Make money day trading Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) by tape reading

Make money day trading Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) by tape reading

By Jumble | Jumble | 4 May 2020


The price for Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) never moves in only one direction. The price continuously goes up and down as it moves in a direction. If the amount of up increments is larger than the down increments, then the price ends higher. To make money, it is not necessary to make the correct decision about the direction for the price before it starts to move. It is possible to make money trading all the small price movements. You do this by reading the tape.

What is tape reading?

Tape reading is look at the order book and the time & sales window for an asset to make an analysis where its price will go. Use the order book to make a decision about the location for support and resistance. Use the time & sales window to make an estimate of the market momentum. Put together the results from these two tools to make an analysis for the short-term direction of price.

Order book shows support and resistance

The order book shows the limit orders at all prices for an asset. In the order book, a limit order above the last trade price is a sell order and shown in red. A limit order below the last trade price is a buy order and is shown in green.

Estimate support and resistance from the order book as follows. A price that has a large quantity of orders will be:

  • support if the price is below the last trade price
  • resistance if the price is above the last trade price.

A number of adjacent prices with large order volume will give strong support or resistance.

Here are two examples of the order book for BTC. The example on the left shows support at a price of $8591. There is also strong support below $8591 because almost all the buy order book quantities are larger than the sell order book quantities. Under these conditions, the price for BTC may go up. The example of the order book on the right shows the order book quantities above and below $8599 to be almost equivalent. Under these conditions, it is difficult to estimate the direction for the BTC prices.

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Time & sales window shows market momentum

The time & sales window shows the real-time trade prices, the timestamp for the trade, and the trade volume. It also shows if the trade from a buy or sell order. Use the time & sales window to analyze the market momentum.

Here are two examples of a time & sales window for BTC. The example on the left shows a large quantity of buy transactions at a price of $8591.5. Many of these trades had large volume. The time & sales window only shows two sales transactions at a price of $9591.0. The volume for these two trades is very small compared to the volume for the buy transactions. Under these conditions, the market momentum is on the buy side and the price for BTC may go up.

The example of the time & sales window on the right shows many buy transactions at a price of $8599.0 and many sales transactions at a price of $8598.5. The volume for the buy transactions is not much greater than the volume for the sales transactions. Under these conditions, it is difficult to make a decision about the market momentum and to estimate the direction for the BTC prices.

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Tape reading example for BTC

Here is an example of tape reading for BTC. To start, put together the “left-hand-side” example for the orderbook and time & sales window given above. They were saved at the same time. Here are the results from the inspection of these charts (from above):

  • The order book show shows support at a price of $8591 and strong support below $8591. Under these conditions, the price for BTC may go up.
  • The time & sales windows shows a large quantity along with large volume of buy transactions at a price of $8591.5. Under these conditions, the market momentum is on the buy side and the price for BTC may go up.

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And what occurred? The price of BTC quickly increased.

To “right-hand-side” example for the orderbook and time & sales window given above were also saved at the same time. They were saved 40 seconds after the first set of charts. During that 40 seconds, the price for BTC increased by $8.5, and then it stayed the same price for many minutes. Here are the results from the inspection of these charts (from above):

  • The order book quantities above and below $8599 to be almost equivalent. Under these conditions, it is difficult to estimate the direction for the BTC prices.
  • The time & sales window shows many buy transactions at a price of $8599.0 and many sales transactions at a price of $8598.5. The volume for the buy transactions is not much greater than the volume for the sales transactions. Under these conditions, it is difficult to make a decision about the market momentum and to estimate the direction for the BTC prices.

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Conclusion

The price for BTC, ETH, XRP, and LTC never moves in only one direction. The price continuously goes up and down as it moves in a direction. Make money by day trading these small moves by tape reading.

It is necessary to include the trading commissions to calculate the total profit. To use this method correctly it is necessary to have sufficient capital available.

Good luck trading.

 

 

Note 1: The order book and time and sales window are from: Bitmex

Note 2: This post is for information purposes only.  It is not intended to be investment advice.  Seek a duly licensed professional for investment advice.


Jumble
Jumble

Technical and marketing content writer. And a cryptocurrency fanatic.


Jumble
Jumble

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