How To Predict Flash Crashes:
Flash Crashes are when the market drops significantly in a very small window of time. Also, a Flash Crash entails that the price rises back up relatively quickly. Some people refer to this as a correction, when in reality it’s not a correction.
Best examples of Flash Crashes:
April 2013
October and November of 2013
Flash Crashes are usually very scary to people. I don’t look at them as scary, they’re an opportunity to make a lot of money.
On to how to predict them…
To predict a flash crash we will be wanting to examine 3 things in charts.
1) The 1 minute chart.
2) The 15 minute chart.
3) The 30 minute chart.
Anything after the 30 minute chart will not give you accurate depictions of what you are looking for.
This is the chart that I use. I prefer to use the BitStamp charts to look at these, as it is ususally the median between BTC-E and Mt.Gox (Dont ever use Mt.Gox guys...)
Now if we take a look at the 30 minute chart and see tiny red candles that is good. If there are more red candles than there are green candles, we have a problem on our hands. Green candles signify people buying Bitcoins (or whatever you’re looking at the chart of) and the length of the candle signifies the volume of the transactions taking place. Now, if there are multiple green candles in a row then the price is going to go up significantly. Green candles are what drives the currency up like mad.
When to be alarmed:
If there is a time when you see a few small red candles and then a lot lengthy red candles this is a crash. Prepare to make a ton of money. What you want to do is take the medium price that the currency was at for this last 24 hour period and take away about $120, that’s the number I use. Next, go to your exchange and set a limit order for whatever that value is.
Eventually, if you got in on time, the order will fill. In the event that you see many red candles with green candles in between then hold off on setting the order. This could mean that the coin is recovering.
That is REALLY all there is to Flash Crashes.
With experience comes better instincts on when to buy and sell.
I ALMOST FORGOT:
Bitcoin prices are LARGELY influenced by the public’s perspective of the coin. If they feel like the coin is going to rise, then rise it will. If there’s something catastrophic on the news about Bitcoin then it will fall. Best examples of this is the Silk Road bust and Baidu accepting Bitcoin as a payment option.
Mass-Psychology is the key to becoming rich off of Bitcoin.
