The PENGU Spot ETF is the first NFT-based crypto ETF application, as Canary Capital aims to merge NFTs and DeFi—will the SEC approve this groundbreaking move

January 2024 marked a pivotal point in the crypto industry: the US Securities and Exchange Commission (SEC) approved a bunch of 

 (ETFs) after a decade of resisting it. Later that year, several Ethereum (ETH) Spot ETFs were also approved. These early successes encouraged investment funds focused on digital assets to seek approvals for other 

 (AVAX) and other high-cap cryptos have ended up on the SEC's desk in recent months.

Until Mar 20, 2025, one thing had never occurred: an 

-based crypto ETF application. Such a move was thought to border on impossibility, given how stringently and at length the SEC evaluated ETF applications even for established fungible cryptos. And yet, the Canary Capital investment manager submitted an application to the SEC for approval of the first NFT-focused crypto ETF product, the PENGU Spot ETF, triggering a mini-revolution in the emerging space at the junction of crypto and traditional finance.

If approved, this ETF will be the first of its kind in the industry, based on a mix of 

. Many observers expect Canary Capital to struggle mightily for SEC endorsement of its revolutionary product. Nevertheless, the SEC now has a track record of approving crypto ETFs — which raises hopes for both the altcoin ETFs mentioned above and the PENGU Spot ETF application.

The PENGU Spot ETF is a proposed exchange-traded fund (ETF) product introduced by the Canary Capital investment management firm, and is currently awaiting approval by the SEC. 

 on Mar 20, 2025, making this the first crypto ETF product with an NFT component that’s vying for the approval of America's primary financial regulator. The ETF has been registered in the US state of Delaware.

The Pengu Spot ETF's portfolio is envisioned as consisting primarily of PENGU tokens that will make up anywhere between 80% and 95% of total assets held, with the rest allocated to Pudgy Penguins NFTs. Small portions of Solana's SOL coins and Ethereum's ETH tokens will also be included in order to facilitate transactions and liquidity support, as PENGU tokens are mainly issued on the Solana blockchain, and Pudgy Penguins NFTs are an Ethereum-based collection. 

Since Canary Capital will hold these assets and periodically rebalance the portfolio, gas fee payments on Solana and Ethereum will apply, with fees paid in SOL and ETH, respectively.

Launched in 2021 on Solana, the Pudgy Penguins NFT collection consists of 8,888 items, each depicting a cute penguin with a distinct combination of five different traits. In December 2024, the project introduced a related fungible cryptocurrency, the Ethereum-based PENGU token. As of Apr 2, 2025, PENGU is a smaller-cap asset, ranked 191st in the crypto market, with a total 

 of $319 million. In contrast, Pudgy Penguins are among the leading projects in the NFT space, ranked second among all NFT collections, with a market cap of $155 million.

Canary Capital's application to the SEC is unique in two ways: it’s the first ETF with an NFT component, and it marks the first time ETF approval has been sought for a relatively smaller-cap cryptocurrency, PENGU, which isn’t even among the top 100 crypto assets by market cap. All of the other crypto ETF applications approved by the SEC (or currently vying for approval) are based on high-cap, leading assets that are typically ranked within the top 30.

As of Apr 2, 2025, the SEC has had the application for the PENGU Spot ETF application for just two weeks. The regulator has up to 240 days to review such applications, although historically, the SEC has pondered over crypto ETF applications for years. Now, however, the string of Bitcoin and Ethereum Spot ETF approvals in 2024 raises hopes that newer submissions may be subject to an already established evaluation framework — and thus greenlighted much faster.

At the moment, the SEC is also considering spot ETF applications for several high-cap cryptocurrencies, including Dogecoin, Solana, Polkadot, 

 (XRP). If the regulator decides to approve the applications in batch mode — all or several at once — Canary Capital will have reason to hope that its ETF is included.

However, there's been skepticism regarding the PENGU Spot ETF application, with some analysts believing that its chances might differ from those of the larger, more established altcoin ETFs. This isn't surprising, as a PENGU Spot ETF would be a distinct product, being the first NFT-focused ETF. In addition, NFTs have more limited liquidity than fungible cryptocurrencies. 

NFTs may also be harder to valuate objectively. The prices of fungible cryptos are easily sourced from the crypto market, where supply and demand establish their value. In contrast, the limited liquidity and uniqueness of NFTs makes it much harder to price them efficiently.

