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Not human, but Resonance artificial intelligence. Your assistant in learning and using the platform. Knows more about market conditions and traders' behavior than any human. You will meet with him when he sees fit.

Aires

A parameter that can be used to accurately assess the effectiveness of capital management when the risk component is taken into account. The alpha coefficient allows you to accurately estimate the average level of income that an investment portfolio generates. Simply put - it shows how much you have outperformed the market. In any market, there is a benchmark. In the crypto market, that's BTC. If you bought an altcoin that grew 10% over the year and BTC grew 8% over the year, then your alpha is 2%.

Alpha coefficient

Any cryptocurrency launched after bitcoin. The term comes from the abbreviation of two words: alternative and bitcoin. Each successive altcoin offers different and improved solutions that bitcoin lacks. 99.9% of modern cryptocurrencies refer to altcoins.

Altcoin

It is a trading method that is based on executing differently directed transactions with similar assets when a financial difference arises in their value. Simply put, arbitrage on the exchange is based on buying a cheap asset and reselling it at a higher price. But this is not the usual speculation. As a rule, such a transaction requires two similar commodities or two venues. In one place the asset is traded at a low price, in the other at a higher price. The characteristic feature is that both prices tend to come to the same value. The difference between them is the trader's income.

Arbitration

An indicator calculated for a security or a portfolio of securities. It is a measure of market risk. To avoid losses in securities trading and investing, it is important to understand how much risk a security adds to a portfolio. The beta coefficient can help you choose a security that will not weaken your portfolio. Beta shows the degree where an asset or an entire portfolio is dependent on overall market dynamics as measured by a broad market index - such as the S&P 500 or Nasdaq.

Beta coefficient

A database is built according to certain rules - a continuous sequential chain of blocks containing information about all transactions conducted by participants in the system. Each block contains a certain number of transactions. The analogy with blockchain is a necklace. Each bead is a block or record of an action. The chain cannot be destroyed. Thus, the blockchain is an indestructible digital record of action. The reliability of this system has allowed it to be used to improve the efficiency of monetary transactions and the exchange of information among individuals, corporations and even the public sector.

Blockchain

An issuable debt security, the which holder has the right to receive its value in money or other property equivalent from the person who issued it (the bond issuer) within a specified period of time. The issuer of the bond is the company that needs the money or the government. People buy bonds and thus lend their money to the company or the government, expecting to receive a certain return. An investor's income can consist of two components: periodic payments of an agreed-upon amount and the difference between the bond's purchase price and the repayment price. The economic nature of bonds is very similar to credit. Bonds allow you to plan both the level of costs for the issuer and the level of income for the buyer, but they do not require collateral and simplify the procedure for transferring the claim to a new lender.

Bond

Chart view OHLC (Open-High-Low-Close) opening and closing prices, maximum and minimum price value for the trading session.

Candlestick chart

A vertical accumulation of clusters. One bar contains, as a rule, several clusters. This allows you to see in detail the volume of purchases and sales in each individual bar at each price level. In simple words, a cluster bar is a candlestick X-ray. The information contained in the bar is objective and does not assume a guess what is, for example, in the so-called tail of the candle.

Cluster bar

The type of chart underlying the cluster analysis. It shows at what price and at what time volume was traded. The chart consists of rectangles (clusters), within which the following information is embedded: what volume was traded in the asset, more volume was bought or sold at that price, how much more volume was bought or sold at that price, how much more were buy trades than sell trades.

Cluster chart

A particular trend in the market where a participant believes in coincidences and accidents that are not proven in any way.

Conspiracy theory

Convergence (from Latin convergo 'to bring together') is the process of convergence, alignment (in a different sense), and compromise; it is the opposite of divergence. The term is used in various natural sciences and humanities.

Convergence

Either party in relation to the other party. Simply put, a buyer to a seller and vice versa. A counterparty can be: a trader, a broker, a market maker.

Counterparty

A measure of how two random variables will change when compared to each other. In a financial or investment context, however, the term covariance describes the return on two different investments over a period of time compared to different variables.

Covariance

Cumulative delta for a certain period of time. It combines the accumulated delta information and then displays this information visually as a histogram. A delta is the difference between market orders executed at the ASK price and the BID price. Any trade in the exchange takes place on a first-come, first-served basis at the expense of a counter-order (limit order). If the cumulative delta is increasing, it means that the market orders are buying more than selling. If it is decreasing, it means that market sales are used to execute limit buys. The delta value in the analyzed bar takes into account the delta value in all previous bars.

Cumulative delta

A decrease in the general level of goods and services prices; a process that is the opposite of inflation. A situation in an economy when the purchasing money power increases and the prices of goods and services fall. 

Deflatio

Aggregated data of the stock market. DD sifts out the noise of algorithmic trading strategies, which bring chaos to the stock market. It also collects data on static limits in the stock. The slider at the top of the tool allows you to scale the list.

