When trading cryptocurrencies, it is of utmost importance for traders to lower their risk and secure profit. Although not limited to cryptocurrencies, the Sharkfin market movement is one of the studied patterns for achieving these goals. The strategy, as the name implies, is a “look-like” of shark fins and it is identified using some trading indicators.

What is Sharkfin?

Technically, a sharkfin is a market movement that occurs when the Relative Strength Index (RSI) extends out of the Bollinger bands on the Traders Dynamic Index (TDI). These extensions create market patterns shaped like shark fins on the Bollinger bands.

Snapshot from MetaTrader 4

A Sharkfin can also be referred to as a trading method implemented following the prediction of future sharkfin market patterns.

Bollinger Bands

Bollinger bands are oscillating lines that appear at 2 Standard deviations above and below a market’s moving average over 20 days. Bollinger bands are formerly called trading bands. It was developed by John Bollinger in the 1980s and trademarked Bollinger bands in 2011.

Snapshot from MetaTrader 4

Relative Strength Index

The RSI is an indicator that displays the speed and size (momentum) of a stock’s price changes. It indicates the rate at which a stock is being bought or sold.

Traders Dynamic Index (TDI)

The Traders Dynamic Index (TDI) Pro indicator is a 3-in-1 market indicator that reveals predictable Entry & Exit Points of trade. It was invented in 2005 by Dean Malone, who allegedly made millions using it to trade.

As a 3-in-1 market indicator, the TDI Pro indicator shows the trend direction, momentum, and market volatility of a currency in a market. It is designed for use in the MetaTrader 4.0 platform.

Sharkfin market movements can only be effectively detected using the TDI Pro indicator.

How to Identify a Sharkfin

Sharkfin: The Market Movement

The Sharkfin market movement occurs when the RSI moves past the Bollinger bands creating a Sharkfin-above-water movement graphically. Sharkfins happen downwards or upwards along with the Bollinger bands.

This analysis is carried out on the Traders Dynamic Index (TDI), where the Bolinger bands are visible and easy to see in a graphical presentation. A one-hour time frame is usually used for this analysis.

A sharkfin typically happens at the levels of 25 and 70. When the RSI breaks through the Bolinger bands and reaches a level of 75 or greater, this is called a bearish Sharkfin. You sell during a bearish sharkfin.

Where the RSI falls to 30-25 and below, it’s the time to buy. This trade follows the basic rule of commerce: buy low, sell high.

Sharkfins at the top indicate that a currency has been “overstretched” (overbought) and will likely start being sold off. When Sharkfin is at the bottom, it indicates that the currency has been oversold and will soon start getting high demand because of its low price.

As a general rule, when looking to trade with Sharkfins, you buy when the RSI of the stock is at 30 and below and sell when the RSI is at 70 or above.

Summarily, when the RSI extends close to the Bolinger bands, there could be a possible Sharkfin forming.

Sharkfin: The Trading Method

After predicting a bearish Sharkfin you want to trade on, the process of selling at this point is called a Sharkfin. Buying low using the downward Sharkfin movement is also referred to as Sharkfin.

The entire process of identifying and trading a Sharkfin (market movement) could also be referred to as Sharkfin (trading method).

To trade a Sharkfin, switch from a one-hour to a 5 minutes time frame so you can see the point you want to enter from. Here, you navigate to the Long position to choose a Stop Loss. A Stop Loss is a period you want to ride the RSI for with hope for another upward Sharkfin giving you a profit.

When you want to sell, navigate to the Short position to choose a TP.

Confluence in Sharkfin Trading

Sharkfin trades have a high probability of succeeding. Nevertheless, it is also advisable to make a sharkfin trade only when there is confluence in the market. Confluence helps you avoid anticipating and trading fake Sharkfins.

Confluence is when two or more factors point towards a high probability of a good time to buy or sell. The purpose of using a confluence is to get greater accuracy in the market predictions that influence your buy/sell move.

You can achieve confluence by combining two or more results from technical analysis and other many trading techniques.

Working with confluence reduces your loss time to almost zero and increases your earning ratio.

Examples of Confluences to Consider

1. Moving average touch. E.g. 8 Moving Average, 50 Moving Average, 200 Moving Average, 800 Moving Average, etc.
2. Trendline
3. Trendline retest
4. Major areas of support
5. Major areas of resistance
6. Key Fibonacci level
7. Higher time frames of significant moving averages
8. Higher time frames of critical Bollinger bands touch points.

Gate.io Sharkfin Products

Gate’s Sharkfin Products are a structured financial product hedged by option products. Each product is designed using an underlying currency lock-up period and subscription limits based on current market fluctuations.

Gate Sharkfin Products are named after the shark fin because it works with the sharkfin market movement, shaped like a shark fin.

The interest rates on Gate.io Sharkfin Products are not fixed. Interest earned depends on the type of Sharkfin Product you participate in.

On each Sharkfin product, the interest rate depends on whether the price of the target currency exceeds (breaks above slash/falls out) the price range set during the lock-up period.

Gate Sharkfin Products generates profit for users this way:

1. If the price at the end of the lock-up period does not exceed the price range set, users could get a higher annual income.
2. Alternatively, if the price at the end of the lock-up period exceeds the price range set, there will be a guaranteed return of minimum interest with a total capital.

Advantages and Disadvantages of Gate.io Sharkfin Products

Gate Sharkfin Products provides the following advantages for users:

1. Risk-free income opportunity. It is a capital-guaranteed wealth management system.
2. High yield opportunity for users who can judge the market movements.
3. It is simple to operate. The complex work of selecting a long and short position on typical trading platforms has been replaced with simple UX/UI.

There are reservations around Gate. Sharkfin Products:

1. Lock-up risk. The funds you use in the trade will be locked up till chosen expiration date.
2. Value risk. While the capital will be preserved in its ordinary standard, it is still subject to market rise and decline. It is the cryptocurrency itself that is locked up. It is not converted before lock-up.
3. Volatility risk. Sharkfin is more suitable for a stable market to ensure the lowest guaranteed return.
4. Investment limit. Only BTC is accepted. Additionally, there’s a limit on the number of transactions accepted for investment.

These reservations are insignificant because the risk lies with general market movement, not the product itself.

Moreover, sound knowledge of how Sharkfin works will help users predict the Gate Sharkfin Product. The exposition on Sharkfin provided in this article will help you make smart financial predictions on our Sharkfin Product.

Conclusion

Sharkfin is a market movement that when traded, provides a higher-than-average expected rate of return that is low-risk. This shark fin-like market movement can be utilized for massive capital gains in a trading technique with the same name.

Gate.io built the Gate Sharkfin BTC Product on the Sharkfin concept (both the market movement and the trading method) to provide a low-risk, high-yield investment opportunity for passive income seekers.

The Sharkfin BTC Product is ideal for cryptocurrency owners who don’t identify as traders in the blockchain ecosystem but seek opportunities for low-risk, long-term investment.

Taking into account the risks involved with lock-ups and market fluctuations, ensure you understand the characteristics of Gate.io Sharkfin BTC Product before participating.