EUR/USD Daily Price Forecast - Advanced Forex Strategies

Almost every day people come to this subreddit asking the same basic questions over and over again. I've put this guide together to point you in the right direction and help you get started on your forex journey.
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A quick background on me before you ask: My name is Bob, I'm based out of western Canada. I started my forex journey back in January 2018 and am still learning. However I am trading live, not on demo accounts. I also code my own EA's. I not certified, licensed, insured, or even remotely qualified as a professional in the finance industry. Nothing I say constitutes financial advice. Take what I'm saying with a grain of salt, but everything I've outlined below is a synopsis of some tough lessons I've learned over the last year of being in this business.
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LET'S GET SOME UNPLEASANTNESS OUT OF THE WAY
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I'm going to call you stupid. I'm also going to call you dumb. I'm going to call you many other things. I do this because odds are, you are stupid, foolish,and just asking to have your money taken away. Welcome to the 95% of retail traders. Perhaps uneducated or uninformed are better phrases, but I've never been a big proponent of being politically correct.
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Want to get out of the 95% and join the 5% of us who actually make money doing this? Put your grown up pants on, buck up, and don't give me any of this pc "This is hurting my feelings so I'm not going to listen to you" bullshit that the world has been moving towards.
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Let's rip the bandage off quickly on this point - the world does not give a fuck about you. At one point maybe it did, it was this amazing vision nicknamed the American Dream. It died an agonizing, horrible death at the hand of capitalists and entrepreneurs. The world today revolves around money. Your money, my money, everybody's money. People want to take your money to add it to theirs. They don't give a fuck if it forces you out on the street and your family has to live in cardboard box. The world just stopped caring in general. It sucks, but it's the way the world works now. Welcome to the new world order. It's called Capitalism.
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And here comes the next hard truth that you will need to accept - Forex is a cruel bitch of a mistress. She will hurt you. She will torment you. She will give you nightmares. She will keep you awake at night. And then she will tease you with a glimmer of hope to lure you into a false sense of security before she then guts you like a fish and shows you what your insides look like. This statement applies to all trading markets - they are cruel, ruthless, and not for the weak minded.
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The sooner you accept these truths, the sooner you will become profitable. Don't accept it? That's fine. Don't bother reading any further. If I've offended you I don't give a fuck. You can run back home and hide under your bed. The world doesn't care and neither do I.
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For what it's worth - I am not normally an major condescending asshole like the above paragraphs would suggest. In fact, if you look through my posts on this subreddit you will see I am actually quite helpful most of the time to many people who come here. But I need you to really understand that Forex is not for most people. It will make you cry. And if the markets themselves don't do it, the people in the markets will.
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LESSON 1 - LEARN THE BASICS
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Save yourself and everybody here a bunch of time - learn the basics of forex. You can learn the basics for free - BabyPips has one of the best free courses online which explains what exactly forex is, how it works, different strategies and methods of how to approach trading, and many other amazing topics.
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You can access the BabyPips course by clicking this link: https://www.babypips.com/learn/forex
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Do EVERY course in the School of Pipsology. It's free, it's comprehensive, and it will save you from a lot of trouble. It also has the added benefit of preventing you from looking foolish and uneducated when you come here asking for help if you already know this stuff.
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If you still have questions about how forex works, please see the FREE RESOURCES links on the /Forex FAQ which can be found here: https://www.reddit.com/Forex/wiki/index
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Quiz Time
Answer these questions truthfully to yourself:
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-What is the difference between a market order, a stop order, and a limit order?
-How do you draw a support/resistance line? (Demonstrate it to yourself)
-What is the difference between MACD, RSI, and Stochastic indicators?
-What is fundamental analysis and how does it differ from technical analysis and price action trading?
-True or False: It's better to have a broker who gives you 500:1 margin instead of 50:1 margin. Be able to justify your reasoning.
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If you don't know to answer to any of these questions, then you aren't ready to move on. Go back to the School of Pipsology linked above and do it all again.
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If you can answer these questions without having to refer to any kind of reference then congratulations, you are ready to move past being a forex newbie and are ready to dive into the wonderful world of currency trading! Move onto Lesson 2 below.
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LESSON 2 - RANDOM STRANGERS ARE NOT GOING TO HELP YOU GET RICH IN FOREX
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This may come as a bit of a shock to you, but that random stranger on instagram who is posting about how he is killing it on forex is not trying to insprire you to greatness. He's also not trying to help you. He's also not trying to teach you how to attain financial freedom.
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99.99999% of people posting about wanting to help you become rich in forex are LYING TO YOU.
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Why would such nice, polite people do such a thing? Because THEY ARE TRYING TO PROFIT FROM YOUR STUPIDITY.
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Plain and simple. Here's just a few ways these "experts" and "gurus" profit from you:
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• Referral Links - If they require you to click a specific link to signup for something, it means they are an affiliate. They get a commission from whatever the third party is that they are sending you to. I don't care if it's a brokerage, training program, hell even an Amazon link to a book - if they insist you have to click their super exclusive, can't-get-this-deal-any-other-way-but-clicking-my-link type bullshit, it's an affiliate link. There is nothing inherently wrong with affiliate programs, but you are literally generating money for some stranger because they convinced you to buy something. Some brokers such as ICMarkets have affiliate programs that payout a percentage of the commission you generate - this is a really clever system - whether you profit or blow your entire account, the person who referred you to the broker makes a profit off you. Clever eh?
• Signal Services, Education & Training Programs, Courses - If somebody is telling you they are making a killing with a signal service and are trying to convince you to join it, I guarantee they are getting a piece of your monthly fee. And better still, these signal services often work...for about a week. Just long enough to suck a bunch of poor fools into it. You see people making money, you want in so you agree to pay the $200+/month subscription fee. You follow the signals and it looks like it's making money for a few days or weeks. Then it turns sideways, you start losing money hand over fist. Pretty soon you have lost most of your trading account because you blindly followed a signal service. And better still - when you go screaming at the person running the signal service they will be very quick to point you to their No Refunds policy. To add insult to injury, the buttfucker that referred you to the signal service in the past will likely listen to you getting mad, and then come back with something like "Sorry it didn't work out, but I just joined this other amazing service and it's working great, you should come join it to earn your money back. Here's my link..." You get the point here right?
• Multi-Level Marketing (MLMs) - These people are scum. They are going to offer you training and education, signals, access to forex experts and gurus, and all kinds of other shit with the promise that you will live the dream and become financially free. They are also loading you into a pyrmaid scheme where you will be hounded to recruit other people and make money off them just like you got roped into it. A really prime example here is iMarkets Live (or IML for short). Don't touch this shit with a 10 foot pole. I don't care what they are claiming, you will lose everything using them.
• Fund Managers - These people make my skin crawl. It's a classic scam and it works like this - somebody will post online about how much money they are making trading forex/commodities/stocks/whatever. Most of the time they won't explicitly post they are offering a trading service, rather they just put the message out there and wait for the ignorant masses (that's you) to contact them. They will charm you. They will lie to you. They will promise you the moon if you simply wire them some money or give them API access to your trading account. Care to guess what happens next? If you send a wire transfer (or Western Union...hell any kind of payment to them) they will vanish. Happens usually after they take a bunch of suckers for the ride. You sent them $2,000 and so do 9 other suckers. They just made $20,000 and are gone. With API access to your account, you will find your account gets blown super fast or worse - possibly leaving you open to persecution by the broker you are using.

