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August 7, 2018

Advanced trading on HUOBI

This is the second article in the three-article series on trading at Huobi, who is more caring than some girlfriends we had and will touchingly send you a text every time you log in. Awwwn! Huobi is - both - one of the most endearing and technically enhanced exchanges around, and we are happy to be introducing the best of its finest aspects to you here.

You can find the first article, The Essentials of Trading AT Huobi, here. By now we hope we have captivated your attention long enough for you to finish the first article so you know how to get in, deposit your funds, buy crypto, and trade, more or less. Huobi, as you well know by now, is one of the largest trading platforms around with a market cap of $990 953 582. It looks pretty good too (where else will you find something like this?):

and if you have read our article with advice on which features to look for, you’ll know that a good design and intuitive interface are also on the list of desirable features for an exchange. So you’re in the right place. Let’s make a move!

Trading

Sign in first by clicking the corresponding button in the top right corner. When you put in your password, a confirmation letter will go to your email, in our case, as we have used the email option when registering. Copy and paste it into the window that pops up, and you’re good to go. Please enable 2FA/Google authenticator before you continue. It’s very simple but very effective at the same time.

We also strongly recommend, if you’re going to stick with Huobi, to bookmark it so that you don’t Google it and get redirected to a suspicious address. This is where you should be if you’re trading.

For beginner traders, we recommend not storing all your crypto at an exchange (in fact, the best thing to do would be probably to store as little as possible in one). Cold storage is the best, and you might even go as far as to try out a subdermal wallet. Right? Maybe not, but for advanced users we recommend spreading your funds across a number of exchanges as cold storage may seem a little impractical if you trade seriously.

Note, by the way, that not all countries support fiat trading at Huobi, so we were granted permission to trade Russian fiat coins, weirdly, but you will have to double check for other countries to avoid getting stuck.

So here you are at https://www.huobi.pro/finance/. You already know how to deposit crypto into your address (we use Bitcoin for example), so transfer the funds from the outside to your Bitcoin address at Huobi.

Please bear in mind that sending the right coins to the wrong address is actually less harmful than sending the wrong coins to the right address, which will annihilate them.

While you may get Bitcoins back from someone you have sent them to (theoretically), sending Bitcoin Cash to a BTC wallet will erase them off the face of the Earth permanently. There are procedures in some cases for recovering coins, but don’t count on it and monitor your transactions carefully, especially with formats as similar as Bitcoin and Bitcoin Cash.

Your next move is to go to the Exchange tab. You will see the standard graph on the right, which will give you some idea of where things are going. We hope you recognize an absolutely hopeless graph when you see one and turn away, but basically, if there is a movement in the right direction, there is a reason to believe the price is rising, so you want to buy the currency.

You may want to use the downward market to make money too, but that is riskier and we recommend getting really good before you start if you want to do things like borrowing money from the exchange and selling them at a lower price.

Underneath the graph, there are the Buy and Sell windows which you are already familiar with thanks to our first article. So the general idea is that you buy when everything is cheap and wait for the price to go up.

We are decidedly against margin trading, like we are against trading with borrowed funds at all times, because there is more risk than necessary, and it also requires more verification, more waiting times, and more sharing of your personal data with a person you don’t know and who could directly benefit from selling it (and your coins). You can find an article on the advantages of decentralized exchanges here (no single point of failure, etc., but also own drawbacks like less tech support and not too many users).

What is the difference between market orders and limit orders?

You will see market orders and limit orders on Huobi. Market orders are the most basic thing ever. Just click on Market order and use the slider below to get the best market price.

Limit orders allow you to set conditions. In that way, they are similar to smart contracts, which will force the system to trigger a deal when a condition is met. In this case, if you want to buy something, and you set a limit, the buy will be executed only when the price has reached that level.

Market orders can suck if you know no other way. Placing a market order will mean using the market’s best price. For example, you want to buy 100 sausages. You look at the prices on the right:

It seems there are sausages available at $10 each. You place an order, but there aren’t that many sausages at that price. You buy all 50 sausages there are. The next best market price for the next 20 is $15, and for the next 30, it is $17. That way, you bought stuff, but the average is much higher than you planned . So-called slippage happens when the price you set and the price you got were different things, and it can work one way or the other, to your benefit or against it.

(We’re back from our lunch break) limit orders help you avoid the awkwardness by letting you choose the price at which you want to sell. So, for instance, you bought some NEO for 0.009316 BTC, and you could set a Limit order for it to only be sold at 0.01338 BTC so that you can sit back and reap the rewards, from which, by the way, the exchange fees will be subtracted.

Still, if you want to make money, you’ll have to wait for a while - the more money you want to make, the longer you will have to wait because everyone will be buying the cheapest stuff and yours will be in the queue for some time. There is no guarantee it will be sold at all. So market orders are quick but not very safe. Limit orders are safe but not very quick.

Using different types of orders is crucial to functional trading in the same way as knowing how different pieces move is crucial to winning a chess game.

