 <div class="text-justify">Greetings everyone, Welcome to another wonderful episode in the crypto Academy community. Before I present my homework post, I would like to acknowledge the professors and the crypto Academy community for making such a wonderful poject. Today's topic is very technical **Trading with Contractile Diagonals.**</div> Without wasting enough time, I would present my homework post systematically based on the questions from the professor @allbert. ______  _____ ><center> 1- Define in your own words what a contractile diagonal is and why it is important to study it. Explain what happens in the market for this chart pattern to occur. (screenshot required / Bitcoin not allowed)</center> ______ **Contractile Diagonal** is a new strategy adopted by traders in the crypto ecosystem. As we all know, crypto tradings is becoming very broad and most experts are devising new strategies and techniques to improve their trade wins. Toady’s technique is something unique and very efficient to crypto traders. With contractile diagonals, the chart behave in a wave-like structure. There’s an uptrend reversal followed by a downtrend reversal. Contractile diagonals have two trend lines which converges at a point. That means the trend lines are not parallel but however the trend lines could both be a bullish trend or the bearish trend. _____ #### <center>Chart of contractile diagonal </center> <center></center> _____ - From the chart above, we can see clearly that the chart behavior of the Binance coin behaves like a wave. - There are two diagonals line all moving in an uptrend direction but they both meet at a point which signifies a contractile diagonal. - we can see clearly that, the wave 1 is larger than the wave 3. Wave 3 is also larger than wave 5 and wave 2 is also larger than wave 4. ______ These trends on the charts occurs when the volume of the trading assets are reduced. Usually these manipulation are caused by whales in the stocks market who owns big volume percentage of the asset. They sometimes reduces the volume of the asset which later causes the trend reversals and later generates these contractile diagonals. _______  ______ ><center> 2- Give an example of a Contractile Diagonal that meets the criteria of operability and an example of a Contractile Diagonal that does NOT meet the criteria. (screenshot required / Bitcoin not allowed)</center> _____ In crypto tradings charts, there are numerous waves everywhere in the charts. In fact crypto charts are full of waves. However, to identify contractile diagonals, in a chart, there are some requirements or standard the wave should meet before it can be called a contractile diagonal. According to the lecture from @allbert, - Wave 1 should be larger than the wave 3 - wave 2 should also be larger than wave 4. - wave 3 should be larger than wave 5. - The trend line must join wave 1 and 3. However, the 5 wave should be in rage or better still it could join the trend line. - The trend line should also join wave 2 and 4. - The two diagonal line should converge at a point in the chart. **( Shouldn’t be parallel )**. _______ #### <center>Contractile Diagonal that meets the criteria</center> ______ <center> </center> ____ **We can see clearly that wave above meets all the criteria required to be a contractile diagonal** ______ _______ #### <center>Contractile Diagonal that doesn’t meet the criteria</center> ____ <center> </center> _____ From the chart above, we can that wave 3 is larger than wave 1 which violates the requirements. _____  ____ ><center> 3- Through your Verified exchange account, carry out a REAL purchase operation (minimum 15 USD), through the Contractual Diagonal method. Explain the process and demonstrate the results and graphical analysis through screenshots. Your purchase data must match your analysis data: such as cryptocurrency and entry price</center> ______ ##### <center>Buy trade of ADA/USDT pair</center> _____  _____ Using the contractile diagonal strategy and the 15mins chart, - wave 1 is larger than wave 3 and wave 3 is also larger than wave 5. - wave 2 is also larger than wave 4. - The diagonals connects each other as seen in the chart. - we placed a buy order when we see a clear bullish stick as the breakout. ______  _____ Order placed successfully. _____ ______  ____ ><center> 4- Through a DEMO account, perform one sell operation, through the Contractile Diagonal method. Explain the process and demonstrate the results and graphical analysis through screenshots. Bitcoin is not allowed.</center> ____ ##### <center>Sell trade</center> _____  ______ - Using the 2 hours chart. - From the chart above, the wave 1 is clearly larger than wave 3. And wave 3 is also larger than wave 5. - wave 2 is also larger than wave 4. - we placed a sell order when the price was $2.20 - I place a stop loss at $2.35 and take profit at $2.05. ____  ____ Order place successfully. ___  ____ ><center> 5- Explain and develop why not all contractile diagonals are operational from a practical point of view. (screenshot required / Bitcoin not allowed)</center> ______ Not all contractile diagonals are advisable to be used in tradings. Some of these diagonals violates the requirements of the strategy. _____  ______ From the screenshot above, we realized that the contractile diagonal violates the requirements. - wave 2 doesn’t connect with wave 4. - wave 5 is larger than wave 3. - the diagonals looks parallel which means they wouldn’t converge any where after the waves. - wave 1 doesn’t touch wave 3. That mean the contractile diagonal above is not suitable for trading with the strategy. Since most of the requirements are not met. ______ ______ More to the point, some contractile diagonals sometimes meet all the requirements but are still not suitable for tradings. With these types, usually the risk reward ratio doesn’t favor the trader. The stop loss becomes bigger than the take profit which is not advisable for any trader in the crypto market. These situations occurs when the candlestick required to break the strategy exceeds the limit. _____  _____ From the chart above, we can see clearly how the bearish candlesticks breaks the chart massively. - Although not all the requirements are perfect as it should be, the presence of the long bearish candlesticks is not advisable for trade. ______ _____ #### Conclusion _____ _____ From my perspective and my experience through this lecture, I think the contractile diagonal would be very good technique in scalping if mastered. However, I wouldn’t recommend this strategy to any beginner with less knowledge. Thanks to @allbert for giving such a wonderful practical technique. I wish to keep on learning from your practical lessons. Regards @avagah
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| author | avagah |
| permlink | trading-with-contractile-diagonals-crypto-academy-s4w3-homework-post-for-allbert |
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Hello, @avagah Thank you for participating in Steemit Crypto Academy season 4 week 3. <p></p> | Criteria | Grade | | --------|---------| | Q1 content|1 /1 | | Q2 content | 1/1| | Q3 content| 1.5 /2.5| | Q4 content| 1 /2.5| | Q5 content| 1.5 /2| | Post Presentation | 0.5 /1| | ***Total*** | ***6.5/10***| <p></p> Homework task: 6.5 <p></p> Feedback: <p></p> First of all, I should clarify that this strategy is not as new as you think. You may have heard it under a different name... in English, it is usually called wedge. <p></p> With respect to the first theoretical part I see that you have mastered the subject, so I congratulate you. <p></p> However in the preugnta 3, the truth was not the best example of a contractile diagonal. I still appreciate your effort. <p></p> In question 4, it seemed to be fine, but at the last moment it broke the structure earlier than expected, which rules out that operation. <p></p> Finally, in question 5 it would have been great if you had accompanied with a chart what you explained about the risk/reward ratio.
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