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On the most fundamental level, traders use visualization as a crucial element to technical analysis. Patterns showcase the unique ability of our brains to locate patterns and build models by comparing price charts to separate historical price movements.
These price formations tend to correspond to similar historical price movements, due to the fact that crowds tend to react to similar situations in similar ways.
View a chart as a “log” of crowd behavior, in order to better understand why price history can help us gauge the current state of the market. Price history not only allows us to spot the current mood of participants, but most importantly, the balance between buyers and sellers.
On the other hand, your mind can play tricks on you as well. Traders tend to see patterns that aren’t necessarily there and confirm these subconsciously. Psychologists call this “confirmation bias”. It is the most notorious enemy of traders and investors alike.
While visualization is an important and necessary tool for traders, especially experienced ones, never treat a chart or pattern as the end-all be-all. They aren’t magical tools, however in experienced hands, they can boost your returns and help you find great trading opportunities, while protecting your investment.
Support and resistance levels can be seen as the most basic (sometimes most reliable) chart patterns. As a general rule, simplicity is extremely helpful when formulating your trading strategy. Over complicating your charts with a plethora of charting tools and indicators will only lead to confusion. You can certainly find some confirmation on complicated charts; however it typically won’t give you any more direction than simple ones.
The patterns we’ll discuss below aren’t necessarily the Holy Grail of chart patterns. They are simply the best tools we can use to trade the cryptocurrency markets with at a surprising degree of accuracy.
For example, many traders like the head and shoulders pattern as it has an accuracy of over 80% when it’s fully complete. Not too many other patterns can match that.
Within this guide, I’ll go over 4 of the best and most widely used chart patterns in cryptocurrency trading. Follow the instructions and practice on a live chart. Teach yourself how to spot these patterns and trade them appropriately.
Let’s start off with the classic head and shoulders chart pattern which most people have heard of and know what it resembles.
This pattern generally signals a reversal in the market and means that there is a failed attempt of the trend to move any higher. An uptrend can be easily defined as a series of higher highs and higher lows. In the case of the head and shoulders pattern, the last trend (right shoulder) fails to make a higher high and higher low. Soon thereafter, a new downtrend is initiated.
Turn the pattern upside down, and we have an inverse head and shoulders pattern. This signals a shift from a downtrend to an uptrend.
The head and shoulders pattern is considered to be the most reliable patterning trade. It can often be easier to spot on a chart and can help you filter through all the clutter.
This is what is known as a continuation pattern. It’s considered one of the most reliable bullish patterns in trading. Also referred to as a pennant or wedge, the bull flag is often formed when the price enters a consolidation phase following a strong uptrend.
The consolidation phase shows that the market is gathering momentum for the next rally up. It’s a very natural part of a trend where those who were at the beginning of the trend are starting to take some of their profits. On the other hand, new traders are entering the market and taking positions for the next run-up in price.
This pattern is a bullish one that’s very well known in the stock market and also appears in in the crypto market just as often.
As you can see from the image below, the pattern forms a cup like shape before a dip on the right corner of the cup, leading to another significant rise in price. In order to confirm the pattern, you would want to look out for a significant increase in trading volume near the end of the handle. A buy order should be entered when the price breaks above the right corner of the cup.
The logic behind this trading pattern is that the cup represents the bottom of the market and the handle creates a higher low which by definition means that an uptrend will begin.
This pattern is very similar to the bull flag, where price appears to be stuck between a support and resistance. The more touches there are between the support and resistance the more reliable the pattern is considered to be.
The rectangle pattern is a trend continuation pattern and is often a waiting game for traders as it’s difficult to tell exactly when the price is going to break out. Depending on the direction of the preceding trend, the rectangle can be either bullish or bearish.
This pattern can be traded into ways. One method would be by placing an order at the lower end of the rectangle and placing a stop loss right under. The second method would be placing a buy order just above the upper end of the rectangle in hopes of catching the breakout.
The problem with this last option is that a price spike can happen quickly and then subsequently dip back down through the rectangle pattern. This is called a “fake out” and occurs quite frequently. As with anything you do in trading, taking the slightly more conservative approach should serve you better in the long run.
Now head on over to TradingView, and practice spotting all four of these popular trading patterns. Once you think you’ve got a handle on things, open a demo account or paper trade (fake money) on TradingView.
The last step will be to start trading with a very small amount of cryptocurrency within an exchange. See how well you can stick to these charting patterns, with money on the line. That’s a whole lesson in itself, that no trading guide will ever be able to teach you.
You might have heard that some professional traders don’t use stop losses. This might be all well and true; however you must also realize that they also have multiple years of experience under their belt. They’ve dealt with these stressful situations more times than you can probably count.
On the other hand, seems like everywhere you look, you see a ton of advice from other “so-called traders” telling you that you should never trade without a stop loss. With all the conflicting advice, which one do you choose?
As you can imagine, there’s pros and cons to each. Depending on your trading style (if you have one yet) and experience, this will vary from person to person.
Personally, I tend to lean more towards using stop losses than not. I’ve found myself losing a lot more money from not implementing these handy “safety nets”. Believe me; I’ve had my fair share of trades without them and none have turned out well.
With that said, this doesn’t mean that you shouldn’t explore your own trading style and see which one works best for you.
For those of you that are brand new to trading, stop losses are orders that a trader places at a specific price which automatically executes a buy or sell at a certain price point.
If you’re “long on a trade”, you would utilize a sell stop loss at a level below your buy-in price. This is what majority use along their trades. If you’re shorting a trade (margin trading) then you would set your stop loss as a sell order above your buy-in price.
One of the main purposes of setting a stop loss is to allow yourself to remove all emotions from your trading decision. It also serves a secondary purpose of not having to worry about watching over your position like a hungry jackal. Setting a stop loss will allow you to actually enjoy your life and walk away from the charts without your trade completely tanking.
In order to make a thorough decision on whether to use a stop loss or not, you should consider the advantages and disadvantages behind each one. If you decide against using a stop loss, I highly recommend you test this strategy on a demo account or with a very small amount of currency.
In many cases, traders don’t want to close a trade because they somehow think that the market will eventually reverse in their favor . The problem with this train of thought is, markets don’t typically move towards an individual traders favor, no matter how powerful you think your Jedi mind tricks are.
On the other hand, stop losses allow you to just “set it and forget it”. This gives you the freedom to walk away from your charts, have a life, work on other business matters, enjoy a hobby, exercise…. you get the point. In not utilizing stop losses, you’re essentially staring at charts all day. Setting alerts for key price points will still have you glued to your smartphone.
An apparent benefit to using a stop loss is the fact that it eliminates “trading discipline” which you might have not cultivated yet. No matter how mentally tough you think you are, it takes the willpower and mental fortitude of a triathlete. It’s tough to cut a loss once your trade has gone completely sour.
Keep in mind; you need to be confident in your trading strategy in order to stick to your original plan. Setting a stop loss and take profit will help you stick to your original game plan as intended.
Overview of Stop Losses:
A mental stop loss is referred to as a stop loss you “remember” to set before opening your trade. This is unlike a ” standard stop loss” which is manually set on a cryptocurrency exchange. A mental stop loss only abides by the rules you put into action “if” your trade moves below your buy in price. It’s only as flexible as your mind allows it to be.
A mental stop loss will test your trading discipline. Trust me, when those dips get deeper, that panic button starts to look more and more enticing.
