Successful trading is impossible without mastering the principles of how the cryptocurrency or securities market operates. The behavioral paradigms of market participants are the fundamental trigger for technical analysis and are the same regardless of the trading assets. Only by “feeling” the market can you correctly interpret certain price movements and thus make profitable trades. Understanding the market comes with time: every productive hour you spend observing and analyzing the market will add extra points to your experience piggy bank.

What is a Market?

At first glance, market behavior appears chaotic, since the market consists of many people who act based on their own goals, ambitions, or fleeting desires. However, in general, market behavior can be characterized using certain patterns, as well as tools for analyzing the qualitative characteristics of the market and its chart.

Market Participants: Who Are Counterparties?

In slang, buyers are often called “bulls,” while sellers are called “bears.” “The bears broke the bullish trend and went on the offensive” = sellers gained the upper hand and the previous upward trend turned into a price decline for the asset. Jokingly, you could rephrase the concept of a market by saying that it’s a place where bulls and bears coexist in a state of constant struggle.

Principles of Price Formation: What Are Limit and Market Orders?

You can buy or sell using limit and market orders.

A limit order is an order placed in the order book at a specific [best] (in the trader’s opinion) price.

A market order, or buying “at market” (from the English “market”), is the instant execution of an order at the price of the nearest limit order.

Conclusion

This lesson covers only the basic concepts of the market. The main points you should take away from this lesson are:

Thank you for your attention!