather than to intesinfy your confirmation bias by positive feedback. Actually I have connected the interface to other exchanges but the responsibility to execude trades is too much to handle right now. Just the mere fact exchanges change their API here and there plus their own issues with reliability is this feature on par with gambling right now

If you would like to check out my app someday without registration and providing email, just PM, I would send you an invitation code.

I can imagine that trading interfaces would propose some issues. Even as a display only feature it would be interesting. Crypto exchanges suck at displaying the data.

This is my E-mini S&P I'm trading right now:



The VAP column is displaying the the volume traded at each price. The red 5 in the middle indicates that the last trade had a volume of 5 and the colour indicates it traded on a downtick (green for up and white for the same). It's important that number is cumulative until the trade price changes not just the last trade size as cheaper products do. That way you can see how many contracts go through. That is the only information I need to trade.
If you ever find a product that can show me that for Crypto exchanges then please PM me.

[dklodner]

On what time frame does this volume cumulation occur? Also what price resolution do you consider appropriate for crypto markets? Since the volatility is so high, the center trade volume might change quite often.

EDIT I mean volume cumulation of VAP rows, not the middle one.

[TheQuin]

On what time frame does this volume cumulation occurs? Also what price resolution do you consider appropriate for crypto markets? Since the volatility is so high, the center trade volume might change quite often.

EDIT I mean volume cumulation of VAP rows, not the middle one.

The cumulative volume is shown live, it's basically as every tick from time and sales comes in it's added to that number. So that's what you watch rather than time and sales and it's right there in the middle of the price ladder which is far easier to see what is going on than the old fashioned order book display the exchanges use. The price resolution is always a difficult issue on Crypto as it going to be different for different coins. I trade at Bitfinex mainly and they have a good solution where you can zoom in or out to find the level that works best.

Another product worth looking at because they have a lot of videos show it in action and explaining what is shown is Jigsaw Trading. https://www.jigsawtrading.com/learn-to-trade-futures/
They have a heatmap thingy as well but their reputation is built on one the best DoMs there is.

[treather]

Hello to everybody,

I have question about chart analysis. Are there any differences betwen chart analysis in traditional stock exchange and crypto exchange?  Considering that the crypto exchange is much more emotional in decision making? Can we use exactly the same analysis techniques or do we have to adjust them to our crypto reality? If yes, please give me some tips what I have to change that the analysis would be more accurate. 

 

I am not sure about crypto trading being influenced more by emotions as opposed to other types of trading. The basics of trading are the same everywhere. Sometimes decisions have to be made quickly other times not so fast, they are alll the same and the respective analysis charts should work - assuming accurate - each way.

[Ejanend]

On what time frame does this volume cumulation occur? Also what price resolution do you consider appropriate for crypto markets? Since the volatility is so high, the center trade volume might change quite often.

EDIT I mean volume cumulation of VAP rows, not the middle one.

I have seen the bitcoin working at the different stages and the features of the bitcoin are very different from the other currencies bitcoin is different and then I hold the other currencies instead of the bitcoin at this time the price of the bitcoin is high and the value for the bitcoin is getting more high so like to have the bitcoin and the analysis according to me is the other thing like I know it will grow very fast now.

[Raistlinnn]

Thanks for your opinion. I agree with you about Heikin Ashi and Renko. It was just a request from few users. Also I am not selling anything and I have no plans to monetize that in the near future. I just wanted to share my experiment.

I am open to discussion about heatmaps though. You've said yourself, watching order flow is important to determine if the support/resistance will hold. I might be biased but heatmaps have proved itself very useful in this regard (for me). Support and resistance is so easily visible from order book heatmap and the overall ratio of trading history heatmap can determine trend strenght better than ADx or whatever momentum indicators I tried to use.

It's true I am not a professional trader so I would appreciate some pointers to sources about pro trading and better trading methods based on your trading experience.

P.S. Heikin Ashi/ Renko are to my knowledge based on OHLCV data, Heatmaps on the other hand rely on trading history and order book snapshots. Am I missing something?

