MDR Peaks & Valleys strategy

~ 0 min
2020-06-13 04:17

Hello Everyone, I am going to talk to you today about one of many ways that you
can use our site to help you find gains trading. At the moment we are in beta and
we are a bit of a secret weapon as not many people know about us yet.

Before we show you our technique for trading MDR peaks and valleys, and this is important - Technical analysis has been being performed and perfected for around 100 years now. This book, “Technical Analysis of the Financial Markets” is somewhat of a 500
page bible for technical analysis and has been around a long time. The book was
originally written as many of our common day “T””A” practices were being defined
and was later revised around the year 2000. The book outlines 3 major components
to technical analysis - Price, Volume & Open Interest. But the forefathers of “T”“A”
who wrote those trading strategies for Price and Volume, really just glaze over open
interest, and here is why - Traditional stock markets only support a view into open
interest for contract vehicles such as futures and options. Traditional markets are
not capable of providing open-interest on individual assets, they cant tell you how
many buy and sell orders there are for shares of Apple, Microsoft or shares of any
other individual asset.


With the advent of crypto-currency exchanges, this changes everything! Now for
the first time ever, we can see and chart open interest on individual assets. This is
something our “T”“A” forefathers and traditional traders today could only dream of.
This is why we say we are reinvigorating Technical Analysis. We believe that
numerous methods of techncial analysis for this data will emerge, presenting the
world with a new round of TA forefathers. So analysts, come to our site and
establish your methodology and perhaps find your place in future history books.
Now let’s talk about trading MDR peaks and valleys, its essentially relying on order
book ratio trending as an absolute confirmation to price action. This is just one of so
many ways to use this data but we like it because it’s really easy to use.


So what are you looking at when you look at MDR? The MDR is the Market Depth
Ratio, of the order-books - this is a single percentage, plus or minus, that represents
the leaning of the order books. So a negative 5% MDR indicates there is currently
5% more asks than bids by overall book value, this is a powerful market sentiment
indicator.


We are integrating trading view charts as we speak, in the meantime, I am using a
plugin to draw on my browser for you today.
The MDR peaks and valleys are exactly what they sound like, now let’s see what
they look like in practice and how they work.
I have purposely chosen several assets that have recently made price moves, but
let’s start with the global market - this is all the assets concatenated for a single
market view, which by the way, you can also click up here and see assets by
regional market and filter out exchanges, another pretty cool first to market
feature.


VCDepth.io MDR Explainer Script 01a
Now lets look at this big valley and subsequent peak. As soon as we see the
previous peak pull back, this one was really small, but we signaled the potential
start of the new valley, confirming or possibly leading the increase in price. -
Once we reach the bottom of the valley and confirm that we are starting back up
the valley, we are seeing the price decline. Once the valley becomes a peak, the
same principal applies in reverse, this shift in sentiment is likely an ideal point to
enter or exit a holding. Confirming a reversal is performed in the same way as
charting price, a movement that officially breaks the trend line in the reverse
direction.


Now I am going to show some examples that help reiterate and illustrate this simple
method of trading depth of market using MDR peaks and valleys. I have chosen
three assets as they appear to strongly correlate price to MDR. Let’s take a look.
First, Chainlink, look at these peaks and valleys along with their relevant price
action. – Here you can see as the valley comes up into a peak, the price is falling,
and then once we see the peak officially start to slope, we see the prices run.
Depending on your appetite for risk on whether you trade the slope or the crossover
which might be considered safer. Notice nearly every price movement on this chart
- signaled in books prior to price action when using this strategy.
-
Here is Binance, again, look at price to MDR action, clear indicators that signal well
in advance
-
Look at ADA and how it responded better to a different depth of market, almost like
focusing the MDR chart.
-
I want to show you one more, “E””R””D”, look at these spikes, it makes me want to
investigate a little more. Let me change this to show bids and asks and, make sure
its a day chart. Look at this, there is repeated shifting from buy wall to sell wall in
what appears to be direct market manipulation. This isn’t peaks and valleys but
another thing you can see at vcdepth.io


Now when using MDR, it is important to note that each asset can respond differently
based on its own normalized order book behavior. Some assets, their peaks and
valleys work exactly opposite of what we just showed you, but they provide the
same value. Some assets are not responsive to the peaks and valleys strategy at
all. Also some assets and trading strategies may require users to filter the depth of
market that they are viewing in order to optimize the book to price correlation. We
have found MDR Peaks and Valley strategy to work best with assets that have
visible peaks and valleys looking at 100% of the order books on a weekly chart. See
our explainer video for more details on using the depth of market filter.

There are so many more ways to use this data, its scary powerful and traders are
already using this data today to make profits. There are also numerous analysts that are starting to cover methods for trading market depth using our data. Look in
the description of this video for a link to one of the earliest adopters of our data,
Bitcoin Trading Challenge. He has made numerous videos regarding trading
methodologies for trading market depth and leveraging our site. So if you are
looking for more ideas trading depth, his channel is a great place to start!
This video is not investment advice, do your own research - good luck everyone and
happy trading!

 

Come see peaks and valleys on your favorite crypto asset @ https://vcdepth.io

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