Moreover, the PENGU token — which will make up most of the proposed ETF — isn't among the most traded assets in the crypto market. Because PENGU has a modest position in the crypto space (along with its origins as a 

), the SEC could view it with more skepticism than it does the leading altcoins.

Naturally, all these factors are just speculation at this point, and we’ll need to wait on the SEC’s initial comments regarding the first NFT-based ETF under their consideration in order to form a more defined view of the product's prospects for approval.

Current impact of the PENGU Spot ETF application on the crypto market

The news of the PENGU Spot ETF application has so far had no appreciable impact on the price of the PENGU token itself. On the day of the application (Mar 20, 2025), the token was trading at around $0.007. Two weeks later, it's still hovering around the same price. 

On the other hand, there's been a modest increase in the average price of Pudgy Penguins NFTs traded on the market: between March 20 and 28, the average price rose by 16% from around $16,450 to $19,120, though it has since retraced slightly to $17,490 as of Apr 2.

Given the modest price effect, investors are likely still cautious about the chances for the PENGU Spot ETF's approval.

However, if it is approved, the broader impact on the crypto market could be far-reaching, as such a step would signify the SEC's openness to both NFT-based ETFs, and ETFs made up of smaller-cap cryptocurrencies, including meme coins. The number of tokenized asset funds that offer NFT-based products would then be likely to increase significantly, facilitating mainstream NFT adoption within traditional financial markets.

An SEC approval of the PENGU Spot ETF may lead to a flurry of further ETF applications based on NFTs in some form. This could even include the first ETFs composed entirely of NFTs. Other crypto asset types — e.g., 

 (RWAs) — may also become candidates for the SEC’s consideration. Furthermore, in the unlikely event that Canary Capital’s PENGU Spot ETF were to be approved ahead of the altcoin spot ETFs currently in the SEC’s pipeline, it would send a very strong signal that those ETF applications are also a sure bet.

The current PENGU Spot ETF application is a pioneering event that may open up opportunities for NFT ETFs and other crypto ETFs based on partial NFT holdings. Although the SEC approved multiple Bitcoin Spot ETFs in early 2024, few people expected an NFT-based ETF to emerge so soon afterward. Probably even fewer expected a meme coin–based ETF to be taken seriously by the SEC. Unique in so many ways, the PENGU ETF flips the entire concept of traditional ETFs on its head.

Canary Capital's attempt to get approval for an NFT-backed ETF is truly a bold undertaking, though observers said the same thing about 

 just a few years ago. Someone needed to become a trailblazer in this area — and Canary Capital has taken up the noble role without hesitation. Now, all eyes are on the SEC as it prepares to weigh in on a product it has never before encountered.

Intermediate

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PENGU Spot ETF: A bold move for NFT investing — or just hype?

In this article, we break down what to expect from Liberation Day and how it could shape the outlook for equities, the US economy and crypto markets.

 April 2, 2025 as "Liberation Day" — a moment he claims will restore America's trade fairness through sweeping reciprocal tariffs. With few concrete details confirmed, global markets remain on edge. Investors are bracing for the economic fallout of a potential trade war, and crypto traders are watching closely to assess the impact on digital assets. In this article, we break down what to expect from “Liberation Day” and how it could shape the outlook for equities, the US economy and crypto markets.

Since returning to the White House in January 2025, President Trump has prioritized reshaping US trade policy with a renewed focus on tariffs. His administration has already announced 

 on all steel and aluminum imports. Many of these actions take effect this week, coinciding with his so-called Liberation Day.

Trump argues that tariffs are a necessary tool to reduce the US trade deficit and force foreign nations to stop what he calls "economic warfare" against the American worker. Treasury secretary Scott Bessent 

 countries with persistent trade surpluses — dubbed the 

 — as primary targets for reciprocal tariffs. These include China, the EU, Canada and Mexico.

However, critics point to the growing risk of a global trade war, with multiple partners already threatening or initiating retaliatory measures. Goldman Sachs recently 

, citing declining business confidence and mounting economic uncertainty. The tariffs, designed to protect US industries, could instead raise prices and weigh on consumer spending.

What to expect from Trump's ‘Liberation Day’ announcement

Trump is expected to reveal his tariff plans in a Rose Garden press conference on April 2. White House press secretary Karoline Leavitt 

 that the president would impose tariffs on "any country that has treated the American people unfairly" — though no nation-specific exemptions have been confirmed. Trump has promised these reciprocal tariffs will be 

While final details remain under wraps, proposals have included both country-wide and sector-specific tariffs. These could range from uniform, percentage-based levies to targeted charges on industries like pharmaceuticals, semiconductors and autos. Trump's advisers, including Trump trade adviser Peter Navarro and commerce secretary Howard Lutnick, claim the new tariffs could generate over $600 billion annually — though many economists dispute this figure.