That's Ok, I wasn't thinking you selling anything. I have experience from many years in investment banks and know some professional traders in prop shops. Every single one of them trades purely from a Depth of Market. That shows bids, asks, volume at price and cumulative trades at the current price. They only use charts to make a note of possible support and resistance areas first thing in the morning before they start.

Heatmaps are just the latest in a long line of snake oil being sold to retail traders. How can knowing where there were some orders that got pulled previously were help you? The only thing that matters is what is happening right now. Are orders getting filled or being pulled, are there icebergs producing orders as fast as the ones you are seeing being filled. These are the only things that will tell you what is happening now so you can make a good guess what will happen next.

If you want to see how pro traders do it I think you can find youtube videos by a guy called John Grady who is about the only trading educator I know of with prop trading experience and who is an actually profitable trader. (I'm not recommending any of his services, I haven't tried them, I'm just pointing out the videos show what a pro is actually looking at).

Also if you want to have a go yourself you can sign up for a free demo account at Trading Technologies (trade.tt). It's the software the vast majority use. The demo is 10 minute delayed data from the CME and CBOT, but you can pretend it's live.

Thank You for link and Your suggestions, they were very helpfull for me.

[hitrawal91]

Hello to everybody,

I have question about chart analysis. Are there any differences betwen chart analysis in traditional stock exchange and crypto exchange?  Considering that the crypto exchange is much more emotional in decision making? Can we use exactly the same analysis techniques or do we have to adjust them to our crypto reality? If yes, please give me some tips what I have to change that the analysis would be more accurate. 

 

Chart analysis is pure technical analysis way of making money. There is nothing big differences between stock exchange and crypto exchanges, and this is the reason that you can use the same analysis techniques and system ideas for cryptotrading also. You can also modify it to some extent if you wish because stock exchanges are open to a certain time limit whereas crypto are 24 hours market. While trading the crypto make sure that you apply the techniques in high volume and high volatile coins like Bitcoin, Ethereum, and litecoin only. This is because other coins are not suited for those chart analysis techniques.

[Granxis]

The chart of investment can help you a little. Your remaining experience and experience can benefit you. Just like an alphabet, the first letter is a chart.

[logicgate]

The chart of investment can help you a little. Your remaining experience and experience can benefit you. Just like an alphabet, the first letter is a chart.

 Chart analysis is no doubt very much important thing for someone who is involved in the world of trading. It can significantly affect the earnings of the traders as most of their decisions will be based on hoe accurately they have interpreted the charts. But the fact is you never know what will happen in future, so chart analysis is not a t all sufficient for someone to become a successful trader.

[alfs75]

Hello to everybody,

I have question about chart analysis. Are there any differences betwen chart analysis in traditional stock exchange and crypto exchange?  Considering that the crypto exchange is much more emotional in decision making? Can we use exactly the same analysis techniques or do we have to adjust them to our crypto reality? If yes, please give me some tips what I have to change that the analysis would be more accurate. 

 

The chart analysis is only a basis of how to trade basically in the world of digital currency,in other words it is the basic fundamental analysis on how to trade properly and orderly,and its is useful to us,especially those beginner of trading investment.when the time will past person become knowledgeable about trading so,we must upgrade our way of trading to become a crypto exchange that more on our own emotional or decision making to gain a better profits of our investment.

[imyashir]

the crypto exchange is lot emotional because the crypto market is a faster than a stock exchange market. Here in the crypto market is easy to get a money if u have an idea about the trading analysis if u are a trader in stock is a same charting like candles stick. If u want to earn in trading just u need collect first knowledge before you enter in the market for u know what will u do in a crypro exchanger..

It really is not. The stock markets are dominated by high-frequency trading algorithms running on custom-made machines with built with FPGAs colocated in the exchanges. There a are some trading bots being used on crypto but they are much slower because of the latency caused by internet connections. Your chances of success are far higher in crypto trading due to the absence of these HF alogos.

you're the boss of the stock market high frequency compare to crypto so it's better to crypto trading than the stock market and the potential of your income increases if your internet is well connected and you're in the knowledge.