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These are just a few examples. The reality is that very few people make it big in forex or any kind of trading. If somebody is trying to sell you the dream, they are essentially a magician - making you look the other way while they snatch your wallet and clean you out.
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Additionally, on the topic of fund managers - legitimate fund managers will be certified, licensed, and insured. Ask them for proof of those 3 things. What they typically look like are:

• Certified - This varies from country to country, in the US it's FINRA (http://www.finra.org). They need to have their Series 7 certification minimum. You can make the case that other FINRA certifications are acceptable in lieu of Series 7, but the 7 is the gold standard.
• Licensed - They need to have a valid business license issued by the government. It must clearly state they are an investment company, preferrably a hedge fund because they have some super strict requirements to operate (and often require $25,000+ in fees just to get their business license, so you know they at least have some skin in the game).
• Insured - They need to be backed by an insurance company. I'm not talking general insurance for shit like their office burning down. I'm talking about a government-implemented protection insurance program - in the US I believe that is issued by the Securities Investment Protection Corporation (https://www.sipc.org/).

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If you are talking to a fund manager and they are insisting they have all of these, get a copy of their verification documents and lookup their licenses on the directories of the issuers to verify they are valid. If they are, then at least you are talking to somebody who seems to have their shit together and is doing investment management and trading as a professional and you are at least partially protected when the shit hits the fan.
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LESSON 3 - UNDERSTAND YOUR RISK
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Many people jump into Forex, drop $2000 into a broker account and start trading 1 lot orders because they signed up with a broker thinking they will get rich because they were given 500:1 margin and can risk it all on each trade. Worst-case scenario you lose your account, best case scenario you become a millionaire very quickly. Seems like a pretty good gamble right? You are dead wrong.
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As a new trader, you should never risk more than 1% of your account balance on a trade. If you have some experience and are confident and doing well, then it's perfectly natural to risk 2-3% of your account per trade. Anybody who risks more than 4-5% of their account on a single trade deserves to blow their account. At that point you aren't trading, you are gambling. Don't pretend you are a trader when really you are just putting everything on red and hoping the roulette ball lands in the right spot. It's stupid and reckless and going to screw you very quickly.
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Let's do some math here:
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You put $2,000 into your trading account.
Risking 1% means you are willing to lose $20 per trade. That means you are going to be trading micro lots, or 0.01 lots most likely ($0.10/pip). At that level you can have a trade stop loss at -200 pips and only lose $20. It's the best starting point for anybody. Additionally, if you SL 20 trades in a row you are only down $200 (or 10% of your account) which isn't that difficult to recover from.
Risking 3% means you are willing to lose $60 per trade. You could do mini lots at this point, which is 0.1 lots (or $1/pip). Let's say you SL on 20 trades in a row. You've just lost $1,200 or 60% of your account. Even veteran traders will go through periods of repeat SL'ing, you are not a special snowflake and are not immune to periods of major drawdown.
Risking 5% means you are willing to lose $100 per trade. SL 20 trades in a row, your account is blown. As Red Foreman would call it - Good job dumbass.
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Never risk more than 1% of your account on any trade until you can show that you are either consistently breaking even or making a profit. By consistently, I mean 200 trades minimum. You do 200 trades over a period of time and either break-even or make a profit, then you should be alright to increase your risk.
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Unfortunately, this is where many retail traders get greedy and blow it. They will do 10 trades and hit their profit target on 9 of them. They will start seeing huge piles of money in their future and get greedy. They will start taking more risk on their trades than their account can handle.
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200 trades of break-even or profitable performance risking 1% per trade. Don't even think about increasing your risk tolerance until you do it. When you get to this point, increase you risk to 2%. Do 1,000 trades at this level and show break-even or profit. If you blow your account, go back down to 1% until you can figure out what the hell you did differently or wrong, fix your strategy, and try again.
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Once you clear 1,000 trades at 2%, it's really up to you if you want to increase your risk. I don't recommend it. Even 2% is bordering on gambling to be honest.
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LESSON 4 - THE 500 PIP DRAWDOWN RULE
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This is a rule I created for myself and it's a great way to help protect your account from blowing.
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Sometimes the market goes insane. Like really insane. Insane to the point that your broker can't keep up and they can't hold your orders to the SL and TP levels you specified. They will try, but during a flash crash like we had at the start of January 2019 the rules can sometimes go flying out the window on account of the trading servers being unable to keep up with all the shit that's hitting the fan.
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Because of this I live by a rule I call the 500 Pip Drawdown Rule and it's really quite simple - Have enough funds in your account to cover a 500 pip drawdown on your largest open trade. I don't care if you set a SL of -50 pips. During a flash crash that shit sometimes just breaks.
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So let's use an example - you open a 0.1 lot short order on USDCAD and set the SL to 50 pips (so you'd only lose $50 if you hit stoploss). An hour later Trump makes some absurd announcement which causes a massive fundamental event on the market. A flash crash happens and over the course of the next few minutes USDCAD spikes up 500 pips, your broker is struggling to keep shit under control and your order slips through the cracks. By the time your broker is able to clear the backlog of orders and activity, your order closes out at 500 pips in the red. You just lost $500 when you intended initially to only risk $50.
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It gets kinda scary if you are dealing with whole lot orders. A single order with a 500 pip drawdown is $5,000 gone in an instant. That will decimate many trader accounts.
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Remember my statements above about Forex being a cruel bitch of a mistress? I wasn't kidding.
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Granted - the above scenario is very rare to actually happen. But glitches to happen from time to time. Broker servers go offline. Weird shit happens which sets off a fundamental shift. Lots of stuff can break your account very quickly if you aren't using proper risk management.
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LESSON 5 - UNDERSTAND DIFFERENT TRADING METHODOLOGIES
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Generally speaking, there are 3 trading methodologies that traders employ. It's important to figure out what method you intend to use before asking for help. Each has their pros and cons, and you can combine them in a somewhat hybrid methodology but that introduces challenges as well.
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In a nutshell:

• Price Action Trading (Sometimes called Naked Trading) is very effective at identifying when trends will start and finish. This gives you the advantage of staying ahead of the market and predicting when a change in trend direction will occur. It has the disadvantage of being really easy to screw it up if you don't plot your support and resistance lines properly and interpret the chart wrong. Because you can identify a change in trend direction, you'll generally make more profit on a new trend than a technical strategy will.
• Technical Analytics (or TA) uses math and statistics to try and identify where the market is headed or confirm/reject whether a trend is happening. It has the advantage of being very math and stat driven which is hard to refute the numbers, but it has the disadvantage of being late to the party when it comes to identifying trends (hence why people call TA a lagging strategy). When people fail using TA, it's not because of the math - it's because you misinterpreted what the math is telling you.
• Fundamental Analysis (or FA) uses news and macro scale events to predict what is going on. A really good example right now is Brexit, what a clusterfuck that is. Every time some major brexit news breaks it causes all sorts of choas in almost every currency pair. Fundamental trading has the highest potential profitability per trade but it also has the highest potential drawdown per trade.

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Now you may be thinking that you want to be a a price action trader - you should still learn the principles and concepts behind TA and FA. Same if you are planning to be a technical trader - you should learn about price action and fundamental analysis. More knowledge is better, always.
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With regards to technical analysis, you need to really understand what the different indicators are tell you. It's very easy to misinterpret what an indicator is telling you, which causes you to make a bad trade and lose money. It's also important to understand that every indicator can be tuned to your personal preferences.
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You might find, for example, that using Bollinger Bands with the normal 20 period SMA close, 2 standard deviation is not effective for how you look at the chart, but changing that to say a 20 period EMA average price, 1 standard deviation bollinger band indicator could give you significantly more insight.
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LESSON 6 - TIMEFRAMES MATTER
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Understanding the differences in which timeframes you trade on will make or break your chosen strategy. Some strategies work really well on Daily timeframes (i.e. Ichimoku) but they fall flat on their face if you use them on 1H timeframes, for example.
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There is no right or wrong answer on what timeframe is best to trade on. Generally speaking however, there are 2 things to consider:
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• Speed - If you are scalping (trading on the really fast candles like 1M, 5M, 15M, etc) odds are your trades are very short lived. Maybe 10 minutes to an hour tops. For the most part, scalping strategies will produce little profit per trade but make up for it in the sheer volume of trades. Whereas swing trading may only make a few trades but each one could be worth a significant amount of money.
• Spread (the fee you pay to the broker when you trade) - If you are a scalper, the spread is your worst enemy because you have to overcome it very fast to make a profit on your order. Whereas swing trading the spread hardly impacts you at all.