However mentally strong you think you are, it’s nothing compared to the feeling you’ll get once that dip accumulates more sizable losses.
PRO TIP: I’ve typically found, once a major dip has occurred, a quick rebound in price action will follow. The real question is, will this rally lead you back to those tasty profits, break-even point, or merely soften the blow with a smaller one?
My advice is, take a look at the charts history and see what happened with previous dips. Which of the three options mentioned above, did the previous dips most often follow?
Set a trailing stop loss underneath each previous candle. I’ll typically move my stop loss in this manner, as to avoid a sharp reversal.
Cryptocurrency trading is an extremely volatile market. It’s been known to trigger stop losses on more than a few occasions. A short-term fluctuation could easily trigger a premature stop loss. This is why I highly recommend you set stop losses on a “per chart basis”.
Each chart comes with its own story. There will be a wide range of fluctuations that you need to analyze for each one.
Some charts tend to fluctuate 2 to 3%, others will fluctuate 10 to 15%. Always take a look at your charts history to view previous candlestick fluctuations, in order to decide on what range to work with.
Does it often dip 10% and rally for more prominent gains? Does it consolidate for several hours before an increase in price action? You can easily answer these questions for yourself by looking at your current charts history.
Another item you want to check before setting a stop loss is the order book. Order books show a list of orders from any given exchange which records the interest of buyers and sellers in the market at any particular time.
By analyzing buy and sell walls, you can get a good indication as to where to place your stop loss. Make sure to place your stop loss at least a few percentages behind a high buy wall, when trading on a long position.
This strategy paired with historical chart data, will allow you to formulate a more sustainable stop loss location.
Implement these variables into your stop loss strategy and you’ll lower your chance of triggering a premature stop loss.
There are going to be occasions where stop losses are triggered, no matter how strategic you are. Just remember, there’s no such thing as a perfect strategy. All you can hope to accomplish with any trading strategy, is to minimize your losses and maximize your potential gains. However, you’ll win a lot more of your trades than not, if you stick to this very simple, yet effective strategy.
Overview of Mental Stop Losses
Each chart has a different story to tell. Some may fluctuate wildly while others maintain a more consistent and stable support. Although mental stop losses have their time and place, I highly advise anyone who has less than a few years of consistent trading experience to stay far away from them.
Look at it like this…
Your time is much more valuable than the capital you trade with. If a dip continues deep into a bear market, you’ll have only two choices. Take a greater loss than you had originally intended or get left holding bags until the coin reverses and potentially reaches your buy zone again.
Waiting for your coin to recover can cost you a lot of time. Meanwhile, holding onto those bags will cost you a lot of time which you could be using on winning trades. This could be prevented if you had a standard stop loss in place.
Don’t trade your time for money. Get in, get out, and move onto another trade.
Good luck and happy trading!
Reversal patterns are the closest thing you get to a crystal ball when it comes to predicting trend reversals within the volatile world of crypto trading. Once you start timing these patterns consistently, you’ll gain an uncanny advantage over your trades. A well timed trade off a reversal pattern can make the difference between making 5% on a trade or 50%.
It doesn’t matter if you’re trading Bitcoin, various altcoins, or any other asset. Reversal patterns are an extremely important part of any traders skill set.
This guide will be covering 6 of the most widely used reversal chart patterns. Learn to recognize these bad boys for a well-placed trade that will leave you “head and shoulders” (pun intended) ahead of the pack.
Common Reversal Trade Patterns We’ll Be Discussing
Head and Shoulders Reversal Pattern
One of the more popular reversal chart patterns is the bearish formation known as head and shoulders. As you might’ve guessed, the pattern resembles a raised head with two matching shoulders on each side.
The bottom of the left shoulder should always be drawn across to the bottom of the right shoulder. The neckline serves as an area of support which the price will eventually drop below.
When the price drops below the neckline of the right shoulder, the pattern is considered complete. After completion of the pattern, price will most likely proceed lower off the right shoulder towards a bearish breakout.
Head and Shoulders Overview
Trend – Bearish
Signal confirmation – when the price drops below the neckline on the right shoulder.
Pattern target – tends to break out below the bottom of the right shoulder.
Percentage pattern hits target – 62%
The inverse head and shoulders is a common bullish formation which, as you might’ve guessed by now, predicts the reversal of a downtrend. As the name implies, it resembles an upside down head and shoulders.
The top of the left shoulder should always be drawn across to the top of the right shoulder. The neckline serves as an area of support which the price will eventually rally above.
Once the price drops above the neckline of the right shoulder, the pattern is considered complete. After completion of the pattern, price will most likely proceed below (moving upward) the right shoulder towards a bullish breakout.
Inverse Head and Shoulder Overview
Trend – Bullish
Signal confirmation – when the price drops above the neckline on the right shoulder.
Pattern target – tends to break out below the bottom of the right shoulder (moving upward).
Percentage pattern hits target – 75%
The double bottom is a bullish formation that is frequently found at the end of a bear market. It predicts the reversal of a current downtrend and commonly resembles the “W” shape. The shape is formed by two consecutive dips that have roughly around the same lows that are separated by a peak.
The patterns neckline, which is drawn above the middle peak, acts as an area of resistance which must be broken through. The reversal pattern is complete once the price rises above this neckline, indicating a bullish rally.
Double Bottom Overview
Trend – Bullish
Signal confirmation – when the price rallies above the peak between the two dips.
Pattern target – tends to break out above the peak towards bullish rally.
Percentage pattern hits target – 65%
The double top is a bearish formation that is frequently found at the end of a bullish market. It predicts the reversal of a current uptrend and commonly resembles the “M” shape. The shape is formed by two consecutive peaks that have roughly around the same highs which are separated by a dip.
The patterns neckline, which is drawn below the middle dip, acts as an area of resistance which must be broken through. The reversal pattern is complete once the price falls below this neckline, indicating a bearish trend.
Double Top Overview
Trend – Bearish
Signal confirmation – when the price dips below the valley between the two peaks.
Pattern target – tends to break out below the bottom of the right peak to breakout towards a bearish movement.
Percentage pattern hits target – 74%
This bearish reversal pattern predicts the reversal of an uptrend and is sometimes referred to as an Inverse Saucer. This pattern is more easily found under the long term reversal patterns which typically last weeks or even months.
Rounding Top Overview
Trend – Bearish
Signal confirmation – price exceeds below the right bottom of the saucer.
Percentage pattern hits target – 27%
This bullish reversal pattern predicts the reversal of a downtrend and is sometimes referred to as a Saucer Bottom. It’s also easily identified by its “U” shape. This pattern is typically found under the long term reversal patterns which last weeks or even months.
Rounding Bottom Overview
Trend – Bullish
Signal confirmation – price exceeds above the right top of the saucer.
Percentage pattern hits target – 60%
These reversal chart patterns are not too hard to recognize once you actually remember to look for them. Look over a few of your favorite cryptocurrencies here, and see if you can spot a few reversal patterns I’ve mentioned here within this guide.
These powerful cues will help you forecast dramatic shifts within the supply and demand of any cryptocurrency. Reversal patterns are a very important tool to add to your cryptocurrency trading skillset, so learn them, love them, and use them.
A major part of technical analysis is determining whether to buy in or sell out of a formidable crypto trade. Kenny Rogers always use to say, “know when to hold em, know when to fold em, know when to walk away, and know when to run”.
