The cryptocurrency industry is one of the fastest-growing industries in the world. With an approximate value of about 1.58 billion dollars, its value has seen a great rise since its early days. The cryptocurrency industry is valued by how much is being traded by its users daily. Cryptocurrency trading can be a very lucrative investment. However, like every other investment, without the right knowledge and guidelines, it can be extremely volatile.
When trading cryptocurrency, the first step is to go through charts to determine which currency will be good to trade. However, studying charts requires knowledge about analysis. There are two types of analysis in cryptocurrency trading, these are;
Technical analysis is the use of analytic tools and sites to scrutinize charts to determine the flow of the market. Technical analysis uses the psychology of traders as well as the volume of coins moving to determine what direction the crypto market will move in.
Technical analysis utilizes statistical data and the flow of price action to help traders make decisions about buying or selling their assets. It works on the assumption that certain adding actions from the past can be used to determine the movement of the cryptocurrency market in the future. In technical analysis the flow of price is called a trend and trends usually determine the direction of a trade.
Fundamental analysis involves using the information provided by news and the web to determine how the price of a coin will flow. Fundamental analysis is largely dependent on how companies choose to utilize coins, whether coins are facing any issues on exchanging, financial regulatory bodies’ opinions, and more.
The fundamental analysis of a cryptocurrency can be influenced by whales and people whose opinions can alter the price flow of a coin. This is why it is easy to use social media such as Twitter, Reddit, Facebook, etc to determine how to trade a specific coin pair.
Apart from learning to use various forms of analysis to trade crypto, there are also other ways to grow a cryptocurrency trading account while minimizing the risk of loss. Some include
Proper Risk Management
When using proper risk management, you need to set a stop loss. This is the maximum amount that you are willing to lose on a trade. A good stop loss helps to prevent you from losing too much on a trade. Another major advantage of a stop loss is that when you out on it helps to ensure that not all the assets in your wallet are at stake while you trade.
Risk management also involves setting Take profits which are values of the amount of profit you would like to retain from a trade. This also prevents you from getting too greedy and ending up in a loss on a good trade if you aren’t watching charts attentively.
Using Trading Bots
A trading bot doing crypto spot trading is a tool that helps traders to analyze and determine potential positions to enter when trading the crypto market. Some automated trading bots even place trades as well as stop loss and take profit for a trade. A trading bot is an effective way to trade crypto when you are unable to do your analysis or just don’t have the time. A good example is napbots.com
As volatile as the crypto industry is, it is a great place to make money as well as learn the power of long-term investing.