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If you are a total newbie to forex, I suggest you don't trade on anything shorter than the 1H timeframe when you are first learning. Trading on higher timeframes tends to be much more forgiving and profitable per trade. Scalping is a delicate art and requires finesse and can be very challenging when you are first starting out.
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LESSON 7 - AUTOBOTS...ROLL OUT!
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Yeah...I'm a geek and grew up with the Transformers franchise decades before Michael Bay came along. Deal with it.
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Forex bots are called EA's (Expert Advisors). They can be wonderous and devastating at the same time. /Forex is not really the best place to get help with them. That is what /algotrading is useful for. However some of us that lurk on /Forex code EA's and will try to assist when we can.
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Anybody can learn to code an EA. But just like how 95% of retail traders fail, I would estimate the same is true for forex bots. Either the strategy doesn't work, the code is buggy, or many other reasons can cause EA's to fail. Because EA's can often times run up hundreds of orders in a very quick period of time, it's critical that you test them repeatedly before letting them lose on a live trading account so they don't blow your account to pieces. You have been warned.
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If you want to learn how to code an EA, I suggest you start with MQL. It's a programming language which can be directly interpretted by Meta Trader. The Meta Trader terminal client even gives you a built in IDE for coding EA's in MQL. The downside is it can be buggy and glitchy and caused many frustrating hours of work to figure out what is wrong.
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If you don't want to learn MQL, you can code an EA up in just about any programming language. Python is really popular for forex bots for some reason. But that doesn't mean you couldn't do it in something like C++ or Java or hell even something more unusual like JQuery if you really wanted.
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I'm not going to get into the finer details of how to code EA's, there are some amazing guides out there. Just be careful with them. They can be your best friend and at the same time also your worst enemy when it comes to forex.
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One final note on EA's - don't buy them. Ever. Let me put this into perspective - I create an EA which is literally producing money for me automatically 24/5. If it really is a good EA which is profitable, there is no way in hell I'm selling it. I'm keeping it to myself to make a fortune off of. EA's that are for sale will not work, will blow your account, and the developer who coded it will tell you that's too darn bad but no refunds. Don't ever buy an EA from anybody.
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LESSON 8 - BRING ON THE HATERS
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You are going to find that this subreddit is frequented by trolls. Some of them will get really nasty. Some of them will threaten you. Some of them will just make you miserable. It's the price you pay for admission to the /Forex club.
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If you can't handle it, then I suggest you don't post here. Find a more newbie-friendly site. It sucks, but it's reality.
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We often refer to trolls on this subreddit as shitcunts. That's your word of the day. Learn it, love it. Shitcunts.
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YOU MADE IT, WELCOME TO FOREX!
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If you've made it through all of the above and aren't cringing or getting scared, then welcome aboard the forex train! You will fit in nicely here. Ask your questions and the non-shitcunts of our little corner of reddit will try to help you.
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Assuming this post doesn't get nuked and I don't get banned for it, I'll add more lessons to this post over time. Lessons I intend to add in the future:

• Demo Trading
• Why you will blow your first account and what to do when it happens
• Trading Psychology (this will be a beefy one and will take a while to put together)
• Exotics vs Majors and which you should focus on as a newbie (aka how to blow your account in a single trade with exotics)
• Which Broker Should You Use? (This is covered in pretty good detail on the FAQ already - https://www.reddit.com/Forex/wiki/index - so I may not bother)
• Hedging (there isn't really a good guide written on this anywhere)
• Doubling Your Risk to Save Your Ass or Lose a Shit Ton (aka Martingale & Anti-Martingale)
• Risk On/Off
• Forex Calendars
• Currency Strength / Heat Maps
• Swap
• Margin Calls (What are they and why are you getting them?)

If there is something else you feel should be included please drop a comment and I'll add it to the above list of pending topics.
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Cheers,
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Bob
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*Introductions: I'm joskye. A cryptocurrency investor and SDC holder. *
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Hi again. This is the third part in our ongoing series on how to trade better and determine intelligent investments in cryptocurrency for the future.

• In part 1 I talked about the importance of selling enough to make back your principle investment i.e. if you buy something at $300 and it rises to $600 in value, sell $300 to eliminate all future risk of personal loss e.g. if that asset falls to $150 in value after (which can happen easily since suchvolatility is very common in cryptocurrency). In cryptocurrency trading/investments a 100% return of investment should always prompt you to consider selling 1/2 your stack.
  
• In part 2 I talked about the psychology behind fear of missing out; i.e. the dangers of buying during a sudden rise in an asset's price and how to make the most of such rallies whilst minimising the risks involved in joining them.
  
• In part 3a I discussed The importance of a value proposition and the absolute need for any cryptocurrency you invest in to already generate or have the potential to generate revenue in a manner completely independent of it's speculative value as dictated by daily market prices.
  

Part 3b continues where I left off with a discussion about price metrics specifically, what determines the price and the importance of liquidity:
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The day traders:
As I mentioned in my previous article, as of writing almost every cryptocurrency is determined purely by speculative value.
Thus the absolute price of a given cryptocurrency is determined solely by the day traders and specifically the last price it was agreed that currency would be sold at with confirmation of that price by a buyer who bought it.
People say lots of things determine the price; marketcap, liquidity, value proposition, revenues generated by the coin, the number of said coin in circulation but ultimately it comes down to the number of buyers and number of sellers competing for that coin.
Perhaps the other thing is the size of said market relative to the money held by the players in it.
For instance in cryptocurrency Bitcoin is still the biggest player in the game. It carries a per unit price of $900 per coin. There are currently 16,090,137 (16 million) coins in circulation giving it a total marketcap value of [$900 x 16090137 =] $14481123300 or 14.48 billion USD.

• This is 85% of the current cryptocurrency marketcap. (The total marketcap of all cryptocurrencies as of writing is 17.17 billion USD.)
  
• Compare and contrast Shadowcash (SDC) which has a unit price of $1.27 with 6,616814 coins in circulation giving it a total marketcap value of [$1.27 x 6616814=] $8392766 or 8.39 million USD.
  
• Thus Shadowcash in comparison to Bitcoin is a tiny cap of the cryptocurrency sphere. Shadowcash has a total value that is only 0.06% of Bitcoin when comparing marketcap's.
  

Shadowcash looks even more meagre compared to the total cryptocurrency marketcap with only 0.048% of the total cryptocurrency sphere.
To any Shadowcash holders despairing at this point, relax. There are over 707 cryptocurrencies trading as of writing and SDC holds the 27th ranking in terms of market cap. In such a competitive field, filled with scams that's pretty good. Moreso when you consider that SDC is a legitimate technology and is currently probably very undervalued.
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Lets look at the rich list for bitcoin:

• The top holder has 124,956 Bitcoin valued at $1,12460400 or 1.24 billion USD.
  
• The top SDC holder has 1027261 SDC valued at $1,304621 or 1.4 million USD.
  
• Thus the wealth of the top SDC holder is 1.16% that of the wealth of the top Bitcoin holder.
  

Why did I just talk about this?

• Well they say that a big fish can easily occupy, make a splash in and empty a small pond just by diving in.