If you’re under 25, you probably have no clue what the hell I’m talking about, so just disregard my 80’s reference or go ask your dad.
These crucial chart patterns help traders forecast future price movements. It doesn’t matter which coin you’re trading, these bad boys show up all over the charts.
Continuation chart patterns DO NOT predict the future (wouldn’t that be nice). However, they do help with locating the “probability of movement” within a particular trend. I promise these powerful buy and sell signals will help you make much more accurate investment decisions. Scouts honor!
Study the chart patterns I outline for you below. If all else fails, we can always fall back on the Dolorean and predict our way to crypto riches.
As stated above, continuation chart patterns will tell you whether price movement is going to continue moving up or down within a prevailing trend.
For example, if price movement of a downtrend trend shows signs of a continuation pattern, what do you do? If you guessed, “buy in” then keep reading. The correct answer would be…wait until a reversal pattern emerges. Alternatively you can just move onto another trade.
So let’s start things out with 6 of the more popular continuation chart patterns. Study each as if there will be a test at the end of this guide.
This continuation pattern depicts sideways price movement between 2 horizontal trend lines (support and resistance) along a strong uptrend, which generally results in an overall uptrend continuation.
In order to be defined as a true bullish rectangle, price movement should touch each trend line at least two times on both support and resistance. Upon doing so, the price action should break the top trend line of resistance. Investors want to purchase the cryptocurrency when the price action closes (candlestick close) above the upper trendline.
This continuation pattern depicts sideways price movement between 2 horizontal trend lines (support and resistance) along a strong downtrend, which generally results in an overall downtrend continuation.
In order to be defined as a true bearish rectangle, price movement should touch each trend line at least two times on both support and resistance. Upon doing so, the price action should break the bottom trend line of resistance. Investors may want to short the cryptocurrency (refer to margin trading) or sell the coin at this position for a loss.
This bullish continuation pattern is depicted by a right triangle which is created by two trend lines. The bottom trend line is drawn horizontally upward, where support prevents the price action from breaking through.
The top trend line is represented by a horizontal level which prevents the price from breaking through this resistance. Once this resistance line is broken, upward price momentum is expected to continue.
This pattern showcases that the demand for the crypto coin is increasing over time.
The bullish continuation pattern is depicted by a right triangle which is created by two trend lines. The bottom trend line is drawn at a horizontal level where support prevents price action from breaking through.
The top trend line is represented by a downward horizontal line which prevents the price from breaking through this resistance. Once this resistance line is broken, downward price momentum is expected to continue. It is recommended to sell here.
This pattern showcases that the demand for the crypto coin is weakening over time.
This continuation pattern resembles a flag at the top of a pole. The bullish flag is a short-term continuation pattern which tells you that a temporary market consolidation is occurring before a continuation of an uptrend.
Within the pattern, the flagpole is represented by the sudden vertical spike in price as the flag portion is represented by a temporary downward consolidation against the uptrend.
Typical bullish flags are angled downward from the predominate trend, however on occasion it can be angled upwards. The continuation pattern is complete once price action breaks above the upper resistance trendline.
A typical price target is measured by adding the length of the flagpole to the price associated with the bottom of the flag.
This continuation pattern resembles an upside down flag. The bearish flag is a short-term continuation pattern which tells you that a temporary upward market consolidation is occurring before a continuation of a downtrend.
Again, the flagpole is represented by a sudden vertical dip in price as the flag portion is represented by a temporary upward consolidation against the downtrend.
Standard bearish flags are angled upward or sideways from the dominant downward trend, however on occasion it can be angled downward. The continuation pattern is complete once price action breaks below the lower trendline of support.
A typical price target is measured by subtracting the length of the flagpole to the price associated with the top of the flag.
You did it kiddo! You studied your ass off right? You ready for the big leagues now? Don’t get to far ahead of yourself…..there’s more.
This is where the rubber meets the road. Apply these patterns to your favorite trading chart before claming your fame. Head on over to our Tradingview charts and get started on a few while it’s still fresh on your mind.
Once you’re comfortable with recognizing these patterns, throw a few dollars at your favorite exchange (whatever you can manage – start slow). See if you can win a few rounds within your own crypto trading challenge.
Remember young grasshoppa, practice doesn’t necessitate real world experience, but it sure as hell helps!
If you enjoyed this guide, leave a comment below. I’d love to hear from you and the experiences you’ve had along your crypto trading journey.
No matter what anyone’s ever told you, producing a steady income trading takes time, experience, dedication, and a lot of emotional grit. However unlike traditional markets, you can make money much faster trading cryptocurrency (and lose it just as fast) due to the markets volatile nature and low barrier of entry.
There are two vital aspects to become a successful crypto trader. Obtaining a solid understanding of technical analysis and managing your own emotions. I would go so far to say that the emotional aspect of trading is a bit more difficult, however we’ll dive more into that aspect of trading in another guide.
Let’s talk technical analysis and some of the most basic crypto trading indicators you’ll need to learn, in order to get a grasp on what you’re doing.
Technical analysis (AKA – TA) is a representation of price and trading volume over time, using an easy to read graphic representation of candlesticks. These candlesticks form patterns over time which traders commonly referred to as chart patterns. These patterns represent mass psychology over a group of traders during a set period of time.
The only other option you have to make sense of all these varying numbers would be for you to calculate volume and price on a linear scale over time. Take that number and multiply it by pie over distance. Easy right?
For the 99% of us that aren’t math geniuses, charts and technical patterns are what we have to revert to in order to make sense of it all. Without it, our brain would clench up faster than doing multiple trigonometry problems on 8 cans of red bull.
Ok, you get the point, moving on….
There are two types of research methods that you want to be familiar with before attempting to make any trade; technical and fundamental analysis.
Fundamental analysis is focused on aspects of of a cryptocurrency like the development team, utility of the coin, white paper current investors, etc . The latest news, and rumors surrounding your potential coin can also be factored into fundamental analysis. All these play a major part on the value of any cryptocurrency.
You’ll find our live charts page to be an all-in-one resource to for all your fundamental analysis needs. We cover cryptocurrency whitepapers, official crypto websites, social media accounts, blockchain info, and more. We everything you need to know, in order to make a well informed buying decision.
Before we go covering the details of technical analysis, remember that price movements on a given chart are rarely ever random. They often follow a trend, both long or short term, depending on the timeframe you are looking at.
The term trends, within the trading community, are not some new pair of $100 stone washed Justin Bieber jeans you decided to purchase because your girlfriend thought they were cute. These trends refer to the mass psychology of a group, in order to obtain increased price movement, through the analysis momentum in a particular direction.
The “group of people” (or herd) were analyzing, always follow certain patterns and react to certain price levels. These can be predictable to those who know what to look for. This…my friend, is what technical analysis is all about.
In order to be a one of the great crypto traders of our time, you’re going to need to recognize certain trends as well as chart and candlestick patterns. Also worth noting, trading indicators (RSI, MACD, Stochastics) are a great way to verify your TA strategies.
Got it? Good! Let’s move onto….
One of the more simple indicators to identify in your early stages of your trading career are support and resistance lines. Trading patterns are always made up of of these two fundamental levels.