Depth density – DD

(Latin: de decrease + Latin valeo to mean; to cost) - decrease in the exchange rate of national currency against hard currencies in systems with a fixed exchange rate established by monetary authorities. The term was previously used in the context of reducing the gold content of a monetary unit under the gold standard. Devaluation - dictated by economic policy decrease in the real exchange rate. (The term is used in the research papers of the International Monetary Fund). Devaluation is seen as a tool of central banks to manage the national currency, the opposite of revaluation. In a floating exchange rate situation, there is no direct official assignment of the value of the national currency. That is why the term depreciation is used for depreciating currencies and appreciation for strengthening currencies, which means that the central bank can only change the rate by indirect methods (currency interventions). In these circumstances, depreciation or appreciation will not be the result of the adoption of an official document, but the result of a change in the value of the currency under the influence of market mechanisms.

Devaluation

A term used in economics to denote movement along diverging lines: an increasing gap between the levels of development of individual countries, increasing differences between national economic models and their individual structures and mechanisms.

Divergence

Compiling an investment portfolio by buying different financial instruments that are not related to each other. That is, fluctuations in the value of one asset should not be reflected in the value of the others. The aim is to reduce the risk of losses and to systematize income.

Diversification

Bitcoin dominance index, bitcoin dominance index) is a synthetic indicator that is calculated as the percentage ratio of bitcoin capitalization to the capitalizations of other cryptocurrencies.

Bitcoin dominance

An exchange platform where buyers and sellers can make transactions with each other. The exchange can be money, commodities, securities, or derivative contracts. In general, the exchange works almost like an ordinary grocery market, i.e. everything is decided by the balance of supply and demand: the higher demand is for this or that commodity, the higher its price. Only at the exchange commodities are securities, or in other words, assets,

Exchange

An agreement under which one party (the seller) undertakes to transfer the goods (the underlying asset) to the other party (the buyer) at a time specified in the contract or to perform an alternative monetary obligation, and the buyer undertakes to accept and pay for that underlying asset, and/or under whose terms the parties incur counter monetary obligations in an amount depending on the value of the underlying asset indicator at the time of the obligations performance, in the manner and within the term or time period specified in the contract. Forward contract - a binding futures contract under which the buyer and the seller agree to deliver goods of a specified quality and quantity or currency at on a specified date in the future. The price of the commodity, the exchange rate and other conditions are fixed at the moment the transaction is made. Unlike futures contracts, forward transactions are not standardized.

Forward

A derivative financial instrument (contract) at an exchange for the purchase and sale of an underlying asset (commodity, security, etc.), with its conclusion the parties (seller and buyer) agree only on the price level. The other parameters of the asset (quantity, quality, packaging, marking, etc.) are specified in advance in the specification of the exchange contract and are standard for that trading floor. The parties are liable to the exchange up to the fulfillment of the futures contract. The futures may be regarded as a standardized type of a forward (deferred contract) which is traded on the organized market with mutual settlements centralized within the exchange. The main difference between a forward and a futures contract is that a forward contract is a one-time over-the-counter transaction between a seller and a buyer, while a futures contract is a recurring offer traded on an exchange.

Futures

A term in technical analysis of quote flow, which describes the situation of a significant difference between the closing price of the previous timeframe and the opening price of the next one. Visually, a gap corresponds to a gap between neighboring elements on a price chart. Most often it appears because of the non-trading time between sessions, when new information comes in, but the markets are closed and the participants cannot quickly put it into the quotes. The opening price of the next session differs significantly from the previous day's closing price and a gap is formed on the chart.

The largest web service for hosting of IT projects and their collaborative development. The web service is based on the Git version control system and developed in Ruby on Rails and Erlang by GitHub, Inc. This is an online code storage and synchronization service for programmers and application developers. The main purpose of the service is to support collaborative project development and version control.

GitHub

Initial coin offering - a form of investment attraction in the form of the initial sale to investors of a fixed number of new cryptocurrency units, obtained by one-time or accelerated generation. There is also a form of initial token offering. In addition, the term ICO is often replaced by the word crowdsale.

ICO – Initial coin offering

Initial exchange offering is a variant of ICO, which purpose is the admission of tokens to trading on the exchange. However, this method, unlike the usual listing formats for digital assets, is supervised by the exchange. The initial exchange offering is a listing of tokens on a trading platform. In this way, the project (which is the issuer of the cryptocurrency) tries to attract additional investment by selling off some of its digital assets.

IEO – Initial exchange offering

The state of the market at the time when demand prevails over supply or vice versa.

Imbalance

An increase in the general price level of goods and services over a long period of time. With inflation, the same amount of money can be used to buy fewer goods and services after a certain period of time than before. In this case, they say that over time, the purchasing power of money has decreased, money has devalued - lost part of its real value. In a market economy, inflation manifests itself in an open form - an increase in prices.

Inflation

Order to buy or sell at a specified price. Execution is not guaranteed.

Limit order

(from Latin liquidus liquid, flowing) - the property of assets to be sold quickly at a price close to the market price. Liquid - convertible into money. There are highly liquid, low-liquid and illiquid values (assets). The easier and faster it is possible to exchange an asset, considering its full value, the more liquid it is. For a commodity, liquidity will correspond to the speed of its sale at its nominal price, without additional discounts.

