fbpx
Connect with us

CryptoSpace

3 Styles for Cryptocurrency Trading

Published

on

Best Cryptocurrency trading app

Cryptocurrency trading is an activity that is becoming increasingly popular among  retail traders as a means of increasing their income on a monthly basis. This is in large part to do with the low barrier to entry. More often than not, what is required of an individual to start trading is an account on a cryptocurrency exchange, which takes seconds to setup, and a small but respectable starting amount.

Top 5 Cryptocurrencies 2020

Many of these individuals have chosen to approach cryptocurrency trading in three separate but distinct ways: long-term, medium-term and short-term trading. The selected style that a trader will choose is very much dependent on a multitude of factors such as: risk appetite and desired monthly returns.

In this article, we’re going to walk through each method of trading so as to equip you with the knowledge needed to ensure that you select a style of trading that suits you.

Long-term Trader

If you prefer to trade over a time frame of years, then you may very well be a long-term. These traders tend to focus more on the fundamentals of a cryptocurrency when evaluating if or not they should invest. Some of these fundamental qualities include:

  • The quality of the development team
  • The dollar value of the industry the cryptocurrency is disrupting
  • The partnerships formed by the team

Given a long-term trader’s investment horizon, these questions are critical because you want to ensure that any project that you invest in as a long-term trader will be around for the foreseeable future. You’ll also want to make sure that the industry the cryptocurrency is disrupting is a high value one, as this will affect any returns that you generate as a result of the progress made by the development team.

A long-term trader will also attempt to project where they think the price of a crypto will get to after a period of years. You won’t be concerned with the day to day price moments of a cryptocurrency and see any short-term fluctuations as noise.

Furthermore, you’ll also prefer to focus on the higher time frames such as 1-month and very rarely, 1-week. This allows you to get a solid understanding of which direction a cryptocurrency is trending and if there exist any potential opportunities.

Long-term traders very much tend to believe in the mission of cryptocurrency and the solution that it brings to an industry.

Medium-term Trader

However, if you prefer to trade over a time frame of a few months, then you might be a medium-term trader. These trades will use a mixture of both fundamental and technical analysis in order to inform their trading decisions. The fundamental qualities that you’ll care about as medium-term trader is very much the same as a long-term trader, however, you would employ technical analysis tools to bolster your decision-making. Tools such as:

  • Fibonacci Retracements
  • Momentum & Trend Analysis
  • Support & Resistance
  • Chart Patterns

These tools will be key in helping you identify possible entry and exit positions that should be considered prior to entering a trade. Automation tools such as crypto bots and crypto signals are also useful in trade execution. Moving on, medium-term traders also tend to use low leverage such as 5x in order to mitigate the introduced risk that comes with trading on margin.

When it comes to time frames, you will typically find themselves using the 1-day, and at a push, the 1-week time frame if necessary. The key strategy here is to ride the wave on an ensuing up or down trend, with less of a focus on the overall direction the space is moving in.

In terms of risk-appetite, as a medium-term trader, it should be on the low side, with the sole intention of wanting to generate consistent and sustainable returns over the course of weeks and months.

Short-term Trader

If you’re still unsure about the style of trader you are, then it’s likely that you fall into the bucket of a short-term trader. Traders of this nature care very little about the fundamentals of the cryptocurrency that they’re investing in, and very much about the technicals.

As a short-term trader, you will use the typical technical analysis tools mentioned above such as: Fibonacci Retracements and Chart Patterns and will only seek to hold onto a position for a few hours, and at a push, for a day. Your risk appetite will be very high, and you may opt to use higher leverage leverage such as: 25x to 100x.

If you are ever considering employing the short-term trading mentality, then you’ll find yourself predominantly operating on the lower timeframes such as: 15 minutes and 4-hours. The aim of this is to get in and get out of trade as quickly as possible, whilst as the same time keeping risk to a minimum.