Support is when you have more than two candlesticks that touch a particular price level towards the bottom of a trend. These tend to touch and bounce off support, thus moving up towards the top of the price level. These are known as resistance levels. A single bounce off support and resistance is known as a cycle. The more candlesticks that touch your support and resistance, the stronger they are. Let’s take a look at a strong support and resistance.
As stated above, you need at least 2 touches of a candlestick, within a cycle, in order to claim any sort of support or resistance. I typically look for at least 3, in order to be more confident about a certain level.
Ok, now that we’ve covered support and resistance levels let’s move onto trend lines.
The only major difference between support and resistance lines are the fact that trend lines tend to be drawn in a diagonal direction. Support and resistance are drawn with straight horizontal lines.
When it comes to trading, a picture is definitely worth 1000 words. In order to better conceptualize trend lines, let’s have a closer look at both rising and falling trends.
Much like the support and resistance lines, you want to make sure you have “at least” 2 or more touches off a candlestick in order to consider it a trend. The more the merrier.
Trend lines can also move sideways, which we typically label as a “consolidations”. You also have short, intermediate, and long term trend lines depending on the timeframe of the chart you’re looking at.
Time to step your game up a little and start getting acquainted with more technical aspects of trading like moving averages.
|Moving averages are generally used to simplify trend recognition. These moving averages are based on the average price of a coin over a designated period of time.
You can calculate moving averages to show the average of any group of candles, but most traders calculate these averages over a period of 10, 20, 50, 100, and 200 timeframes (minutes, hours, days). The one I personally use the most is the 50 Day Simple Moving Average (SMA).
There are also two types of moving averages you can use, exponential or simple moving averages, depending on how broad or narrow you want your insight to be. I recommend using both. Let me explain…
There are certain strategies for each, however to be more specific, exponential moving averages give higher weighting values to recent prices, whereas simple moving averages assign equal weighting to all values.
To put it in layman’s terms, SMA will give you a broader overview of where a trend is at and EMA is best used to make quick judgment calls on more recent price action and trend reversals.
I like to use a 50 day moving average on all my charts. These allow me to quickly tell whether a trend is currently in a bear or bull market within the timeframe I am viewing.
Anything below the 50 day moving average tells me that the trend is currently in a short or long term bear market. If the candlesticks are above the 50 day moving average, you’re in a bear market trend. Knowing which trend you’re in (both long and short term) will allow you to better formulate a strategy moving forward.
Exponential moving averages (EMA) will help you decide if a trend is about to reverse within a short term timeframe. Many traders use different EMAs, however the one that I found to be the most useful are the 13 and 34 day moving averages.
Here is the basic strategy behind EMA …
As you can see, as soon as any of the lines cross, a substantial shift within the trend can be seen. This combined with a few other indicators to help substantiate your trading strategy, will help you form a profit maximizing trade.
Next, let’s talk about a very important indicator that all traders use… volume.
Trading volume plays a crucial role in identifying whether a trend is weak or strong. Strong trends with high trading volume will always be accompanied by long candlesticks. The same goes for weak trends. These will be accompanied by short candlesticks.
Let’s break this down and structure it appropriately…
– If you have several long candlesticks along the volume indicator, this indicates a strong trend. If most of these are green, that would indicate a strong bullish trend. The opposite goes for red candlesticks indicating a strong bearish trend.
Pretty simple right? Exactly! This ain’t brain surgery folks. Volume indicators are really simple to understand.
Don’t be lured into the always present debate between fundamental and technical analysis. Many novice traders tend to choose sides between these two research powerhouses. They believe one is ultimately better than the other.
This couldn’t be any further from the truth. You should be asking yourself….why choose one method over the other, when you can choose both right?
Using technical analysis (TA) as well as fundamental analysis (fundamentals) will equip you with the prophetic knowledge you need to culminate a precise trading strategy that you can actually feel good about.
Technical analysis will give you a practical way to measure past price movements and their corresponding trading volume. This is vital knowledge you’ll need when considering a trade.
Fundamental Analysis will empower you with significant insight regarding the current cryptocurrency conditions. Everything from current news, rumors, and future developments will play a crucial role in your decision when using fundamental analysis.
Combine these two powerful research techniques into one highly effective trading strategy.
Utilize fundamental analysis to dictate which coin is worth investing in, while tightening up your strategy when you’re ready to trade, by finding a good entry point with technical analysis.
In order to get started, we’re obviously going to need to get familiar with a trading chart to plot out some beautiful technical analysis strategies right? You can start by utilizing our free chart here, however there will come a time when you need more than what this free solution has to offer (like alerts, more indicators, etc).
This is why I highly recommend TradingView for all your trading and chart plotting needs. TradingView offers a lot more than just charts. They include a massive selection of experienced traders you can follow and learn from. Take a look over expert trade setups on a number of coins and learn from real life application.
It is the quintessential social media platform for all traders, both novice and experts alike. They also have a very comprehensive traders reference guide that you can study if you ever want to expand your knowledge on the field. Reading up on trading ideas about various indicators, chart patterns, candlestick patterns, and then viewing them on live trades really helps.
I highly recommend starting with the Pro plan to start. If you need more indicators and alerts on down the line, go for the Pro+.
This guide has presented you with the basic concepts behind technical analysis. I highly recommend you practice using the indicators and patterns I covered above. Once you’ve got a good handle on them, move on to more advanced charting patterns. I’ll go over these within another guide.
Now get out there and start charting!
Go on….you can do it! Don’t just let your dreams be dreams!
There are a lot of theoretical trading strategies out there from novice traders (watch out who you follow on YouTube). There are also just as many experienced traders who really know what they’re doing and share a wealth of helpful trading strategies with the general public.
Coming from a trading background in forex, I will preface this guide by stating that a majority of it is based on fundamental technical analysis, excellent money management skills, and most importantly…..experience!
How well you train your mind to deal with certain aspects of trading will be just as important as the strategies you implement below.
For starters, I want to go over some of my own personal and time-tested cryptocurrency trading strategies. These are just some of the techniques I found, through my own trial and error, helped me generate steady profits, day trading the volatile cryptocurrency market.
The entire goal of day trading is to produce quick and steady profits over the course of a few hours (or day if you’re swing trading)? Day trading can be a quick way to make money if you know what you’re doing. It can also be equally as quick losing it, if you don’t know what you’re doing.
The term day trading was derived from traditional stocks where quick”in and out” hourly trading during the day was always present. The market opens at 9:30 a.m. EST and ends at 4 p.m. EST. On the other hand, cryptocurrency exchanges never close, so trades can resume 24/7. Due to this fact, cryptocurrency trading can be very lucrative no matter what your particular schedule is.
Now remember, if you decide to enter the day trading arena, you can’t exactly hold a coin over the long term. Any trade over a 24 hour period of time would be considered swing trading. We’ll cover that in another guide. For now, let’s go over some of the day trading strategies that have helped bring in steady profits….day in and day out.
When first embarking on your day trading journey, it’s best to eliminate any sort of wild swings or fluctuations within the marketplace. This is why I highly recommend you start out trading USDT to bitcoin or other altcoin pairs so that you’re not dealing with fluctuations on both sides of a currency when trading pairs. USDT is a stable baseline commodity that will not fluctuate while you’re trading against an altcoin.
Assuming the cryptocurrency exchange you’re using has USDT (all the major exchanges do), your goal for the day should be to produce 1% to 2% from several different altcoins, which show a history of stability over the last 2-3 days, in order to produce a minimum of 7-12% profit within a 12 hour period of time. This comes out to well over 50% profit, over the course of a week.
