2018 has ushered in a cryptocurrency climate that is showing levels of dynamic and volatile price movement never seen before. Bitcoin’s new high of almost $20,000 in December, 2017, saw new highs for a wide range of cryptos.
With the following downtrends, we are seeing the first true signs that cryptocurrencies are viable to day trade. As traders, this is an exciting time since cryptocurrencies came into existence because of the movement on display.
You might wonder why you should think about adding cryptocurrencies to your trading regime.
Well, essentially all mainstream forex brokers now offer crypto trading – it’s time to take a closer look at cryptocurrency trading.
So, how do you start trading cryptocurrencies? By adding them to your watchlist!
With the right preparation and risk awareness, you can sign up and start day trading cryptos today if you wanted.
So, let’s take a look at the current state of cryptocurrency trading.
Cryptocurrency Market Volatility
Volatility is a double-edged sword. If you are risk-averse and diligent with your trading, a volatile market is possible to navigate.
But if you make spontaneous trade decisions you could find yourself in the beginnings of a hole.
If you dedicate time and hard work to studying the crypto market, you will see good returns. Your best bet at doing this is adding crypto pairs to your watchlist!
It requires time to train an eye to spot potential setups in a volatile market. If you are able to make a weekly habit of analysing cryptocurrency charts, you will be doing your future self a huge favour.
Realistically, you aren’t going to quit your day job to start trading cryptos. Dedicating a half hour every couple of days to look over the main crypto pairs is an achievable goal that will pay off in the long run.
To do this you’re going to need decent charts. Whilst most brokers have their own charts, they are usually pretty basic and outdated. Instead, we’d recommend you use Tradingview for crypto charting, or something similar.
A lot of traders already use this for their forex charts and you can easily add crypto pairs to your watchlist. If you don’t have TradingView, you can sign up here.
At cryptos4noobs.com we use price action to trade cryptos. Price action trading is all about reading the movement of price.
The cryptocurrency market is more sensitive by peoples emotions than forex, making price action an effective approach to cryptocurrency trading.
This enables us to trade on a wide range of time frames using price action. From the weekly charts to the 15 minute charts, you can apply price action to any time frame that suits you.
What this means is that whether you are a scalp or swing trader, using price action to analyse cryptos can be done with immediately and easily.
Price action includes the analysis of the most recent data, something incredibly valuable when trading cryptocurrencies.
Lagging indicators are not as reliable as current data when it comes to analysing cryptos. To achieve consistent profitability, we need to be able to adapt to the cryptocurrency market at a fast pace.
Flexibility in your strategy is going to be critical if you are looking to profit from this market.
Take a look at this trade we took earlier this month:
As you can see, we have a support and resistance level on the chart from which we took our trade. The preceding trend in this example is relatively strong, but notice the indecision candle that forms on our resistance.
With a lower low hit, our trade was triggered and our target set at the 9.5k psyche level, giving us a risk to reward ratio (RR) of 2.
This setup is not complex, nor is it difficult to spot if you are paying attention. Even beginner traders have the ability to take this setup! With the levels of volatility on display you will find that your RR will typically be slightly higher with cryptos.
This is where the potential for huge returns comes into play. Consistent huge returns are enticing, but it doesn’t come about through luck. It’s important to go in with realistic expectations, so let’s see what those should be.
Why Trade Cryptocurrencies?
Crypto trading is in the early stages of development and without doubt in the early adopter stage of growth. As such, the full potential of cryptos is as of yet unknown.
But that doesn’t mean you can’t start exploring the space! There are encouraging signs that cryptos can be one of the more lucrative currencies to trade.
Simply adding cryptocurrencies to your forex watch list is the best way to see how cryptos trade.
The first advantage cryptocurrency trading has is its 24 hour accessibility. You can trade around the clock, 7 days a week.
This gives you flexibility, especially to those of us with less time to spare. You can also trade from anywhere in the world, all you need is an internet connection and you are good to go!
The predictability of cryptocurrency plays a large role in the legitimacy of day trading. The crypto market is driven largely by people and this means that price reacts to psyche levels of varying types. By utilising strong psyche levels, we can take trades that give us extremely good risk to reward ratios.
These big returns do come with a drawback – placement of stop losses and take profits must be of a high quality. Your trade management skills will need to be brushed up if you are looking to trade cryptos.
Realistically speaking, you need to dedicate time to demo trading cryptos, even if you are an experienced trader. It also helps to understand cryptocurrency trading platform fees which can be costly if you don’t know your way around a broker.
Cryptos are currencies, yes, but they also act akin to commodities which provides another layer of complexity. On top of this, the crypto space is a fast-moving world where unforeseen developments can affect price.
This is why demo trading is integral. There is no need to lose any money by jumping in head first. Take your time, the crypto trading space is here to stay.
We are currently seeing cryptocurrencies swing between vast periods of growth, followed by large downtrends. These trends cut into a large chunk of the value gained during the uptrends, providing us an opportunity to jump in.
This is a pattern that we have seen multiple times – take a look.
The potential to trade is clear enough and you will see in the coming year a lot of different strategies start to slowly emerge. If you begin day trading cryptocurrency today, you will be an early adopter. That in and of itself is a slight risk, but with the persistent nature of cryptocurrencies we are confident that the trading landscape has a lucrative future.
And as crypto investors will tell you, early adoption can make you great returns.
But Cryptos are Unregulated!
A downside of trading cryptos is the lack of regulation. As a trader, regulation is a good thing in a healthy amount. There is more freedom for forex traders as opposed to stock traders, and even more freedom for Crypto traders.
However, with no broad regulation in the crypto trading space you need to protect yourself. Established forex brokerages are in the crypto trading market and provide you with a good level of protection should anything go wrong.
Unless you are tech savvy, you should stick to these established brokers.
A bonus with little regulation at the moment is that this trading climate will likely never come about again for cryptocurrencies. It is an exciting space to work in as long as you don’t open yourself up to unnecessary risk!
The regulatory decisions that will be made can’t possibly be known yet. Take advantage of the current crypto climate whilst you still can!
Don’t sit on your hands and wait for others to profit off crypto trading! This is a new corner of the trading world that has yet to discover its identity.
The reality of the cryptocurrency space is that the ship has sailed for most investment opportunities. Sure, you could hop into an ICO of a crypto you think will succeed – but this is akin to the lottery nowadays.
With over 1,500 cryptocurrencies, there’s no telling what will climb to the top. Trading cryptos provides you with an opportunity to not miss out on this booming financial sector!
You don’t need to go off and buy ten books on the wonders of cryptocurrency in order to start. A consistent and gradual learning of crypto’s price action through something as simple as a watchlist is a fantastic beginning.
Give yourself 10 minutes a day to look at that day’s movement – that’s it! Familiarising yourself with cryptos only opens yourself up to more possibilities. It’s up to you how prepared you are when you decide to walk through the trading door.