Rakesh Upadhyay Discord AMA
Rakesh Upadhyay is Cointelegraph's technical analysis expert, you can find his full bio in the link below
Let's start the first one from @Wrong_again. What are the best tradingview indicator(s) to use to determine an entry point on a coin\token that you don't want to hold more than a few hours\days? What trading period(s)?
This is a very relevant question. Whether it is for swing trading or for intraday trading, the best thing to do is to keep the indicators the same. That is because there will be no change in the way you read charts whether you trade intraday or swing. The same setups that are used on swing trading can be used for day trading, it is just that the time frame will be reduced.
So, a good way is to choose the indicators that work best for you and then use them repeatedly, instead of changing them as the time frame changes. The more you stick to the same indicators and play around with them, the more clearly you will see the patterns and gain confidence to trade them.
For intraday periods, one can start with the one-hour chart and then gradually reduce the time to a 30-minute chart and finally to a 15-minute chart. The time periods should be reduced only after successfully trading a period. That means, if you are profitable trading intraday with the one-hour chart, then you can reduce the time period to a 30-minute chart as that will help you get a few more setups. Anything lesser than a 15-minute chart is suitable mostly for experienced day traders or scalpers.
Let's move on to the second one, which is again by @Wrong_again. I’m not sure how many people read books anymore, but do you have a favorite book on trading\crypto\analysis to recommend?
Traders should read as many books as possible as most patterns that were relevant decades ago work even now. The ways to identify a trend have not changed and the classical chart patterns are relevant even today. Support and resistance levels work equally well now as they worked earlier.
If there is only one book that one wants to read, I will suggest “Technical Analysis of Stock Trends by Robert D. Edwards and John Magee.” Next, “The Market Wizards” series by Jack. D. Schwager. This book gives you an insight into how different traders use completely different strategies but are still very successful as they have found what works for them.
And specifically for short-term trading, “Street Smarts: High Probability Short-Term Trading Strategies” by Linda Bradford Raschke and Laurence A. Connors is a good book.
There are many other books that are good, but if one reads the above books, it contains enough knowledge needed for trading. However, a word of caution. When reading a book, do not copy the author’s trading style or recommendations word by word. They have done what works best for them. Therefore, after reading the books or learning about an indicator, modify it according to what works best for you and then formulate a strategy.
Let's move on to the next question which is from @Arie . What is your favorite way to combine trading volume and price action to decide on a trade? Is volume data reliable enough to be useful? https://ftx.com/volume-monitor says: "Percent of reported crypto volume that is fake: 26.0%" Are there any free indicators for this on TV that help?
That's a nice question as many people are worried about volume.
My personality is such that if I have too many variables thrown at me, it becomes difficult for me to make a decision. Previously, I used to look at volumes closely but that did not aid me in my decision making and only confused me. Therefore, I don’t look at volumes now and rely completely on price action.
The reliability of the volume data in crypto is questionable. However, if volume is something that you use for your decision-making, then also it is fine. There are several successful technical traders who depend on volume for their trading decisions.
I prefer to use very few indicators for my setup and largely depend on the price action. Therefore, I apologize, I will not be able to guide you about the best volume indicator to use on TV.
The next question is also from @Arie. How can Volume-by-Price best be used? Is it comparable to on-chain data that shows Global In/Out of the Money?
I am sorry, I have never used Volume-by-Price. The various on-chain data also do not aid me in my analysis because I am from the school of traders who believe that every bit of information needed is already baked into the price. One just needs to be able to read it to benefit from it.
Sorry, I was not of much help in the volume department. But that is how I analyze.
The next question is also an extension of the previous questions from @Arie. And how can arbitrage make balancing transactions so fast that pretty much for all trading pairs across all centralized exchanges price action is similar? Or is there something else going on? See this TV screenshot of a 1-minute timeframe of SOL/USDT on Binance and Huobi for instance. This question is related to 'fake volume'. Can the price be fake as well? (IE, not directly come from the actual order book).
Generally, fast computers and programs are used for arbitrage as every minor discrepancy is capitalized. These algos usually compete where every second matters. So, the chart of a 1-minute period is likely to be more or less the same across all major exchanges. I would not be too worried about it. I have not really researched if the price data can also be faked.
let's get on with the next question from @dh12
How normal is it to see a pattern form like the one on ETH above, where it breaks out of the wedge in each direction, moves sideways out of the wedge, then breaks out?