When it comes to the frequency of trading, short-term traders tend to place over 10 trades or more on a monthly basis. This method will yield an increased number of losses, but the rationale is that this should be offset by letting the few good trades run for as long as possible.

Conclusion

To conclude, trading cryptocurrencies is an incredibly viable method to add to one’s income on a monthly basis. Traders who trade crypto tend to fall into 3 buckets including: long-term, medium-term and short-term trader.

It is important to align your own personal trading goals with that of the style that you’re looking to trade. If for example you lack the time and energy to dedicate to trading, then perhaps going for a longer-term trading style is more appropriate.

Where retail traders tend to fall down and be unsuccessful, is when traders attempt to trade a style that does not suit their personal circumstances. 

For example, if your goal is to make several thousands of dollars every month trading, with minimal effort to learning, and you decide to employ a short-term trading style, it’s likely you’ll fail.

So, when trading, always keep in mind the style that not only suits your risk appetite, but also the amount of effort you can dedicate to becoming a profitable trader!

Thank you for reading and sharing this article. We appreciate you.

Stay safe and healthy!

Top 5 Cryptocurrencies 2020

IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

Continue Reading
1 Comment

1 Comment

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    CryptoSpace

    Why this bull run has no precedence? ONE key metric to rule them all

    Published

    on

    bull run 2020

    Everyone is singing the praises for the bulls’ arrival in the crypto space.

    Some say that 2020 will mark the biggest bull run in cryptos’, albeit short, history.  

    We are already in October so we doubt any fireworks will take place now since there is a lot of uncertainty about the US elections.

    Add the uncertainty around the stimulus bills, unemployment trends, soon to be lifted forbearances and the list goes on.

    2020 still has another 2.5 months to go but most of these uncertainties will take a while to show their true impact.

    For instance, what will a Biden presidency mean for the economy and cryptos?  

    How many people will be forced to sell their homes once the forbearance’s are lifted?

    What happens if the next stimulus bill does not pass through?

    When will the vaccine become available?

    These are some of the unique situations that we have no precedence for. Do not let anyone convince you that we know what’s going to unfold, because no one does.

    Yes, everyone has theories, like the ones we are presenting here, but that is all they are: theories.

    The BIGGEST metric that crypto community is not considering

    We are no economists nor can we run any fancy charts to impress a point on you.  

    We are just good observers and have common sense to deduce a few things based on data.  

    For instance, between 2007 and 2010 consumer spending dropped by an overall .2% and we know what that meant for the economy.

    Personal consumption expenditure

    In 2020, people have literally cut down on their spending.  Some of it is forced due to the restrictions imposed by external forces and most of it is self imposed.

    I am sure the spending on marijuana, liquor and food have gone up but what about other spending?

    2020 also saw a spike in the savings balances.  

    Economy is not stimulated by people hoarding their money. People need to exchange value for the economy to thrive.

    What happens to the spending behaviors when the true stats around evictions, lost jobs (that are not coming back) and small businesses that are shutting down permanently are out?

    Our guess is that people are going to be weary of spending money in the short to medium term. If we were forced to pick a timeline – we would say about 12-16 months (assuming we get a vaccine in Q1 2021).

    When is the next bull run? 

    Based on what we have seen in 2007 through 2010 and observing the consumer spending habits in recent times, we think that Bitcoin (and cryptos) will not find their true peak until next halving.

    We know this is not what you came to hear.  

    If the bull run in your mind is hitting the 2017 highs then we do not think you have to wait until the next bull run.

    If the bull run means a $100,000 bitcoin then we stand by our opinion on when that is going to be.

    A case for bull run

    In spite of what is going on in the street, following factors are acting as strong bull market signals for the crypto space. 

    Hype: Crypto space (specifically Bitcoin) has been gathering a lot of steam in terms of brand awareness and mass penetration.  This is great for the long game.

    Adoption: More than ever, private and public enterprises are becoming serious about bitcoin and underlying blockchain technology.  What is good for bitcoin is good for blockchain and vice-versa.  MicroStrategy investment, Paul Tudor Jones getting involved with bitcoin are some examples.

