#2 SMT01 For Trading In Crypto Space

samest (61)in #cryptocurrency • 5 years ago

Hello! Friends,

Welcome to the second edition of SMT01. The first edition explains exchanges, assets and some basic terms in crypto space. Today we shall look into seven terms as far as crypto space is concerned.

_{Pixabay: Bitcoin price Index}

Sell Wall

In crypto space sell wall connote a large number of sell orders which are placed on the order book all at once. In your exchange, you will see some value of token sometimes in red in a section tagged order book and these prices are seemingly undervalued... check out the image below.
When you see huge undervalued price in an order book, it means that there are a group of rich individuals trying to manipulate the market to drive down an asset's price before it takes on a large position in it.

To explain this future, imagine a high-net-worth individual in a group need to buy a particular cryptocurrency but their target is not for the market to move with a large order due to the fact that it will make them pay a premium for there trade. With this, they buy only small fraction from the position they want to take (like 200,000 of cryptocurrency rather than 600,000) and then flood the market with underpriced sell orders just to bring the price of the token down. due to the fact that the market is flooded with large selling volume, it will make the buying pressure low and slow to eat up through the wall and this will make many who want to liquidate their own positions in this token will have no choice than to sell at a price lower than that of the sell wall. This exercise will drives down the cryptocurrency's price to that point this high-net-worth group wanted and they are comfortable to buy the quantity they initially wanted. The moment they are done buying, they take out the sell wall and the rise of this token start to rise accordingly.

Buy Wall

This is the opposite of a sell wall. It's a large number of buy orders which are placed on the order book all at once.

A couple of reasons come to being to why a high-net-worth individual would put up a sell wall. I understand the one of ensuring the token price doesn't drop below the position of the sell wall and another is to try to drive the token's price up before they sell some or all of their position in it.

Buy The Dips

This is a motto that reflects the philosophy that someone should buy a cryptocurrency when its price has significantly dropped with the mind of the cryptocurrency will bounce back eventually.
Do you remember that Warren Buffett's Advice? You need to be fearful when others are greedy and be as greedy as possible when others are fearful

Bull Trap

This is a false signal that cryptocurrency's price is about to rise and it's a trap because the price is actually high to fall. The name was given as a result of its ends up trapping bullish traders in bad trades.
Some example has happened in time past when the cryptocurrency looks like it is set to break through a certain resistance level but subsequently fails to do so.

Bear Trap

Are you thinking about the kind that will gore your leg in the woods? Oh! no... This is the opposite of a bull trap. A false signal that cryptocurrency's price is about to fall and its a trap to rise. This can be trick bearish investors into shorting the cryptocurrency or let me say selling off their position in it. Imagine you sighted a signal that a cryptocurrency's price is about to drop and you sell out and 30minutes after the cryptocurrency's price increase.
Take note, the bear trap happens the moment it looks like cryptocurrency is about to break through a particular support level and the support level ends up holding.

Bull Trend

When the overall cryptocurrency market experience a long-term upward trend we call it bull trend. This is also associated with indicators like a positively sloped moving average and it can be on the order of months or years.