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Introducing Dollar Bars for DEX Tokens.
When looking at price charts for tokens, I really couldn’t tell why price moved the way it did, or truly anticipate from looking backwards where price might move next…
So I decided to change that and build a chart that would show me who made or lost money, by how much and how fast.
But why not just use what we already have? We have daily, hourly or even by the minute price, volume, moving averages, RSI, Fibonacci ratios, pink elephants and orange monkeys?
Right! But none of that really leads to predictability which we objectively covered with hardcore analysis in the Udemy course.
So what then?
After giving this some thought, I decided to try and do what investment banks do, but rather than applying it to stocks, bonds or forex and all that jazz, to rather apply the same techniques to degen crypto tokens listed on Ethereum and Binance chains.
For example, you are used to seeing price bars like this. Let’s take hourly for example. Time moves by one hour, so a bar is printed. Time moves by another hour, so another bar is printed and so on…
BUT time is NOT what moved price! VOLUME is.
There are 3 steps to to building a chart which gives me a true view of what price is actually doing and who is making or losing money to gain an edge over traders.
The 1st step was to replace time bars with dollar bars.
So instead of for every hour, or day being the marker for creating a new bar, every amount of volume (say 5.0 ETH or 10K BUSD) would be the deciding factor.
Now for every 5 ETH a bar is printed, then for the next 5 ETH another bar is printed. Don’t worry though, I made this threshold adjustable so we can get more granular or zoom out if we need to.
With that solved, I decided to also add a time element for each bar and give it a light color if it moved fast and a darker color if it took a while. The beauty of this, is we now have a true view of momentum too! Something we just could never see with regular time bars.
BTW I run into a problem though. Every single exchange and tool out there uses TradingView which works great for time bars, but wasn’t going to cut it for dollar bars…do I ended up having to code even the charting from scratch. But that’s ok, because you know I love coding.
I wasn’t even half-way though, we also want to see who are dumping tokens on the market.
So the 2nd step was to track every single blockchain account that traded our given token of which were sellers who had the token before it was listed - for example on presale. I decided to call these external traders.
By doing this, I could now see how much of the volume was dumped by people holding tokens before listing.
Also, for the time being am tracking from the last 10,000 trades. So if someone bought before that and sold, that will show as purple too, but I plan to improve on that and track complete history at some point.
Ok so this next part really excited me when I had seen it for the first time.
We can also track the position of each trader who bought and sold after the token listing (let’s call these internal traders). So the 3rd step was to aggregate how much profit or loss they were realizing when selling their tokens bought during and after listing.
There is one more thing though. See this on the left, we can see the win rate of traders and get a really good idea of why they are and what they do.
I mean We could even set up our own bots to notify us of their trades. The ultimate copy trading.
Even though this is just a prototype of something secret for now that am working on, I decided to make it available to anyone who wants to use it and chucked it over at dexbars.com.
To get a working proof of concept, I used Bitquery to get the on-chain data so when you hit the site, either connect through them given they have a free tier, or of course if you are a member of Crypto Wizards, you can just sign in and you’ll be covered for data until our credits run out.
Ok so I have a lot learned in building this which of course am going to share with you, but now have even more ideas and honestly can’t put the project down. I think you’ll have loads of ideas too so I left a feedback form here for you to brain dump on me.
Chart: dexbars.com
Website: cryptowizards.net