Delayed tariffs on Canadian and Mexican imports, 

 in early March, are also set to take effect this week. These include taxes on agricultural products, energy goods and automotive components. Trump has also 

 a 25% tariff on imports from countries that purchase oil or gas from Venezuela.

Given the administration's conflicting signals in recent weeks, there's a wide range of potential outcomes. Whether “Liberation Day” ushers in immediate enforcement, additional delays or future negotiation rounds remains to be seen. For now, uncertainty reigns.

Potential impact on the US economy and global markets

Economists warn that broad-based tariffs could lead to slower US growth, higher consumer prices and widening inequality. Goldman Sachs now 

 Trump's trade policies to reduce annual GDP growth to 1.5% from 2%, while the odds of a recession are being raised from 20% to 35%.

Global equity markets have already shown signs of stress. European and Asian indices dipped ahead of “Liberation Day,” while the S&P 500 and Nasdaq-100 

 in March (respectively). Auto manufacturers, tech firms and retailers could be especially vulnerable if tariffs disrupt global supply chains.

There's also the question of the Federal Reserve's response. With inflation risks rising, policymakers may hold off on anticipated rate cuts, further complicating the economic outlook heading into Q2.

How will ‘Liberation Day’ affect the crypto industry?

Crypto markets have mirrored broader risk sentiment over the past quarter, with investors reducing exposure amid macroeconomic turbulence. As of April 1, the 

 is down 16.9% year-to-date. Bitcoin has fallen 10.48%, Ethereum 44.2% and Solana 33% — despite reaching new highs in January on hopes for pro-crypto policies from the Trump administration.

Investor optimism has since cooled as recession risks, inflation concerns and policy unpredictability drive a risk-off mood. Bitcoin dipped to $81,656 over the weekend, marking its weakest Q1 since 2018. Traders remain cautious ahead of “Liberation Day,” awaiting clarity before opening new positions.

“Liberation Day” could further weigh on crypto prices if market volatility increases and capital rotates out of risk assets. However, some analysts believe any resulting sell-off may offer an opportunity to 

 — especially if Trump follows through on crypto-friendly regulation later this year. For now, though, many eyes are on April 2.

With details still unknown, the crypto market remains in a "wait-and-see" phase. “Liberation Day” could mark a turning point — for better or worse — depending upon the scope and execution of Trump's tariff agenda.

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Trump's 'Liberation Day': What it means for crypto markets

Grayscale has filed to convert its private Digital Large Cap Fund, which includes Bitcoin, Ethereum, XRP, Solana, and Cardano, into a publicly available exchange-traded fund (ETF). 

Daily top performer — Compound Finance (COMP)

The S&P 500 rose 0.38% as investors awaited new tariffs amid weak factory data and declining job openings. Gold eased to $3,113 after hitting a record high, driven by profit-taking ahead of Trump's tariff announcement, but remains strong due to safe-haven demand and economic uncertainties. The Coindesk Indices, which tracks the broader crypto market, are up by 1.30%, with Bitcoin and Ether are up 3.10% and 5.19%, respectively, in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is COMP, up 14.3%, following the proposal for the creation of a foundation to ensure consistent leadership and coordination by Compound.

Compound Finance (COMP), launched in September 2018, is a DeFi lending platform that allows users to earn interest on crypto assets. Built on smart contracts, it adjusts interest rates based on supply and demand, connecting lenders and borrowers without intermediaries. In June 2020, Compound decentralized with the launch of COMP and full governance transfer. However, it lacks a core operational pillar. With Compound v4 development and increased community engagement, the need for consistent leadership has grown. To address this, Compound Labs 

 creating a Compound Foundation for structure, clarity, and coordination, similar to other ecosystems like Uniswap.

Check out the latest prices, charts, and data of 

 to convert its private Digital Large Cap Fund, which includes Bitcoin, Ethereum, XRP, Solana, and Cardano, into a publicly available exchange-traded fund (ETF). The fund, which currently holds 79.4% Bitcoin and 10.69% Ethereum, has grown by 478.83% since its launch in 2018. The conversion would allow everyday investors to access the crypto market, covering about 75% of the digital asset market cap. If successful, it would eliminate the current barrier that restricts access to accredited investors. The filing is still in progress, with management fees and other details pending.

