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Explained: Technical Analysis Basics

What is shorting?

A short position means buying an asset again at a lower price and selling it for a higher price. Shorting relates to margin trading and can involve borrowing assets. It is widely used in the derivatives market along with simple spot positions. There is a fairly simple process of shorting the markets. If you already have bitcoin and you are waiting for its price to drop, you can also sell BTC in USD, and you can buy it again later at a lower price if you want. If you want to start bitcoin trading check what crypto credit cards you should get one.

In a case like this, you enter a short position with bitcoin and sell a short position to sell a high. In a case like this, you are essentially entering a short position on bitcoin because you can sell high with a short sell. If you borrow an asset that may lose value – for example, a cryptocurrency or stock, you can sell it immediately if you want.

If the trade follows your own path, you will be able to repurchase the amount you borrowed when the asset’s price goes down. The profit is to be paid by looking at the difference between the price of the asset you borrow and the price you initially sell and buy.

What is a stop-loss order?

Do you know what a stop-loss order is, if not then let’s talk about it? A stop-loss order is a limit and a market order. It will be activated only when it reaches the specified price which we also call the stop price. Stop-loss orders have only one main purpose and that is to limit losses. In trading, it is necessary to have an invalidation point, so that is the price level and it is necessary to define it in advance. This is the level at which the initial idea could be wrong, which means that one has to exit this market to prevent further losses. 

The invalidation point is where you can place your stop-loss order. Stop-loss orders can be combined with both limit or market orders. This is one reason why they are referred to as stop-limit and stop-market orders. 

What is a market order?

The market places orders to buy and sell only at the market price available in the order. This can be the fastest way to enter or exit the market. If you’ve set up a market order, that means you want to say “I want to execute the order now at a good price, that’s all I can get.” A market order fills an order from the order book until it fills the entire order. This is probably the reason why the big trader uses all those market orders which have more influence on the time price. Markets in which an order can effectively take away liquidity.

As bitcoin has gained popularity, the community surrounding it has also matured. Its users are starting to look into other uses including loans and more.

What is a trend line?

This is a simple tool used by trend line traders and technical analysts. It has lines that connect certain points of data on the chart. This is a data cost, but it is so only in some cases not in all. Behind the trend line drawing, there are some aspects to the price action that are visualized. This way, the trader will be able to identify the overall trend and market structure very easily. Keep in mind that a trader needs to gain a better understanding of the market structure as well as how to use trend lines. Others use it only on one basis and that is to consider actionable trades on how these trend lines can interact with the price. Some trend lines on the chart show the time frame that is implemented. With market analysis tools, higher time frame trend lines are considered to be more reliable than shorter time frame trend lines.

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