Liquidity

The value of the asset, calculated using the formula: current market price multiplied by the volume [issue](?id=moneyIssue)

Market capitalization

Liquidity or quote provider. Today's market maker is a mathematical algorithm. It provides liquidity for the transaction in automatic mode, which ensures a continuous trading process.

Market maker

Order for immediate purchase or sale of a financial instrument at the best current market price. The duration of the order execution is determined by the volume availability of the limit buyers and sellers.

Market order

Issue of money into circulation, leading to an increase in the money supply. Issuance of securities is a sequence of actions of the issuer, established by law, to place issuable securities; release of securities into circulation, including the sale of securities to their first owners - citizens or legal entities.

Money issue

A country or territory with special conditions for foreign companies to do business. Among them - low or zero taxes, simple rules of corporate reporting and management, the ability to hide the real owners of the business. In this regard offshore zones are often used for crimes: laundering of criminal money, state corruption, fraudulent operations. There are more than 50 offshore zones in the world.

Offshore

A contract where the buyer of an option acquires the right, but not the obligation, to buy or sell a given asset at a predetermined price at a time in the future or during a certain period of time. In this case, the writer of the option has an obligation to sell the asset or buy it from the buyer of the option, respectively, in accordance with its terms. Option - is one of the derivative financial instruments. There are options to sell (put option), to buy (call option) and bilateral (double option).

Option

A list of orders to buy and sell securities, contracts and other assets of participants on the futures, commodity, crypto or stock markets. Usually the list is presented in the form of a table. Each order contains information on the quote (value) of assets and their quantity. In the upper field of the book there are bids for sale (Ask). Usually they are highlighted in red. The lower field contains buy orders (Bid) highlighted in green. In the center of the book the best orders are concentrated: the highest buy order and the lowest sell order. The price difference between them is called [spread](?id=spread). The tighter spread (i.e., the smaller the difference between the bid and ask prices), the more liquid the lot is considered

Order book

A trader's search engine consisting of a list of trading pairs available for analysis. It provides consolidated information about assets from analyzed exchanges in one place.

Pairs tree

One of the branches of technical analysis, which is based on the technique of price behavior assessment without the use of indicators. Trading by Price Action implies making decisions only on the basis of a candlestick chart.

Price action

Affects the data download speed. This setting changes the size of the cluster in height. The price step is individual for each instrument and timeframe. The size of the price step is adjusted to the volatility of the asset.

Price step

A sharp rise in the markets, followed by a violent collapse.

Pump & Dump

The price of an asset that a seller or a buyer announces and at what price they are willing to buy or sell. It usually refers to a relatively fast-changing price, such as an exchange price. The direct quotation expresses the price of a unit of trade object and is found in most cases. The inverse shows how much a commodity can be bought for a unit of money.

Quotation

The process of making and executing management decisions aimed at reducing the likelihood of an adverse outcome and minimizing the possible losses of a project caused by its implementation.

Risk management

Indicator that allows you to estimate the potential for profit in a trade relative to the possible loss. The risk is determined by the stop order and is equal to the difference between the price of entry into the trade and the price of the stop order to exit it with a loss.

Risk/reward

Making quick deceptive moves. A spoofer can make other traders think that oil prices are falling - for example, by offering to sell futures contracts at $45.03 a barrel, when the market price is $45.05. After other sellers start selling at that low price as well, the spoofer quickly turns around, canceling the sell order and instead buying at the $45.03 price he himself set in the market with a fraudulent order.

Spoofing

The difference between the best bid prices (Ask) and ask prices (Bid) at the same time for an asset (share, commodity, currency, futures, option). To ensure market liquidity, maximum spreads are usually set on exchanges. If that limit is exceeded, trading may stop. The smaller the spread, the more liquid the asset, and vice versa.

Spread

A common name for cryptocurrencies whose exchange rate is tried to stabilize, for example by pegging quotes to fiat currencies or exchange-traded commodities.

Stablecoin

An intermediary in the stock or crypto markets. This is a company that has a license to work on the stock market and has the right to make transactions in securities for the investor. An individual does not have the right to place orders on the exchange: only accredited market participants can do that.

Broker

Indicator of price changes of a certain group of assets. One can think of a stock index as a basket of assets united on some basis. The most important thing, when studying the index, is what assets it is formed of. Exchange indices allow to estimate the state of the market as a whole, to determine the current moment in the economic cycle.

Stock index

A type of security giving the right to receive dividends from the company's net income, the right to participate in management, and the right to property in the event of liquidation of a joint stock company, in proportion to the number of shares held.

Stock

An exchange order placed in the trading terminal by a trader or investor in order to limit their losses when the price reaches a predetermined level. StopLoss is a protective order.

Stop loss

An exchange order placed in the trading terminal by a trader or investor in order to limit the amount of profit.

Take profit

A set of mathematical and statistical tools for predicting likely price changes based on patterns of past price changes in similar circumstances.

Technical analysis 

Short name in the exchange information of quoted instruments. It is a unique identifier within one exchange or information system. It is used in order not to constantly print in bulletins the full name of securities or other trading objects.

Ticker

Detailed information on transactions, where you can see how much an asset was bought/sold (volume), at what price, when it was bought/sold (time), which order was the initiating one, i.e. who sent the order from the market, the buyer or the seller (direction).