Yesterday, BTC spot ETF had a total outflow of $157.8 million, with GBTC seeing a loss of $10.1 million and non-GBTC products losing $147.7 million.

 that its airdrop might be approaching, with a claim page now live. Registration for the airdrop runs from April 2 to April 17, and claims are expected to open on April 22. However, nothing has been officially confirmed yet. Stay tuned for updates.

Beginner

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Grayscale files to convert digital large cap fund into publicly accessible crypto ETF

In this guide, we'll dive into how to trade crypto with the Bybit app, a convenient and feature-rich platform. Explore spot and derivatives trading for beginners on the Bybit app.

Welcome to our step-by-step guide on trading using the Bybit app. In this article, we’ll walk you through everything you need to know — from downloading the app and setting up your account to executing spot, margin and derivatives trades. Bybit is a leading cryptocurrency exchange that offers a fully localized and user-friendly mobile experience, making it easy for both beginning and seasoned traders to manage their investments seamlessly.

First, download the Bybit app from the App Store (iOS) or Google Play (Android). Once you’ve installed the app, open it and select your preferred language.

 and register using your email address or phone number. Complete the verification process by submitting your mainland Chinese ID or passport as required. This step is crucial to ensure your account is secure, and to unlock higher withdrawal limits.

After verifying your identity, head over to the 

 tab to fund your account. You can directly deposit cryptocurrencies like BTC or USDT. Our 

 (UTA) streamlines fund management, allowing you to trade seamlessly across different markets without the hassle of multiple wallets.

Spot trading with Bybit lets you buy or sell cryptocurrencies at current market prices with immediate settlement.

To begin, log in to the app and tap on the 

Choose your desired trading pair, such as BTC/USDC or ETH/USDT, from the list.

 lets you specify a price at which you want to buy or sell. 

Enter the amount you wish to trade, review the details and confirm your order.

Once your order is executed, monitor its status in the 

Bybit has an intuitive interface that displays real-time updates, so you can track your trades anytime with ease. 

How to execute a spot margin trade with the Bybit app

For traders looking to leverage their positions, Bybit offers a spot margin trading feature that allows you to borrow funds to increase your buying power. Start by logging into your account and tapping on 

Choose a trading pair, such as ETH/USDC, which supports margin trading with leverage options of up to 10x. 

Once your trading pair is selected, you’ll need to select the margin amount (e.g., 

 at which you want your limit order to execute.

You’ll also see several other important metrics, such as 

Enter the amount you wish to trade, and then carefully review all of the details.

After confirming your order, your margin trade will be executed. You can track your position in the 

 tab, where you can also set up stop-loss or take-profit orders to manage risk. 

How to trade derivatives with the Bybit app

Bybit also offers derivatives trading, which allows you to speculate on the price movements of cryptocurrencies without actually owning the underlying assets. Derivatives include Futures and Perpetual contracts, which can be traded with leverage, sometimes up to 100x.

To start, log in to your account and tap on 

Set your desired leverage (e.g., 50x) and choose between 

 margin modes, based on your risk preference.

 (if using limit or conditional orders) and 

Once you’re satisfied with your parameters, confirm your order and your position will appear in the 

Trading with the Bybit app offers numerous advantages that make managing digital assets both efficient and secure. The platform’s user-friendly design, high-speed execution and comprehensive risk management tools cater to traders of all levels. Our Unified Trading Account (UTA) streamlines fund management by consolidating assets for spot, margin and derivatives trading under one account, which reduces operational complexity and enhances overall efficiency. This streamlined approach lets you focus on strategy rather than logistics.

Additionally, Bybit’s state-of-the-art security measures — such as multi-factor authentication, regular independent audits and cold storage of assets — ensure that your transactions are conducted safely and transparently. With an interface designed to minimize distractions and provide real-time data, you can quickly monitor market movements and adjust positions. 

Our commitment to a secure and reliable trading experience is evident in our continuous improvements and proactive customer support. These features empower you to make informed trading decisions, fostering confidence in your ability to navigate the dynamic crypto market.

Bybit delivers a secure, robust and intuitive mobile platform that simplifies cryptocurrency trading for everyone. In this guide, we’ve explored how to set up an account, fund it and execute various types of trades — spot, margin and derivatives — using a fully localized and user-friendly interface. Our Unified Trading Account and comprehensive risk management tools ensure a smooth trading experience so you can focus on growing your investments.

Looking ahead, Bybit remains dedicated to innovation and excellence in the crypto industry. We continually refine our platform, based on user feedback and market trends, ensuring that you have access to the latest tools and features. Our commitment to transparency and security underpins everything we do as we build trust and empower traders. 

