Types of Trading Analysis

When it comes to crypto trading there are three types of analysis. Your mastery of these analysis types will play a big role in your success.

Technical Analysis

Of all the types of trading analysis, technical analysis will be the one you use the most. Technical analysis looks into a currency pairs’ history and informs decision-making.

This type of analysis is what you use to analyse the charts.

Looking at historical data and price movement, you utilise this information to predict what will happen in the present. It is not always successful. A diverse method of analysis always prevails.

However, what technical analysis does provide are patterns and consistent bounce points. This makes technical analysis one of the standout methods. It is our primary method of analysis in the trading world.

Man trading at computer

When you open a chart, there will be a wide variety of tools and indicators that you can use.

Things like Fibonacci numbers, theories on wave patterns, moving averages etc.

Don’t feel overwhelmed by them! Stick to what you know. Over time, you can explore the different options when you are ready! We will get you started with indicators in the next stage.

Fundamental Analysis

This type of analysis encompasses a wider range of topics. This is your analysis of economics, politics, and social factors that accumulate to affect price.

It can be difficult to factor these elements into one concise opinion. Fortunately, sites exist that keep track of events that may affect price.

It helps to be well read on current events. Also, having knowledge of the crypto you want to trade is useful.

Woman reading news

To be informed is to be prepared!

With cryptos, you should have some knowledge of the coin you want to trade or invest – there is no beating around that bush.

It is daunting at first if you are not interested in politics or news, but don’t worry.

Political decisions around cryptos are constantly shown on news sites. You can easily set these up to give you notifications.

You don’t have to become a news junkie, you just need to keep yourself aware of the broad flow of news.

Sentimental Analysis

This final method of analysis takes into account our subjective side.

If everyone was wholly objective, it would be as simple as following indicators to make profit. As you know too well, we all have opinions.

Every single trader will see a chart differently from you. Analysis and the results we extract from that analysis will differ.

Example of sentimental analysis

That’s just how the world works – we are subjective and objective.

It is for you to decide the overall sentiment of a market. You may think that price should push because you are confident.

This is not necessarily reflected by the market though.

Remember, there are millions of people affecting price. You need to assess what the crowd mentality currently is. How confident does everyone seem?

This analysis requires a bit of trial and error in the long term.

Fortunately, no one type of analysis will get you profit. A combination of all three will elevate you to your best potential!