Hello toknormal, I would like to understand, what are you saying/writing in your post. I`m just...too lama for short/long, MACD terms.
What does it mean to regular user ? Not really a trader guy, but I`m interested in... Is there a short explanation, what does those trends means, to regular lama like me ? I read about candles, green/red and what they mean. But need to translate to human speech
Hi JasonB
A quick tour:
Chart RangesExhibit A Cryptsy:
https://bitcoinwisdom.com/markets/cryptsy/drkbtcExhibit B Bitfinex:
https://bitcoinwisdom.com/markets/bitfinex/drkbtcMarkets don't move in straight lines. They move in cycles. Think of a cyclist peddling up a hill and focus your attention the peddle. Even though the bike is steadily going up, the peddle moves down briefly before moving up again. If were an ant stuck to the peddle there would be times when you thought you were moving down when in fact - overall - you were actually ascending. To see that you'd need to zoom out a bit to see the whole bike.
But now imagine your living geological time and the entire hill is in fact sinking. If you zoomed out this far you'd see that the bike was in fact descending relative to the earth's crust, even though the guy is peddling 'uphill'.
Markets are like this. If you just watch a price and see it going down, you can't know if your seeing an "ant cycle" a "bike cycle", or a "geological cycle".
Charts are named after the amount of time it takes for 1 candle to complete. So a 15 minute chart means that it each candle on that chart represents a 15 minute time period. That would probably be considered an "ant cycle".
Traders can pick "which chart" they are trading. For example, if I'm a relaxed family guy with a day job who wants to trade over the period of a week or two and can only afford the time to check the markets once a day, then I'd probably use the 4-hour or 6-hour charts to plan entry and exit points but then use other charts to monitor progress.
On the other hand, if I'm a manic, chain-smoking, 15 double-espresso-a-day cryptomarket addict that needs to scrape every satoshi of the smallest swings in existence like
these people, then I'd be glued to the 5-minute, 15-minute and 1-hour charts for 12 hours a day with a bottle of blood pressure pills on standby at all times.
In the longer range trade, you would not mind of the price went down temporarily during the week as long as it was within a detectable cycle on one of the shorter range charts. (i.e. you're trading "bike time" but you may notice temporary price decays in "ant time"). But the trollbox guys would have to respond to such a movement in order to not loose money.
CandlesThe chart candles are simply an encapsulation of whether the price went up or down during the chart interval. It is green if the entry price was higher than the exit price and red if exit is lower than entry. The "body" of the candle is defined by those two prices (entry and exit). The "wicks" (little thin lines that poke up and down out of the candle) indicate the maximum and minimum prices that were reached during the interval. So lets say, at 3 O'Clock, the Dash price was 0.0152 and at 3:15 it was 0.0148. You'd then have red a candle who's top and bottom was defined by those price levels.
EMAs, MAsThe main chart area usually displays moving averages of the price - in fact 2 or more are usually displayed. One is slow, the other is fast which means that one line is averaged over a longer time period than the short one. Moving averages are used to generate
sell signals and
buy signals. Basically, when one crosses over the other, that's an indication of a short term trend change, but you need to use other indicators to decide how significant it is. The "EMA" is an exponential moving average which uses some fancy maths to accent the trends - i.e. bring out movements that may appear only subtly on the regular moving average.
MACDImagine your in a car. The car is moving at a steady speed. In that case your speed is non zero but your acceleration is zero. By knowing the speed of the car we can know we're moving forward, but we can't know if we're speeding up or slowing down. To know that we need to measure the "acceleration". If the acceleration is negatice, we're slowing down. If it's positive, we're speeding up.
The MACD is the acceleration of the acceleration of the acceleration of the acceleration (or thereabouts !
). It's basically a readout of the "momentum" of the market and helps to anticipate in advance when the trend is going to turnaround. The indicator has 2-lines (just like the MAs and EMAs above) and similar to those, when they crossover signify a reversal in the momentum. This doesn't mean the price has turned around yet, it just means that either the selling/buying is slowing down or speeding up.
The acronym stands for
Moving
Average
Convergeance
Divergeance.
MACD HistogramThis is a measure of the distance that separates the slow and fast moving averages of the MACD chart value. This is a powerful indicator because it gives a visual display of how fast one is closing on the other. A significant use of the MACD histogram is for detecting the length of correction cycles. For example, after a big rise, the market usually "corrects" or nosedives for a while as people take profits (short term traders who are only in the market while it's rising and who will then leave). This indicator helps to monitor the correction cycle and anticipate its closure.
Note: All these indications are only relative to the chart range we're operating in a a given time. The correction cycle in the 4 hour chart may not complete for days after the first correction in the 1-hour and so on.
OBVThis indicator brings trading volume (the amount of money that was spent) into the picture. It's calculated by adding the trading volume for the time interval to a running total if the candle was green and subtracting it if the candle was read. The idea of this one is that the trading volume "drives" the market and can give advanced warning of a rally or a selloff. The way I usually read these is: if the slope of the OBV is equal to or more pronounced than that or the price signal then we can anticipate a market move in the equivalent direction (i.e. OBV slopes up and price is either horizontal or exactly same slope as OBV, then possible rally in the offing). If the OBV and price signal are in opposite trends the it's possibly ***Amber Alert*** (if other indicators are consistent).
OBV is a bit meaningless in the shorter range charts but becomes more significant at longer ranges.
h.t.h. !!!!
