Trying to analyse the crypto market as a beginner is a little like trying to work out a maze in the dark. Even if you’re making a small investment, you need lights at every corner to show you the way and keep track of where to turn next to see an optimal return.
Thankfully for you, that’s exactly what we’re here for. While we may not be as knowledgeable as Brian Armstrong or Chris Larsen, we think we know a thing or two about the crypto market and how you can keep on top of it. With this in mind, here are 5 of our tips to help you analyse the market and make sure you’re making all the right moves:
First Off, Accept You’re Not The Expert
The first thing to note is that you’re not the expert. Sure, there are a lot of stories out there about first-time investors who struck gold on intuition, but this is rarely the case. Cryptocurrency shouldn’t be a gamble. All decisions should be educated and have a rhyme or reason to them. For this reason, we suggest you get on board with a platform that can offer clear-cut guides and investment strategies to help you along the way. The site Cryptosoho is one example of a resource, with a number of guides and reviews on different subject matters, as well as evaluations on crypto brokers to trade through.
Make A Clear Strategy
How you analyse the crypto market will depend on what your strategy is. There are a number of crypto trading strategies out there, including HFT – high-frequency trading – straddling, scalping,, day trading, arbitrage trading and range trading. If you decide that day trading is for you, then you’re going to be analysing the market every day, making low-risk decisions that will involve entering and then exiting your positions within a few hours, minutes, or seconds. You need to have this strategy in your head before you invest, as it will dictate where exactly you should be looking and how often.
Keep Your Eye On Price Charts
For most trading strategies, you will want to be focusing mainly on price charts. These are tools that will help you carry out your analysis, as they reveal real-time price movements that will give you an idea of market trends, patterns, and resistance. In our opinion, candlestick charts are the best for this, as they offer the most information on movements, including the tug-and-pull between buyers and sellers over a select period of time. These are the charts used by technical analysts.
Volume Data Is Your Friend
As an investor, you need to know what is being bought and what is being sold over a specific period. This can be given to you through trading volume data, which will demonstrate a consensus on any particular cryptocurrency. It should be relatively simple – high trading volumes signal strong demand, and low trading volumes signal a dip in investor confidence. But by analysing this alongside the price charts, you can achieve a complete picture of the market and where you should move next.
Social Media Is Also Your Friend
If we’re talking about friends to investors, it’s hard to deny the importance of social media to crypto. When trading crypto, you need to not only know where the movement is, but why that movement is happening. Social media will give you a picture of the overall mood and attitude toward certain tokens and brokers, and this will also dictate how volatile the movement is – a lot of the time in the crypto market, coins can dip and rise as a result of social media and news articles. If you keep on top of this, you’re keeping on top of a significant part of the market that not only moves prices but tells you exactly why it’s doing it.
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