In cryptocurrency I see this happening on the markets all the time. Indeed market manipulation effects every single cryptocurrency eventually.
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Market manipulation!
Large holders of valuable, high marketcap coins will often make multiple small volume purchases of less valuable, low marketcap coins. Often this will follow announcements regarding developments in that low marketcap coin.

• An example of low volume ordering is buying 1 SDC at $1.20, 0.5 SDC at $1.2001, 5 SDC at $1.2010, 3 SDC at $1.21, 10 SDC at $1.22 and 0.11 SDC at $1.24, but then leaving someone else to fill the order for 100 SDC priced at $1.242.
  
• Thus by spending $23.77, in low volume purchases the buyer can raise the market cap of SDC from ($1.20 * 6,616814 coins) $7.94 million to (1.24 * 6,616814) $8.20 million! (4.2% increase).
  

Low volume buying in a market with low daily trading volume can gradually drive up the price attracting an influx of buyers into that coin; often they will make larger volume purchases of it which helps drive up the price much further. This will trigger a further chain of buyers experiencing FOMO (fear of missing out, detailed in Part 2) who will drive up the price even further. The price will pump. Often will smaller cap cryptocurrencies this may result in a sudden 20, 40, 60 or even +100% increase in value often over a very short time space (1-2 days, 1-2 weeks maximum).

• Often the original purchaser who triggered these events will have accumulated a lot of said cryptocurrency cheaply prior to or during the early stages of the pump and will wind up selling the majority of his/her's purchases when the price reaches a peak; usually when the daily/hourly trading volume on that coin starts to decline but sufficient buyers are still available.
  
• This results in a sudden or often more gradual dump in the coins value, usually by falling by 75% or more of the rise.
  

The only way to discern if the sudden rise in coin value is due to pre-rigged market manipulation is to look at:

• the value proposition of that coin (discussed extensively in part 3a of this guide)
• the order book
• the depth chart
• the pattern of change on daily trading volume (and liquidity)
• the price charts (15 minute, hourly, 1 day, 3 day, 7 day, 1 month, 6 months)
• the news cycle relevant to that coin

You are looking for organic, gradual growth based on a solid value proposition. Sudden large spikes in value should make you pause and wonder if it's worth waiting for a gradual correction (organic drop) in price before entering your buy order.
Do not fall for a pump and dump. Stick to the lessons covered in previous parts of this guide (especially part 3a and 2) and you will be much less likely to lose money in the long run trading and investing in cryptocurrencies.
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The pattern of change on daily trading volume, the order book and liquidity:
Lets look at SDC and Bitcoin again. This time we are going to compare the daily trading volume (last 24 hours) in USD.

• In the last 24 hours (dated 8th Jan 2016), SDC traded a total volume of $26,033. This is 0.01% of all USD daily trading volume on exchanges and only 0.39% of the total marketcap of SDC.
• In contrast Bitcoin traded $163,306,776 ($0.16 Billion) over the same 24 hour period. This is 76.15% of USD daily trading volume on exchanges and only 1.12% of it's total marketcap.

I'd just like to use this opportunity to point out and reinforce the idea that day traders not holders dictate the daily price of an asset. I'd also like to point out daily global trading volume on Forex is $4800 billion which makes Bitcoin a very small fish in the broader arena of global finance and trade i.e. Bitcoin is still very vulnerable to all the price manipulation tactics and liquidity issues I am going to be describing in this article by bigger players with richer pockets.

• The numbers means that just because the marketcap of Bitcoin is $14 billion, that does not mean that there is truly $14 billion worth of fiat currencies (USD, Yuan, Euro etc) in Bitcoin; the total fiat volume is merely an estimate based on current price and number of Bitcoin in circulation.

The daily trading volume also gives you an idea of how much fiat currency you can invest into a given cryptocurrency before you suddenly shift the price.

• For example based on the 24 hour daily trading volume for SDC I know that if I blindly spent $15,000 (57% of the daily trading volume) buying SDC without any regard to the price, I can be confident that I will likely cause the price of SDC to go up significantly.
• In contrast spending $15,000 to buy Bitcoin (0.0092% of the daily trading volume) without regards to it's price, I can be confident that it will not likely cause a significant rise in the daily spot price of Bitcoin.

A sudden rise in coin price heavily out of proportion to the rise in daily trading volume should be the first sign to alert you to a pump & dump scam.

• It implies a low volume trading at low prices to trick the unseasoned trader to perpetuate higher volume, high price buys.
• If daily trading volume cannot organically increase to sustain the price, it will eventually fall when the original pumper (or group of pumpers) sell to take their profits.

Daily trading volume should show a steady increase over time with sustained buy support at new price levels; this is a good marker of organic, sustainable growth.

• This does not always have to be the case! Sufficiently large price movements (several 1000%) can significantly raise the next absolute low in price for the mid-term (months) even if that is several 100% lower than the peak!
  
• Conversely declining trading volumes indicate loss of interest in the coin and a price that is potentially more prone to and at risk of price manipulation with smaller amounts of fiat/bitcoin (than if higher daily trading volumes existed).
  
• Finally the fact that daily fiat trading volume for Bitcoin and Shadowcash is such a small percentage of it's total marketcap reinforces the idea that price is set by day traders not by holders!
  

...
For more detail you can now look at the depth chart:
The depth chart is very useful to know how much fiat currency is required to cause the spot price of a given cryptocurrency to rise or fall by a given amount.

• The depth chart groups different bids (buy orders) and asks (sell orders) by price and volume e.g. 17.739 bitcoin worth of SDC are currently on sale at poloniex for 0.00117500 bitcoin each ($1.07 per coin) and 0.149 Bitcoin are on sale at the current spot price of 0.00135750 Bitcoin ($1.24)
  
• So as of writing, I can see (from the charts) to raise the price of SDC from 0.00135750 Bitcoin ($1.24) to 0.00181381 Bitcoin ($1.66) I would need to spend 26 Bitcoin ($23783).
  

NB the price of most cryptocurrencies is expressed in Bitcoin because it has the largest market cap and daily trading volume of all cryptocurrencies by a very large margin and because with a few exceptions (Ethereum, Monero) most cryptocurrencies do not have routes to directly purchase via fiat currency without first purchasing Bitcoin.

• The depth chart shows me how many coins I can buy without significantly increasing the price and how many coins I can sell within a given price range. It gives me an idea of the liquidity and volatility of the market i.e. if I buy SDC right now and need to sell it later today or tomorrow for fiat, what is the realistic probability I can get my entire amount in fiat returned to me in the amount originally spent.

Liquidity is super important. People often complain about a market lacking liquidity but that is often because they are trading in fiat volumes which far exceed the daily trading fiat volumes of the cryptocurrency they are referring to. If you are investing or trading in a cryptocurrency, always factor in the your personal liquidity and need for liquidity relative to that of the cryptocurrency you are investing in. In other words don't expect to make a profit next day selling 'cryptocurrency x' if the size your single buy order composes >90% of the buy orders on the market for 'cryptocurrency x' that day (indeed in such a scenario be very prepared to sell at a loss next day if you absolutely have to)!

• The depth chart also gives me an idea of where significant supports exists (price zones with large buy orders relative to the depth chart) to determine the true base price (in conjunction with daily trading volume) and where significant resistances exist (price zones with large sell orders relative to the rest of the depth chart) to determine what the majority of sellers think the coin is truly worth. Be wary though as buy walls (large supports) and sell walls (large resistances) can be moved at any time.

There are certain patterns on a depth chart that make me believe a significant, sustained price rise is imminent: One example occurs when there is a very large volume of buy orders (>25% of total buy volume within 5% of current price) very close to the current (spot) price, and a very large number of sell orders close to but significantly above the spot price (approx 25% total sell volume within 10% of current price) and especially if the total buy order volume is a significantly higher percentage than it has previously been. This simply indicates high demand at current price which may soon outstrip supply. Again I stress that these patterns can be manipulated easily by wealthy traders.

