Preface

Trading is like being a seasoned captain navigating the unpredictable sea of the market. You have your vessel, the trading strategy, built with your knowledge and experiences. The instruments at your disposal, the indicators and charts, act as your compass and map. The high and low tides of the sea mirror the volatile market prices.

Weather patterns come and go – storms of market uncertainty, peaceful periods of stable prices, the unpredictable gusts of news events stirring the market – yet, the seasoned captain remains steady, adjusting the sails accordingly.

The goal is not to conquer the sea but to ride its waves, to understand its patterns, to respect its power, and to make it an ally. Success is a journey rather than a destination, and each day brings a new sunrise, a new trading opportunity. Just as the captain learns the sea’s moods over time, so does the trader grow in understanding the market’s rhythms.

Welcome to a journey through the intricate labyrinth of cryptocurrency trading. This book is your seasoned guide, ready to lead you through the twists and turns and equip you with the knowledge to navigate the market’s volatile seas. From debunking market myths to building a unique trading strategy, you’ll get the foundations you need to weather even the most formidable market storms. It’s not just about theory; it’s also about practical, hands-on learning. We explore the understanding of market participants, technical analysis, trading psychology, and money management techniques. This journey is about understanding the ebbs and flows of the market, creating and refining your trading system, and learning to ride the market waves, ever prepared for the next trading opportunity.

Who this book is for

This comprehensive guide is designed to cater to the following audience:

• Trading novices eager to learn the ropes and start their journey into cryptocurrency trading
• Crypto market enthusiasts who want to actively participate in trading rather than just holding
• Traders whose initial attempts haven’t been successful and want a structured path to improve their results
• Learners who are interested in trading psychology and money management techniques
• Anyone who wants to develop and automate their own successful trading strategies
• Readers looking for hands-on examples, real-time scenarios, and a wealth of interactive resources to help them navigate the dynamic world of cryptocurrency markets

Dive into structured lessons, learn about trading psychology and money management techniques, and develop and automate your own successful trading strategies. With hands-on examples, real-time scenarios, and a wealth of interactive resources, you’ll be well-equipped to navigate the dynamic world of cryptocurrency markets and unleash your potential as a cryptocurrency trader.

What this book covers

Chapter 1, Introduction to Cryptocurrency Trading, sets the stage for the structured learning experience that this book aims to provide. The chapter will share the author’s story and process and then debunk market myths and explain why many traders lose money. It will help you understand the pitfalls of information circulating among the trading community and equip you with the practical knowledge needed for your trading journey.

Chapter 2, Understanding the Basics, is designed to help you navigate your emotional responses when trading through a risk assessment questionnaire. You will also take your first steps in studying a chart on various timeframes through a unique candlelight story. The chapter will delve into the trading behaviors of different market participants, helping you comprehend why sudden buy or sell actions occur in the market, even if indicators suggest otherwise. Finally, you’ll learn about the three different types of markets.

Chapter 3, Technical Analysis – Candles and Patterns, lays the foundation for your trading career by introducing one of the most powerful charting tools: TradingView. This chapter will guide you to see the “story of the price” on your screen and comprehend the emotions driving small price movements through candlestick patterns. You will explore chart patterns for stronger and long-lasting movements, delve into support and resistance areas, and understand the laws that govern them.

Chapter 4, Technical Analysis – Technical Indicators, introduces the most commonly used indicators in trading, making sure you understand how each works and in which situations you should use them.

Chapter 5, The Centralized Exchange, demystifies the operations of centralized exchanges and trading procedures on these platforms. The chapter also discusses an advanced tool that links to centralized exchanges, making the trading process user-friendly.

Chapter 6, Money Management, dives into crucial aspects of trading strategy management, including loss limitation, position sizing, the advantages of maintaining a trading journal, the essentiality of a precise trading plan, and the choice between trading in stablecoin versus Bitcoin.

Chapter 7, Finding Your Edge, guides you through the extensive process of developing and implementing a successful trading strategy, starting with the basics of a trading system, identifying potential trading patterns, and culminating in defining entry and exit points – crucial elements for risk mitigation and profit securing.

Chapter 8, Automated Trading, focuses on the technical aspects of trading strategies, starting with creating a custom indicator in TradingView using Pine Script. It then transitions to coding strategies using an open source bot for cryptocurrency trading. This allows for 24/7 trade execution with accuracy and speed, effectively marrying your trading ideas with technical execution for powerful, automated systems. Why not trade while you sleep?

Chapter 9, What’s Next?, is a road map for your journey after the book. Having learned sufficient theory and practice and developed a strategy that can be traded manually or automatically, this chapter suggests a recommended path forward.

Bonus Chapter, contains trades I took during one month of trading. Here, you can see me in action: see how I analyze Bitcoin, how I think when entering the trades, and even what I feel regarding consecutive wins and losses (yes, I have those too!).

To get the most out of this book

This book builds your trading knowledge from the ground up. If you are interested in automated trading (found in Chapter 8), you will need basic programming knowledge in order to learn the Pine Script language, and basic Python knowledge if you want to use Freqtrade to automate your strategy.

Software/hardware covered in the book	Operating system requirements
Python 3.10 or above	Windows, macOS, or Linux
Pine Script V5

If you are using the digital version of this book, we advise you to type the code yourself or access the code from the book’s GitHub repository (a link is available in the next section). Doing so will help you avoid any potential errors related to the copying and pasting of code. The GitHub repository also includes folders with high-quality images for you to follow, along with templates for indicators, strategies, and a backtesting methodology.

In the event any links in the book expire, kindly drop us an email at [e-mail]

Download the example code files

You can download the templates mentioned in this book from GitHub at https://github.com/PacktPublishing/Zero-to-Hero-in-Cryptocurrency-Trading. If there’s an update to the code, it will be updated in the GitHub repository. You can also find the color images there, in case you want to zoom in on the data presented.

We also have other code bundles from our rich catalog of books and videos available at https://github.com/PacktPublishing/. Check them out!

Download the color images

We also provide a PDF file that has color images of the screenshots and diagrams used in this book. You can download it here: https://packt.link/pXrot.

Conventions used

There are a number of text conventions used throughout this book.

Code in text: Indicates code words in text, database table names, folder names, filenames, file extensions, pathnames, dummy URLs, user input, and Twitter handles. Here is an example: “We’re using the latest version of the Freqtrade interface, v3. We will use the class name PrivateMACross to call the strategy from the command line.”

A block of code is set as follows:

class PrivateMACross(IStrategy):
    INTERFACE_VERSION = 3

Any command-line input or output is written as follows:

docker-compose run --rm freqtrade backtesting --config user_data/config/config-backtesting-book.json --strategy PrivateMACross --timerange 20210811-20220812 --timeframe 1d -p BTC/BUSD

Bold: Indicates a new term, an important word, or words that you see onscreen. For instance, words in menus or dialog boxes appear in bold. Here is an example: “If we run this strategy on BTCBUSD 4H and go to the Strategy Tester tab, we’d get a -1% net profit.”

Tips or important notes

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Get in touch

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