It starting to smell like profit in here.

Market mathematics. Market mathematics.

Simply put: Mathematics of the market. (No shit Sherlock)

Market mathematics is simply defined as using mathematical tools to try and guess on which side of the market you should be.

The truth is that, nowadays, profits are hard to come by for most noob traders.

And that is because most people only know how to make money when the market is going up.

But it is 100% possible to make money based on the market going down.

Let's see an example.

Yesterday, the overall market on the BTC/USDT pair was down about 1.8% on the day. I was up 13%.

I made most of my money yesterday short selling. And while this isn't an investment guide, I will touch on short selling later in this post.

There is no guarantee these steps will work for you, so don't take this as investment advice and go and splash your retirement fund based on advice some random guy on the internet gave.

Ok. Let's get in.

To make profits trading cryptocurrencies, you need to make profits based on cryptocurrencies.

"What the heck did this dude just say?", you're probably wondering, almost about to leave the post.

Just hang on.

Let's assume that you bought BTC at $9300, and you sold at $9800. That's a nice $500 profit right there.

But let's assume that you opened another position at $9800, and sold at $9950. Another cool $150 profit, but a serious 0.02 dip to your BTC account. You made money in dollars, but lost Bitcoin in the process.

Why?

Because as the purchasing power of USD goes up, the intrinsic amount of BTC you get goes up as well. But the extrinsic value goes down.

"Ok, what the heck?", you say, really about to click off this time.

Stay with me here.

Intrinsic value basically means that you get more Bitcoin for every one more dollar you pay.

Extrinsic value on the other hand means that based on the previous price at which you bought Bitcoin, you might actually lose Bitcoin buying at a higher price, even though theoretically you spent more money.

Sound obvious? It is.

So the first way to make money is not to mid the USD amount, but the BTC amount. Because the BTC amount increases your USD amount, but your USD amount doesn't always increase your BTC amount.

I hope all that gibberish made some sense.

Next up, don't let losses run.

I've seen most people buy BTC at the top, and once the downtrend starts they don't close their positions and accept the loss. They just let the loss run hoping for a rebound that will never happen.

If your losses go below 3%, something should tell you that they aren't coming back anytime soon. Close the position, cry for a couple of hours and get back on the drawing board. 

That's the way this tango works.

Lastly, know which dips to buy.

"Buy the dip" is a very common saying. But which dip do you buy?

There is a really detailed analysis on which dips to buy that I have written here. Check it out!

But the summary of that post is that, using some indicators, crossovers and a little bit of common sense, you can actually know (to a very large extent) exactly which dip NOT to buy.

It doesn't tell you which dip TO buy, but if you know which one not to buy, then common sense will tell you which one TO buy.

Alright. That short selling thing I was talking about before.

Short selling is "borrowing" of an asset based on your feeling that it will either go up or down in price.

Let's say you believe that the next stop for BTC/USD in $50.(for some convoluted reason).

You would borrow BTC from your broker, and proceed to buy BTC at the current price.(say $9000)

If the forces of evil come together and actually drag BTC/USD price all the way down to $50, you make the difference in the prices as profits.

Now you would be saying: "Ok. Now he owes the broker some money. He's in serious trouble man!"

But recall that he didn't borrow "USD" from his broker. He borrowed BTC, and can pay back the BTC at the current price of $50. So all in all, he lost just $50 to the broker. 

The rest is his to keep.

Of course, this is a convoluted example. You can make money short selling, but I won't advice new or intermediate traders go that route. There are also fees accrued on the hour for every BTC you borrow, so keep that in mind.

Anyway, that's it for now.

Thanks for reading.