• It is up to you to study the depth charts and discern the patterns. You will learn more about day trading this way.

...
The order book is another way of looking at the depth chart and allows you to see the specific transactions occurring that compose daily trading volume by the second!
I find it useful because it allows me to identify:

• If there is a string of low volume orders that can be filled to pump the price (or conversely a string of low volume sell orders to dump it). This can play on the psychology of the entire market as many people aren't simply aware of how the manipulations occur; most people simply look at the price!
  
• Where resistances to price change occur and how much money it will take to break them (i.e. if I am day trading to make a profit via pumping, is it worth me spending X to clear a sell wall to encourage others to buy and push up the price further or do I need to spend so much of my capital that should I fail to stimulate buy orders, I become vulnerable to a dump in coin price with effective subsequent loss of fiat money).
  
• The presence of automated trading bots rapidly cycling a buy or sell order of fixed volume between a series of prices that dynamically adjust with the overall trend in price movements. Bots can be your best friend (to pumping or dumping price) if you know how to manipulate them!
  

...
The price charts:
Discussions about price charts could be endless. I'm not going to go into too much detail, mostly because I'm an investor who believes the value proposition, good consistent development, decent marketing and communications will ultimately trump spot prices and adverse (or positive) short term price trends in the future.

• I'm also going to skim this because I'm not as versed in this subject as I'd like to be.
  
• I personally use the candle bar charts on Poloniex to look at 15 minute and daily candles on the hourly, daily, weekly and monthly charts.
  
• I combine this with charts on Bittrex which can calculate the RSI (to estimate if a coin is overbought or oversold) and Bollinger Bands (again to help estimate if a coin is overbought or oversold).
  
• I usually look at the overall direction of trading over a period of several days, compare it to the direction and trends over the last month. I then try to interpret it in the context of the daily trading volume and depth charts.
  
• I often get my predictions on short term price movement wrong if I only look at candle charts without factoring in depth charts, order book and daily trading volume patterns! I have a lot more learning to do on technical analysis.
  
• The charts do often reveal mid/long term supports and resistances in price!
  
• Investopedia is a good place to start learning about different mathematical techniques to analyse charts (including any terms used in these articles).
  
• I'm a big fan of u/kustonoy who inhabits the Ethtrader sub. I personally feel his analysis of the short term markets are generally pretty good. You should never be too lazy to not do your own regular market analysis especially if trading short term, but if you want a good reference point, I suggest following him.
  

...
The news cycle:

• I've mentioned this lower down the list because for intra-day and day traders and even to some extent investors, the news cycle matters very little unless it directly affects the value proposition in some way.
  
• If a news event does result in real maturation of the proposed value proposition (such that the technology has confirmed a new sustained user base or revenue stream) then it might justify a sustained rise in price regardless of the volatility achieved reaching and following the peak.
  
• Some assets may have nothing but an endless stream of good news which meets the above criteria yet it's valuation fails to increase. This is likely a sign that a larger player is deliberately manipulating the market to accumulate more of that asset to sell very high later (I believe Ethereum has fallen victim to this recently).
  

...
Other interesting points: The 'coin x' scenario and the ridiculousness of marketcap:
'Coin X' is an imaginary hypothetical coin. There are only 10 in circulation. It has no value proposition beyond it's speculative value i.e. it will never generate a revenue independent of it's speculative value.

• If 'coin x' had only 10 in circulation, was indivisible and each coin had a value of $3 billion, the market cap of 'coin x' would surpass Bitcoin!
• If all 10 coins were not on sale then 'coin x' would have a value of zero.
• If 9 people had bought 'coin x' at $1 and the 10th person bought it at $3 billion, it's marketcap would still be $30 billion. This does not mean there is $30 billion of fiat stored in coin X.
• If an 11th buyer came along and bought 'coin x' at $1.20 the price of coin X would fall to $1.20 and the marketcap of 'coin x' would be $12.0.
• This still does not mean there is $12 of fiat stored in coin x.
• This does not mean everyone can sell 'coin x' at $1.20.
• A new buyer blind to the purely speculative nature of 'coin x' looking at the trend charts could try to argue it is now extremely undervalued and a great buy or possibly was a grand scam and untouchable.
• Either way the next price at which 'coin x' is bought/sold is purely arbitrary and determined by the patience of the seller and the impatience of the buyer.
• [Edit]: I could also issue 10 more of 'coin x' and if it's unit price remained $1.20 the market cap would instantly double from $12 to $24!

I'd like to point out the similarities between ZCash and 'coin x' (especially during it's launch).
...
Lessons:

• Marketcap is derived from the price, not the other way around. Until a cryptocurrency generates significant revenue independent of it's speculative valuation this will remain the case.
  
• Price is determined by the day traders, not by the holders.
  
• The spot price of any given cryptocurrency is determined by the patience of the seller and the impatience of the buyer.
  
• Price of most cryptocurrencies is derived from bitcoin unless they have a direct fiat gateway. Unless a significant amount of trading volume occurs via the fiat gateway, the price of that cryptocurrency is still heavily dependent on the price of bitcoin.
  
• Bitcoin is (for now) is the gold standard of cryptocurrencies. Because it has the largest marketcap (by a very massive margin).
  
• Market manipulation means that large holders in more valuable currencies (large marketcaps) can tamper with and set the value of much smaller currencies (i.e. smaller marketcaps).
  
• Bitcoin's price itself can be manipulated by investment banks, governments or firms who trade in multi billions of USD daily. This is because the daily trading volume is almost 5 trillion trillion USD (which is several thousand times larger
  
• There is nothing wrong with investing or trading in cryptocurrencies with low daily trading volumes and marketcaps, just be concious not to put more money into them than their long term buy support can handle and only invest what you can afford to lose.
  
• The concept of liquidity in a market is important relative to the amount of fiat you are planning to invest or trade in it.
  
• Whether day trading or investing, pick cryptocurrencies with good fundamentals i.e. excellent development teams, good marketing and strong value propositions that will provide the cryptocurrency in question use and value independent of speculative valuations. You are less likely to get manipulated or scammed in the long run that way especially if you are a holder.
  
• Be very weary of trading or investing small amounts of money in larger markets that allow leveraged trading. Those markets will behave irrationally and not follow the fundamentals in the short term.
  
• It is up to you to study the depth charts, order books, candle bar charts, daily trading volumes and news cycle to discern the patterns. The price is a composite of this and the psychology of people who don't understand this. You will learn more about day trading this way and more importantly learn to trade/invest independent of the price.
  

...
Finally why am I writing this?
I mean I just spoke openly about how SDC and indeed any cryptocurrencies (or purely speculative assets) price can be manipulated in the short term.
Well SDC has an incredible value proposition that could generate and attract large amounts of non-speculative fiat currency into it's ecosystem. I already covered that in part 3a (https://www.reddit.com/Shadowcash/comments/5lhh6m/the_intelligent_investors_guide_to_cryptocurrency/).
For this reason I think the short term speculative pump and dumps in SDC will eventually be replaced by a more sustained, larger buy support. I suspect this will occur when the marketplace is released and certain other announcements are released.
For this reason I declare my opinion that Shadowcash is the best cryptocurrency investment of 2016 and I believe it will be again by March 2017.
...
References:

• Coin market capitalisations and data including rich lists derived from:

1. Coinmarketcap rankings: https://coinmarketcap.com/all/views/all/ 2. Coinmarketcap daily trading volumes https://coinmarketcap.com/currencies/volume/24-hou 3. Bitinfocharts - Top 100 Richest Bitcoin addresses: https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html 4. Crypto ID - Shadowcash Rich list: https://chainz.cryptoid.info/sdc/#!rich 

• Investopedia: http://www.investopedia.com/
• Daily FX volumes rise to $4.84 trillion in Jan - CLS, Feb 10th 2016, Reuters, http://www.reuters.com/article/global-forex-volumes-idUSL8N15P2VA

...
Disclaimer: All prices and values given are as of time of writing (Midday 08-Jan-2016). I am not responsible for your financial decisions, nor am I advising you take a particular financial position. Rather I am sharing my experiences and hoping you form your own opinions and insights from them. Full disclosure: I have long positions in Ethereum (ETH), Shadowcash (SDC), ICONOMI (ICN), Augur (REP) and Digix (DGD).