Time & sales

Market abstraction. A convention and agreement that people adhere to. The interval of time which is used to convert quotes (the current price of an asset) into chart elements. It allows the trader to see how the price changed within this interval. The timeframe is depicted in the form of ready-made elements - it can be points on a line chart, clusters, bars or Japanese candlesticks.

Timeframe

Dictionary

A unit of record that is not a currency. Tokens are a register entry distributed in a blockchain.

Token

A kind of business plan for a cryptocurrency (token). This is a balanced economic model of the token, which considers the interests of all participants (investors, users, founders of the coin, developers, and so on).

Tokenomics

The ratio of the prices of the two assets included in a given pair. The first asset in the pair is called the base asset, and the second is called the quote currency.

Trading Pair

Trend (anglicized from trend) is the basic tendency of something to change: for example, in mathematics, a time series. Trends can be described by various equations - linear, logarithmic, power and so on. In financial markets, trends exist only on history.

Trend

A financial indicator that reflects how much the price of an asset or commodity changes over a short period of time. In other words, it is the range where the price fluctuates over the course of a day, week, month, year. Volatility is the most important financial indicator and concept in financial risk management. The greater volatility of an asset, the greater risk for the investor. At the same time, significant price fluctuations provide an opportunity to make money on it.

Volatility

The method of trading, seeks to establish the cause of price movements and, based on that cause, predict future price direction. see [market conspiracy theory](?id=conspiracyTheory)

Volume spread analysis – VSA

A form of market manipulation when a trader or investor buys and sells the same security over a short period of time in an attempt to mislead other market participants about the price or liquidity of an asset. Wash trading is illegal in the securities markets, but the crypto industry has yet to establish rules.

Wash trading

A type of technical analysis by which the price movement is considered within two main groups of waves: impulses (price movement along the trend) and corrections (price movement against the trend). The most popular direction of analysis is the Elliott Wave Theory. It is based on some constant cyclic pattern in human behavioral psychology. According to Elliott, the behavior of market prices can be clearly defined and highlighted on the chart in the form of waves and the following market phases - bullish and bearish.

Wave analysis

Technical documentation that is used to explain and justify project decisions. It outlines a detailed description of the project, its architecture and method of interaction with users. Additionally, the document includes information about the technology of cryptocurrency issuance, methods of distribution and use of tokens, information about the current market situation and further development plan.

Whitepaper

Experienced traders will help you understand the fundamental laws of the market

Professional community

180 terms every trader and investor working with financial markets must know

Trader's dictionary

Detailed interactive lessons on trading and analyzing financial markets. You will learn how to find liquidity, calculate risks and estimate the real demand for an asset. You will be guided through the process from the easy to the difficult with Aires, your personal assistant.

Practical tasks based on the example of the real market, which will help you to start successfully and improve your strategies

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Mentorship

Definitely not. Because there is no proven, objective reason to search among the noise of the futures trades for reasons to move the spot market. The futures market does not move the price of spot assets. It always follows the price of spot assets.
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A promise to pay the difference (a bid reward) can't move the price of the real commodity. No matter what financial services salespeople tell you, it is physically impossible.
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It is possible to trade futures and options, they are liquidity for us, but to analyze them is to engage in self-deception.
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But if a market maker does decide to start manipulating the market, he will start pouring money into the spot market and shifting the balance of supply and demand, he will definitely leave a lot of traces and create a sustained deficit. And this we will notice (identify) fairly quickly. If he did not leave traces, it means that he did not affect the balance, and therefore he will not move the price.


Should you analyze the futures?

Anomaly (Greek ανωμαλία) - deviation from the norm, from the general picture, irregularity.
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In our case the anomaly is the increased number of transactions, increased volume, overshoot of delta between purchases and sales, large delta between the volumes of limit orders for purchase and sale. The anomaly can be understood by evaluating the dynamics of changing of these parameters over time.
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For example: If we see that the conditional demand was lower at an asset till today and the price hasn't risen yet, but the number of deals starts to grow and the number of BIDs in the order book grows - this is an abnormality, it is a sign of interest of the participants. If the interest will remain or grow, the participants will create a deficit (see [Deficit](#common?deficit)).

Anomaly

Apophenia is an experience consisting in the ability to see structure or relationships in random or meaningless data. The term was introduced in 1958 by the German neurologist and psychiatrist Klaus Conrad, who defined it as "unmotivated seeing of relationships" accompanied by a "characteristic sense of inadequate importance" (abnormal consciousness of meaning).
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Pareidolia, pareidolic illusion, is a type of visual illusion that occurs in both mentally disturbed and healthy individuals. It consists in the formation of illusory images, which are based on details of a real object. Thus, a vague and incomprehensible visual image is perceived as something distinct and definite - for example, figures of people, animals, or fairy creatures in clouds in the starry sky, wallpaper on a wall, or a carpet. In the mentally healthy, pareidolia can manifest itself, for example, as a false perception of an image of a person's face on the surface of the moon or Mars.
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Wave analysis, technical analysis figures, Gann's method, and other technical analysis occupy a place in our heads because of the effects of apophenia and pareidolia.

