Being a crypto trader has its benefits as any other type of trading. For some, it might look more effortless than trading currency pairs or stocks, but is it? There are many calculations of a different kind coming into account if we are talking about cryptos.
If you have already started trading, you know the basics, but is there something you forget to do that you don’t even notice? Here, we offer some examples that will help you see if something is missing in your trading strategy so you can quickly improve your trading.
Are you paying attention or learning about technical analysis?
In essence, we are asking you if you’ve learned about charts and how to read them properly. If you are trading cryptos, many online Twitter accounts will post various charts every day, including reliable websites. You can learn reading charts with the help of your broker, taking an online course, even browsing on Youtube. There are several points when it comes to technical analysis for crypto trading you should know:
- Every trader’s focus is on the support and resistance of a currency. In short, support will lower the currency’s price, while the role of resistance is to make it higher.
- These boundaries tend to fluctuate, and after a “breakout”, a currency often finds another support and resistance spot.
- Indicators are crucial when you are analyzing a specific currency, and there are several of them you should learn more about, such as Bollinger Bands, RSI (Relative Strength Index), and a Stochastic.
The most common chart you come across is the candlestick chart; you are probably familiar with from other areas of life. They serve to show you the highest and lowest point at a specific time. They consist of only two colours – green and red. Red means that the price has gone down and green indicate that the price got up higher.
Are you following the news in general?
People tend to forget to pay attention to world news, once they get into crypto, but it is a very important part of a profitable trading strategy. Following the crypto news is a must, even though it sounds like a drag at first. Once you get used to getting bits of information every day, it will be much easier to predict and know what’s going on, instead of accumulating lots of information at once. Over time, you will learn to spot things you usually wouldn’t that could improve your trade. Economic and political news usually affect “regular” currencies and stocks, but finding out information about a company that is investing a lot in Bitcoin or Ethereum can be of great use in predicting whether the price will go up or down.
Changing up your trading strategy
Where you are at the beginning certainly doesn’t mean you will be at the end, or during the process. Like you weren’t the same person two years ago, you can’t stick to every rule you set up for your trading strategy with your broker. We are not suggesting changing your plan now and then completely, but it’s good to tweak it from time to time since you are going to learn a lot from trading yourself. You will recognize what’s not working and what’s right, but you weren’t expecting it to work in your case. That’s something you should reconsider with your broker then, and figure out what you should add and throw out the window. Everything on the market is evolving, and it’s logical you also as a trader will. Having more experience, learning how to learn charts quicker and eventually having a good sense of prediction and taking advantage of the circumstances the market is in. The worst thing you can do is invest money and completely forget about it. Yes, it would be best if you didn’t become obsessed with checking the news, but being responsible for your money is another quality of a profitable trader.