*Introductions: I'm joskye. A cryptocurrency investor and holder. *
...
 
Hi again. This is the third part in our ongoing series on how to trade better and determine intelligent investments in cryptocurrency for the future.
 

• In part 1 I talked about the importance of selling enough to make back your principle investment i.e. if you buy something at $300 and it rises to $600 in value, sell $300 to eliminate all future risk of personal loss e.g. if that asset falls to $150 in value after (which can happen easily since suchvolatility is very common in cryptocurrency). In cryptocurrency trading/investments a 100% return of investment should always prompt you to consider selling 1/2 your stack.
  
• In part 2 I talked about the psychology behind fear of missing out; i.e. the dangers of buying during a sudden rise in an asset's price and how to make the most of such rallies whilst minimising the risks involved in joining them.
  
• In part 3a I discussed The importance of a value proposition and the absolute need for any cryptocurrency you invest in to already generate or have the potential to generate revenue in a manner completely independent of it's speculative value as dictated by daily market prices.
  

 
Part 3b continues where I left off with a discussion about price metrics specifically, what determines the price and the importance of liquidity:
...
 
The day traders:
 
As I mentioned in my previous article, as of writing almost every cryptocurrency is determined purely by speculative value.
 

• Thus the absolute price of a given cryptocurrency is determined solely by the day traders and specifically the last price it was agreed that currency would be sold at with confirmation of that price by a buyer who bought it.
  
• People say lots of things determine the price; marketcap, liquidity, value proposition, revenues generated by the coin, the number of said coin in circulation but ultimately it comes down to the number of buyers and number of sellers competing for that coin.
  
• Perhaps the other thing is the size of said market relative to the money held by the players in it.
  

 
For instance in cryptocurrency Bitcoin is still the biggest player in the game. It carries a per unit price of $900 per coin. There are currently 16,090,137 (16 million) coins in circulation giving it a total marketcap value of [$900 x 16090137 =] $14481123300 or 14.48 billion USD.
 

• This is 85% of the current cryptocurrency marketcap. (The total marketcap of all cryptocurrencies as of writing is 17.17 billion USD.)
  
• Compare and contrast Shadowcash (SDC) which has a unit price of $1.27 with 6,616814 coins in circulation giving it a total marketcap value of [$1.27 x 6616814=] $8392766 or 8.39 million USD.
  
• Thus Shadowcash in comparison to Bitcoin is a tiny cap of the cryptocurrency sphere. Shadowcash has a total value that is only 0.06% of Bitcoin when comparing marketcap's.
  

 
Shadowcash looks even more meagre compared to the total cryptocurrency marketcap with only 0.048% of the total cryptocurrency sphere.
To any Shadowcash holders despairing at this point, relax. There are over 707 cryptocurrencies trading as of writing and SDC holds the 27th ranking in terms of market cap. In such a competitive field, filled with scams that's pretty good. Moreso when you consider that SDC is a legitimate technology and is currently probably very undervalued.
...
 
Lets look at the rich list for bitcoin:

• The top holder has 124,956 Bitcoin valued at $1,12460400 or 1.24 billion USD.
  
• The top SDC holder has 1027261 SDC valued at $1,304621 or 1.4 million USD.
  
• Thus the wealth of the top SDC holder is 1.16% that of the wealth of the top Bitcoin holder.
  

 
Why did I just talk about this?

• Well they say that a big fish can easily occupy, make a splash in and empty a small pond just by diving in.

 
In cryptocurrency I see this happening on the markets all the time. Indeed market manipulation effects every single cryptocurrency eventually.
...
 
Market manipulation!
 
Large holders of valuable, high marketcap coins will often make multiple small volume purchases of less valuable, low marketcap coins. Often this will follow announcements regarding developments in that low marketcap coin.
 

• An example of low volume ordering is buying 1 SDC at $1.20, 0.5 SDC at $1.2001, 5 SDC at $1.2010, 3 SDC at $1.21, 10 SDC at $1.22 and 0.11 SDC at $1.24, but then leaving someone else to fill the order for 100 SDC priced at $1.242.
  
• Thus by spending $23.77, in low volume purchases the buyer can raise the market cap of SDC from ($1.20 * 6,616814 coins) $7.94 million to (1.24 * 6,616814) $8.20 million! (4.2% increase).
  

 
Low volume buying in a market with low daily trading volume can gradually drive up the price attracting an influx of buyers into that coin; often they will make larger volume purchases of it which helps drive up the price much further. This will trigger a further chain of buyers experiencing FOMO (fear of missing out, detailed in Part 2) who will drive up the price even further. The price will pump. Often will smaller cap cryptocurrencies this may result in a sudden 20, 40, 60 or even +100% increase in value often over a very short time space (1-2 days, 1-2 weeks maximum).
 

• Often the original purchaser who triggered these events will have accumulated a lot of said cryptocurrency cheaply prior to or during the early stages of the pump and will wind up selling the majority of his/her's purchases when the price reaches a peak; usually when the daily/hourly trading volume on that coin starts to decline but sufficient buyers are still available.
  
• This results in a sudden or often more gradual dump in the coins value, usually by falling by 75% or more of the rise.
  

 
The only way to discern if the sudden rise in coin value is due to pre-rigged market manipulation is to look at:

• the value proposition of that coin (discussed extensively in part 3a of this guide)
• the order book
• the depth chart
• the pattern of change on daily trading volume (and liquidity)
• the price charts (15 minute, hourly, 1 day, 3 day, 7 day, 1 month, 6 months)
• the news cycle relevant to that coin

 
You are looking for organic, gradual growth based on a solid value proposition. Sudden large spikes in value should make you pause and wonder if it's worth waiting for a gradual correction (organic drop) in price before entering your buy order.
 
Do not fall for a pump and dump. Stick to the lessons covered in previous parts of this guide (especially part 3a and 2) and you will be much less likely to lose money in the long run trading and investing in cryptocurrencies.
...
 
The pattern of change on daily trading volume, the order book and liquidity:
 
Lets look at SDC and Bitcoin again. This time we are going to compare the daily trading volume (last 24 hours) in USD.
 

• In the last 24 hours (dated 8th Jan 2016), SDC traded a total volume of $26,033. This is 0.01% of all USD daily trading volume on exchanges and only 0.39% of the total marketcap of SDC.
• In contrast Bitcoin traded $163,306,776 ($0.16 Billion) over the same 24 hour period. This is 76.15% of USD daily trading volume on exchanges and only 1.12% of it's total marketcap.

 
I'd just like to use this opportunity to point out and reinforce the idea that day traders not holders dictate the daily price of an asset. I'd also like to point out daily global trading volume on Forex is $4800 billion which makes Bitcoin a very small fish in the broader arena of global finance and trade i.e. Bitcoin is still very vulnerable to all the price manipulation tactics and liquidity issues I am going to be describing in this article by bigger players with richer pockets.
 