The lines that we draw on the charts can be changed depending on the price action. Therefore, if the price moved marginally above or below the setup, the lines could be redrawn to include a larger portion of the price action inside the pattern, if feasible. You can redraw the lines of the triangle shown above to include the false breakout and breakdown candles.
In a trending market, I have not come across many such instances where the price reaches the apex without a valid breakout or breakdown. The possibility of that happening increases in a range-bound market. These are mostly market makers trapping the aggressive bulls and the bears.
If you get caught in such a trade, it is bad luck and such odd instances keep happening occasionally. That is why always have stops in place to limit the losses. And do not repent if the stops hit and the price moves in the direction that you had previously envisaged. That frequently happens in trading and should not bog you down.
The next one is also from @dh12. What are a few of the best indicators you've found for day trading crypto and how do you apply them?
This is similar to the question asked earlier. One should try to gain mastery over a couple of indicators over different time frames rather than using different ones for swing trading or intraday trading. The indicators that work best for me are the 20-period EMA, the 50-period SMA, and the RSI. However, these suit my personality best. Bollinger Bands, ADX, MACD, Stoch, Weighted moving averages, any of them may be used. The indicators do not make the difference to a trading result. The time you spend with an indicator and how nicely you use it makes the difference.
Continuing with @dh12 questions. When looking at an alt, do you also consider the trend of BTC and/or ETH? if so, how much weight do you give that?
For a swing trade, I generally do not look at BTC or ETH because an altcoin can rise due to some news-based event. However, if it is a long-term bet, then it is better to know the direction of BTC and ETH as it is difficult for a rally to sustain if the big two are not supportive.
Can you cover how you determine entry and exit points when making a trade?
The first thing to look at is what is the general trend of the markets. If the markets are in a strong bull phase, waiting for a correction could be futile as traders buy every intraday dip due to FOMO. In such a condition, the best way is to buy breakouts. The exits are usually after a vertical rally. My preferred way is to trail the stops higher, rather than book profits.
When the broader markets are range-bound and the action is specific to a sector or coin, it is better to wait for a pullback as that gives a good risk to reward ratio. If there is a pattern that is being traded, like an ascending triangle, then partial profits may be booked at the pattern target and the remainder could be trailed with a stop to protect about 75% of the profits
The next question is from @g777. what is your risk management protocol?
This is again specific to the trader and the trading strategy used. For a positional trader, the stops will be wider as the number of trades is few. For such trades, the risk to reward ratio is easily greater than 1:3. However, for someone who takes many trades, the risk to reward ratio of at least one is preferred.
And yes, risk management is very relevant in crypto markets, more so because the volatility is high.
The main thing remains, never over leverage as volatility can easily wipe the account. Be patient and aim to grow the account gradually. Good opportunities do not come around daily. So, wait for them patiently and when you find them, take the trade.
Never risk more than 2-3% of your trading capital on a single trade, depending on how big your account size is because any trader can have a bad stretch of trades. The drawdowns should not put you out of the business of trading.
what’s up sell Fil or hodl I’ve been holding a position in xmr and Eth
I’ve purchased filecoin at 73$ and am hodling patiently but this market is making me think I should sell by the end of each week
This is how I would be approaching. First, when you bought the stock, you would have decided whether to keep it for the long term or short term. Also, you should have kept a stop-loss. If your stops have hit, then one should not hold in hope.
However, if your stops haven't hit and you are selling out of panic, just because we are in a bear phase, then it is not the right approach in trading. In a bear market, expect the news to be bearish. And patience is the key during a bear phase because no bear market lasts for ever. A bull market will follow again
Do you recommend any strategy on holding the assets during the weekend as most of them go down compared to the rest of the week?
That again depends on how you look at it. If your analysis finds that most assets go down during the weekend, then one of the ways could be to exploit that to your advantage by buying during the weekend and selling later in the week when the price jumps up.
And if you are a long-term holder, then small blips should not worry you. Just avoid trading during weekends. Rather spend that time away from the screen and you will be a lot less worried.
what are your suggestion for trader if they have a a significant losses over a certain coin (which they do not set a SL), sell and take the losses or patiently wait until price rise again (which can take ages)?
Hope is the biggest enemy in trading. The more one holds on to a losing trade, higher the chances of repeating the same mistake again and again. If you realize that a mistake has been done, then take a loss. That will help you reorganize yourself and see to it that you don't repeat the mistake again. It will take a long time to recover the loss, so don't do revenge trading and don't keep going back to the coin that caused the loss. Formulate a new strategy and stick to it.