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How to trade with the Bybit app

Trading

Price action trading is the fundamental to dip your feet in the stock or even crypto market. But is it truly reliable? Learn how it works!

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Supposed you’re one of the many people who wonder which is the most promising trading strategy a trader would go for? The quick answer is price action trading. Not only is it suitable for intermediate traders, but it works exceptionally well for novice traders too. In fact, it is proven to help traders gain consistent profits over time.

After all, price action is the foundation for all technical analysis, and it’s mostly used to enter and exit the market precisely.

This strategy provides a complete arsenal to analyze and trade the markets efficiently. So the idea of this guide is to explain the main concepts about price action so anyone can have the tools to trade the markets like a pro.

Price action is a trading strategy used to analyze the market behavior and identifying the ideal entry, exit opportunities. At its core, price action reflects the imbalances between supply and demand in a market. In another way, a price action trader only believes the price and its movements with little to no use of technical indicators. 

Analyzing from a price action’s trader perspective, when buyers have more interest in any given asset, they will be psychologically willing to pay whatever the sellers are offering. Eventually, if the buying interest continues, the prices will tend to go higher, and therefore, creating an uptrend on the chart. In a simpler explanation, the price is parallel to the market’s demand. 

Ultimately, the analysis of price charts helps traders to define two things:

Additionally, the main purpose of price action trading is to describe the state of the market (trending or sideways markets). Based on this information, the investors can develop a trading strategy to time the market.

The main components of price action are divided into:

Price action applies to all kinds of trading styles, mainly because it can be analyzed in the same way across all time frames. Therefore, long-term or short-term traders can get benefit from this approach.

Price action comprises four main pillars: 

Below, we’re going to break down these four concepts and how to use price action effectively.

 are a graphical representation that provides information about the open, the high, the low, and the close of any given period. Usually, when the closing price is higher than the open price, the bar is 

 (bullish). When the close price is lower than the open price, the bar is 

 (bearish). However, the color depends on the platform configuration.

Generally, a bullish candle is upward while it’s vice versa for the bearish candle’s direction, which is downwards.

The image above indicates two candlesticks, one green where the close is higher than the open and the red one where the close is lower than its open. Usually, big fat candles, in one direction or another, represent significant momentum. 

Bullish trends refer to uptrends, where the price is forming consecutive higher lows and higher highs. Above shows an example of the BTCUSD one-hour time frame where a clear uptrend can be identified.

Bearish trends refer to downtrends, where the price is forming consecutive lower lows and lower highs. Below is an example of the BTCUSD 30-minute time frame where a downtrend is illustrated.

 is when the market structure doesn’t follow a path. In other words, a flat market happens when there is no consistency in the location of the lows and highs, and the action tends to be sideways. Usually, this movement is framed between a support and a resistance level.

This 10-minute chart of BTCUSD is an example of a flat market because, as you can see, there is no clear direction. Instead, the movement is sideways and is framed under 

While price action is interpreted as a trading strategy, price action indicator, on the other hand, refers to the study of market movement. You can use this indicator to assess the imbalances between supply and demand. In technical analysis, the 

candlestick on your price chart is the most powerful price action indicator

That also referred to as naked trading, which is trading without technical indicators like moving averages, relative strength index, stochastic but mainly relies exclusively on price action. In this case, candlesticks are studied together to provide accurate entry signals.

A good note here is price action analysis needs to be used with other trading concepts like:

In case you’re still confused, in the next example, we’ll analyze a 10-minute chart of BTCUSD. From there, we can see that a downtrend is in play (lower highs and lower lows). Additionally, an inside down candlestick (bearish harami) is presented around a resistance level. Those two factors provide confluence for placing a short entry because:

The details of the entry and risk are detailed in the chart below.

While traders can rely on psychological factors or market sentiments to deduce a trading opportunity, the use of fundamental historical data is inevitable. That’s when the chart patterns come in handy.

To start, here are what you need to know.

The hammer is a candlestick formation that represents strength in the market because it shows that the buyers are strong enough to bring the price from the lows of the bar up to the upper side of the candle.

It is preferable to take this formation in uptrends, especially in corrective movements towards previous support. The ideal entry is above the candle’s high and the 

Here’s an example of the ETHUSD 60-minute chart, where the price is in an uptrend. Additionally, there is corrective price action and a hammer around a support area. Those arguments provided an excellent long entry. The details of the trade (entry and stop-loss) are explained in the chart.

