Since the emergence of cryptocurrency, we have got a glimpse of a change that impacted the growth of businesses around the world and paved the way for more uses of Blockchain technology.
As cryptocurrency lately addressed a broader audience, it has also sparked the interest of investors everywhere. But even experienced investors can’t be jacks of all trades, and some can find it quite difficult dealing with trading cryptocurrency. This article may be a solution for learning what investing in cryptocurrencies involves.
When it comes to crypto trading, the basics are a necessary starting point.
Crypto Trading Strategies
The Crypto trading process implies exchanging digital assets to either buy or sell cryptocurrencies like Bitcoin, Ethereum, and many others. Trading can be challenging and requires patience and diligence. Specific strategic planning is needed before the trading process can begin. Below are three essential strategies to remember when dealing with crypto:
- Scalping — usually meant for experienced traders, this trading strategy focuses on profiting from the small price movements instead of the broader ones and requires knowledge as well as effort. The idea behind this fast-yielding strategy is that assets with high volatility and liquidity are the best ones to trade. Experienced traders focus more on staking a large number of funds to earn high profits within a short period.
- Range Trading — this trading strategy relies on a system that works within a limited or desired range to account for the instability of digital assets. At the two extremes, the system is like a resistance band at the highest price and a support band at the lowest.
- Swing Trading — this type of trading strategy is meant for beginners because it involves a lengthy process concentrating on large price trends. Under such conditions, less valued assets can be sold when the market price grows, and the trader gets a large profit from investing in undervalued assets.
Two Essential Crypto Indicators
Trading is a challenging job, but these two key indicators can make a crypto investor’s life much easier.
Moving Average
Also referred to as a lagging indicator, it’s an indicator where the feedback is delayed after the price movement occurs. The moving average indicator usually has specific time frames, like 20 days, 50 minutes, 60 weeks, or any time period the trader wants. There are four types of moving averages:
- Simple
- Exponential
- Smoothed
- Weighted
Relative Strength Index
Also referred to as a momentum indicator, the RSI holds the price movements and behaves as an oscillator that sways from 0 to 100. The most common time-frame marked is 14 period RSI, but for small traders, it is 5 or 7 periods RSI, and for long-term traders, it is 21 or 30 period RSI.
RSI is an excellent aid for traders in spotting discrepancies because it lets them know the possible trend reversal that can change the results.
With a better understanding of the identification of uptrend and downtrend, traders can go on a secured path without risking too much.
Bottom line
Price indicators are essential technical analysis tools to aid the trading process. Although no single indicator draws precise information, traders use various indicators to make better decisions in the ever-changing market needs. Thanks to these price indicators, we can better understand whether a cryptocurrency is undervalued or not at different moments of the trading process.
The Smatvestments Series was created to bring investors valuable and much-needed knowledge to ensure a smoother path towards financial freedom. If you’re ready to embark on a new journey, Your Friendly Crypto Exchange, IXFI is here to offer you the best tools a crypto investor can make use of.
Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