Alternatively, if you can only find one altcoin that has been consolidating over the last 2-3 days, then go with that. What we’re trying to avoid are massive fluctuations in price. Utilizing this simple yet effective strategy can double the profit of your initial investment in just under two weeks.
I recommend this to novice traders because it’s safest trading strategy you can implement from day 1. A profit of 1-2% per chart is much more easy to obtain than say, 5-15% on a more volatile coin. Trading these massive swings in price can work, but for beginners, I recommend you walk before you run.
If you’d like to aim for a higher percentage of profit, that’s not a problem either, but realize you should be ready to face any consequences that result from being a bit too greedy. Remember, greed is what inevitably drains your profits, not the lack of knowledge on chart or candlestick patterns. Generally speaking, if you stick to around 1-2% increments, you’ll avoid any significant losses that may occur from your natural instincts of wanting more.
Never buy a coin under pressure, as long as there is profit to take. Remember, if you’re walking away with profit, your winning. Don’t look back. Fight the urge to speculate on the “what ifs”. Just know, you’ll rarely buy in at the bottom and sell at the peak of each swing.
If you accept somebody else’s price (that is already listed in the order books) then you’ll end up paying a higher fee on some exchanges. In this situation you are the “taker”. It’s always advisable to be a maker and not a taker on the exchanges that charge different fees for each. Make sure to check “the structures” pertaining to the exchange you’re trading.
You want to set the trading bot to buy and sell your chosen coin at 1-2% intervals, according to the strategy I outlined for you above. Make sure the coin you’re trading is stable over a 24 hour timeframe (longer if possible)
From that point, you want to assign the trading bot to do the heavy lifting of buying and selling between the 1-2% intervals as opposed to you manually doing it within the exchange.
Alternatively, you can work this strategy on an overall bullish trend (look at daily chart), but make sure you set a stop loss on these trades.
You can tweak the trading bot, as per your preference, through following indicators like Stochastics or RSI on the 5- 30 minute timeframe. I’ll most likely write another article (or video) in the future with regard to bot trading. For now, use the strategy above to steady profits.
|PRO TIP: Make sure to sign up for our notifications (bottom right corner bell icon) or sign up for our newsletter located on the right sidebar for all our future guides and step-by-step walk-throughs.|
It’s smart to set trading alerts in order to be notified of these breakouts. We offer a free trading notification service here. I highly recommend you take advantage of this service or others like it, when utilizing this strategy.
Use limit orders and stop losses. Make sure you create a stop loss order after your initial buy in on any trade. This is the price you set to exit the trade if your coin drops below a certain point. If the price does in fact fall lower than your stop loss, the exchange automatically sells at your set price, to minimize your loss.
On the other side of the spectrum, set a sell limit order to cash out of a trade when the coin reaches your goal (1-2%). Setting both a limit order and stop loss will allow you to step away from the trade without watching the chart like a hungry vulture. It’ll also eliminate any emotional attachment from your end, thus creating mistakes out of bad habits.
These are just a few fundamental day trading strategies you can use in order to create a stable income for yourself day trading without putting too much risk on your shoulders. If you follow these strategies and don’t stray too far away from the fundamentals, you’ll most likely enjoy many days of rewarding success.
Good luck and happy trading!
Since the dawn of cryptocurrency, we’ve seen a major increase in its value. The value and utility over paper currency is much better suited for our way of life in this new digital era. It’s possible that it may one day take over the future of currency; however that’s a bit over speculative for now. With so many benefits to offer, many who never thought about trading in their life are now tempted with these digital nuggets of gold.
Even if the concept of cryptocurrency seems foreign, trading is fairly simple when you get a handle on it. However, in order for it to be useful, you need to understand fundamental concepts of the market.
Much like institutional stock trading, it’s important to understand signals at the beginning of your trading journey. Understanding signals can be the difference between winning or losing your ass on a trade. One of the most important “signals” ‘you can begin to study is the candlestick.
|Candlestick patterns have been in use for decades and have become very popular in terms of plotting the price action of a security or stock. Typically, a candlestick chart has a series of bars, called candles, which have different colors and heights. The colors and sizes depend on the price action of the security being studied at that point in time. It usually contains both opening and closing prices.|
The bars of the candle depends on the unit of time, be it a minute, day or even a week. This, however, does not affect the candle’s color. If a bar is visible, it means that the closing price is higher or lower than the opening price of the currency. These are generally referred to as the “body” of the candle.
A red candlestick is used when the opening price is higher than the closing price, thus showing a downward pull, whereas a green color is used to show that the price rose from the starting period to the end.
Even though the candlestick chart will allow a person determine what rate the cryptocurrency is headed towards, technical analysis is also needed so that a better decision on movement can be made.
Let’s take a look at a few popular candlestick patterns that can often be found on any particular chart. There are two categories of candlestick patterns: continuations and reversals. A continuation pattern can predict the extension of the price action currently prevailing, whereas reversal patterns predict the change in price direction.
Take a look over the following nine bullish candlestick patterns. Look out for these when focusing in on strong reversal signals.
Being a bullish reversal pattern, the hammer can be seen as a signal that the currency has almost reached the bottom of a downtrend. This typically means that the bears have been exhausted.
The hanging man is the exact opposite of the hammer. Here, the signal is showing the cryptocurrency is nearing the top of an uptrend. If you see a hanging man, when the price is going up, do not buy. The prices will most likely be dip soon so it’s best to take your profits now.
Three “white” soldiers is a bullish candlestick pattern which predicts the reversal of a downtrend. As you can see from the image below, the pattern consists of three consecutive long body candlesticks. These candlesticks open within the previous candles body in close above the previous candles high.
The bullish engulfing pattern typically occurs when a large green a candlestick fully and goals the smaller red candlestick from the period before it. The opposite is true for the bearish engulfing pattern.
This pattern typically indicates a potential reversal of traders sentiment.
The evening star will typically indicate where an investor should look into exiting a trade. This candlestick pattern is based on three candlesticks. The first one is a long bearish candle. The second is a small bullish candle indicating indecision. The third is a large bullish candle substantiating the reversal.
This pattern is formed with two consecutive candlesticks. The first candlestick is red in the second candlestick is green which indicates a potential reversal. Take note that the green candlestick must be more than halfway above the bottom of the first red candlestick.
Is a type of reversal pattern that indicates a falling price. It looks exactly the same as an Inverted Hammer (below) however found at the end of an uptrend. The candles made up of a small lower body with a long upper wick. The wick should be two times the size of the lower body.
This is one bullish reversal pattern and indicates the support level. The signal shows that bulls are attempting to raise the prices upward, this is also why you will see long shadows (also referred to as wicks). They aren’t strong enough to push the prices up at the moment, however when you see this signal, you need to stop selling your currency because there is a very high chance of an upcoming rally.
When you see a doji, you need to be cautious since the pattern means that the market is not very sure about future movement and is waiting for an external sign. This typically means a reversal is impending. The signals are not as strong as can be seen from the signals discussed above. If you spot one, don’t attempt to buy or sell since the uneasy market can mean you might end up losing the trade.
It’s better to use a variety of technical analysis and candlestick patterns in order to determine a clear plan of attack for future movement. Both upward and downward movements are more prominent when evaluating them over a long period of time, depending on if your day or swing trading.
