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Technical analysis is a reliable assistant in cryptocurrency trading, without which you cannot do without. There are thousands of indicators on the basis of which crypto traders develop their own strategies. These strategies are very popular and help to earn as much as possible. They can also be used in betting at Hellspin Casino.
Most of them can be difficult for beginners to understand. But there are also effective strategies that have gained great popularity among novice traders due to their simplicity. In this article, we will talk about such strategies that will be easy for a beginner to understand, but at the same time they will help in trading.
How to use indicators
Technical indicators reflect real market performance and help identify key support/resistance, overbought/oversold levels, trend direction and more.
With the help of indicators, crypto traders can find the optimal market entry points and receive signals to buy and sell cryptocurrencies with a certain accuracy.
Based on indicators, traders create their own strategies. As a rule, indicators are used combined for more accurate signals so that the trader can see a more complex picture of what is happening in the market. This eliminates unnecessary noise and allows you to extract the necessary information faster and better.
As a rule, crypto exchange terminals contain pre-configured basic indicators that a trader can use in their trading, such as SMA (moving averages), MACD, Volume and others.
MA indicators smooth out price fluctuations and calculate average price values, allowing you to understand in which direction the trend is currently directed. And the Volume indicator reflects the current market activity: how much buyers (bulls) or sellers (bears) prevail.
Traders can add, remove and customize the indicators they need according to their individual trading preferences. But for beginners, standard settings will be enough – they are recommended by the creators of these indicators and are often used by professional traders. As you gain experience, you will learn how to customize the settings for yourself. Next, we will look at popular trading strategies and explain how to use them in crypto trading.
#1 scalping
Scalping is not the easiest strategy for novice crypto traders, but with proper risk management, it can bring good results. The essence of scalping is to make many transactions during the day to get a small profit up to a few percent. However, cryptocurrencies are highly volatile assets, and their price can change by 10% – 50% or more within one day. But this carries increased risks for traders, especially beginners.
How to trade
This means that it is important for a trader to determine at least two key parameters: support/resistance levels and trend direction. With the help of support and resistance levels, a trader can determine when it is best to open / close positions. When the price rebounds from the lower border, this is a buy signal, and a rebound from the upper border is a sell signal.
#2. Trend trading
Another popular strategy among beginner traders is trend trading. In this case, it is necessary to determine in which direction the price is moving at a given time. Trends are local and global. Global trends are suitable for medium and long term trading.
How to understand that the trend is up
During an uptrend, the price moves like a ladder in a narrow channel and may slightly go beyond it. Moreover, as a rule, each local minimum is higher than the previous one. The same is true for local maxima.
How to trade
So, when you have determined that the trend is up, it is necessary to highlight the key support and resistance levels – we will start from them. Accordingly, the support zone is suitable for opening long positions, and the resistance zone is suitable for closing.
#3 Resistance level breakout
This strategy is used when a new trend has not yet formed, but a break of a key level may indicate its change. During a certain period of time, the price can bounce from support and resistance levels for a long time.
But sooner or later, the forces of the market are outweighed in the other direction: the price cannot move in only one direction. When the rate rises significantly, buyers weaken and bears actively join the game. The reverse is also true.
How to determine that the trend can change?
When approaching this moment, the price amplitude begins to decrease, that is, the price is in a sideways movement or in a flat. A breakdown of the resistance level may indicate the beginning of an uptrend. And before that, sellers “push” the price closer to the resistance level.
One of the characteristic signs of a trend change can be observed when the resistance level practically does not change, and the support level approaches it, closing the chart in the form of a kind of wedge. At a certain moment, the resistance level is broken and the price starts to rise, indicating the emergence of a new uptrend. At the same time, it is important that the price does not immediately roll back to the previous level – this phenomenon is called a false breakout.
How to trade
There is no need to rush and open a position immediately after the price breaks above the resistance level. It is necessary that the following condition be met: the new formed support level should not be lower than the previous resistance level. In this case, you can open long and then trade with the trend.
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