Perhaps the most exciting and alluring factor that bitcoin holds for traders is the fact that it is wildly volatile. Making paupers and princes alike, all in one day. Bitcoin and other cryptocurrencies have many factors that even the most competent traders find compelling.
Although bitcoin is publicly traded, famous companies who operate in Europe like Bitvavo do exactly this; it still enjoys a dynamic and often a capricious trading platform that is rarely seen in other publicly traded platforms. This creates a dynamic that seasoned investors endeavor to take part in and a market that even the greenest stakeholders want to have a piece of. However, with this in mind, the more competent investor will readily see that certain nuances must be considered. Largely, the draw of dabbling in cryptocurrency has to do with the incredibly hands-on nature of the trading environment itself.
Which is why we have compiled a list of the most important things to keep in mind when trading in bitcoin:
View From the Top
There is nothing more important for a crypto trader- either a novice or pro- than to stay on top of technical investigation. In order to be able to read markets appropriately, and create a comfortability with trends, a trader in cryptocurrency must familiarize themselves with both short-term and long-term trends. This isn’t something that can be put off for days at a time, as the investor must devote their time daily to reading and interpreting market trends. Because the world of cryptocurrencies and bitcoin is so incredibly volatile, it’s paramount for any serious investor to investigate trends intimately- daily.
Understand What’s Expected
While cryptocurrency has the ability to make any Joe Schmoe rich within a day, any serious trader needs to be cognizant of the way they trade. For the adept trader, it’s important to understand which tools and indicators you rely upon heavily. Treating cryptocurrencies like any other investment will get you far, but knowing which tools you consistently rely on, and paying close attention to what they’re telling you, is a sure-fire way to get a fast grip on the trends that bitcoin is currently exhibiting. If you’re new to the investment game, it’s wise to entertain other types of stable investment entities and get a solid groove before you start playing with fire.
Know the Market
Cryptocurrency markets like bitcoin are unique in the fact that the trends they exhibit are much more difficult to predict. There are a few reasons that this is true, but it’s largely because cryptocurrencies exist essentially like the Wild West. There is little legislation that touches the markets and they are unregulated by central bodies. Most trends regarding sell-offs and rallies are leaked to industry insiders first, so it’s unlikely that you’ll be able to get an early foothold on market values. Pump and dump schemes, along with insider trading aren’t only not regulated, but they seem to be encouraged. For many seasoned investors, cryptocurrencies offer them the rare ability to try and understand the abyss of unregulated trading.
Get Familiar with Patterns
Candlestick patterns are extremely important to any trader that sees themselves amongst the legitimate trading elite. While candlestick patterns are generally regarded as the most basic of market indicators, it doesn’t make them any less important. There are five major patterns that are indicative of price direction and momentum and it’s important that you familiarize yourself with them early. The Bullish Engulfing Pattern, The Morning Star, The Hammer, The Piercing Line, and The Three Soldiers are all patterns that even the most green of investors should familiarize themselves with. Especially when dealing with markets in cryptocurrency and bitcoin.
Oscillate with the Best of Them
Oscillators are traditionally used by more advanced investors,, but that doesn’t mean that they can’t be mastered by the newer investor. Regardless of their inherent difficulty, oscillators can provide an in-depth and technical analysis of cryptocurrencies and their habits. Oscillators are doubly useful when used in conjunction with other analysis tools such as clouds. These tools will give any investor a more intimate and predictive look at market momentum, which in the world of cryptocurrencies, is key. Because bitcoin is generally traded in overbought and oversold postures, this makes the Stochastic and Relative Strength Index oscillators all the more important.
Last Updated on April 20, 2021.