When evaluating candlestick patterns, try to wait until the next candlestick forms before analyzing the previous one. Some candlesticks patterns are based on speculation. Any recent news event can turn the whole pattern upside down. Try trading on days when there aren’t any profound news events. This will allow the candlestick patterns to be properly represented within the market and won’t change drastically.
I highly recommend checking out our charts here and practice predicting certain candlestick patterns as they form. While you’re at it, print this candlestick cheat sheet until you achieve a solid understanding on how to spot candlestick patterns. Regardless of how long you’ve been trading, the cheat sheet should always be readily available.
For more easy to follow trading guides, visit our crypto trading resource page.
Now get to work and start practicing your trades!
This extensive beginners guide to cryptocurrency trading will introduce you to a wide range of fundamental investment and trading strategies you’ll need to learn before moving onto more intricate topics like technical analysis.
I hope this guide can help serve as an introduction to those looking to get into crypto trading. Many of its lessons I had to learn the hard way, so buckle up and try not to make the same mistakes I did. Regardless of how careful you are, just know that you’re going to make mistakes. As long as you learn from them, and move forward, you’ll be successful in this new and highly exciting cryptocurrency era.
If you’re just starting out, I highly recommend you bookmark this guide and start from Step 1. If you consider yourself a moderate to experienced trader, by all means, use the table of contents below to zip down to exactly what you need to know!
Ready? Good! Let’s get started…
Don’t just join one, join them all. You’ll find that one exchange will be slower to transfer fiat currency than another during certain times of the year. It’s always good to have backups of your backup.
You’ll need to submit a driver’s license, passport, etc in order to get into most serious crypto exchanges. You might as well kill two birds with one stone and apply to all these exchanges, at once.
|PRO TIP: there’s no need to purchase a whole number of a cryptocurrency. You can own small fractions of any denomination, so don’t really worry about fulfilling an entire Bitcoin for example. There are millions of investors and traders who only own fractional amounts of multiple coins.|
|If you’re impatient like me and don’t feel like waiting several days for your deposit to complete, check out LocalBitcoins This place accepts everything from cash, credit card, and even Walmart card payments into crypto.|
Everything on this site is sold through third-party sellers so be careful and make sure you purchase through a reputable one who has reviews on their local user ID (think eBay for crypto).
With this option you’re not paying ridiculously high fees. However, you will have to get up off your ass and make the transaction yourself either through bank account transfer or cash in hand.
4. Set up a direct deposit or wire transfer from your bank account for the quickest possible deposit into any one of these exchanges. Depending on the time of day, alignment of the stars, season of the year, etc… it can take anywhere from 1 to 7 days for the funds to reach your account.
To be quite honest, it really depends on how busy your current exchange is at any given moment. Coinbase tends to be the busiest and most widely used so if you’re in a hurry, you may not want to use this one immediately…unless you have time to kill.
|Now that your deposit has hit your account, and you have that beautiful cryptocurrency on-hand (because I know it’s burning a hole in your digital pocket) let’s move on to the next step, trading on crypto exchanges.|
PRO TIP: – when you sign up to Coinbase or any other “US-based” exchange, your transactions will be reported to the IRS. Do yourself a favor and make sure you’re tracking all transactions.
A great service that provides this for you, without having to do it manually (which is an extreme headache) is CoinTracking. I highly recommend this service to everyone who intends on trading more than a few coins per year.
This is where the rubber meets the road. If you want to invest or trade in a cryptocurrency other than Bitcoin, Litecoin, Ethereum, or Bitcoin Cash then you’re going to need to get real familiar with a cryptocurrency exchange trading platform.
These exchanges can be a bit intimidating to the weary newcomer, however believe me when I say, once you learn one, you’ll know how to use all of them.
I’ll go over the intricacies of how to use each one, however let’s stay on course and get you signed up to a few of these beginner friendly exchanges.
Also worth mentioning is GDAX, however you essentially get access to that exchange when you get accepted to Coinbase. It’s the official trading platform for their users. I don’t currently use that platform but realize that there are a lot of other beginners that do, so it’s worth checking out.
|PRO TIP: learn what “dollar cost averaging” is before you start trading. This basically means that if you want to invest $1000 total into a coin, you want to split that up into segments of 4 ($250).|
For example…let’s say you want to invest in Litecoin (LTC). You invest $250 to start. After a month, you want to invest another $250. Keep repeating this process every month, until you have fully invested your full $1000 capital.
This strategy ensures that you get the best price over time. To ensure you get the lowest price, invest on monthly dips. Over the course of 4 months, you’ll end up investing at a much lower price than you would have dumping your entire investment in one lump sum.
|PRO TIP: – Stay tuned to our Youtube channel where I’ll cover more details behind trading and technical analysis on different platforms as well as several different beginner trading strategies.|
Watch this video to get acquainted with the Binance trading interface
Be sure to check out our Technical Analysis, Candlesticks, and Chart Patterns section of our site where I cover all the standard details of crypto trading.
Trading Platform Order Types
There are 3 different order types you’re going to use when buying or selling at any crypto exchange. You should be comfortable with each one in order to be a successful trader.
Note that all orders, both buy and sell, have fees attached to them. They are relatively small (fractions of a percent), so don’t worry about them too much.
Market Orders – these orders allow you to get into a trade right away at the current market price. Orders are immediately filled within an order book at the best available rate. The advantage of this order is, it’s completed immediately. On the other hand, you don’t always receive the best price..
Limit orders – This order type allows you to set a specific price. The market can then fill that order at the specific price. The drawback to this order type is, your order may not always be filled before the price inevitably increases. You may notice that the order book is full of buy and sell orders. Once you place a limit order you’ll be able to view where your order is within the order book, usually indicated by an arrow pointing to your exact order. On other exchanges your order is in bold print.
Stop Orders – (AKA – “stop losses”) The disadvantage to having a stop order is that there are cases where a price will drop significantly during a small period before it rallies (increases) to meet your original goal. This is a way for market-makers to eliminate stop losses before increasing price action for a more prominent bullish run.
I cover more intricate details about stop losses within this guide. I highly recommend you read it before implementing this feature into your trades.
PRO TIP: Trading is all about minimizing losses and maximizing your gains. No one and I mean no one is going to win them all (not even close). You just have to make sure that your losses are small while keeping your gains relatively large. Obviously this is an oversimplified statement, but it covers the basis of trading.
Many technical strategies and money management techniques go into making this statement a reality.
Candlesticks and Trading Patterns – you want to get yourself familiar with these indicators as they are the basic foundation of trading cryptocurrency. We cover a wide variety of these patterns on our candlestick and trading patterns section. I highly advise that you check these out now and study them while you’re waiting for your exchange approvals to facilitate.
|If you’ve been in the crypto world for more than a week, then I’m sure you’ve heard of the website CoinMarketCap.com. This handy crypto tool should be your ever-loving sidekick when it comes to checking on the latest trends, prices, exchange listings, and news for anything crypto coin related.|
The only real issue that I’ve had with a CoinMarketCap is that it’s not updated in real time and can showcase older prices (by an hour). However if you want to view real time cryptocurrency price updates, I highly recommend you check out our live crypto chart page for up to the minute price updates.
So let’s just pretend you’ve been living under a rock for the past few months and heard about a new cryptocurrency that’s bound to change the way we view reality. I know, tough sell. The very first thing you want to do is check CoinMarketCap and place a search for that coin.