    Tech explosion: Crypto space is home to some of the brilliant minds in the tech space. Add Big Techs interest in the crypto space and you have a perfect recipe for monumental shifts in crypto perception. Tech giants like Microsoft, Google, Twitter, Facebook are all getting involved with blockchain and cryptocurrencies in some shape or form.

    Retail demand: More and more retail investors are looking for alternative investments and they are waiting on the sidelines to get involved with Bitcoin.  As soon as companies like Fidelity or other brands offer crypto investment through retirement plans – there would be a massive influx into this space.

    DeFi: DeFi in its current state might be infested with shittty projects but as a concept and technological shift to turn the current banking system upside down – it holds great potential. Any demand to DeFi brings more demand to bitcoin, ethereum and blockchain in general.

    Conclusion

    The debate around when is the next bull run will hinge on how the market recovers from this pandemic. How soon will we get the vaccine and how many of the lost small businesses and jobs are we going to resurrect?

    From a macro perspective, Bitcoin and few select cryptocurrencies will continue their upward trajectory so if you looked back to 2020 five years from now, you might think bitcoin was on sale.  

    Question is: how many people have that kind of patience?

    Thank you for reading and sharing this article. We appreciate you.

    Stay safe and healthy!

    Top 5 Cryptocurrencies 2020

    IMPORTANT DISCLAIMER

    Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

    We do not endorse or guarantee the accuracy of the information and claims made.

    All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

     

    Continue Reading

    CryptoSpace

    Is Cryptocurrency driven by fundamentals or hype?

    Published

    on

    Fundamentals or Hype

    During the early 2000s India experienced a massive real estate bubble. With a lot of western companies opening their outsourcing centers in India, the land prices shot up 2x, 5x, 10x, and even 100x.

    You read that right. 

    Have you heard about 100x in Real Estate?

    To be sure, the demand was exponentially growing in the major cities like Bangalore, Hyderabad, etc., which were quickly turning into back offices for the many western companies.

    The hype in these cities was somewhat justified.

    However, here is the kicker.  Many remote places which did not directly benefit from this influx of foreign direct investment started seeing their prices go up in similar fashion.

    In a crazy case of trickle effect and super-hype created by the real estate agents, properties were just trading from one party to another for unbelievable markups and the prices constantly went up.

    Today, that massive bubble is still intact minus the crazy multipliers.

    The reason we like the comparison of what happened in Indian Real Estate market to the crypto is that a genuine need in a specific space has been exploited to translate that hype onto anything tagged with the name. 

    In India that hype tag was ‘land’ and in crypto that hype tag could mean anything from ICOs to DeFi.

    Ask any crypto enthusiast they will make you believe that crypto is all about fundamentals.  However, anyone who has spent even a few months in the space quickly realizes that crypto prices don’t follow fundamentals.  

    This is one place where Crypto space shares its similarities with the stock market as well.

    Stock market is completely distanced from the economy and it too acts irrationally, that is, when people are losing jobs and businesses are shutting down permanently, the stock market rallies higher and higher.

    Similarly, crypto space, to its own detriment, is ignoring the projects that have amazing fundamentals while pumping other projects solely based on the hype.

    Long term vs. Short term

    Hype is short lived. Fundamentals are a long game.

    That is why we emphasize that anyone interested in the crypto space does their own research in finding the projects that meet their fundamental criteria.

    Once you know that a project has fundamentals (team that can execute, problem worth solving, solution that can solve, market demand, etc.,) then you just ignore the FOMO and FUD.

    This will help you sleep better and use your spare time and energy in quality endeavors like taking care of yourself or spending time with family, etc.,

    If you get on the hype train – it will be difficult to catch the right wave and this constant lookout for the next big thing is going to rob you of all the peace.

    And, if you find yourself on the right side of the wave – you will be decimated and drowned.