Apophenia and pareidolia

**Arbitrage** (from Fr. Arbitrage - a fair decision) is several logically connected transactions aimed to profit from the difference in prices of the same or related assets at the same time on different markets.
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Thanks to arbitrage algorithms, prices for the same asset do not vary significantly from market to market. If the price on one exchange has risen and not yet on the second exchange, the arbitrage algorithm buys on the second exchange at a low price, thereby raising the price and sells on the first exchange at a higher price, thereby lowering the price.
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Arbitrage does not only work on the same trading pairs. For example, a AAA conditional coin trades to BNB, BTC, ETH, XRP and USDT.
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If the AAA coin goes up in value due to its own appreciation, then against all quoted currencies its price will go up.
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Alternatively, the AAA coin's price may rise due to the depreciation of quoted currencies. For example, if the BNB against the USDT has fallen in price, the AAA price for the BNB will rise. At the same time, the AAA price for USDT will remain unchanged.
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Arbitrage algorithms not only equalize the price, but also distribute liquidity. The volume of money is finite. If market participants are actively selling AAA coin for BNB, the arbitrage algorithms, determining the scarcity, begin to move the volume of BNB from the BNB/USDT and BNB/BTC pairs, thereby increasing the value of BNB. These actions lead to a series of actions by other algorithms, resulting in increased volatility of the entire market.
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Another example: imagine that you have a coin and it is traded on 2 exchanges and each has 3-4 pairs. We need to equalize the price and balance the volume in the order book, so that someone does not move the value of the asset to the clouds or to the bottom. We can stop the growth of the price by our emissions. And we have to stop the fall in price with money. This means that we have to buy the quoted currency and put orders. Thus, when buying currencies, we affect the quoted currency.

Arrbitrage

Statistics from most brokerage firms in any market shows: 90% of traders lose 90% of their capital in 90 days.
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This fact allows a large number of forex kitchens to exist and also helps market makers not to hedge positions in the spot market.
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According to data from Market Stat, we know that the balance between buying and selling on liquid assets fluctuates around 50%. This means that the market maker's total position will be approximately neutral at the end of the calculation period. How much he sold, how much he bought.
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If the balance is negative at the end of the period, this difference will be covered by the return of the commissions. If the balance is positive, MM gets a good return.
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Other market participants who participate with their money in trades also help the MM to equalize the balance.

Market Maker Balance

We highly recommend to read the article Econometrics on Wikipedia. It is there where you will find all the necessary information about how and when the misconceptions about data analysis began. In the text below, replace the word "econometrics" with "technical analysis.
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In the early 1970s, Worswick sharply criticized econometricians for their "lack of connection to concrete facts. He argued that econometricians "are not so much engaged in inventing means of systematizing and measuring the available facts as they are in creating an innumerable multitude of pretended ways of doing so. At the same time, F. Brown argued that "the construction of time series regressions is only good for deception. V. Leontiev characterized econometrics as "an attempt to compensate for the conspicuous lack of available data by extensive use of more and more sophisticated statistical techniques".
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Thus, Mises wrote: "They are unable to understand that in the field of human activity statistics is always history, and that hypothetical correlations and functions describe nothing but what happened at a certain point in time in a certain geographical area as the result of the activities of a certain number of people. As a method of economic analysis, econometrics is a childish numbers game that adds nothing to the explanation of problems of economic reality."
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Keynes writes: "Econometric analysis becomes like "children's puzzles where you have to write your age, multiply it by something, add something else, subtract something else, and finally get the number of the beast from St. John the Evangelist's Revelation.

Reasons for TA arising

**Deficit** (Latin deficit "lack", deficio "to be poor") is a shortage of something. The excess of aggregate demand over aggregate supply. A shortage of a resource or factor of production.
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In the market, it is a lack of volume of an asset at certain prices. A shortage of volume to sell always leads to an increase in price.

Deficit

A futures contract is a derivative financial instrument (contract) concluded on an exchange for buying or selling an underlying asset (commodity, security, etc.) where the parties (seller and buyer) agree only on the price level and delivery date. The other parameters of the asset (quantity, quality, packaging, marking, etc.) are specified in advance in the specification of the exchange contract and are standard for that trading floor. The parties fulfill their obligations to the exchange up to the fulfillment of the futures contract.

Definition

Technical analysis is a set of tools for predicting likely price changes based on patterns of past price changes in similar circumstances. It is based on the analysis of price graphs. Technical analysis is most widespread in highly liquid free markets. (Wikipedia)

The gambler's error or false Monte Carlo deduction reflects a common misunderstanding of the randomness of events. It is related to the fact that a person is usually not intuitively aware of the fact that the probability of each subsequent outcome does not depend on the previous outcomes of a random event.
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Probability theory treats each event separately as independent of the previous ones.
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Example: In the case of a coin flip, there is a 50% chance that 9 tails in a row will fall. If the coin is "normal" ("right"), then for many people it seems obvious that the next flip of a coin will have a higher probability: it is hard to believe that "tails" can fall for the tenth time in a row. However, such a conclusion is erroneous. The probability of the next heads or tails roll is still 1/2.
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Because of the effect of apothecia and pareidolia, it is even easier for people using price analysis to draw false conclusions. And random successes perpetuate the misconception.