Once you find it, click on the link and look under the tab labeled “Markets” to view what exchanges sell the coin. You’ll typically notice that it’s being traded on several exchanges, unless it’s brand new.
You can also view other relevant information on the coin like their website, latest news release, forum gossip, market value over time (charts), and so much more. There’s a ton of information for you to dissect on CoinMarketCap, so you have no reason to not do your due diligence before investing.
This should be one of the very first places you explore before trading or investing in a new altcoin. Alternatively, our CCJ Live Trading Charts give you the same information offered on CoinMarketCap.
Transfers seem to be common occurrence for cryptocurrency trading, even more than any other trading commodity in the world (forex, stocks, options, etc), so let’s make sure you do it right, ok?
One aspect to coin transfers that you really need to get acclimated to our the fees. Transfer fees from one cryptocurrency exchange to another can vary greatly.
For example, at the time of this release, Bitcoin transfer fees are fairly high, whereas Litecoin offers a much cheaper rate. Always make sure you check the transfer fees before submission. They are displayed within a pop-up box right before you submit the transfer.
Also take note of the transfer time, which is equally as important as the fees. Check out bitinfocharts to see what the current coin transfer rates and fees are before setting up a transfer.
Once the transfer is complete, you can easily purchase the cryptocurrency that you intend to trade pairs with (typically BTC, ETH, or USDT).
Deposits and Withdrawals
These both work in the same manner and are fairly easy to accomplish. Once you complete the process once, you’ll most likely be able do it again without hesitation. In this example, we’ll be depositing BTC into Binance from Coinbase. You want to start out by retrieving your deposit address (the exchange you will be sending coins to). From here you want to click on the deposit button and copy your deposit address.
Take that deposit address and place it into the Coinbase Send/Request tab under Recipient. Once you click the “Send Funds” button, the transfer is complete. Now that wasn’t too hard was it?
Important Note – If you want to check on the status of your transfer, keep your deposit address handy and place it into the search bar located on blockchain.info
|PRO TIP : Always, and I mean always enable the two factor authorization for all exchanges you currently use. Most exchanges use the authenticator app or Authy app which reside on your smartphone. This will ensure that no unwanted guests have access to your account without also having access to your smartphone. This little added security feature is what you want to have when there are thousands of dollars on the line.|
Congratulations young grasshoppa! You’re one step closer to becoming the next crypto millionaire. However, there is one aspect to crypto that you want to make sure you adopt in the early stages of your career. SECURING YOUR PROFITS!
Weekly news regarding exchange hacks and crypto scams are prevalent within this budding industry. Cryptocurrency is in its “Wild West” stage of adoption so everyone’s out to grab a little piece of your digital nuggets.
Many of the low level hacks that tend to go under reported however occur on at daily basis are spoof sites scams. These are websites that look like real crypto exchanges you frequent. The scammer requests that you login to the fake exchange and once you login with your credentials, you can say goodbye to your precious crypto coins. That’s why utilizing 2 factor authentication is so important. Make sure you have that feature turned on before you start trading.
You can also utilize sites like HaveIBeenPawned and input your information there so the site can scan for security breaches to see if your username, password, or other information has been leaked. Sign up for their notifications so they can let you know of future breaches as well.
Securing Your Profits via Digital Wallet
Now that you’ve acquired your little stake of currency within the crypto sphere, you need a secure place to store. There are 4 mediums in which you can do just that.
Crypto Exchanges – this is the easiest option, however the most risky as well. It allows for fast liquidation of assets. You don’t have to wait for your crypto to transfer to your exchange of preference. You can easily exchange your coins for others altcoins and diversify your portfolio from within these virtual crypto shopping malls.
The biggest disadvantage to these venues is the fact that you don’t have full control over your wallet. If the exchange is hacked (many of the newer and less established exchanges are) and they declare bankruptcy, you might end up holding the bags for it. Mt Gox is a great example of this. This infamous exchange is constantly being referred to when it comes to these types of scenarios. [LATEST: they are currently in process of returning customer funds]
Soft wallets – this solution includes storing your crypto on a computer software program like Exodus. All your coins will be stored on your desktop or laptop computers for safekeeping.
When using the solution, you need to make sure you keep your private key safe in case something happens to your computer, like a virus or hardware malfunction. This private key will enable you to retrieve your funds if an unfortunate event like this occurs.
Make sure that this private key is secured in a safe place. Like other utilities that have private keys, you’re still the susceptible to having them stolen if you’re not careful where you place it.
Online Wallets – this offers users you way to keep your cryptocurrency online, within a secure environment, without the worry of being hacked or shutdown. Services like My Ether Wallet (MEW) offer an option to access your wallet from anywhere in the world, while maintaining full control of your funds. You’ll always have access to your private key when needed.
The main advantage of this service is, portability of funds. The disadvantage is that your private key is still susceptible to being stolen if you keep it on your computer or somewhere easily found within your home. It’s a very small chance, but still a chance.
Hardware Wallets – the introduction of wallets like Ledger Nano S can take care of your private keys for you so that you’re off the hook with regard to keeping your key in a safe place. This ultimately means that hackers will never be able to steal your private key via key loggers, file scanners, etc.
If that wasn’t good enough, you’ll have a backup of your secret key, which you can access if you ever lose sight of your Ledger Nano. The only disadvantage (if you’re really reaching for one), is that you’ll have to pay a transfer fee when you decide to transfer your coins from your wallet to an exchange. I wouldn’t really categorize that as a disadvantage as it simply comes with the territory regardless of what wallet you decide to use
In order to get you moving in the right direction I want to cover a few proven ways to make money trading cryptocurrency. Many of these techniques have been carried over from traditional stock market trading, however, unlike traditional stocks you won’t find the volatile swings we see every day with cryptocurrency. This means more opportunities for us.
A Little Technical Analysis Goes A Long Way
First and foremost, you’re going to want a get a good grasp on technical analysis and trading patterns. Please check out the technical analysis section of our site where I cover all the fundamental chart patterns, candlesticks, as well as indicators. You’ll need to study these in order to achieve a high chance of success with trading. I also cover more detailed technical analysis over on our YouTube channel along with several different trading strategies.
If you’re more of the investor type and you plan on investing in numerous altcoins for the long haul, it’s still good to have a fundamental understanding of technical analysis.
So what exactly is technical analysis?
Technical analysis is the study of past price patterns in order to receive a high probability of a potential outcome. This tends to equip us with a unique ability to identify future opportunities of profit. The cryptocurrency market, more than any other traditional trading marketplace, have a herd like mentality. The tendency for inexperienced traders is to buy when the price is high (rallying) and sell when the price is low. We can take clear advantage of this with proper technical analysis.
It’s much easier to nail down fundamental analysis, simply because everyone has the ability to stay up-to-date on the latest cryptocurrency news due to all the information we have at our fingertips. In order to become a successful trader, we need to utilize fundamental and technical analysis at all times.
Note: technical analysis is not an all-in-one strategy. It is only one of the tools we use to help execute our overall strategy.
Be careful to not dump 100% of your funds into one single coin. Spread your funds out over several different coins or use dollar cost averaging, which I covered above.
Trading Tools For Technical Analysis
Tradingview, in my honest opinion, is the very best charting platform on the net. They not only offer you a free chart to hone your technical analysis skills with, but it’s also a great social networking site for beginner and advanced traders. You can really learn a lot by following how other traders are plotting their trades.
