Crypto trading is not a game of guesswork, trial and error. More must be considered to ensure you are a perfect trader and make good from your trade ventures.
The decision to buy or sell cryptos occurs in a split second. This period will determine whether you gain or lose on the crypto market. This explains why amateurs find trading cryptos challenging due to insufficient informed analysis and facts.
Crypto trading decisions are based on facts, data, analysis, news and trends generated by experts and various crypto trading algorithms. Therefore, you will likely be an expert trader if you access more of these signals and decide based on them. This is why master traders pay attention to the data and invest more in analysis and algorithms to make profitable trades.
However, not all the indicators are accurate since they are based on other factors like sentiments, trends, and news. To avoid falling for wrong signals, here are some indicators that should guide your trading decisions.
1. Crypto Trading Relative Strength Index (RSI)
Before you buy or sell your cryptos, you need to understand the amount sold and bought. If the crypto is oversold, you have a reason to worry why people are selling more of it. It is probably losing value; hence, its future value may depreciate. The depreciation will affect your investment value, so you should not buy the coins.
If more people buy, this is a testament to the crypto’s strength, meaning more people want to own it. Such cryptos tend to increase in value in the future; hence, you can profit by buying them and then selling them in the future to make some profits.
These decisions should be based on the RSI, which shows you the mark if it is over-sold or over-bought. If the mark is below 70, it is overbought; if it is below thirty, it is oversold. Therefore, make a cautious decision to consider a crypto with values about 60 and not below that. Based on the RSI crypto signals you can know when to trade or buy more coins for future profits.
2. Crypto Trading Aroon Indicator
An amateur crypto trader will likely make sale and purchase decisions based on trends. For example, most are likely to buy when others buy and dump when others are dumping. Making decisions based on sentimentality and market influence is dangerous, so experts use the Aaron indicator.
Generally, this indicator shows you the nooks and cronies when assessing the strength of the selling and purchase trend. The indicator consists of two marks you need to know: the Aroon Upline and the Aroon Downline. The upline shows the exact time when the trend is at its peak, i.e. when the crypto hits the highest price; hence, this can be the best time to trend to make a profit.
The downline shows the time when the currency is at its lowest price. If indicators show the crypto may gain value in the day or future, this is the best to buy as you will buy cheaply, hold, and then sell at peak to make more profits than other traders.
3. Crypto Trading On Balance Volume
Sometimes, crypto traders can decide to inflate an asset or hype the market to purchase a currency that will soon collapse. This is an example of wrong signals that you must be aware of. To avoid being a victim, the on-balance volume (OBV) can help. It shows you weak and wrong signals by monitoring the asset value vs the price.
For instance, when the asset value is low but the trend indicates higher purchase, an amateur will likely fall for this and interpret it as a high-value asset. By measuring the directions, i.e. asset price and the volumes available, OBV shows all the wrong and right signals.
One thing to note is that sometimes the crypto value can be inflated by minimizing supply to increase the asset value and demand. This is normally the case with new cryptos whose true value is unknown. Purchasing such assets will likely put you at more risk in the future if the asset does not hold its value or the volume increases.
4. Crypto Trading Fibonacci Retracement
Sometimes, market support and resistance for a crypto asset can be the best trend a trader needs for profitability. Generally, this is when the uptake is high or lower. According to this indicator, sometimes the decision to buy or sell should be based on the asset support and resistance levels. More people purchase when the support is high; therefore, the values go higher.
During the resistance, the value and purchase price are low. Crypto highs and lows are sometimes the best indicators for selling and buying. This chart alone is insufficient for decision-making as support and resistance can sometimes be based on unquantifiable sentiments. As such, the decision to buy can lead to losses. Therefore, you need other indicators to supplement your decision.
5. Crypto Trading Ichimoku Cloud
Here is another indicator if you are still making your decisions based on the resistance and support levels. It is fairly reliable as it includes more aspects in the decision-making and analysis. These new aspects include potential trend reversals and market momentum. These trends can help you increase your decision certainty and profitable trades.
The key to being a good crypto trader is leveraging market signals for decision-making. To ensure you rely on the right signals, monitor the indicators and analytics to avoid making worse decisions. For ultimate and the best decisions, consider using more than one indicator. At any point, use about three indicators to make informed decisions.