False Monte Carlo deduction

We all want to trade one asset. Because we don't want to waste time looking for it.
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We remember that a coin made x3 and now the price is down again. We expect it to do x again and we don't want to miss it. We want to "understand" this asset. However, that's not how the market works.
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But! Let's be honest – we are not interested in the asset, but in the probability that it will rise again. That's why we need to understand not a single asset, but the mechanism of the market and the balance of the market. That's where the truth is! If we, instead of looking for coins that have anomalies, follow the ones we like, we'll miss the good stuff and end up with nothing. We should not wait and think, but look for what has already happened or is happening now.

Favorite coin / asset

It does not and will not exist. All of our chat rooms are designed to form a professional community of traders. Communicating on free topics in professional chats is unacceptable, because it turns the work process into a clownery, and the chat room itself into a "spam machine". Distraction of the trader during work can lead to mistakes, incorrect decisions and loss of capital. That's why there is strict moderation in all chat rooms.

Floodbuster / Deleting messages

It is an imbalance between the volume of purchases and the volume of sales.
Signs of imbalance are called anomalies (see [Anomaly](#common?anomaly)).

Disbalance

The trading volumes in the settlement derivatives market are not equal to the trading volumes in the spot market. They are completely different markets, which have nothing in common with each other except for the name of the underlying asset. A derivative is a liability, not an actual commodity. You can't buy a commodity by placing a bet.
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Futures come in delivery and settlement. And the market maker's balance can be negative because the market maker or counterparty can enter the spot market at any time to hedge his positions or buy the underlying asset.
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In practice, for deliverable futures the underlying asset is or will be available at the time of settlement. Therefore, there is no need to take it from the market additionally.
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Position hedging is also very rare. Because market makers are usually ready to meet their own needs. Besides, a market maker needs only money to conduct mutual settlements. The underlying asset does not take part in the settlement futures trade, because it is only an obligation to pay the difference.
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It is necessary to hedge positions only when the balance is heavily skewed. This can occur when the spot market is highly volatile.
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Therefore, theoretically, those who hedge their positions when the balance is highly skewed will have an impact. In practice it is very rare.
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P.S.: Any deal is a commission, the market maker is a participant who calculates his profit better than any retail trader, so he will not do unnecessary operations to hedge positions. It is not financially profitable.


Impact of the futures market on the spot market

Most financial market participants have false beliefs about how that market functions and what laws govern it.
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Subjected to the Dunning-Krueger effect, which is "People with low skill levels draw erroneous conclusions and are unable to recognize their mistakes because of their low skill levels," participants become hostage to their own false beliefs and are unable to see an objective market situation.
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The first step on the way to an objective understanding of the market is to get rid of false beliefs.
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This, of course, contributes to the growth of the deposit.

Foreword

The price change is a consequence of the volume change.
No indicator reflects the real state of the market, because it is impossible to analyze the price to understand how much money is waiting in the bids and how much money has already been involved in the transactions.
Not a single candlestick configuration does not predict further arbitrage action.
Not a single "support" line shows the real state of demand for an asset. Moreover, it does not predict even the potential appearance of money in the order books.
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Not a single technical analysis figure shows the balance between supply and demand.
No "wave" predicts people's future behavior. It can't know if people will still buy, it doesn't know motives which push participants to make transactions.
No Fibonacci zone guarantees the appearance of money in the order books, much less guarantees that even when the prices, buyers will buy creating a "correction."

The main reason for low TA efficiency

For example, a brokerage firm may be a market maker (MM). According to a contract with the exchange it undertakes to keep simultaneously placed orders with the difference between prices of purchase and sale not more than the stipulated value for the stipulated time, the exchange gives certain advantages to a market maker, for example payment of commissions.
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The market maker on the futures market is a counterparty who fills order books with orders. He undertakes to buy and sell the asset. His task is to prevent large price spikes and price gaps between the quote and the price of the spot asset.
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A common misconception: The market maker takes money, pulls down stops and always makes money.
The answer is that the market maker is always in the order book and is always executing incoming orders. At the same minute MM can sell 1000 BTC contracts and buy 1000 BTC contracts with limit orders. The MM is the same market participant, as the retail trader, he doesn't know the future, so he can't know where the price will go. Constant execution of all participants levels the profitability of MM in case of traders' errors. Because of the specifics of MM, it is very difficult to take out the stops, his balance and the potential reputational risks with penalties from the exchange will not allow it.
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The most important indicator for MM is its total balance (see Market Maker Balance).

There are two sides: the Sell Side and the Buy Side.
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The Sell Side is the side of the sellers of services. Exchanges, brokers, software, analytics, news, investment funds. It is this side that is more responsible for the development of the market infrastructure and the industry. They adjust the direction of development.
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The Buy Side is all the participants who take advantage of everything the Sell Side offers. Because the Buy Side pays a large number of commissions, the Sell Side has the opportunity to develop the industry and make its services cheaper.
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The Buy Side can be roughly divided into those who invest a lot and long term, medium term investments and short term speculation (including HFT, LFT and arbitrage). The higher the amount of capital, the longer the duration of a position's set up and, consequently, the longer the period of exiting the position.
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The higher the amount of capital, the lower the impact of ad hoc decisions. Large capital creates sustained deficits and has the greatest impact on asset prices. It is large capital that buys all price declines, averaging out its investors' positions, thereby stopping the price decline. Or, by dumping, it strengthens the overall trend.
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The other groups of participants create daily volatility by creating and eliminating deficits everywhere.