• The numbers means that just because the marketcap of Bitcoin is $14 billion, that does not mean that there is truly $14 billion worth of fiat currencies (USD, Yuan, Euro etc) in Bitcoin; the total fiat volume is merely an estimate based on current price and number of Bitcoin in circulation.

 
The daily trading volume also gives you an idea of how much fiat currency you can invest into a given cryptocurrency before you suddenly shift the price.
 

• For example based on the 24 hour daily trading volume for SDC I know that if I blindly spent $15,000 (57% of the daily trading volume) buying SDC without any regard to the price, I can be confident that I will likely cause the price of SDC to go up significantly.
  
• In contrast spending $15,000 to buy Bitcoin (0.0092% of the daily trading volume) without regards to it's price, I can be confident that it will not likely cause a significant rise in the daily spot price of Bitcoin.
  

 
A sudden rise in coin price heavily out of proportion to the rise in daily trading volume should be the first sign to alert you to a pump & dump scam.
 

• It implies a low volume trading at low prices to trick the unseasoned trader to perpetuate higher volume, high price buys.
• If daily trading volume cannot organically increase to sustain the price, it will eventually fall when the original pumper (or group of pumpers) sell to take their profits.

Daily trading volume should show a steady increase over time with sustained buy support at new price levels; this is a good marker of organic, sustainable growth.

• This does not always have to be the case! Sufficiently large price movements (several 1000%) can significantly raise the next absolute low in price for the mid-term (months) even if that is several 100% lower than the peak!
  
• Conversely declining trading volumes indicate loss of interest in the coin and a price that is potentially more prone to and at risk of price manipulation with smaller amounts of fiat/bitcoin (than if higher daily trading volumes existed).
  
• Finally the fact that daily fiat trading volume for Bitcoin and Shadowcash is such a small percentage of it's total marketcap reinforces the idea that price is set by day traders not by holders!
  

...
 
For more detail you can now look at the depth chart:
 
The depth chart is very useful to know how much fiat currency is required to cause the spot price of a given cryptocurrency to rise or fall by a given amount.
 

• The depth chart groups different bids (buy orders) and asks (sell orders) by price and volume e.g. 17.739 bitcoin worth of SDC are currently on sale at poloniex for 0.00117500 bitcoin each ($1.07 per coin) and 0.149 Bitcoin are on sale at the current spot price of 0.00135750 Bitcoin ($1.24)
  
• So as of writing, I can see (from the charts) to raise the price of SDC from 0.00135750 Bitcoin ($1.24) to 0.00181381 Bitcoin ($1.66) I would need to spend 26 Bitcoin ($23783).
  

NB the price of most cryptocurrencies is expressed in Bitcoin because it has the largest market cap and daily trading volume of all cryptocurrencies by a very large margin and because with a few exceptions (Ethereum, Monero) most cryptocurrencies do not have routes to directly purchase via fiat currency without first purchasing Bitcoin.

• The depth chart shows me how many coins I can buy without significantly increasing the price and how many coins I can sell within a given price range. It gives me an idea of the liquidity and volatility of the market i.e. if I buy SDC right now and need to sell it later today or tomorrow for fiat, what is the realistic probability I can get my entire amount in fiat returned to me in the amount originally spent.

 
Liquidity is super important. People often complain about a market lacking liquidity but that is often because they are trading in fiat volumes which far exceed the daily trading fiat volumes of the cryptocurrency they are referring to. If you are investing or trading in a cryptocurrency, always factor in the your personal liquidity and need for liquidity relative to that of the cryptocurrency you are investing in. In other words don't expect to make a profit next day selling 'cryptocurrency x' if the size your single buy order composes >90% of the buy orders on the market for 'cryptocurrency x' that day (indeed in such a scenario be very prepared to sell at a loss next day if you absolutely have to)!
 

• The depth chart also gives me an idea of where significant supports exists (price zones with large buy orders relative to the depth chart) to determine the true base price (in conjunction with daily trading volume) and where significant resistances exist (price zones with large sell orders relative to the rest of the depth chart) to determine what the majority of sellers think the coin is truly worth. Be wary though as buy walls (large supports) and sell walls (large resistances) can be moved at any time.

 
There are certain patterns on a depth chart that make me believe a significant, sustained price rise is imminent: One example occurs when there is a very large volume of buy orders (>25% of total buy volume within 5% of current price) very close to the current (spot) price, and a very large number of sell orders close to but significantly above the spot price (approx 25% total sell volume within 10% of current price) and especially if the total buy order volume is a significantly higher percentage than it has previously been. This simply indicates high demand at current price which may soon outstrip supply. Again I stress that these patterns can be manipulated easily by wealthy traders.
 

• It is up to you to study the depth charts and discern the patterns. You will learn more about day trading this way.

...
 
The order book is another way of looking at the depth chart and allows you to see the specific transactions occurring that compose daily trading volume by the second!
 
I find it useful because it allows me to identify:
 

• If there is a string of low volume orders that can be filled to pump the price (or conversely a string of low volume sell orders to dump it). This can play on the psychology of the entire market as many people aren't simply aware of how the manipulations occur; most people simply look at the price!
  
• Where resistances to price change occur and how much money it will take to break them (i.e. if I am day trading to make a profit via pumping, is it worth me spending X to clear a sell wall to encourage others to buy and push up the price further or do I need to spend so much of my capital that should I fail to stimulate buy orders, I become vulnerable to a dump in coin price with effective subsequent loss of fiat money).
  
• The presence of automated trading bots rapidly cycling a buy or sell order of fixed volume between a series of prices that dynamically adjust with the overall trend in price movements. Bots can be your best friend (to pumping or dumping price) if you know how to manipulate them!
  

...
 
The price charts:
 
Discussions about price charts could be endless. I'm not going to go into too much detail, mostly because I'm an investor who believes the value proposition, good consistent development, decent marketing and communications will ultimately trump spot prices and adverse (or positive) short term price trends in the future.

• I'm also going to skim this because I'm not as versed in this subject as I'd like to be.
  
• I personally use the candle bar charts on Poloniex to look at 15 minute and daily candles on the hourly, daily, weekly and monthly charts.
  
• I combine this with charts on Bittrex which can calculate the RSI (to estimate if a coin is overbought or oversold) and Bollinger Bands (again to help estimate if a coin is overbought or oversold).
  
• I usually look at the overall direction of trading over a period of several days, compare it to the direction and trends over the last month. I then try to interpret it in the context of the daily trading volume and depth charts.
  
• I often get my predictions on short term price movement wrong if I only look at candle charts without factoring in depth charts, order book and daily trading volume patterns! I have a lot more learning to do on technical analysis.
  
• The charts do often reveal mid/long term supports and resistances in price!
  
• Investopedia is a good place to start learning about different mathematical techniques to analyse charts (including any terms used in these articles).
  
• I'm a big fan of u/kustonoy who inhabits the Ethtrader sub. I personally feel his analysis of the short term markets are generally pretty good. You should never be too lazy to not do your own regular market analysis especially if trading short term, but if you want a good reference point, I suggest following him.
  

...
 
The news cycle:
 

• I've mentioned this lower down the list because for intra-day and day traders and even to some extent investors, the news cycle matters very little unless it directly affects the value proposition in some way.
  
• If a news event does result in real maturation of the proposed value proposition (such that the technology has confirmed a new sustained user base or revenue stream) then it might justify a sustained rise in price regardless of the volatility achieved reaching and following the peak.
  
• Some assets may have nothing but an endless stream of good news which meets the above criteria yet it's valuation fails to increase. This is likely a sign that a larger player is deliberately manipulating the market to accumulate more of that asset to sell very high later (I believe Ethereum has fallen victim to this recently) or that it is occuring during long period of consolidation is where diversification of asset ownership is happening which means a new price floor is being set for much larger increases later on. The lowest most frequently occurring point which the price repeatedly bounces off of (stops falling below) is the new floor.
  