    DeFi defies all common sense

    That is what happened with a lot of people who tried to ‘time’ the DeFi market.  

    Don’t get us wrong. Many people made a ton of money (and good for them).  However, remember, crypto at this point of its evolution is a zero sum game.  That means, for everyone who made a million someone lost that million.

    Unless you got on a project quite early keeping your risk level low or you have some insider information (not to mention this being illegal), you can generally not ‘time’ the market.

    Many veteran traders have lost their shirts in chasing the market.

    Conclusion: does this mean I should stay away from DeFi?

    We cannot tell you that.  That is something you got to decide for yourself.

    By market cap, Yearn Finance is considered one of the top DeFi projects. It lost over 67% in less than a month.   

    Personally, if the top most project is still trying to find the ground while other projects are losing 99% of their value in a matter of a day, that means one thing:  the space needs time to mature.

    We will continue to learn about DeFi. We will continue to invest what we can afford to lose when we find the right project that meets our fundamentals criteria.

    That is our strategy at the moment. You have to find a strategy that suits you.

    While crypto space is riding on the hype at the moment, we continue to believe in fundamentals.

    Thank you for reading and sharing this article. We appreciate you.

    Stay safe and healthy!

    Top 5 Cryptocurrencies 2020

    IMPORTANT DISCLAIMER

    Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

    We do not endorse or guarantee the accuracy of the information and claims made.

    All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

    Continue Reading

    CryptoSpace

    Will India Ban Cryptocurrency Trading?

    Published

    on

    Cryptocurrrency Ban India

    India keeps playing with the emotions of the crypto community in India with constant back and forth of change in rules.

    First it was a complete ban of crypto transactions. RBI forbids banks from serving any clients that deal in cryptocurrencies. Thanks to the Supreme court decision, RBI had to back off.

    Now, there is a renewed effort to place a ban on crypto again.  

    Is Crypto Ban a good thing for India’s financial future?

    No, Cryptocurrency is here to stay according to many financial investors and billionaires. As nations prepare for a hyper-inflation cycle to sweep the world, Cryptocurrency can act as a hedge in addition to gold and silver.

    If the government is concerned about illegal activities with cryptos then they can relax because most crimes happen in fiat cash transactions, not crypto which is traceable.

    Crypto traders generally are not the ones that take part in illicit trades.  It is those who introduce illegal ICOs and OTC trades.

    How about regulations?

    Instead of banning crypto trades, how about bringing clear regulations to provide a framework for the crypto trading.

    Such a framework should include stricter guidelines for ICOs and OTC trades.  

    Crypto exchanges can relay the trading information directly to the tax authorities (instead of needing to be subpoenaed) so that there is transparency.

    Will India Ban Cryptocurrency Trading?

    That depends on whether India wants to be in the ranks of the United States, Switzerland, South Korea, etc., or if it wants to be counted among China, Russia and North Korea.

    The United States, South Korea and Switzerland (along with other countries) are doing everything to stay ahead in the blockchain and crypto race.

    Other countries we stated above are working to stomp on the innovation. 

    A better question is: Can India ban cryptocurrency trading?  

    The answer is NO.  

    To ban cryptocurrency trading – India will have to shut down the internet.  

    In the event of an actual law that bans Indians from participating in the cryptocurrency trading, the only people that will be impacted by those are the ‘honest’ citizens because the crooked ones will still find ways to trade using VPN or alias names.

    For a country that wants to be at the forefront of technological revolution a ban would be a very backward decision.

    We urge the Indian government to NOT punish the honest citizens by introducing a ban.  Rather, introduce a sensible legal framework for everyone to operate in.

    This will bring more businesses to India and take India’s platforms to the world.

    Thank you for reading and sharing this article. We appreciate you.

    Stay safe and healthy!

    Top 5 Cryptocurrencies 2020

    IMPORTANT DISCLAIMER

    Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

    We do not endorse or guarantee the accuracy of the information and claims made.

    All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

    Continue Reading

    Trending