Market Basics - Chapter 1: Trends - Part 3

Summary

In this educational video, the host focuses on teaching viewers the fundamentals of trading and price analysis, emphasizing the importance of recognizing trend reversals. They discuss the use of 20-day and 50-day exponential moving averages (EMAs) for confirming trends and the 200-day simple moving average (SMA) for identifying macro trends. The host also shares personal trading strategies, including taking profits regularly and avoiding long-term holdings in most altcoins, which they believe will eventually lose value. The video promises further insights into trading techniques and market analysis in upcoming episodes.

Takeaways

• 📈 Importance of Recognizing Trends: The script emphasizes the significance of understanding trends for successful trading, especially in futures markets.
• 🔄 Trend Reversal Identification: The speaker aims to teach viewers how to recognize when a trend might reverse, which is crucial for making informed trading decisions.
• 📊 Use of EMAs for Trend Analysis: The script mentions the use of the 20-day and 50-day exponential moving averages (EMAs) for trend analysis, especially on weekly and 3-day charts.
• 📉 Bearish and Bullish Signals: The speaker explains how to identify bearish and bullish signals using price action and moving average crossovers.
• 💡 Confirmation of Trend Reversals: The importance of using multiple indicators, such as EMAs and price breakouts, for confirming trend reversals is highlighted.
• 📊 Utilizing the 200-Day SMA: The script suggests using the 200-day simple moving average (SMA) for identifying macro trends and confirming the validity of a trend.
• 🚫 Caution Near Key Supports/Resistances: The speaker advises to be cautious and wait for further confirmations when trading near key support or resistance levels.
• 🤑 Regular Profit Taking: The importance of taking profits regularly to maintain a healthy portfolio and avoid potential losses is stressed.
• 📉 Bearish Confirmation Example: The script provides an example of how a bearish trend was confirmed by a price breakout below the moving average and subsequent price action.
• 📈 Bullish Momentum Indicators: The speaker discusses how to identify the start of bullish momentum using price consolidation and breakout patterns.
• 🧐 Disinterest in Certain Indicators: Despite not being very interested in certain indicators, the speaker acknowledges they can provide additional confirmation for trading decisions.

Q & A

What is the main focus of the video script?

The main focus of the video script is to teach viewers how to recognize trend reversals in trading and how to deal with prices using various moving averages.

Why is understanding the trend important in trading?

Understanding the trend is crucial for making informed trading decisions, especially in futures trades, as it helps in identifying whether to go long or short based on whether it's a bullish or bearish trend.

What moving averages does the script mention for recognizing trends and trend reversals?

The script mentions the 20-day exponential moving average (EMA), the 50-day EMA, and the 200-day simple moving average (SMA) as tools for recognizing trends and trend reversals.

How does the speaker suggest using the EMA 20 and EMA 50 on Bitcoin's weekly chart?

The speaker suggests using the EMA 20 and EMA 50 to look for deviations and intersections, which can serve as confirmations of a trend reversal, especially when the price breaks out from these moving averages.

What is the significance of a price breakout from the moving average?

A price breakout from the moving average is significant as it can indicate a change in the trend direction, providing a signal for potential trading opportunities.

What does the speaker mean by 'momentum' in the context of trading?

In the context of trading, 'momentum' refers to the acceleration of the price in the direction of the new trend that is forming, which can be used to gauge the strength of the trend.

Why does the speaker prefer to wait near key supports and resistances instead of trading?

The speaker prefers to wait near key supports and resistances because these areas can often lead to trend reversals, and they want to avoid acting impulsively without further confirmations.

What is the speaker's strategy for taking profits in trading?

The speaker's strategy for taking profits involves taking profits regularly, every week, month, or day, to ensure a healthy portfolio with available funds for further trading opportunities.

What does the speaker suggest about the future of most altcoins?

The speaker suggests that most altcoins, including those touted as the next big thing in finance, will likely go back to zero when the market makes a significant reversal.

How does the speaker describe their approach to trading after making significant profits?

After making significant profits, the speaker continues to trade, taking profits as needed and maintaining exposure to the market, ensuring that their portfolio remains at an all-time high regardless of market fluctuations.

What time frames does the speaker primarily use for analyzing trend reversals?

The speaker primarily uses the weekly and 3-day (3D) charts for analyzing trend reversals, though they mention that the monthly chart can also be useful.

Outlines

00:00

📈 Understanding Trend Reversals and Trading Strategies

The speaker begins by greeting the audience and continuing a series of videos focused on trading education. They emphasize the importance of recognizing trend reversals, which is crucial for future trades, whether bearish or bullish. The speaker explains the use of the 20-day and 50-day exponential moving averages (EMA) and the 200-day simple moving average (SMA) to confirm trends and reversals, using Bitcoin's weekly chart as an example. They highlight the significance of price action, support levels, and resistance levels in identifying trend reversals. The speaker also mentions the use of other indicators for confirmation but prefers a more straightforward approach. They conclude by advising viewers to wait for further confirmations before acting, especially near key supports and resistances.

