Cryptocurrency trading is a relatively new phenomenon considering that the entire market is less than a decade old. This brings an element of unpredictability to cryptocurrency trading as there is less contextual information, and fewer reliable data points, to inform your trading strategy.
As with any other asset you decide to trade, having a clear trading plan in place is key, as is investing the time in solid research and in-depth analysis to help guide your trading decisions.
In this course we'll look at some common sense tips and trading strategies for cryptocurrencies.
Cryptocurrencies can be particularly volatile so it's worth remembering, because cryptos are so new the movement in price can be bigger than for many other assets which means two main things when it comes to your strategy; risk management is even more important than usual and holding positions (especially overnight) can be more risky.
A Day Trading strategy is aimed at taking advantage of market volatility over shorter time frames of a few hours rather than days and weeks.
Day Traders identify market trends and trade with the prevailing sentiment until a support or resistance level is met or until a predetermined price point is hit.
Day Trading can be a time intensive approach and requires plenty of flexibility and the ability to react to fast market moving events.
A great deal of your trading strategy when it comes to cryptocurrencies will revolve around market news and speculation
Research and analysis
While there are fewer data points and recurring market trends in the cryptocurrency space compared to some more established assets, the research and analysis you do into the crypto you have chosen is still vitally important.
A great deal of your trading strategy when it comes to cryptocurrencies will revolve around market news, speculation and a deep understanding of prevailing market sentiment.
The cryptocurrency markets often do not move on the back of traditional market forces such as central bank rate decisions, political turmoil or issues like supply and demand.
Rather, as brand new, decentralised assets they can be particularly sensitive to news regarding regulation, potential hard fork events and attempted attacks on coin exchanges.
There are a wide range of independent cryptocurrency message boards, community sites and forums which are worth keeping an eye on in addition to regularly monitoring your position and the wider market in general.
Indicators and drawing tools
With an asset that can see huge price swings on even a daily basis, having the tools to track trends and pre-empt major market movement is crucial.
Our suite of powerful indicators and drawing tools will help you analyse cryptocurrency markets closely, identifying trends and changes in sentiment in real time.
Make use of indicators including MACD, RSI and Bollinger Bands to keep your finger on the pulse of market movement and view multiple charts with a range of time frames to zero in on trading opportunities.
Use our customisable watchlists to track wider market sentiment and make sure you utilise powerful risk management tools to protect your position should the market move against you.