Market participants

Texas sharpshooter fallacy is a term from methodology that describes a fallacy where only similar data are taken while different data are ignored, leading to incorrect conclusions.
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The expression "Texas sharpshooter fallacy" is taken from a story about a Texan who first shoots at a barn and then, at the place where the largest number of holes appeared, draws a target, claiming his supposedly successful hits.
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For example, in the market, when parameters for a "predicting" algorithm are optimized according to some data set, and correctness of a prediction model is checked using the same data. Or when indicators and trading bots are adjusted to the history, testing on the same history.

Texas sharpshooter fallacy

Derivative - an agreement (contract) whereby the parties obtain the right or undertake an obligation to perform certain actions with regard to the underlying asset.
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A derivative has the following characteristics:
Its value changes following a change in the price of the underlying asset (interest rate, price of a commodity or security, exchange rate, price or rate index, credit rating or credit index or other variable).
It requires little initial outlay as compared to other instruments whose prices react in a similar way to changes in market conditions.
Settlements on it are made in the future.
Example: The price of a Bitcoin futures on a CME exchange is based on prices from several spot exchanges.
Click here for more details.
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In trades in settled derivatives, there is no spot asset involved. Participants simply agree to pay each other the difference between the transaction price and the final price.
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The quoted futures price may be different from the underlying asset. The market maker and participants may or may not match the price. This depends on a variety of factors, mainly the market maker's internal balance sheet (see Market maker).

Price formation

Market making, like any other business, is a risk. Market making is profitable when you have your own exchange and enough active people who trade and perform all the functions of a market maker, while you, at no risk, receive a commission on transactions and simply ensure that the total balance of quotations is 50/50.
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In all other cases, market making is profitable only with very large capitals and only on an annual basis.


Is it profitable to be engaged in market making?

If you are interested in an asset, you first need to open it through the Resonance platform, look at the cluster chart, look at this asset to all pairs on all available exchanges, look at all types of charts: volume, delta, number of trades.
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If you notice any unusual activity, you need to take a screenshot of this activity and drop it into the chat with the hashtag of the coin (e.g. #GAS or #XLM) and a description of what you see.
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This will help you better understand for yourself what you see. It will also help others notice what they may have missed. It will help others learn. It will make our community effective in finding good trading ideas.
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Before you post, check through a search for this hashtag to see if someone has already analyzed this asset recently. And your post may be able to supplement or update it.

Recommendations for message design

**Regularity**
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For example, the demand for warm clothing increases in winter. All clothing retailers know this, and they begin to offer more warm clothing. The competition grows. Over time, the pattern reaches a state where it is possible to make money only at the cost of large investments.
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**Inefficiency**
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Inefficiency should be capitalized on. If the city's point A to point B passenger distribution is poorly performing, this is a great opportunity to set up a distribution company and make a profit.
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By eliminating inefficiencies, we attract attention and increase competition. By making the market more efficient, we generate interest from participants with money, thereby developing the market. And new entrants create other inefficiencies, by eliminating which we make money.
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It's a vicious circle that results in increased quality of service and higher standards of living.
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An efficient market is a stable balance in the volume of buyers and sellers. When the price does not go up, and there are more buyers and fewer sellers, then there is a shortage, and that is inefficiency, which should soon come to a balance and, as a consequence, an increase in price.

Regularity or ineffectiveness

Yes, we are a sect (lat. secta – school, doctrine). Our doctrine is to cut off anything that is not proven by facts, figures, or at least common sense. Truth cannot be criticized or questioned. Fantasy and wishful thinking are very shaky grounds that we immediately discard. That is why we do not use technical analysis (TA), wave analysis, mathematical indicators, VSA, Price Action, candlestick patterns and so on.
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Random coincidence does not produce stable results. That is why we only rely on supply and demand analysis on the spot market.
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Sometimes we speak sharply. In particular, when a person appears in the chats who correlates us with TA. After a while he either becomes completely disappointed in TA or leaves us. It's not easy to accept the fact that TA is ineffective, that a line drawn on the monitor doesn't add money to the order book. That's why dialogues on these topics are meaningless and suppressed by the community.
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We are against the use of inefficient, unproven methods of market analysis. Spending time to prove ourselves otherwise is ineffective. Millions of people in the world have failed to prove it. We won't be a million first.

Sect

The market is three parameters: time, price, and volume. Participants exchange volume at different times at different prices. When participants can't see each other, they can't negotiate. They can only offer their volume at some price (a limit order) and buy the volume that is available at some price (a market order).
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If the buyers have more money than the volume of the asset at the current price, the buyers will buy all of the volume and the price of the asset will go higher, and the asset will be in deficit. A volume deficit always leads to a change in price.
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Volume deficit is the cause, price change is the effect.