Using protection

You can get much farther with a kind word and a gun than you can with a kind word alone. No, wait, that’s a different quote. Well, like many of our American friends would say, never leave home without protection. That is so true that Moscow even started offering bodyguarding services for people who deal with large quantities of crypto. We’re against guns, but for protection, and in light of the recent events it may even turn out the times demand greater protection than before. You may have heard about the recent break-in into Reddit. Reddit stated:

“On June 19, we learned that between June 14 and June 18, an attacker compromised a few of our employees’ accounts with our cloud and source code hosting providers. Already having our primary access points for code and infrastructure behind strong authentication requiring two-factor authentication (2FA), we learned that SMS-based authentication is not nearly as secure as we would hope, and the main attack was via SMS intercept. We point this out to encourage everyone here to move to token-based 2FA.”

Now, we know 2FA does offer some degree of protection, but it is not the ultimate protection we would be using if we were you. In that sense, when you’ve found an exchange you like, check it just to make sure it does offer specialized protection. Huobi is one of our favorite exchanges for a good reason:

“Huobi launched the Investor Protection Fund in January 2018, and buy HTs every quarter with 20% revenue at the secondary market, the HTs we buy will be withdrawn to the Investor Protection Fund, which prioritizes compensating the Huobi. Pro users when sudden risks happen to protect the investor’s rights.”

Huobi.Pro launched another asset protection system for users in Feb. 2018——“The Security Reserve Mechanism”:

  1. Its total amount is 20000 BTCs, this provision belongs to Huobi.Pro, and is put in an independent address, it’s launched to get ready for the extreme security accidents that may happen;

  2. For any asset loss that is not caused by users, Huobi.Pro will prioritize compensating the users with money from The Safety Provisions.

If you have read our article on which features of exchanges we think matter the most, you know we think security is one of the top things on the list. It can be tricky finding out exactly how much an exchange is doing to keep their customers safe, so don’t hesitate to ask the support (and hope they know more than you do).

Rogue Nation

Huobi also offers some Mission Impossible stuff that we really did like, kind of, to make sure you’re really safe from viruses, which is to log in Chrome stealth mode and take a look at your withdrawal addresses, copy them into Word, and check with what your current version of Huobi or your app is offering.

That procedure is, actually, aimed at redirect viruses and fake apps, which there has been a lot of lately, so we offer bookmarking the site too (given you’re on the right page, to begin with, of course).

Reading candlestick charts

In general, charts seem overall clear, so some people just quickly look at them and move on, but you need to know everything about them if you want to start trading seriously.

Although candlestick charts are intuitively understandable, they contain a lot of compacted information, which has made them quite popular recently, at least in the world of crypto. The name comes from, you guessed it, candles, which feature information like open, high, low, and close position.

Composition

Candles are made of two parts, which are the body and the tail. The body is the biggest part. The difference between the top and the bottom part is the difference in price for the period that a candle is responsible for. You can make conclusions about how quickly things change by how tall the candles are. For instance, a candle can be really small or non-existent, which means that the price stayed more or less the same.

Time

Choose the candle size at the top: 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hours, 1 day, 5 days, 1 week, 1 month.

Colors

The colors usually used with candles are green and red. Green means that the price went up, and red means it went down. There are different colors used for this, including black, so make sure you study the relevant materials if you study those.

Open

Open price is the first price that the candle handles. Open price can be the top or the bottom. We know that sounds confusing but wait. If the price went up, the candle will be green and its bottom is the open price (price at the beginning), and the bottom will be the closing price (price at the end). If the price went down, the candle’s top will be the open price and its bottom will be the closing price.

High and low prices

The high price is the highest price traded and the low price is the lowest price, accordingly. These are indicated by candle tails, which will be positioned either above or underneath the candle. Notice candles will change color as they are being formed, for example, if the current price was above the open price but then dropped below.

Volatility

Also, note that the size of the candle (called range) will indicate just how much the price went up or down. By that parameter, you can estimate just how volatile this currency is and choose tactics accordingly. Usually, more volatile currencies need more technical expertise, which is why we recommend having an analyst nearby you can reach out for.

When you’re dealing with something as sensitive as crypto trading, you need to be able to analyze the graphs all the way (more on that in the Pro sections). One of the terms you will come across a lot is Spread.

Spread is the difference between the buy and sell prices for a particular crypto. The buying price is higher, and the selling price is lower - because those who sell want to sell quickly, and those who come up with a buying price want to make money. The market price is somewhere in the middle.

Spread is often used by traders for scalping strategies. For example, one law of trading is that history repeats itself. That means that currencies move in patterns, more or less, and go through similar motions periodically, although they are influenced by many other events. To a degree events at the market are predictable.

You’ll want to choose currencies with the large spread, so you can make money on small changes in price, which are usually easier to predict. The technique called scalping includes buying shares at the price offered by the market and selling them as soon as they go up - very quickly. You do a hundred or so trades during the day, collecting benefits slowly but surely, and end up with a win at the end of the day. Given a good exit strategy, this works, but in order to predict when assets go up, you’ll need a lot of spread.

Check out our next article in the series, which will include more advanced trading strategies, including scalping, and keep an eye out for version 1.0.

We hope you had a good time. We certainly did. We’ll see you soon!

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