...
 
Other interesting points: The 'coin x' scenario and the ridiculousness of marketcap:
 
'Coin X' is an imaginary hypothetical coin. There are only 10 in circulation. It has no value proposition beyond it's speculative value i.e. it will never generate a revenue independent of it's speculative value.
 

• If 'coin x' had only 10 in circulation, was indivisible and each coin had a value of $3 billion, the market cap of 'coin x' would surpass Bitcoin!
  
• If all 10 coins were not on sale then 'coin x' would have a value of zero.
  
• If 9 people had bought 'coin x' at $1 and the 10th person bought it at $3 billion, it's marketcap would still be $30 billion. This does not mean there is $30 billion of fiat stored in coin X.
  
• If an 11th buyer came along and bought 'coin x' at $1.20 the price of coin X would fall to $1.20 and the marketcap of 'coin x' would be $12.0.
  
• This still does not mean there is $12 of fiat stored in coin x.
  
• This does not mean everyone can sell 'coin x' at $1.20.
  
• A new buyer blind to the purely speculative nature of 'coin x' looking at the trend charts could try to argue it is now extremely undervalued and a great buy or possibly was a grand scam and untouchable.
  
• Either way the next price at which 'coin x' is bought/sold is purely arbitrary and determined by the patience of the seller and the impatience of the buyer.
  
• [Edit]: I could also issue 10 more of 'coin x' and if it's unit price remained $1.20 the market cap would instantly double from $12 to $24!
  

 
I'd like to point out the similarities between ZCash and 'coin x' (especially during it's launch).
...
 
Lessons:
 

• Marketcap is derived from the price, not the other way around. Until a cryptocurrency generates significant revenue independent of it's speculative valuation this will remain the case.
  
• Price is determined by the day traders, not by the holders.
  
• The spot price of any given cryptocurrency is determined by the patience of the seller and the impatience of the buyer.
  
• Price of most cryptocurrencies is derived from bitcoin unless they have a direct fiat gateway. Unless a significant amount of trading volume occurs via the fiat gateway, the price of that cryptocurrency is still heavily dependent on the price of bitcoin.
  
• Bitcoin is (for now) is the gold standard of cryptocurrencies. Because it has the largest marketcap (by a very massive margin).
  
• Market manipulation means that large holders in more valuable currencies (large marketcaps) can tamper with and set the value of much smaller currencies (i.e. smaller marketcaps).
  
• Bitcoin's price itself can be manipulated by investment banks, governments or firms who trade in multi billions of USD daily. This is because the daily trading volume is almost 5 trillion trillion USD (which is several thousand times larger
  
• There is nothing wrong with investing or trading in cryptocurrencies with low daily trading volumes and marketcaps, just be concious not to put more money into them than their long term buy support can handle and only invest what you can afford to lose.
  
• The concept of liquidity in a market is important relative to the amount of fiat you are planning to invest or trade in it.
  
• Whether day trading or investing, pick cryptocurrencies with good fundamentals i.e. excellent development teams, good marketing and strong value propositions that will provide the cryptocurrency in question use and value independent of speculative valuations. You are less likely to get manipulated or scammed in the long run that way especially if you are a holder.
  
• Be very weary of trading or investing small amounts of money in larger markets that allow leveraged trading. Those markets will behave irrationally and not follow the fundamentals in the short term.
  
• It is up to you to study the depth charts, order books, candle bar charts, daily trading volumes and news cycle to discern the patterns. The price is a composite of this and the psychology of people who don't understand this. You will learn more about day trading this way and more importantly learn to trade/invest independent of the price.
  

 
...
 
References:

• Coin market capitalisations and data including rich lists derived from:

1. Coinmarketcap rankings: https://coinmarketcap.com/all/views/all/ 2. Coinmarketcap daily trading volumes https://coinmarketcap.com/currencies/volume/24-hou 3. Bitinfocharts - Top 100 Richest Bitcoin addresses: https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html 4. Crypto ID - Shadowcash Rich list: https://chainz.cryptoid.info/sdc/#!rich 

• Investopedia: http://www.investopedia.com/
• Daily FX volumes rise to $4.84 trillion in Jan - CLS, Feb 10th 2016, Reuters, http://www.reuters.com/article/global-forex-volumes-idUSL8N15P2VA

 
...
 
Further articles in this series:
 
"The intelligent investors guide to cryptocurrency"
 
Part 0 -

• The intelligent Investors Guide to Cryptocurrency Part 0 - Explaining cryptocurrency to a moderately intelligent noob who knows nothing about it. https://np.reddit.com/Particl/comments/7f28ja/the_intelligent_investors_guide_to_cryptocurrency/

Part 1 -

• The intelligent investors guide to cryptocurrency: Part 1 - Sell your profits and make back the principle ASAP. https://np.reddit.com/Particl/comments/699keg/the_intelligent_investors_guide_to_cryptocurrency/

Part 2 -

• The intelligent investors guide to cryptocurrency: Part 2 - FOMO My friend, My enemy. Make fear of missing out, work for you. https://np.reddit.com/Particl/comments/699kx8/the_intelligent_investors_guide_to_cryptocurrency/

Part 3a -

• The intelligent investors guide to cryptocurrency: Part 3a - The value proposition https://np.reddit.com/Particl/comments/699l95/the_intelligent_investors_guide_to_cryptocurrency/

Part 3b -

• The intelligent investors guide to cryptocurrency: Part 3b - Pricing and liquidity https://np.reddit.com/particl/comments/699lme/the_intelligent_investors_guide_to_cryptocurrency/

Part 4 -

• The intelligent investors guide to cryptocurrency: Part 4 - Sell the rumour, buy the news https://np.reddit.com/Particl/comments/699lxj/the_intelligent_investors_guide_to_cryptocurrency/

Part 5 -

• The intelligent investors guide to cryptocurrency: Part 5 - *Growth, Tribalism, Utility and Cryptocurrency: https://np.reddit.com/Particl/comments/6pmqpw/the_intelligent_investors_guide_to_cryptocurrency/

Part 6 -

• The Intelligent Investors Guide to Cryptocurrency: Part 6 - The easiest trading strategy you'll ever know versus the hardest one. https://np.reddit.com/Particl/comments/7qfe10/the_intelligent_investors_guide_to_cryptocurrency/

Part 7a -

• The Intelligent Investors Guide to Cryptocurrency: Part 7a - Do fundamentals exist in cryptocurrency? Yes they do. https://np.reddit.com/Particl/comments/7ra0vg/the_intelligent_investors_guide_to_cryptocurrency/

 
"The intelligent investors guide to Particl -"
 

• The intelligent investors guide to Particl: An introduction to the next significant cryptocurrency and a comprehensive investment case.

 
Full disclosure/Disclaimer: At time of original writing I had long positions in Ethereum (ETH), Shadowcash (SDC), Iconomi (ICN), Augur (REP) and Digix (DGD). All the opinions expressed are my own. I cannot guarantee gains; losses are sustainable; do your own financial research and make your decisions responsibly. All prices and values given are as of time of first writing (Midday 8th-Jan-2017).
 
Second disclaimer: Please do not buy Shadowcash (SDC), the project has been abandoned by it's developers who have moved on to the Particl Project (PART). The PARTICL crowd fund and SDC 1:1 token swap completed April 15th. You can still exchange SDC for PART but only if it was acquired prior to 15th April 2017 see: https://particl.news/a-community-driven-initiative-e26724100c3a for more information.
 
Addendum: Article updated 23-11-2017 to edit references to SDC (changed to Particl where relevant to reflect updated status) and clean up formatting.