A whale is a someone who has a lot of money to trade and can cause massive waves in the price of a cryptocurrency. Whales attempt to sway prices towards their preferred direction and usually succeed in the short-term.
Spotting a whale early could allow smaller traders to go along for the ride and profit alongside the whale as well as avoid being crushed by the whale and being left with losses.
How to Detect When A Whale Is BUYING
Looking to go long (buy) an altcoin? Why not wait for a whale to appear first?
CLUE #1: Look for abnormal increases in the bid size throughout the order book.
CLUE #2: Look for an increase in volatility and price during a quiet period.
If a coin has been trading within a narrow range in a recent period, and all of a sudden….there is an unusual increase in volatility AND price spikes upwards, there could be a whale or whales in the house.
CLUE #3: Look for an acceleration of buying volume versus selling volume.
In a normal market, you’d usually see volume split evenly between the bid and the ask orders. This means 50% of the volumes are buyers and 50% of the volumes are sellers.
If price is an uptrend, buyers may be 60% of the volume, while sellers are 40%. And vice versa, if price is in a downtrend.
But if a whale is in the house, you’ll see an acceleration of volume on the buying side.
For example, if 90% of the volume is on bids within a short window of time, there’s probably a whale there.
Article Source: This article was originally posted on babypips.com by Big Pippin