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Trading concepts

Indicators and techniques, one per page. Each covers how it works, settings for crypto, and where traders go wrong.

In this section

  1. Elliott Wave rules and counts explainedElliott Wave rules and counts explained: the five-wave impulse, the three hard rules of the labelling method, the guidelines, and why two counts can differ.
  2. Fibonacci retracement and extension levels explainedFibonacci retracement and extension levels explained: where the ratios come from, how to draw them on a swing, and why they are drawing conventions, not forces.
  3. RSI divergence and settings explainedRSI divergence and settings explained: the default RSI(14) with 70 and 30 bands, and how regular and hidden divergence are defined and what they can't tell you.
  4. MACD settings for cryptoMACD settings for crypto explained: the default 12, 26, 9, how the MACD line, signal line and histogram are built, and what a crossover can and cannot say.
  5. Moving average settings for cryptoMoving average settings for crypto explained: simple versus exponential, how the EMA weights recent prices, and why the 55 EMA is this manual's choice.
  6. ATR indicator settings for cryptoATR indicator settings explained: the default length of 14 with Wilder smoothing, how true range works, and how to size a stop buffer to a coin's volatility.
  7. Chandelier Exit settings for cryptoChandelier Exit settings explained: the formula, the published default of 22 periods and 3 ATR, crypto variations, and how to trail a stop with it.
  8. Supertrend indicator settings explainedSupertrend indicator settings: the common ATR 10 and multiplier 3 default, how bands and flips work, why it flips late and how it differs from Chandelier.
  9. What is the funding rate in crypto futuresThe funding rate is what longs and shorts on a perpetual pay each other, charged on position value: how it works, what a hold costs and what extreme rates miss.
  10. What is liquidation price in crypto futuresWhat liquidation price is, how exchanges set it from leverage and maintenance margin, how to estimate it, and why your stop must sit well before it.
  11. How perpetual futures work in cryptoHow perpetual futures work: no expiry, margin, mark price versus last price, funding between longs and shorts, and where liquidation sits. Plain terms and sums.
  12. How to calculate position size in cryptoHow to calculate position size in crypto: pick the stop first, then divide the cash you plan to lose by the stop distance. Worked example, and the 3x cap.
  13. Where to place a stop lossWhere to place a stop loss: beyond the level that proves the idea wrong, with a buffer for noise, then size from that distance and use an order that fills.
  14. What is leverage in crypto tradingLeverage in crypto trading: how it sets margin and liquidation distance, why it leaves the loss at the stop unchanged, and why this manual caps it at 3x.
  15. What is the risk to reward ratioWhat the risk to reward ratio is, how to measure it from entry, stop and target before you trade, and why the ratio says nothing about reaching the target.
  16. What multi-timeframe analysis is and how to use itWhat multi-timeframe analysis is: read a higher timeframe for context, decide on one, and use a lower one for timing, with the pass condition written first.
  17. How to draw trendlines and channels on a crypto chartHow to draw trendlines and channels on a crypto chart: which points to use, wicks or bodies, linear or log scale, and when a line counts as broken.
  18. What support and resistance are and how to mark themWhat support and resistance are in crypto trading, how to mark them as zones instead of lines, how many touches to count, and what a level cannot tell you.
  19. What a breakout and retest isWhat a breakout and retest is: what makes a close through a level count, how a breakout fails, and what a retest can and cannot show about what happens next.
  20. How to read volume in crypto, and what it cannot confirmHow to read volume in crypto: what the bars count, wash trading, spot versus perpetual volume, volume versus open interest, and what it confirms on a breakout.
  21. What volatility is in crypto and how it sets your stop and sizeWhat volatility is in crypto, how ATR, range and standard deviation measure it, realised versus implied, and how it changes stop distance and position size.
  22. Limit vs market vs stop ordersLimit, market, stop-market, stop-limit and reduce-only orders explained for crypto futures: when each fills, what each costs, and which one a stop should be.
  23. What is laddering entries in crypto tradingLaddering entries splits one entry across several limit orders under one stop and one planned loss. See the sum, partial fills and the trap of added rungs.
  24. How to take profit in crypto tradingHow to take profit in crypto trading: targets at real levels, partial exits and trailing stops, with the R arithmetic, the size left open and fees on each fill.
  25. How to keep a trading journalHow to keep a trading journal: the fields to record for every trade and every pass, R net of costs, rule checks, and how to review the log against the plan.
  26. What crypto market cycles are and how they change your setupsWhat crypto market cycles are: bull, bear and range phases, how to label them with a rule fixed in advance, and how each changes which setups fit your plan.
  27. How to make a repeatable trading decisionHow to make a repeatable trading decision: seven steps from observe to review, a check at each one, and why a justified pass counts as a finished decision.
  28. How to ride a trend with the Chandelier ExitHow to ride a trend with the Chandelier Exit: attach it to any setup, hand over from the first stop, keep the planned loss fixed, and know when to leave it off.
  29. Crypto futures trading costs: fees, slippage and fundingCrypto futures trading costs explained: fees, spread, slippage and funding, how thin liquidity widens them, and how to add them to your stop distance and size.
  30. What is trading expectancy and drawdownTrading expectancy is the average result per trade in R, and drawdown is the fall from a peak. See the arithmetic and why long losing runs are normal.
  31. How to test a trading setup before risking moneyHow to test a trading setup before risking money: write rules first, use unseen charts, log every signal, net out costs and judge the sample size.
  32. Correlated crypto positions and total portfolio riskWhy several crypto positions can act as one, how to add their planned losses across a correlated group, and how to cap total exposure before the next trade.
  33. How to use trading indicators in cryptoHow to use trading indicators in crypto: a table of the indicators in this manual, the question each answers, what it cannot tell you and where it is explained.

This manual is for education only. It is not financial advice, and nothing here tells you what to buy, sell or hold. Crypto trading with leverage can lose more than you put in. Only risk money you can afford to lose. Read the full disclaimer.