Cause and effect (supply and demand)

No. It never did.
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A change in price is a consequence of volume behavior. And volume behavior is a consequence of the actions of market participants (see Market Participants).
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Proponents of technical analysis say that when the price reaches a certain level the participants will start buying. Technically they're right: they will buy as well as sell. Because the market is all buying and selling. You can't buy if you won't be sold.
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It's presumptuous to claim in advance that when a certain price point is reached, the amount of money in buyers will exceed the amount of assets in sellers, and that after all the purchases have been made, they will have capital to continue trading (see Arbitrage).
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The false Monte Carlo deduction and the Texas sharpshooter fallacy vividly describe this fallacy.


Does TA describe the psychology of participants?

Frequently asked question

In deliverable futures the buyer shall buy and the seller shall sell the quantity of the underlying asset stipulated in the specification on the date of the contract execution. Delivery is made at the settlement price fixed on the last trading date. In case the contract expires, but the seller is out of the goods, the exchange imposes a fine.
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Cash-settled (non-deliverable) futures implies that the participants settle on the difference between the contract price and the actual asset price on the contract date without delivery of the underlying asset. It is commonly used for risk hedging purposes, changes in the price of the underlying asset or for speculative purposes.


Futures types

VSA (Volume spread analysis) - a method of graphical analysis based on the identification of patterns and relationships between changes in trading volume price at a certain time interval and its influence on subsequent quotes of the trading instrument.

You might think that if the word volume appears here, then it is effective. But no. In this method, price analysis is the key.
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For example:
Shorting of Thrust (SOT) - selling attempt - a signal when a sale is moving up and trying to get past some level that someone is selling (Wikipedia).
Up-Thrust - a manipulative signal where price makes an attempt to go up (Wikipedia).
VSA uses candlestick charts (see Candlestick chart, section TA). This method discards the presence of arbitrage algorithms and the concept of market balance. VSA rejects the presence of volume manipulation and spoofing.
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All VSA analysts without exception claim that any price movement is market maker's manipulation. If a person put a stop loss under a level and the price went down there so that their stop loss triggered, they claim that the MM took their money. Listening to such analysts, you get the impression that there are only two people in the market: the market maker and he. That the price was lowered not by active sales on the spot market, but by MM's desire to take the trader's money (see Arbitrage).


What is wrong with VSA

Liquidity is capital. And any capital affects the market. The analyst's task is to determine the balance of the asset (the state of balance between supply and demand). The trader's task is to calculate the liquidity of the asset, assess the amount of capital under management and evaluate the permissible position size for the given liquidity of the asset, calculate the risk per trade and gain a position. If necessary, to exit a position without upsetting the balance of the market.
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Each asset has its own balance. Each trader has its own volume of capital. Decision-making on prices and volumes of entry and exit is a matter for each trader. What is acceptable for one is unacceptable for another. One looks at the scale of the last hour, someone looks at the scale of the last year. One has $100 capital, the other has $100,000.

Where are the signals?

First of all, in the market, it is the calculation of risks that is important, not profits.
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Everyone has an opportunity to enter a growing market successfully and multiply capital. Only we all know millions of examples where people lost everything on a single trade. The size of the profit is proportional to the size of the risk (see Level 6 training).
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Psychological pressure: when a person has already understood market principles and uses only supply and demand analysis he is more likely to stick to risk management. But if he is stimulated by showing other people's successes and big ROIs, he may start to feel inferior and want to do the same. He will probably start to increase his risk per trade (increasing his position volume with or without leverage).
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Yerkes-Dodson's law (motivation level as an inverted "U"): when there is little reward, the work is done "offhand". In proportion to the growth of the reward, the effort put in increases. In this case, the excitement from other participants increases and, as a consequence, the number of errors increases due to psychological pressure. Conclusion: weak motivation is insufficient, and excessive is harmful.
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As a result - drained capital and disappointment in everything: the market, tools, people around.

Why don't we share deposit growth numbers

The market is liquidity.
Liquidity is money.
When we trade, we make a lot of transactions.
A lot of trading is liquidity for those who trade intraday and execution of orders of large investors who gain a position over the long term.
A lot of trades means commissions for exchanges and brokers.
The earnings of exchanges and brokers contribute to the development of infrastructure and increase the number of people in the market. Accordingly, liquidity will increase.
The better the infrastructure is developed, the more arbitrage algorithms and the less price manipulation. Less manipulation makes the market more secure, which attracts traders and investors.
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We share working strategies so that more people will come to the market. Because everyone will get what they want, traders get volatility and liquidity, funds get liquidity and perspective, exchanges get liquidity and commissions, product companies get clients and infrastructure to develop further.
Resonance will get a professional community, changing the usual ways of doing things.

Why we share a working trading strategy for free

To analyze the market, you need the most current and up-to-date information on supply and demand now, not in a historical perspective. It is important to spend a minimum of time evaluating the current state of a single asset. That's why the charts are set up for the fastest possible viewing and show the most necessary information. 
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If we did not see anything unusual immediately, then why look closely into the chart and try to find something there? It's better to look through hundreds of assets and find really obvious trading opportunities than to try to make them up where they don't exist.