Re: Wanted to share and get feedback on a trading app a friend and I are building
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So coinsight shows the trendline in a different way because it shows the volumes traded on certain pricelevels. Divided by color to show bid/ask and the lighter the color the higher the volume. Is that right so far?
Yes, that's pretty close. The squares and the period totals show net volume, so BTC volume traded at the 'ask' counts as +volume and the volume traded at the bid counts as -volume.
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Im not sure how to use it though. Can the future price be predicted? If so how?
There are a number ways you can use this kind of chart to trade...
It's very effective at highlighting 'breakouts' (when the price breaks out of a trading range), and specifically helping to detect genuine breakouts vs. false breakouts. When real breakouts occur, they are usually confirmed by big volume trading at the ask price.
You can also trade 'volume delta divergences', where if the price is trending upwards across periods, but the ask volume is trending downwards across the same periods, the move is weakening and it's time to get out (or short). You can do this in reverse when the price is falling.
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And i wonder how valid the results are. Because markets work with maker and taker fees. Traders with big money are the ones who mostly move the market and they dont want to pay the taker fee. Because its higher than the maker fee and because they would get less for their coins when selling into bid side. So they would put their coins on the ask side and the result would be different isnt it? I dont think experienced traders will panic often.
Rebates are negligible compared to moves in the price. When the price is really moving, traders are going to be motivated by getting into the market as quickly as possible, and so they're going to cross the bid ask spread. If you try to buy during a big bull move, it's very frustrating to sit on the bid price, because you will consistently be outbid. Emotional traders will always buy at the ask / sell at the bid, which is what gives the data meaning.
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So can you explain if and how its possible to predict how the price will move?
It's not possible to 'predict' how the price will move, but it is possible to make a high probability bet that the price will continue to break-out, or reverse direction. You just have to be right more often than you're wrong, or even better, be right as often as you're wrong, but make more money when you're right