05:01

🏆 Profit-Taking Strategies and Long-Term Market Insights

In the second paragraph, the speaker discusses their personal trading strategies, focusing on profit-taking to maintain a healthy portfolio. They share their experience of buying the bottom of altcoins and taking profits regularly, emphasizing the importance of not falling in love with any particular asset. The speaker warns that most altcoins, including those touted as the future of finance, are likely to return to zero in a market reversal. They stress the importance of profit as the main goal, using the metaphor of building a house brick by brick. The speaker also shares their approach to taking profits after significant gains and maintaining exposure to the market while ensuring their portfolio remains at an all-time high. They conclude by summarizing the importance of using price action and EMAs for trading decisions and hint at a continuation of the basic trading course in upcoming videos.

Keywords

💡Trend

A trend in trading refers to the general direction in which prices are moving. In the video, the speaker emphasizes the importance of understanding trends as crucial for making trading decisions, especially in futures trades. The script mentions looking for trades on the highs in a downtrend to lead to short positions and trades on the lows in an uptrend to lead to gains.

💡Trend Reversal

Trend reversal is a change in the direction of a market trend from bullish to bearish or vice versa. The video discusses recognizing trend reversals as a key aspect of trading strategy. An example given is the intersection and deviation of EMA lines as a confirmation of a trend reversal.

💡Exponential Moving Average (EMA)

The EMA is a type of moving average that places greater weight and significance on the most recent data points. In the script, the 20-day and 50-day EMAs are used as tools to confirm trends and trend reversals, especially on weekly and 3-day charts.

💡Simple Moving Average (SMA)

The SMA is a widely used indicator that smooths price data by creating an average of a certain number of time periods. The script mentions the 200-day SMA as a tool for identifying macro trends and as a confirmation tool for trend validity.

💡Momentum

Momentum in trading refers to the speed at which prices are moving. The video describes momentum as a price acceleration in the direction of a new trend, which can be identified with certain indicators, although the speaker mentions a preference for price action over other indicators.

💡Breakout

A breakout occurs when the price of a security or index moves above a defined support or below a defined resistance level. In the script, breakouts are mentioned as significant events that confirm a bearish or bullish trend, especially when they occur in conjunction with EMA crossovers.

💡Consolidation

Consolidation in trading is a period of price movement where the price of a security or index is in a state of equilibrium, moving horizontally within a certain price range. The video describes consolidation as a phase where the price stabilizes before indicating the start of a bullish momentum.

💡Support and Resistance

Support and resistance are levels on a price chart where the price tends to stop falling and start rising (support), or stop rising and start falling (resistance). The script uses these concepts to discuss price behavior near key levels, indicating potential trend reversals or continuations.

💡Profit Taking

Profit taking is the act of selling a financial asset to realize a profit after it has increased in price. The speaker in the video talks about the importance of taking profits regularly to maintain a healthy portfolio and avoid potential losses during market reversals.

💡Altcoins

Altcoins are cryptocurrencies other than Bitcoin. The video mentions the speaker's strategy of buying the bottom of almost 50 altcoin names and taking profits, indicating a diversified approach to cryptocurrency trading.

💡Portfolio Management

Portfolio management involves the allocation and rebalancing of investments to achieve the desired return and risk level. The script describes the speaker's approach to portfolio management, emphasizing profit taking, diversification, and maintaining a healthy portfolio.

Highlights

Introduction to a basic trading course focusing on understanding price trends and trading strategies.

Emphasis on the importance of recognizing trend reversals in trading.

Use of the 20-day and 50-day exponential moving averages for trend analysis, especially on weekly and 3-day charts.

The significance of price deviations and intersections in identifying trend reversals.

Confirmation of trend reversals through moving average crossovers and price breakouts.

Simplicity in understanding and applying trading strategies for better grasp.

The role of momentum in trading and its relation to price acceleration.

Introduction to the 200-day simple moving average for macro trend analysis.

The importance of key resistance levels and the approach to trading near these levels.

Personal trading philosophy of taking profits regularly to maintain a healthy portfolio.

Avoiding long-term holding of altcoins due to the high risk of market reversals.

The strategy of selling and buying back for profit and diversifying investments.

Warning against falling in love with altcoin names and the potential for most to return to zero.

The concept of building wealth gradually rather than expecting sudden riches.

The speaker's 20 years of market experience and the lessons learned from it.

The use of the 200-day moving average for daily confirmations and its limitations.

Preference for the 3-day and weekly charts over the daily for trend analysis.

Conclusion of the video with a teaser for the next part of the basic trading course.

