Homework Assignment
Question 1:
Give a detailed analysis of BICHI STRATEGY. Staring from introduction, identification of trends, trend reversal in market, entry and exit from the market, one demo trade and finally your opinion about this strategy. (Screenshot required). [4 points]
Question 2:
Define briefly Crypto IDX and Altcoins IDX. What is signal prediction trading. Is it legal or ill-legal in your country. (Explain briefly) [2points]
Question 3:
If you want to create your own penny IDX, then which 4 penny assets will you choose and what what is the reason behind choosing those four assets. Define Penny currencies.(Explain, no screenshot required). [2points]
Question 4:
Conclusion
Question 1: Give a detailed analysis of BICHI STRATEGY. Staring from introduction, identification of trends, trend reversal in market, entry and exit from the market, one demo trade and finally your opinion about this strategy. (Screenshot required). [4 points]
Intro.
Bichi strategy, well I'll just be as honest as possible and say this strategy is definitely a new one to me, like this is the first time I've heard of it. I'm quite glad and thankful to add this to my knowledge, it'll go a long way in my trading experience.
So what is the 'Bichi strategy'? Well it a trading strategy consisting of two indicators, Bollinger bands and the Ichimoku cloud. These two indicators have their own working principles and can function alone, although its not advised to use just one kind of indicator when making your analysis of chart patterns. The two indicators compliments each other well. The two of them working together can also be referred to as another type of confluence trading strategy.
Before futher Ado, let me briefly tell you about the principles behind the Bollinger bands and the Ichimoku cloud.
The bollinger band is basically an indicator that consists of an upper and lower band( standard deviation) and a middle line, that actually a standard moving average. In times of high volatility in the market, the bands expand while they contract/squeeze when market volatility is low and trending sideways. On the other hand, the Ichimoku cloud is another indicator that comprises of lines and clouds. The clouds are a major component of the Ichimoku. When the price is above the clouds, its an uptrend amd when the price is below the clouds, its a downtrend.
identification of trends, trend reversal in market
If you're familiar with most momentum indicators you must have noticed that when the price swing upwards of the indicators, then the market is probably trending upwards and the its trending downwards if it swings downwards unless it's a false signal/breakout.
For the Bichi strategy, to identify a market trend, all you need to do is to sit and wait, patiently for two main occurrences;
For an uptrend;
Wait to see that the price crosses well above the Ichimoku cloud, the Ichimoku cloud will now be in a green color or whatever color you set for an uptrend.
Once this happens, you'll notice that the bollinger bands now serve as a support and resistance line. That is, the upper band serves as the resistance while the middle line,(basis line) serves as the support of the current price movement.
For a downtrend
- Wait to see that price movement cuts the Ichimoku and continues downwards, underneath the Ichimoku cloud.
- Then you can see that the bollinger band now serves as a support and resistance for the current trending market. That is the lower band serves as a support while the basis line serves as a resistance to to current trend.
Alright, so we now know how to identify trends, what about how to identify the trend reversals? Well on a norms, the cross of the price from the upside of the Ichimoku cloud to the downside or vise versa, should easily mean a reversal but this is not always the case as some have observed that in a sideways market, theres usually lots of cross over. This is where the bollinger band comes in handy. It shows volatility of the market and there will give a heads up as to when the volatility has reduced, by contracting. So when the bands squeeze, you can expect a trend reversal on most cases. These two instances of both indicators will give you a very decent information regarding trend reversal. To be sure its actually a reversal in trend, watch out for the trend identification tips given above, if it corresponds, then you're good to go.
A typical Trend reversal in the Bichi strategy.
Entry and exit from the market and a demo trade
Well, we have explained the strategy, now to show you how to actually use them.
For a buy trade setup, simply watch out for when the price breaks above the Ichimoku cloud and when the Bollinger band serve as a support and resistance to the price. Once a crossover occurs, be patient and wait for the next candle before going in also watch for the squeeze/expansion of the Bollinger bands. Remember to set your stop loss, and it shouldn't be the basis line. That is to say that your stoploss would most likely on the basis line because of this, theres the need to be an early bird in order for your stoploss to not be too far off. If you can't monitor the trade, simply set a take profit order.
A buy trade set-up.
For a sell trade setup, the principles is the same as in the buy set up except it's reversed. Now you have to wait for the market to break below the Ichimoku cloud and the bollinger band now serve as support (lower band) and resistance (basis line). Remember to set stoploss at the basis line and to take profit also.
