Published
5 years ago on
March 26, 2019
Table of Contents
- Head and Shoulder
- Cup and Handle
- Monitor the Time Your Favorite Coin Reaches the Bottom and Peak
- Trade with Amount You can afford to Lose and Avoid Trading With Emotions.
- Avoid Chasing Breakouts and Stay Away From Coins at their Peak
Cryptocurrency trading has been a provable means of creating a sound and interesting financial breakthrough. Many people have made a lot from this venture. Interestingly, people who became successful in cryptocurrency trading did not attain the feat on a silver platter, but mastered the game, and understood how it works. Having little or no knowledge about its operation can affect your success rate. In most cases, people who decide to start trading in cryptocurrency search for resources that provide insight in technical analysis and all kinds of tricks. Many traders focus on the sophisticated way of understanding the market more than getting to know the basic rules and methods to become a successful trader. In order to present some of the essential tricks in cryptocurrency trading, this article will focus on four basic rules that will provide an excellent understanding to anybody who intends to enter into cryptocurrency trading.
1.)Know the Chart Pattern by Heart, Choose one, and Strike.
Any famous trader who has made it big from cryptocurrency trading never ignored the chart pattern. The cryptocurrency history usually repeats itself, and knowing the pattern can make it easier to predict the short term prices. Some of these Chart patterns are:
Head and Shoulder
This pattern comes with three peaks with the tallest signifying the head. The two other peaks are below the head, and these are connected by what is called the neckline. When this pattern is formed, it becomes predictable that the price may fall further, and can guide your decision in trading.
Cup and Handle
The cup and handle indicates a bullish continuation trend and provides a strong buying opportunity for the trader. It is characterized by a deep fall, stability, and a swift rise forming a "U" shape. After completing the "U" shape, it takes a smaller fall then rise back above the first peak. When we look at the cryptocurrency price history, we can observe that this price pattern is dominant and usually repeats itself.
There are many types of patterns that traders can master before they enter the market. Some of these patterns are: Flag, Pennant, Ascending Scallop, Ascending triangle and three rising valleys. In this light, it is strongly advised that traders choose one or two of the patterns, read the story behind them, master them and strike. With few practices or engagements, traders would begin to enjoy their trade.
Monitor the Time Your Favorite Coin Reaches the Bottom and Peak
Many people think the cryptocurrency prices follow a random trend that makes it a pure gamble to trade. The truth is that most of the coins have their natural peak and bottom within a time range in 24 hours. Successful traders usually know when their favorite coins settle and when they become more volatile. Choose a coin you want to trade in, and then check through its price history to know the time of the day it usually reaches its peak, and the time it reaches its bottom. This observation will primarily help you to identify when to buy and when to sell. It is also important to understand that each coin has its cycle, so it would be an error to apply the cycle of Bitcoin to Digibyte, though some selected altcoins sometimes move based on the direction of Bitcoin.
It is undeniable that the cryptocurrency market can be manipulated by big coin holders. In this case, the trend may change from its usual cycle so caution should be taken when applying this strategy.
Trade with Amount You can afford to Lose and Avoid Trading With Emotions.
This minor trick do not only create a successful trader but a trader who can sustain his success at the top. One thing is sure in cryptocurrency trading: You win or lose. Yes! with the right technical analysis, you can minimize risk, but using an amount you cannot afford to lose has a psychological implication. For the fear that you may lose everything can cloud your sense of judgment and force you to trade with emotions instead of reading and analyzing the market. Trading with an amount you can afford to lose can help subdue your emotion, bounce back after failed attempts, and establish yourself as a successful trader. In most cases, newbies enter the market with expectation of hitting the jackpot overnight. This idea usually makes them start with a huge sum of money which could be their live savings hoping to make it big in their first attempt, and this can be risky knowing that your chance of winning is not 100% secured.
It is also crucial for traders to have a daily target, buy and sell plans to guide their trade to minimize risk, avoid greed and also build a sustainable profit.
Avoid Chasing Breakouts and Stay Away From Coins at their Peak
Traders who are unable to predict the reversal of a coin by the pattern of a chart always jump into a moving train. They only buy when the green line starts rising. To be convinced; they usually prefer buying when the green line has reached vertical or near vertical. This decision is dangerous. After coins reach their peak, they proceed with a fall. Chasing breakout will not only make you lose you funds, but can also kill your confidence depending on the money involved. When you miss a breakout, count it as missing a moving train. It is more dangerous to run after it.
What this means is that, do not focus much on the peak. Focus more on the lowest point. Buying coins at their peak or near peak increases your chance of being crushed by the volatility of the market. To reduce risk and make a sustainable profit, target the lowest point, buy and wait as anything from here is all profit. It is usually normal that traders are blinded by the profits which make them violate their own rules of getting out of the market at a point. When the price rise high on the price curve, consider getting out of the market after making a decent profit. Do not be greedy at this stage as you may end up losing everything because there is usually a sharp fall after a sharp rise.
