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When to buy Crypto coins!By Abhishek Singh | April 5, 2018, 6:37 a.m. GMT
Timing the market is a fool’s game, whereas time in the market is your greatest natural advantage, said a wise man. Not all of us are wise though, and circumstances vary. So, some of us do want to turn in a quick buck by timing the market. What does that mean? Buy low, sell high.
Needless to say, you cannot get it right every single time even if you are Jesus Christ. The idea is to get it right as often as possible. I want to buy when I know the market is going to go up and sell when I know the market is going to go down. Right?
There are several tools that enable one to make these decisions. Again, none of these tools will enable you to get it right every single time. One such tool is the Fibonacci retracement. Here is what it is and how it works.
Fibonacci retracement is used to identify a possible trend reversal, when a rising market will fall or when a falling market will rise.Thus, it tells you the possible entry point in a trade. If you can say with some degree of certainty the market is going to fall, you can sell. If you can say with some degree of certainty the market is going to rise, you can buy. Makes sense so far, right? Stay with me while I nerd out for a minute before jumping back into how to read Fibonacci retracement.
Fibonacci retracement is derived from the Fibonacci sequence. Fibonacci sequence is a series of numbers derived by adding previous the two number of the series, except the first two numbers 0 and 1.
Fibonacci sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610……
Go grab your calculators now and do two calculations for me.
Calculation 1: Divide every number in the sequence by the number which is higher by two places than itself in the sequence. For example, divide 2 by 5. Divide 5 by 13. Divide 13 by 34. Divide 89 by 233. You get a general idea. Even if you are no Sherlock, you can tell that all the answers are close to .382. Ok, so just remember the number .382.
Calculation 2: Divide every number in the sequence by the number which comes right after it in the sequence. For example, divide 5 by 8. Divide 8 by 13. Divide 55 by 89. Divide 89 by 233. Divide anything by what comes after that anything! You inch closer to another magic number, .618.
There is a third almost-magical magical number .50. Now, around these three magical number marks, a bullish market is most likely to turn bearish or a bearish market is most likely to turn bullish. Basically, the market is likely to reverse.
Yep, not so clear so far, let’s look at the graphs below.
Fibonacci retracement is applied on a bullish or bearish run. If applying on a bullish run, you select the lowest point or the possible start of the bullish run.
And then select the highest point where the bullish run stopped.
When you apply a Fibonacci retracement on candlestick graph, you will see a series of numbers on the y-axis of the graph.
As you can see, the price was dropping and the prices hit the 0.382 level and reversed.
As per experts, the possible point of entry in a trade is between the range of 0.618 to 0.786, it is the optimal trade entry point.
I hope that the significance of these numbers is clear now.
Similar trends hold true for a bear market too.
Now, one last word on how you can do it yourself. Create an account for yourself on Coinigy.com. It will open a page where you will see three major panels. On the left-most panel, you will see a list of exchanges and the coins they provide. From this panel, you should choose the exchange and the coin you want to analyze. For this blog, we have chosen Bitfinex exchange and XMR/USD graph which means this graph is to analyze Monero(XMR) prices in US Dollars(USD). So, click on the exchange and then click on the coin you want to analyze.It will show you the graph you want to see on the middle panel. And the right-most panel is to trade XMR.
Firstly you should expand the graph using the arrow on the extreme right of the graph, as shown in the picture below.
Then, once the graph is expanded you will see various tools in the vertical bar on the left-most side of the graph.
If you click on the arrow of the third option of the vertical bar from the top, it will show a variety of options to analyze the graph. You should choose Fib retracement. And then you are all set to analyze the graph. Once you have done all of these steps, start reading the blog again from the top and you will get the steps further. But, this time along with reading you should analyze a graph by yourself.