Heres a demo trade of mine;
I made my analysis for the trade on the trading view platform. Both thehe the bollinger band and the Ichimoku cloud both indicated a buy signal.
At first, it didn't seem like i did a correct analysis....
This is the same trade setup left running and showed some profits after a few minutes. This showed that the Bichi strategy is indeed a good one.
Well, I think this strategy, new to me, is a cool one. It requires lots of patience and the principles are quite easy to understand with little margin for error, the fact that it doesn't work alone makes it more trusted in making analysis.
Question 2: Define briefly Crypto IDX and Altcoins IDX. What is signal prediction trading. Is it legal or ill-legal in your country. (Explain briefly) [2points]
Crypto IDX
This is crypto index in full and its an internal synthetic asset available only to the binomo platform. It combines the average rates of four crypto currencies to give a value on the chart screen. Mind you, it not only takes into account the price of these underlying assets, but also the demand, supply as well as the market capitalization of these assets. The assets includes Bitcoin, lite coin, Ethereum and Z cash.
The crypto idx functions just as the traditional indexes of the stock market and its an internal synthetic asset available only to the binomo platform. It has various advantages which includes high profitability, all round the clock trading, and very suitable for the short term.
Altcoins IDX
Well, the alt coin index is similar to the crypto index but different in the sense that its now deals with altcoins which includes Ripple, Ethereum, Litecoin and Monero. This trading strategy is available only on binomo platform.
What is signal prediction trading. Is it legal or ill-legal in your country.
Before jumping in to answer this question, let me tell you a little about what a trade signal is.
Well lets simply put it this way, a signal is an initiator, its the initiator for all activities on the market, be it buying or selling. Its usually generated from market analysis, although some people might just trade a market based on guess work, some may be lucky, some others not so lucky. In another way, we can say these signals are an easier alternative for traders to make their trades off the experience of the veterans in the field, who are mostly behind these trading signals.
This analysis which are tools for signal generation may ne human made or automated(machine made). This usually combines some factors before making a decision. The factors considered includes the use of technical indicators, fundamental analysis, economics, sentiments etc.
Which ever the case maybe, the results of the analysis gives of what we know as a signal, which can be acted upon be it right or wrong. These signals can sometimes be sold to someother traders, mostly novices.
So is selling of these signals wrong? Well. selling off forex signals in my country, Nigeria, isn't wrong, as a matter if fact, there are big firms set up for the sole purpose of selling signals. On the other hand, selling off crypto signals is illegal, considering the fact that crypto is a banned entity in Nigeria.
In other words, signal prediction trading could be right and wrong in Nigeria, its a no-no for crypto services and has no problem when it comes to forex/stocks etc.
Question 3: If you want to create your own penny IDX, then which 4 penny assets will you choose and what what is the reason behind choosing those four assets. Define Penny currencies.(Explain, no screenshot required). [2points]
So right about now, you probably have an idea of what IDXs are all about, they invlove the average of 4 or mor coins to give a single value. In this section, I'll tell you a little about Penny IDX and my preferred type of penny coins I'll be using to formulate mine.
But what are Penny currencies? Well you can easily decipher the meaning of this from the name, its simply Cryptos that are worth less than $1, the can be bought with pennies. These currencies are very cheap but with lots of potential.
Personally, I've come across a few interesting penny coins which i think would make the cut for my Penny IDX.
First on the list will be BTT. I simply love this coin, you can even say its sentimetal but here me out first. This is a coin built basically to make downloads faster and better bandwidth. Its currently priced at $0.002 and has a market cap of over 2billion dollars. Its currently ranked 57 in the world of coins.
Second on the list would be Xrp. Built basically to make financial transactions faster. Its worth $0.93 and has a market capitalization of over 44billion. Its ranked 7th.
Then there's Doge coin. The one that was propelled by Elon musk himself who claimed to be the Doge father. It's currently valued at $0.17 and has a market cap of over 20 billion.
Lastly is Automata. This coin is valued at $0.65 and has a market cap of over 110 million. A crypto token that's useable in the newly created metaverse and web 3.
Conclusion
Well, this lecture was worth every word. I've learnt, so far, a new trading strategy that works and also learnt a little more about crypto indexes which is only available to usera on the binomo platform. I was also able to make a trade using the Bichi strategy. Hopefully I'll become a master of this strategy.
Thanks.
Cc
@utsavsaxena11
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