Transcripts

hello everyone guys uh here we are again

on the channel so uh I wanted to

continue a bit with a video the

continuation of the little course we're

doing let's start from the basics to

understand a bit how to trade and how we

should deal with prices in past videos

we saw that Trend which is so important

go check it out if you haven't seen it

and I wanted to continue to make you

understand how to learn to recognize a

trend reversal a a quick recap last time

we saw that understanding the trend is

crucial for moving especially in future

trades whether bearish or bullish in a

downtrend I look for trades that on the

highs will lead me to shorts and in an

uptrend trades that will lead me to

gains everything is very simple without

me repeating everything but you can go

back and see what we Ed to also see I

always prefer the prices but sometimes

to also get confirmations to compare I

also use the 20-day exponential moving

average and the 50-day exponential

moving average especially on the weekly

and on the 3-day chart then I also use

the simple moving average 200 especially

on the weekly let's look at some

examples for instance let's check out

the EMA 20 and the EMA 50 so on

bitcoin's weekly chart take this chart

here let's clean it up we can see that

especially regarding the deviations

which we saw in the other video when

there are intersections okay for example

here where it continued to deviate

and staying above this support these are

even more confirmations of a trend

reversal then use them the moving

average 2050 to see if a trend is valid

okay for example we notice here when

there was this crossover where there was

a breakout all right on this level pay

more attention to simplicity and

understanding I'll try to make things as

straightforward as possible so you can

grasp

them what happened here on this key

resistance the ema20 and em50 crossed

over here the price level broke out from

this moving average and then re-entered

the arest below for me was an even

bigger confirmation that the trend was

bearish indeed it then went down 50 to

60% as year the price started to

consolidate on these levels making a

breakout consolidating here there was

the confirmation that the price has

started the bullish

momentum these are mainly used to see

the

momentum momentum is nothing but a price

acceleration in the direction about the

new trend that is forming which we can

also see with some indicators that I am

not very interested in but many use them

I will show them to you because they can

always provide confirmation another one

that you can use especially let's clean

up the chart especially and on the three

days as I told you to see the trend but

you can also do it daily however here it

is much simpler for you to understand

the General market Trend it's the simple

moving average okay let's dive into the

charts a bit with a longer history where

this SMA is very useful for seeing macro

Trends look here how it works support

here the downside was broken that's why

there were all for the bearish remember

which then deviated and went down here

it was a very simple short that however

I personally near key supports I don't

care much about the shots in fact in

fact what I do is wait I've already told

you in several

videos I'm waiting for a reversal or

Price signals because near supports and

key resistances I prefer to keep pretty

calm that's all so don't act and wait

for further confirmations so we went

down heavily here the stock market was

starting to pump so I personally was

holding still so what happened

here the price has broken through we've

gone down the breakout happened okay the

breakout happened of the SMA and the

breakout occurred also of EMA 20 50 and

of the price all bullish

signs and then in another video which

I'll explain If Ever I

did go take another look at it on

Twitter search for cot report I had

taught you something else after that was

my confirmation that buying the bottom

was mostly of altcoins because I bought

the bottom of almost 50 altcoin names

and many ask me why are you taking

profit now guys I take profit every week

every month every day they are my

strategies because I want my portfolio

to always be healthy and with available

usdt after moving around a lot of names

of 200 300 500 or more because I made

one for 40 it's normal for me to gain

depth we can go up much more there are

many other names in the market I do

trading myself I don't care much I make

a 25% sell buy back later move to other

names I have very few uh long-term bags

and then uh when I make significant

moves or even because of the wind I've

been burned many times in the past

Cycles I have never taken profit I

thought the market was pumping I fell in

love with uh useless altcoin names

opening a parenthesis here know that 99%

of the altcoins that are shown here as

the next future of Finance are all

all of them most of

these names including AI I admit they

will go back to zero when the market

makes a reversal it's not time

yet the market is completely bullish and

I think there will still be especially

to go up on ethereum at the moment but

know that profits must be the name of

the game okay

okay building a house happens step by

step Brick by

Brick it's not like oh my God I suddenly

become rich forget about that fairy

tales can happen rarely but what happens

to someone who degenerated in this

manner doing it on a bet those money

will be lost on another trade trust me

it works like this the market operates

this way I've been in the markets for 20

years and learned it the hard way okay

that's why I take profit that's why I do

it it's normal for me to do it after

500% it's absolutely normal I still have

an nam in it I am still exposed but if

the market were to crash now my

portfolio is still at an all-time high I

couldn't care less because I've already

made the profits I needed to after

reaching my goal so I keep

trading and if we go up I will increase

I still repeat I have many names spots

where my stock are positioned in profile

okay let's close that parenthesis so

summarizing the price action that I

taught you in the last video and use the

20 and 50 EMAs First Step Second Step

also look at the 200 day moving average

this you should use and then you can

also use it on daily confirmations okay

it has never crossed down here for now

so the trend was entirely bullish but I

barely watch The Daily I mostly look at

the SMA because it gives me false

signals so I then mostly use the obv and

I use

others two or three indicators that we

might see later in the

video I mainly use it on 3D and weekly

but the weekly is the chart I use more

and more to see these Trend reversals

which can also be seen on the monthly

but you can see it in the stock market

forget about Bitcoin because it makes no

sense so weekly 3D I'm wrapping up this

video here and another one will be

released right away to continue as I

told you our basic course for all of you

it's going to be very intense very long

but it will definitely be a real

spectacle thanks everyone bye

guys