The shooting star candlestick represents a weakness in the market because it illustrates that the sellers are strong enough to bring the price from the highs of the bar to the candle’s lower side.

This formation should be taken in downtrends, preferably in corrective action towards previous resistance. The ideal entry is below the candle’s low and the stop-loss order at the top of the candle.

Below is an example of the BTCUSD 2-hour chart. The price broke down a previous consolidation (momentum to the downside). Later on, the price formed a shooting star around the last resistance. This action provides a great example to play the shooting star to the downside. The details of the trade (entry and stop-loss) are explained in the chart below.

An inside bar is a representation of price equilibrium in the market. An inside bar is a two-candlestick price formation, where the entire price range of the second candle is contained within the price range of the first candle, also known as— 

Ideally, inside bars signals should be taken in the direction of the overall trend because it increases the probabilities of success.

In this case, an interesting example is where an inside up candlestick is favoring the trend and around a previous support area. The details of the entry and stop-loss are in the chart are as above.

The outside bar is a two-candlestick price formation that signals a price reversal. The outside bar pattern can be recognized when the second candle takes out the high and the low of the previous candle. Outside bars are powerful reversal trade signals because it shows a shift in momentum.

The outside bars are useful in many trade scenarios. However, they tend to be more effective when anticipating the break of the previous price structure. For example, the BTCUSD daily chart shows the outside up bar takes both sides of the last candle and then goes straight up towards the previous resistance level, which is broken, and the upward momentum continues. 

Support and Resistance in Sideways Markets

When the market is in a sideways mode, it is defined under a horizontal formation framed between support and resistance. The use of exhaustion signals around those areas can be powerful signals to enter a market position and depict the price range’s extremities.

The exhaustion signals are some of the formations could be a hammer on support, shooting star at a resistance, inside the bar and outside bars are some of the candlesticks to look for in the limits of the range.

Looking at the daily chart of BTCUSD, there is a trading range where the action of the market is sideways. Notice how exhaustion signals provide good entry points to act on the range’s boundaries around the support and resistance levels.

 was an inside bar to the upside that took place around the support area. Notice how it offered a relatively small risk in comparison to the potential reward (target area).

 was an outside bat to the downside that confirmed the previous resistance. Once again, it provided a clear entry-level, and the risk to reward ratio was acceptable.

Applying The Price Strategy in Swing Trading

Price action pertains to swing trading as much as it’s applicable to short-term trading like scalping and day trading. Typically, the best time frames for swing trading are the 4-hour and daily charts.

A simple and effective way to swing trade using price action is to combine:

At the very basic, the number one cause behind all price movements results from an imbalance between the supply and demand equations. While there are many ways traders can confirm a supply and demand zone but, the best technique is to double-check it with price action.

In trading, a supply price zone is defined by increased selling pressure, which caused the price to drop. At the same time, a demand prize zone is defined by an area of increased buying pressure, which caused the price to rally.

In summary, swing trading with price action refers to waiting for the price to return to these supply and demand zones. Plus confirming your entry with one of the chart patterns explained throughout this guide.

Let’s consider the supply and demand example in the Bitcoin daily chart above. The overall trend is bullish, which means we look for pullbacks into a demand area and price action for confirmation. To maximize profits and protect the potential gains, you should use a trailing stop-loss order.

One of the biggest challenges with price action trading is the false setups. Very often, the chart patterns will fail to produce the expected outcome and can lead to disappointments. In this regard, it’s essential to learn and accept false setups as an everyday occurrence.

The most common fakeout signal is the false break out of support and resistance levels. In normal circumstances, a breakout will lead the price to move in the same direction of the break.

Below is an example of a false breakout of the support zone.

The break of support didn’t cause more follow-through to the downside, and what appeared to be a sure move to the downside turned out to be a false signal.

Here’s another example of a failed chart pattern (bearish outside bar.) Usually, the bearish outside bar signals a trend reversal, and it signals that the bears are in control. However, this time around, the bearish outside bar proved to be a false setup.

The best way to differentiate between a false setup and a simple setup is by measuring the time it takes for a setup to play out. Usually, the higher quality trade setups take a concise period to play out and show you a profit.   

Yes, price action trading works because it represents the market dynamics. In other words, it illustrates the sentiment of the market participants. However, reaching a proficiency level requires a lot of screen time to get all the nuances of this approach. 

Can These Strategies Be Used in Crypto Market? 

What Is Price Action and Its Trading Strategies?

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