Plotting chart patterns, as if you had real money in the coin, helps a lot with learning the basics of technical analysis, however it can never prepare you for the emotional side of trading when using your own money.
Once you feel comfortable with technical analysis and think your skills are up to snuff, I highly recommend starting out with very small amounts to trade, in your beginning stages. This will ensure you are actively trading, perfecting your TA abilities, as well as honing your emotional skills which greatly come into play when trading with currency.
Build Your Strategy and Be Consistent With It
One of the easiest ways to lose money trading is to bounce around from one strategy to the next without really using one particular strategy for any decent amount of time. Crypto traders need strategies and need to be consistent with them.
A solid strategy will always answer these questions…
Just remember, a solid strategy will allow you to win only half of your trading battles, and still keep you in profit.
|PRO TIP: This is definitely worth repeating. Finding a proven strategy that has worked for you and sticking to it is the most important thing you can do along your crypto trading journey.|
With that being said, it also might be one of the toughest. You’re not going to win them all, but if you can at least win close to half of them, you’re going to come out ahead (as well as using proper money management skills). Remember; don’t fix it if it ain’t broke!
We’re almost done, so I congratulate you for sticking with me so far (unless you cheated and skipped to the end). By now, you should have a fundamental understanding on cryptocurrency trading. Hell, you might even think this was more simple than you had originally thought. Better start preparing for that “lambo life” by the end of the year right?
Yeah, yeah….don’t get too far ahead of yourself young grasshoppa. Even though some of these more simplified concepts may sound easy to grasp, the truth of the matter is, the emotional part of trading is a lot more difficult.
You might think you’re a Zen master now, but just wait till you start trading with your own hard earned income. It’s going to take some solid work (and pain) before you really master the concepts within this guide. The only way to do it is through experience and trade discipline.
When trading with real money, you’ve rightfully earned, you’re going to make mistakes. Just realize that now and be ok with it. There’s not a trader out there that hasn’t lost a ton of trades. So let’s close this guide out with a few of the most common mistakes beginner traders (yes you) will make.
Keep Your Cool
Perhaps one of the most frequent and careless mistakes a trader can make is letting their emotions get the best of them. If you have the wrong mindset, you will always lose in the long run. Set a clear goal for the profit goal you wish to obtain for the day or week and just “walk away” once that goal is met. Set up the same for losses to ensure you don’t keep digging yourself a hole.
If your losses for a particular day become too great, walk away and come back another day when opportunities are more present.
2-3% profit per day is a great goal for an initial investment of $1000. Reinvest that money and compound interest to allow your profit to work for you.
Protect Your Investment
Let me sum this up in one word, stop loss! That’s all there really is to say. If you don’t know what a stop loss is, read this article. To me traders fail because they don’t set proper stop limits. This is an easy fix so don’t let it happen to you.
Let Opportunity Come To You
Use technical analysis in order to determine when a particular trading strategy is open, in order for you to take up a position. If you find a chart pattern that’s about to break out and have two or three indicators confirming the pattern, you should feel confident about taking the position.
Also make sure to set trading alerts for when your favorite coins reach an all-time low or break out of a major support. Wait for the trade to come to you as opposed to forcing one. This will save you many painful days of regret.
Watch For Paralysis By Overanalysis
Technical analysis is not a prediction into the future. If that was the case we’d all be billionaires by now. Studying charts for hours is not going to produce consistent income. If certain charting patterns and signals don’t feel right or indicators are not confirming your strategy, then it’s best you trust your gut. Save your money to trade another day.
There will be plenty of times where chart patterns and indicators point to a potential breakout and it doesn’t happen. Don’t let it get to you as the market is made up of too many irrational factors for it to be too predictable. Continue to use a strategy that works for you and implement it on a consistent basis.
Only Invest What You Can Afford To Lose
I realize you’ve heard this statement 100 times over but it does bear repeating. There are too many stories of novice traders investing in a trade, in which they take money out from their bank account (or worse savings) that they can’t afford to lose.
This is not only a bad idea for trading but for any investment opportunity as well. You’ll also realize that your emotions get the best of you when you’re trading money that you can’t afford to lose. Trading with the mindset of not giving a damn is one of the most powerful mindsets that you can bring to the table.
I hope this guide helps you on your journey towards wealth and independence. Be sure to check out our other guides related to technical analysis, trading fundamentals, and crypto trading tools. They’ll help you along your path to crypto millions. Good luck and happy trading!
For an updated list on trading guides, visit our crypto trading section here.
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HSBC Bank Could ‘Cautiously Be Looking’ at Cryptocurrency Investments in the Future Josh Bottomley, the Global head of digital act HSBC, stated that their bank is “cautiously looking” at cryptocurrency for several use cases as
India’s Supreme Court Sets September Date For Hearing on Cryptocurrency Ban India’s Supreme Court has upheld the central bank’s directive of prohibiting banks from offering services to the domestic cryptocurrency sector following a hearing
JPMorgan Pursues Blockchain Patent to Issue ICO Tokens American investment banking giant JPMorgan Chase is pursuing a patent for a distributed system that uses blockchain technology to issue virtual depository receipts that sound suspiciously like
IBM Backs Dollar Pegged Stablecoin on Stellar Network The San Francisco-based financial institution, Stronghold, has been developing a trade-in payment ecosystem which is launched an asset backed token on the stellar network. Buyers will be
The Fastest Cryptocurrency Transaction Speeds for 2018 The development of blockchain technology and cryptocurrency in general have everything to do with the inadequacies of the current financial system. Consumers are sick and tired of the
U.S. Congress Struck a Positive Tone on Cryptocurrency in Latest Hearing A congressional hearing before the U.S. House Committee on Agriculture today struck a positive tone towards the impact that cryptocurrency and digital assets can have for
Wells Fargo Files Patent for Tokenization System to Protect Data San-Francisco-based bank Wells Fargo has outlined a patent for a tokenization system that would protect data, according to a filing published by the U.S. Patent and Trademark Office (USPTO)
Bank of America Files Blockchain Patent for Data Validation Bank of America (BoA) has filed a patent for a blockchain-based system allowing the external validation of data, according to a United States Patent and Trademark
Decentralised Capital Launches Australia’s First Cryptocurrency Vault Blockchain and investment company Decentralised Capital has announced the launch of Australia’s first ever cold storage vault for digital assets. The vault was created in partnership with Custodian
Bitmain Opens 20,000 Square Foot Office in Silicon Valley The cryptocurrency industries largest crypto mining company, Bitmain, just opened their new office in Silicon Valley ahead of its planned Initial Public Offering (IPO) later in
Boeing to Use Blockchain Tech to Track Unmanned Air Vehicles for Future Flight Industry Boeing, the the world’s biggest aviation company, recently announced their intention to tap into blockchain technology by utilizing it for their
BitPay Becomes the First Crypto Payment Processor to Obtain a BitLicense BitPay, the cryptocurrency payment processor, has become the 8th firm to receive a BitLicense from the New York Department of financial services (NYDFS), which
The World’s Largest Asset Manager, BlackRock, Seeks Potential Interest in Bitcoin Futures BlackRock, the world’s largest asset manager announced the formation of a working group to assess the potential involvement in Bitcoin. This reported by
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